Verizon landline customers fund mobile and FiOS networks, consumer group claims

 

Verizon has wrongly overcharged its traditional phone customers and spent the cash building out its FiOS and mobile networks, a consumer group alleges.

The allegations — outlined in this New York Post story — might lead to lawsuits or other action against the company, says Bruce Kushnick, executive director of New Networks Institute.

Verizon denies Kushnick’s claims in no uncertain terms. “There is absolutely no factual basis for his allegations,” the company said in a statement to The Post.

2015-09 new-verizon-logoAnd New York regulators seem uninterested in probing Verizon’s fees, which are no bargain.  As The Post story notes, the only regulation of Verizon’s price is a $23 monthly charge for a basic level of service. People who buy the basic service actually pay around $30 after government taxes and fees are tacked on. Charges for things like long distance service, an optional plan by which Verizon maintains the wires inside your home, and add-ons like call waiting and voice mail jack up the price even further.

The state doesn’t regulate the prices of those extras. Kushnick and his group say that’s a big problem. You can read more about Kushnick and New Networks’ claims here.

Though New York shows little interest in regulating Verizon’s prices, it does care about the quality of landline service. The Public Service Commission voted March 17 to investigate whether the company does enough to keep up its copper-wire network.

2016-03-21 Verizon chart from PSC order

Source: NYS Department of Public Service

Fewer and fewer people rely on Verizon’s copper network, which dates to the late 1800s. But the abandonment trend is slowing. This chart shows what’s going on. The blue line’s gradual trend toward horizontal shows that fewer customers are giving up traditional phone service. This is happening despite the fact that Verizon’s copper-wire service is very expensive compared to what Time Warner, Cablevision and other TV/Internet companies charge for phone service. It’s also pricey compared to mobile service. People save money by giving up their Verizon land lines.

“(N)otwithstanding competition, millions of Verizon’s customers … may very well opt to rely on the copper network for critical voice services,” the Commission noted in an order March 21. Commission chair Audrey Zibelman said at the March 17 meeting that for years, state policymakers have assumed Verizon’s customers would choose cheaper phone options. State officials are puzzled by their loyalty to the company. “They’re not walking,” Zibelman said.

Customers are staying with Verizon despite evidence that the quality of its service is declining. At public hearings and other forums, Verizon customers have complained to the state that “service quality was poor and that they were often out-of-service for extended periods of time,” the March 21 order says. “They expressed dismay in [sic] Verizon’s response to their service quality concerns and cited many examples of repair times taking far longer than 24 hours.” The Commission sees an obligation to make sure Verizon’s remaining landline customers have decent service.

New York and other states have had little interest over the last decade or so in the price and quality of old-fashioned telephone service. The Ma Bell monopoly days have passed to history, and phone customers have plenty of choices. As rules and laws have evolved, the federal government has more responsibility for regulating Internet and wireless service.

Verizon has less interest in old-fashioned phones. It has told New York regulators that it’s not interested in expanding its FiOS network beyond areas it now serves. In other states, the company has sold its landline operations as it shifts focus to mobile service. Frontier Communications takes over Verizon’s landline and Internet business in Florida, Texas and California on April 1.

Now we’ll find out if a state investigation can make the company care more about what it sees as obsolete technology.

 

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
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