THE BLOG
09/16/2013 12:47 pm ET | Updated Nov 16, 2013

Fire Island Is Getting Lit With Fiber Optics -- But What About the Rest of Verizon, Much Less the Voice Link Wireless Issues or the $130 Billion Vodaphone Deal?

On September 10, 2013 a deal was cut with Verizon to give Fire Island, New York's citizens a Verizon fiber optic-based service called FiOS, Verizon's broadband and cable service. The agreement, created with the help of Senator Chuck Schumer, is great. As someone who's been working on this issue -- we will take any win we can get.

"By installing fiber-optic cables on the island, Verizon will not only make the system as good as it was before, it will be making it better," said Schumer. "Fire Island residents will now have greater access to high speed internet -- a necessity in the modern age -- and reliable voice service."

But before you light up that congratulatory cigar and take a sip of some fine whiskey, this brings up some basic questions. OK, so a group of small beach communities on an island finally got some adequate phone service; what about the 27 million households in Verizon's territories not to mention the tens of millions of business?

In our last article we outlined that Verizon lines and territories covers 27 million households. We don't know the number of businesses. Verizon has only 5 million FiOS TV customers and passed about 15 million homes -- not the 18 million the media claims they have. This means about 80 percent of their wires are still copper, not fiber and a bit more than 50 percent are currently passed.

Moreover, Verizon has no plans to upgrade at least 1/2 of their customers and instead is telling anyone who will listen that they are going to shut off these customers' copper wire services and force them onto expensive or crap wireless services, like Voice Link. "Crap" is a technical term.

Lowell Mac Adams, Verizon's Chairman & CEO, stated plan is -- Kill the copper.

"The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper. We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.

"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. We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there..."

As you may recall, Fire Island and other parts of New York and New Jersey were hit by Sandy and the phone lines were knocked out in October 2012. Instead of repairing the wires, Verizon decided to push customers onto a wireless product called Voice Link, which is a 1990s-styled cell phone device (literally 2G -- not a fancy 3G or 4G) that can't do basic data services that have been part of POTS, Plain Old Telephone Service, since the 1980s, from alarm circuits or dial up Internet to credit card processing.

And on Fire Island, because Verizon is a monopoly provider and has the only wired network, (there is no cable company offering services, even phone service), this take-it-or-leave-it approach to not repair basic telecommunications services, even after a storm, even though it's an emergency, doesn't matter. Verizon decided to use Fire Island as a test case to move the process of degrading America's communications -- while making more profits -- and do whatever they want. They are the phone company.

However, because of the outrage of the island's citizens, or because Voice Link, well, is "crap", based on many reports from the Fire Island customers including everything from poor sound quality to a lack of basic data applications, and not to mention the story has been getting attention in the national media, Fire Island will now supposedly get 'lit' with fiber optics by next Memorial Day, 2014.

However, the rumors persist that the real reason for Verizon folding is because Verizon probably got FEMA, insurance and other monies to pay for the repairs and simply hung these Sandy-harmed people out to dry.

What about everyone else that was harmed by Sandy or has chronic phone problems -- including customers in the middle of Manhattan, New York or in New Jersey. Or more significant -- is Verizon going to expand FiOS to everyone so that customers have choice of cable and broadband providers?

Nah. Verizon is planning on moving everything to wireless that they can -- even where they should have been upgrading to fiber optics for the last decade.

For example, as we pointed out, a town in New Jersey called Mantoloking was also damaged by Sandy and Verizon also put them on Voice Link. And yet Verizon has obligations in New Jersey to have 100 percent of the state upgraded with a fiber optic service capable of 45 Mbps in both directions -- and completed by 2010. Never did it. We estimate Verizon, New Jersey collected about $15 billion in excess phone charges to do these upgrades. Shouldn't Mantoloking also be properly upgraded like Fire Island?

Or in New York, Verizon got the New York State Public Service Commission to raise rates on EVERY residential and business POTS customer claiming that the extra monies were needed for 'massive fiber optic investments'. Ironically, in 2010 Verizon announced it was halting the expansion of FiOS; yet customers are still paying higher rates for these network upgrades.

"We are always concerned about the impacts on ratepayers of any rate increase, especially in times of economic stress," said Commission Chairman Garry Brown. "Nevertheless, there are certain increases in Verizon's costs that have to be recognized. This is especially important given the magnitude of the company's capital investment program, including its massive deployment of fiber optics in New York. We encourage Verizon to make appropriate investments in New York, and these minor rate increases will allow those investments to continue."

Vodaphone vs Fixing the Wires.

But the kicker was the announcement on Sept 11, 2013. Verizon is planning on selling almost $50 billion in bonds to buy out Vodaphone and give Vodaphone investors $130 billion. Verizon and Vodaphone have a joint venture called "Cellco," which does business under the Verizon Wireless.

According to USA Today:

"Verizon is doing the deal because it wants to fully control the wireless unit as it anticipates future moves to flourish in the lucrative mobile market."

Where's Senator Schumer's concerns about this, when it's clear that Verizon has been not only been collecting money for 'fiber optic upgrades' in New York but more importantly has abandoned proper maintenance and repairs for years -- and now is creating a financial bond, not to make sure that customers are being properly served, but to build up a wireless business which competes with the wired networks.

On April, 25, 2012, the New York Attorney General's Office petitioned the NY State PSC because of massive quality of service declines.

"Despite receiving this substantial deregulation of its service quality requirements, Verizon nevertheless failed to meet four repair service measurements in 2011, the first year of the (new quality of service) plan. Moreover, by limiting the scope of Verizon's performance measurements to the 8% of all New York customers defined as Core, the Commission allowed the company to provide below standard service to 92% of its customers with impunity."

And the attorney general warned that Verizon didn't care about the wires and was shifting its focus to wireless.

"Rather than meet its obligations to provide wireline telephone customers with minimally adequate telephone service, Verizon is continuing to drastically reduce its workforce with the result that the company cannot meet its customers' repair needs in a timely manner. Verizon's management has demonstrated that it is unwilling to compete to retain its wireline customer base, and instead is entirely focused on expanding its wireless business affiliate.

"

And this is just in New York. The proverbial crap is about to hit the proverbial fan with the massive state and federal campaigns run by Verizon and AT&T. On the state level, the companies have been creating model legislation at ALEC, the American Legislative Exchange Council, that essentially erases basic obligations like 'carrier of last resort' -- meaning the company doesn't have to provide basic phone services anymore, as well as removing basic oversight by the regulators. 25 states have already passed this -- crap.

And on the federal level this same crap is being promulgated. AT&T's FCC Petition to move America to "IP-enabled services" is also planning to 'sunset' meaning close down, the networks that offer phone service. There's even an FCC 'IP Transition Task Force' to force this transition down the throats of the public.

But hey. Whoopee. Fire Island is finally getting adequate phone service -- in a year.