Verizon's Boston FiOS Fiber to the Home Plan Needs Investigating--Now.

01/01/2017 09:36 pm ET Updated Jan 02, 2018

The more we dig, the more we realize that it is time for the Commonwealth of Massachusetts and the City of Boston to start immediate investigations.

Example:
In April 2016, Verizon announced that it would be upgrading Boston to FiOS, a fiber to the home service, and the starting point would be the neighborhood of Dorchester. We uncovered that some (most) of Dorchester has already been upgraded, starting in 2006, a decade ago. Verizon could have, at any time, been providing high speed broadband for the last decade--but didn't.

The Boston Globe, November 2, 2006 (Subscription required)


"An urban fiber-optic challenge
Verizon to use Dorchester as a test site for bringing high-speed Net into cities

"Verizon Communications Inc. is installing fiber-optic Internet service in Dorchester, using Boston's biggest, and one of its most diverse neighborhoods, as a test site for the challenges the company will face in bringing "FiOS" to urban areas nationwide."

"Installation in Dorchester started in the first quarter of 2006 but the company didn't begin advertising its availability until August, mostly through mailings to homes that are close enough to the new lines to be eligible for the service. Verizon won't say how many local FiOS subscribers it has in Massachusetts nor will it say exactly how many it has in Dorchester."

But this is only one of many issues surrounding this previous build out. (Verizon has not disclosed whether other neighborhoods were also upgraded at this time.)

I'll come back to this in a moment.

The Announced Plan: In April, 2016, Verizon New England told the public that it would finally be upgrading the city of Boston, spending $300 million dollars over a six year period to upgrade the existing copper wires with a fiber optic wire that will cover 100% of the City.

Verizon laid out four specific areas, "Fiber Zones", to be upgraded. And, the decision on who got served first would be based on potential customers voting for their area to be the leader of the pack.

NOTE: In 2010, Verizon announced it was halting the FiOS, fiber to the home build out throughout the East Coast, from Massachusetts to Virginia, and would only be upgrading areas where there were contractual franchise agreements in place. Verizon even stopped maintaining the existing copper utility networks. Moreover, Verizon hasn't completed some areas, like New York City, even though NYC was supposed to have 100% completed by July 2015.

To Sum Up:

  • Verizon tells Boston that it is going to be offering FiOS, a fiber to the home service, to 100% of businesses and households over the next 6 years.
  • Yet, Verizon is going to only upgrade a fraction of the City and tells the investor community that the plan is only to upgrade a 'few suburbs' and then offer a wireless substitute.
  • Verizon does not tell the public that only parts of Boston will be upgraded.
  • The Verizon-Boston signed cable franchise agreement of December 2016 is only for 25+% of the City and it does not include any obligations to do the rest of Boston.
  • Moreover, Verizon is going to leave the surrounding cities, like Cambridge and Revere, undone, not to mention the majority of Massachusetts even though Verizon is the state-based, wired utility provider and controls the wired infrastructure.
  • Verizon did not make clear to the public (or in any document submitted) that the company had already upgraded portions of Boston in 2006, a decade ago.
  • Verizon claims the decision of where to start upgrading would be based on 'voting'. However, starting with Dorchester vs starting with any other 'zone', was obviously 'rigged'.
  • Verizon claims it will be spending $300 million, yet parts of the City were already done and paid for a decade ago.
  • Verizon's plan is to substitute the fiber to the home with a wireless service.
  • Verizon told the public it was doing a 'test' in Boston of the new '5G' service.
  • Management told investors this deployment was going to be 5G as well.
  • In fact, management now says the wireless service is just 4G with some enhancements, yet hasn't stopped claiming the deployment will be 5G.
  • Verizon will be using the pricing model of wireless -I.e.; customers pay by the gigabit, and there will be severe 'data caps'.
  • The $300 million that is supposed to be spent over six years appears to be 'made up'. There have been no audits or even a budget submitted, or even a timeline of when 100% of the City would be done.

Verizon's CEO Lowell McAdam claims that "Boston is going to be the prototype of the architect for the networks to come..."

In 2015, a letter, signed by 14 mayors from across the Verizon footprint, complained that Verizon wasn't properly upgrading their cities and was not even finishing cities with contractual obligations for FiOS cable TV. The cities included New York City, Philadelphia, Pittsburgh, Newark, Jersey City, Syracuse, Trenton, Albany, as well as Massachusetts cities, Lowell, Brockton, Worcester and Revere.

