THE BLOG

Did Verizon Short Change "Upstate" New York and are POTS Customers and Low Income Families Paying for Fiber Optic Services They Will Never Get?

06/01/2014 07:11 pm ET | Updated Aug 01, 2014

Part III of a new series based on the new report: "It's all Interconnected."

While America ponders the impacts that might happen if the Net Neutrality rules are erased -- such as the ability of the phone and cable companies to be able to charge more for 'fast lanes' or being put in the slow lane, what about those with 'no lanes' -- and the creation of 'Digital Dead Zones'.

As discussed in Part II, starting in 2006, Verizon New York's POTS (Plain Old Telephone Service) customers have been charged rate increases for the 'massive deployment of fiber optics', and that translates into paying for the networks used to deliver FiOS cable TV, phone, Internet and broadband services.

Unfortunately, Verizon New York (VNY) has stated that it has stopped expanding its FiOS deployment and when we cross referenced Verizon's statements and the current deployment, we found that Verizon is only going to upgrade 20 percent of the New York State's municipalities, and that low income families, in particular, have been adversely impacted.

But it will also get worse as Verizon announced that it was also going to start to 'cut off the copper' in areas that were not upgraded and move customers onto wireless. Verizon's CEO Lowell McAdam stated in June 2012:

"And then in other areas that are more rural and more sparsely populated, we have got LTE built that will handle all of those services, and so we are going to cut the copper off there."

Examining the Verizon New York FiOS Deployment --Who Is and Who Isn't Getting Served.

In an interview on WAMC radio, November, 27, 2013, Verizon spokesman, John Bonomo claimed there are 183 municipalities in Verizon NY's service territory that do or should be able to receive FiOS TV and the other FiOS products but VNY has no plans for expansion beyond these commitments, including the state capital, Albany.

"But right now we have commitments to 183 municipalities where we need to complete 100 percent of our network. So we want to make sure that we make good on those commitments before we reach out and get new commitments. Of franchises in other communities, namely like Albany."

According to Wikipedia, there are a total of 994 towns and cities in New York State.

"This is a list of towns in New York. As of the 2010 United States population census, the 62 counties of New York State are subdivided into 932 towns and 62 cities."

With an estimate of 90 percent coverage of New York State households by Verizon New York, (based on the FCC's access line accounting), this would mean that only 20 percent of towns have been or are being upgraded by Verizon New York for FiOS, leaving 712 munis without upgrades.

How Many Customers Have or Can Get FIOS as of 2014?

According to a Verizon New York press release in March, 2014, Verizon had passed 3.7 million 'premises' (business and residential locations) in New York State and their holdings in Connecticut.

"Continuing deployment of the company's award-winning, 100 percent fiber-optic FiOS TV and FiOS Internet services. At year's end, FiOS services were available to more than 3.7 million homes and businesses in the two states New York and CT."

The following supplies the raw census information for New York City and New York State's housing units and businesses. (We left out Connecticut because it is a nominal part of Verizon New York.)

2014-06-01-nystatecensus.png

  • There are 3.4 million residential units and 944,000 businesses in New York City, while there are about 10.1 million business and residences, total, in New York State.
  • Verizon New York covers approximately 90 percent of the state's population, based on using FCC-supplied data on phone lines. This means that there are about 9.1 million 'premises'.
  • Outside of New York City, there are 3.94 million housing units and 816,931 businesses in New York State -- 4.76 million total 'premises'.
  • Basic math suggests that Verizon New York has passed about 41 percent of the 'premises' with FiOS in its New York State service territories.

And we note that according to a Verizon interview in The New York World, March 28, 2014, the company is going to complete the New York City deployment in 2014.

"Verizon is on pace to meet our obligations called for in the franchise agreement to run an all-fiber network throughout the entire five boroughs," said company spokesperson John Bonomo in an emailed statement. "We will complete the premises passed portion of the FiOS build in 2014, meaning we will have fiber up and down each street and avenue in the entire city, providing meaningful competition that benefits all City residents."

There are obvious problems with these numbers that are not easily explained. If Verizon New York is on track to finish New York City, with having 3.4 million housing units passed, (not to mention the 944,000 businesses), then where does that leave the rest of the State's customers, which include residential and business customers?

Uptake Issues: New York State is Mostly Copper-Based.

According to Verizon Communications Annual Report for the year ending December 31, 2013, of the premises passed nationwide Verizon had about 40 percent penetration rate for FiOS Internet and 35 percent for FiOS video. i.e., FiOS Internet and broadband are sold separately from the cable TV services in some areas.

"As of December 31, 2013, we achieved penetration rates of 39.5 percent and 35.0 percent for FiOS Internet and FiOS Video, respectively, compared to penetration rates of 37.3 percent and 33.3 percent for FiOS Internet and FiOS Video, respectively, at December 31, 2012."

This means that of their 3.7 million households and businesses passed, Verizon NY has, at best, only 40 percent who are actual customers -- 1.48 million customers.

We have not found public data on the total number of VNY copper lines in service nor the total customers with FiOS. All that is available are the number of POTS customers from the 2012 Verizon New York's' annual report to the NY Public Service Commission. Using just that statistic, the majority of lines, over 55 percent, are still copper.

The conclusion, then, is that the majority of POTs customers that paid for a 'massive deployment of fiber optics' will never get this upgrade and that Verizon has essentially left most of New York State to be an afterthought.

However, there is also a dark side as to who exactly is getting FiOS. In May 2012, a group of nine mayors from upstate cities outlined how Verizon had been "redlining poor and minority communities." Stop the Cap wrote:

"Virtually every mayor in the urban centers of upstate New York is accusing Verizon Communications of redlining poor and minority communities when deciding where to provide its fiber-to-the-home service FiOS...The mayors are upset that Verizon has chosen to target its limited FiOS network primarily on affluent suburbs surrounding upstate New York City centers."

'"Verizon has not built its all-fiber FiOS network in any of our densely-populated cities. Not in Albany, Buffalo, Syracuse, Binghamton, Kingston, Elmira or Troy,' the mayors say. 'Yet, Verizon has expanded its FiOS network to the suburbs ringing Buffalo, Albany, Troy, and Syracuse, as well as many places in the Hudson Valley, and most of downstate New York. As a result, the residents and businesses in our cities are disadvantaged relative to their more affluent suburban neighbors who have access to Verizon's FiOS, providing competitive choice in high-speed Internet and video services."

Talk about a double whammy. First, low income families got hit with major rate increases. Then they may not get FIOS, a service they paid to deploy. These areas also will have no cable or broadband or Internet competition; thus no lower prices on these other services. And, since they are not getting upgraded, there's a chance that they will be in the new 'Digital Dead Zones' via Verizon's plan to shut off the copper wires and replace it with more expensive wireless services from Verizon's own affiliate, Verizon Wireless.

Part IV: Net Neutrality Solved: Verizon NY's Multiple Financial Books Reveal "Black Hole Revenues."