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Bruce Kushnick

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I Challenge Verizon to a Public Debate: Piano Optional

Posted: 05/31/2012 5:38 pm

Dear Verizon,

I challenge you to a public debate about our findings in our last report "Verizon's State-Based Financial Issues & Tax Losses" and the materials in our previous HuffPost articles -- and please make sure there's a tuned piano in the room.

Bob Varettoni, the executive director for corporate communications at Verizon, wrote "It's Not the Same Old Song at Verizon," claiming that my last few articles were "outdated and erroneous in many ways."

I should write a longer rebuttal, but I will keep this brief as I propose we do a public, live debate. The impartial Internet Society (New York chapter) has agreed to host it.

Ironically, Mr. Varettoni started his response by discussing Glenn Gould's playing of Johann Sebastian Bach's "Goldberg Variations." Gould took the piano world by storm in 1955 because of his technical prowess. Mr. Varettoni then claims that his later version recorded in 1981 was more mature.

And Mr. Varettoni believes that while Gould's playing matured in the later recording, I, however, have "been writing variations on this same theme for nearly 30 years -- and many of the sentences written in 2012 read as if they had been written in 1983."

Unfortunately, the Verizon executive doesn't have a clue about Gould and his playing -- as his later version is not considered by many pianists better than the original but different and more of an afterthought to his career.

I can say this because I've been playing the piano for 55 years. I have a degree in music composition from Brandeis. I played Carnegie Recital Hall (now Weill Recital Hall) a few times, and was joined by Robert Koff, founding member of the Julliard String Quartet. I even have a solo piano CD of my own compositions, released in 2008, and just released some free, new, more modern tunes. I'm expecting to play Carnegie again in 2015 and to play in a bunch of clubs in the interim.

But most importantly, regardless of Gould's playing, the underlying, actual notes and their arrangement -- i.e., the music of Johann Sebastian Bach, never changed in the last 271 years. Factual data is always factual data.

Also, Mr. Varettoni seems to have missed the part of my bio where from 1982 to 1992 we worked for what is now the Verizon and AT&T companies. I was one of the leading consultants in interactive services, as told by this New York Times front-page article as I was consultant to AT&T and all of the other telcos. And in 1992, I helped to roll out the first three-digit service, like "311" in New York, with Cox Newspapers, which was based on a report I wrote in 1990 and published by Probe Research in 1993

But in 1992 I found out that my clients had been not only been able to overcharge my Aunt Ethel thousands of dollars on phone charges, but that the companies had gotten billions of dollars in financial incentives that were supposed to be used for upgrading the network -- and this was based on submitting cost studies that were "made up" and commitments that they would never keep. Others have noticed over the last 20 years as well.

As I wrote in our recent HuffPost article, in March, the New Jersey Board of Public Utilities just issued a show cause order that Verizon-New Jersey failed to properly upgrade 100 percent of state's Public Switched Telephone Networks with fiber-optic service, capable of 45 Mbps in both directions by 2010. The original agreement was a horse-trade; the phone company would replace the aging copper wiring with a fabulous fiber optic future if the state changed the law so that the customers would pay more for service, the new financial largess to be used in the new infrastructure building and we know how poorly that went.

While Mr. Varettoni claims that I've been doing variations on a theme, truth is, it would seem that I've been creating whole symphonies of new findings that matured with age as the more I dug since 1992 the more I found.

Let me address just a few of the wrong notes, foul harmonies and slopping playing of this "Same Old Song of Verizon" -- with no disrespect to the Four Tops' classic, "It's the Same Old Song."

1) Paying New York taxes: More like a comic, out-of-tune minuet.

Verizon: "(Kushnick) ... faults Verizon for getting a state income tax break in New York because the company does not make a profit on wireline services there."

And elsewhere: "And yet, Verizon is vibrant and profitable."