"As the Mayors of 14 major cities along the East Coast, representing over 12 million residents, we are writing to voice our concern at your company's failure to meet the needs of our constituents for access to state-of-the-art fiber optic cable service....As Mayors, we understand firsthand how vital Broadband is to the growth of our local economies and to nurturing a healthy, competitive marketplace in our state....But consistently and increasingly, our consumers have complained that FiOS service is not available to them. These are not isolated complaints - there are millions of residents in communities throughout the Northeast who have been left without service, and with no plan or promise for future resolution."

If Boston is the plan for the rest of the East Coast, then Boston and Massachusetts should take the lead and start investigations.

We've already written a series of articles about the Boston-Bait-N-Switch.

While some may say that a call for an investigation is premature, history shows that Verizon can not be trusted and what we uncovered is just the tip of a deep iceberg. For example, these are pages from Verizon MA's submission in 1994 to the state commission to upgrade the existing copper wires to fiber optics for 330,000 customers by the year 2000, starting in 1996--20 years ago. See 'History Repeats Itself, Yet Again'.

Finally, the real question is: Who paid for all of the wiring? Verizon has filed claiming that the fiber upgrades are part of the existing, state utility telecommunications infrastructure and are using the construction budgets because they are "Title II", common carriage networks. We previously found massive cross-subsidies of the wireless networks- i.e., charging local wired phone customers extra to fund the wireless company's fiber to the cell sites. ("Verizon Wireless" is a D/B/A for "Cellco Partners", which is a separate legal entity.) Moreover, this is not just about the capx; it appears that the wireless subsidiary is not paying market prices for use of the networks or other costs.

We will be doing a separate expose on this because these wireline-wireless cross-subsidies require a separate investigation.

Just Some of the Facts:

1) The Boston FiOS Fiber Optic Service "Starting Point" Was Upgraded in 2006.

As mentioned, but worth repeating, Verizon's starting point, Dorchester, was already being upgraded to fiber in 2006, though Verizon did not disclose the extent of these build outs.

The Boston Globe, November 2, 2006

"An urban fiber-optic challenge
Verizon to use Dorchester as a test site for bringing high-speed Net into cities"

Ironically, these wires could have been delivering service to customers anytime over the last decade--but didn't. We have no idea what areas of Massachusetts or the other Verizon states already had fiber builds that were never 'turned on'.

2) There's a Long History Here - Just Ask Donnie Wahlberg.

The Boston Globe, October 8th, 2013


"'This is New England, where people tell it straight,' says Boston-born TV star Donnie Wahlberg in a new commercial for FiOS, Verizon's cable television and Internet service. 'No phonies, no fakers, no shortcuts.'

"The commercial, titled 'Here's the Truth about FiOS in Massachusetts,' features Wahlberg standing before the Hancock Tower, Trinity Church, and in Charlestown near the Bunker Hill Monument.

"But here's another truth about FiOS: You can't get it in Copley Square. Actually, you can't get it anywhere in Boston.

"Boston Mayor Thomas M. Menino sounded somewhere between flabbergasted and outraged about the commercial."

Too much history to discuss here, Verizon stopped deploying/upgrading to FiOS sometime during 2007-2008. In 2016, Verizon decided to finally do a deal with Boston, first to show that it was still going to wire cities, and second, it was done just before the CWA/IBEW strike to show there would be continued jobs for union members. It appears that most of this was all for show to get the unions to settle.

3) Was the Vote for the Deployment Plans and the Money Spent, Rigged?

Verizon requested that customers 'vote' so that their area would be done first. This is now in question.

According to Fierce Telecom:

"Verizon's Boston Fiber Zones
"Taking a cue from Google Fiber's "Fiberhood" concept, Verizon has divided up its FiOS buildout plan for Boston into four zones. Verizon has invited residents in each of its zones to vote at a site to be the first to get service.

Here is the Verizon announcement.

2017-01-02-1483323651-2669447-fiosbostonvote.png

First, it is clear that while the press releases claim that the company is doing 100% of the neighborhoods, this language claims that "votes" and a "minimum of interest" are required, contradicting the statement that all areas will get upgraded. Next, this announcement claims that: "The order of our build in a Fiber Zone depends on you! Every household or small business that registers in a Fiber Zone is counted as a vote, and where we have the most interest will be our priority."

A lack of disclosure about the previous 2006-2008 buildout is also troubling as it is now obvious that voting had nothing to do with the 2016 starting point.

And the monies to be spent, $300 million, appear to be 'made up'. Verizon has presented no budget. But, if parts of the networks were already built, then the $300 million is pulled from thin air, it would appear.

4) Verizon Is Not Doing 100% Fiber to the Home.

As we previously pointed out in other stories, Verizon's most recent cable franchise only covers 28% of the city.


"Section 13.14 Adjustments to Reflect Expanded Service Areas
Several provisions in this License have included values reflecting the Licensee's initial Service Area represents only a portion of the City, approximately twenty-eight (28%) of the City's geography. As new Service Areas are added, a new portion representing the increased Service Area of Licensee in relation to the City's geography shall be calculated by agreement between the parties prior to the Effective Date for such expansion. Thereafter, certain values in this License, originally calculated to be approximately 28% of a City-wide value, shall be increased proportionately based upon the new revised proportion, effective as of the Effective Date for the increased Service Area."

In fact:

  • The cable TV franchise specifically does not lay out a plan for 100% coverage nor a timeline on when this would be done.
  • The franchise specifically states that the other areas are not part of this agreement.
  • I.e., this is not a contract to do 100% only a fraction of the city - much of which was already wired.

5) Verizon is NOT Rolling Out 5G to Start But Is Now Claiming It Is 4G.

Charla Rath, Verizon Vice President, Wireless Policy Development, speaking at a New America event, in December 2016 (slightly paraphrased)

"Full 5G connectivity? What is interesting here is--what is the definition of 5G? You will here there's a lot of life left in 4G. I think what we're going to find is -- as 5G develops, 5G is less the kind of network advancements we've all become used to who have been in the cellular industry a long time, and more about an entire eco-system that will include parts, a lot of what we're already doing but a lot more of it."

What this says is-we're doing 4G with some tweaks; we'll rename it 5G. We just fibbed about this being an actual 5G deployment as the rest of the world would define it.

6) Verizon Will Move Customers onto 'Gig Pricing'.

  • Pricing - Verizon will use the pricing for its wireless service -where the customer is charged by the gigabit. (Verizon has already done this in at least Pennsylvania when shutting off the copper-based DSL (and not supplying FiOS). Verizon is forcing customers onto its wireless service.)
  • Pricing - There will be severe 'data caps' like wireless. As many know, the price for wireless is ridiculous as it is based on a package of 'gigs' of use. DSL has unlimited usage; Wireless plans can't supply serious streaming video based on the gig pricing, for example.
  • Speed - Fiber to the home can do 1Gbps. This wireless replacement service is going to be based on a modified 4G model.

We guarantee the 'tests' will say show remarkable speeds, at no/low costs, but history
shows they will have little to do with the reality a few years from now.

7) Verizon's Plan Is for a Bait-N-Switch: Promise Them Fiber to the Home; Give Them Inferior and More Expensive Wireless--to Make More Profits.

In statements by Verizon management, Verizon has no intention of doing fiber optic services but will pull a bait-n-switch and replace it with wireless. And this is not because it is technically better but because the company has manipulated the expenses and revenues so wireless makes more profits.

Francis Shammo, Verizon EVP, stated at the Goldman Sachs Communacopia Conference, September 22, 2016:


"But it's going to be a fixed broadband wireless solution.

"And if you think about the cost benefit of that, today, if you think about FiOS and what it costs me to connect a prem to FiOS. I have to lay the fiber down the street, but then I also have to then connect the home, go into the home, make sure the wiring is right, put in install the boxes, install the routers.

"If you think about 5G, you put the fiber down the road, which is what we're doing in Boston. Then all of the labor and the expense of drilling up your driveway connecting the OT to your house and all the labor involved with that, all that goes away, because now I can deliver a beam into your - into a window with a credit card size receptor on it that delivers it to a wireless router, and there's really no labor involved and there's no real hardware other than the router in the credit card. So the cost benefit of this is pretty substantial, at least, we believe it is."

Coda:

There will be a number of updates to this story in the next few weeks focusing on the real question: Who paid for all of the wiring and what are the implications of these deployments being done as Title II, common carrier networks and part of the existing state utility infrastructure?