Verizon, New York showed a $2.2 billion loss in just 2010 in its SEC filed state-nased annual report. (See page 3). Simply put, Verizon manipulated much of the business entities and is moving assets out of the utility, including FiOS, many data services, etc.

Isn't FiOS profitable in New York? What about the "business enterprise services" or even the data services? Aren't these all profitable? Are the revenues counted in the Verizon, New York report? Have these entities paid their fair share back to Verizon, New York or are customers paying for these services to be deployed?

Verizon, I can't hear you? Please sing louder...

2) Verizon: "Verizon pays taxes in New York on gross receipts rather than income."

While Verizon claims that it paid "gross receipts" tax, there is no mention that Verizon "passes through" these "gross receipts" charges to the customers. Here's an actual Verizon-New York small business customer phone bill with multiple "surcharge taxes" that have been mixed in with other charges where Verizon is charging customers for their taxes. The state law specifically reads that "this surcharge is not required by the Commission."

How much of these gross receipts tax-surcharges are paid by customers vs. Verizon?

Verizon, you are singing out of key.

3) Verizon: claims we "misrepresent Verizon on New Jersey property taxes."

Kushnick: We quote the League of Municipalities, which highlighted a current court case against Verizon for stopping to pay property taxes to municipalities.

We didn't miss a beat.

4) Access line accounting: a deceptive cadence

Verizon: We make "baseless assertions about Verizon shifting assets and changing the way we report wireline access lines."

Kushnick: This chart on access lines is taken directly from the FCC. It stops at 2006 (the last year the FCC published this data), and the "loss" of lines is based on counting a subset of lines called "switched" access the majority of lines, mostly "Special Access" show massive gains. In fact, only 40 percent of lines are "switched," and therefore counted.

Where's FiOS? Where's the data services? Where's DSL? Where's the "Special Access" lines? Remember the losses we just discussed? Those losses and the deceptive accounting of access lines are tied at the hip.

Verizon, I believe you have not practiced your piano scales enough.

5) Musical chairs with construction budgets

Verizon: "and -- perhaps most absurdly, given financial realities -- suggests that Verizon wireline revenue subsidize Verizon Wireless."

The New Jersey State's report we quote outlined how the construction budgets that should have been upgrading the utility plant have been shifted to the wireless company, even though wireline customers have been paying excess profits in the state for decades. Therefore, Verizon will not be upgrading at least 155 communities.

"While it is possible for Verizon to extend service throughout its authorized territory to an additional 155 municipalities in the state that are not included in its current application of 369 towns, Verizon has indicated it will now concentrate its capital expenditures, expected to be between $16.8 billion and $17.2 billion in 2010 on its wireless telephone network. ... Therefore, unless a new entrant into the system-wide franchise process emerges in these areas, there is little expectation that they will receive landline cable television competition."

Maybe you should wear some glasses when you try to read the "sheet music"?

6) Verizon is tone deaf and gets an 'F' in music education

Verizon: "So go ahead and listen to Glenn Gould's recordings and marvel for yourself at the evolution of genius. Today, you can ... anytime, anyplace and on virtually any device -- compliments of Verizon's investment in networks."

First, I do want to thank Verizon. I hadn't listened to Bach, much less Gould's rendition in years, though "The Well-Tempered Clavier" is still my favorite Bach collection. Wikipedia writes "The Well-Tempered Clavier" is generally regarded as one of the most influential works in the history of Western classical music.

However, Verizon has left most with a Victrola that is still playing vinyl 45s but charging everyone for digital copies, over and over again.

Moreover, I'm convinced Verizon failed music education and lacks even the basics skills of harmony, theory, counterpoint or analysis, much less a proficiency on their instrument.

Verizon, whenever you ready for a real debate, let me know. But make sure there's a piano in the room. Someone has to entertain those who attend. Here's my music bio.

If you'd like to see us debate, just post some comments here or go to Mr. Varettoni's article. I'm sure he'd love to hear from you.

 
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