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NY Attorney General to Verizon: Either Serve Your Customers Or Sell and Get Out

Phillip Dampier July 3, 2013 Consumer News, Public Policy & Gov't, Rural Broadband, Verizon, Wireless Broadband 12 Comments
Schneiderman

Schneiderman

The New York Attorney General has some strong words for Verizon Communications:

“Verizon [must] divest those portions of its New York franchise where it is no longer willing to continue providing wireline service and replace Verizon with another carrier that will provide wireline service.”

Attorney General Eric Schneiderman is more than a little concerned with Verizon’s plans to abandon offering landline service on the western half of Fire Island and potentially other areas further upstate to satisfy the company’s wireless business strategy.

In a hostile 13-page filing directed to the New York Public Service Commission, Schneiderman’s office accused Verizon of abdicating its responsibility to provide universal access to high quality landline service in favor of moving customers to inferior Verizon Wireless service.

“Verizon is asking the Commission to depart from a century of telephone service regulation, which had as one of its fundamental principles, universal wireline telephone service for all customers,” Schneiderman wrote.

In return for a guaranteed monopoly, profits, and a secure franchise area across portions of New York, telephone companies like Verizon historically agreed to offer phone service to any customer who wanted it. State and federal universal service rules provided subsidies to phone companies to reach their most rural or expensive-to-reach customers.

The goal, Schneiderman argued, was for every resident in New York to have home phone service, enabling them to communicate with their doctors, families, schools, friends and businesses, as well as to send for police, fire and ambulance assistance in an emergency.

Verizon’s intended replacement, Voice Link, represents a downgrade in service even worse than hundred-year old copper wire “plain old telephone service,” according to the attorney general. Schneiderman called Verizon’s Voice Link inferior and its thick 10-page terms, conditions, and disclaimers “legalistic,” leaving consumers without services they previously received or imposing significant new burdens and obligations.

The issues cited by Schneiderman:

verizonVoice Link Service “is not compatible with fax machines, DVR services, credit card machines, medical alert or other monitoring services or some High Speed or DSL Internet services.” Customers in western Fire Island and other rural parts of New York have no FiOS or cable modem Internet providers to switch to, so those who rely on these services have no alternatives if switched to Voice Link.

Because Voice Link “may not be compatible with certain monitored home security systems,” customers’ homes and businesses will be at greater risk from flooding by burst plumbing, fire or burglars.

Although wireline customers whose service is suspended for nonpayment can still reach a 911 operator in emergencies, suspension of Voice Link “will prevent ALL Service, including any 911 dialing and associated emergency response services. Customers may also lose the ability to receive or place calls, even to 911, if they fail to “promptly notify Verizon” of a change in their address, email, or credit card expiration date.

Customers must “defend, indemnify and hold harmless Verizon from and against all claims … for infringement of any intellectual property rights arising from use of Voice Link or its software.”

Voice Link Service “does not allow the Customer to make 500, 700, 900, 950, 976, 0, 00, 01, 0+, calling card or dial-around calls (e.g., 10-10-XXXX),” so customers will be unable to use such pay-per-call information services. Voice Link Service “does not allow the Customer to accept collect calls or third number billed calls. The Company will not bill any charges on behalf of other carriers. [Customers] must have an International Calling Plan in order to make international calls. Wireline customers are able to subscribe to toll and international calling plans provided by other carriers, and have these and other third-party service charges included on their Verizon bills.

Verizon Voice Link

Verizon Voice Link

Voice Link Service “is subject to the availability of adequate wireless coverage throughout your home, and is not available in all locations.”

Unlike wireline service, which supplies its own power over the copper wiring, Voice Link uses customers’ house current to operate. Verizon has not disclosed how much customers’ electric utility bills will increase to power the Voice Link device. Also, if electric power is interrupted, Customers may have to “reset or reconfigure equipment prior to using” Voice Link. This may be difficult for some physically limited or technologically unsophisticated customers to perform.

During power interruptions, the wireless Devices used in Voice Link are battery operated. Although the Devices include a rechargeable battery back-up that provides only 36 hours of standby power and up to 2.5 hours of talk time in the event of a commercial power outage, “[a ]fter the battery is exhausted, the Service (including 911 dialing) will not function until power is restored.”

After the expiration of a one year replacement warranty for the battery back-up included with customers’ wireless Device, customers “are responsible for replacing the back-up battery as needed,” but Verizon has not disclosed the cost of such replacement batteries.

Wireline customers purchase their own telephones from competitive manufacturers, but the Voice Link device is only supplied by Verizon, which continues to own it. Thus, customers will have to pay Verizon to repair the device if “such repair or maintenance is made necessary due to misuse, abuse or intentional damage to the Device.” Verizon has not disclosed what [the] repair or replacement might cost customers in such event.

When wireline customers end their service with Verizon, they have no equipment to return to the company. However, Voice Link customers who cancel their service “are responsible for returning their Wireless Device to [Verizon] in an undamaged condition. Failure to return the Device within 30 days … may result in [Verizon] charging [customers] an unreturned equipment fee.” Verizon has not disclosed the amount of this fee.

Schneiderman accused Verizon of dragging its feet on repairs on Fire Island and forcing Voice Link on customers as the only available alternative.

“It is clear that Verizon is leveraging the storm damage from Sandy as part of its long-term strategy to abandon its copper networks by substituting Voice Link for [landline] service on western Fire Island and forcing customers to accept wireless Voice Link wherever it does not build FiOS,” Schneiderman argued. “Verizon’s failure to make prompt repairs to its Fire Island facilities during the seven months following Sandy left the Commission little choice but to provide temporary approval of Voice Link so that customers would have some form of telephone service during the 2013 summer beach season. However, this ‘temporary approval’ should not be expanded to allow Verizon to avoid its obligations permanently, on Fire Island or anywhere else in New York.”

Schneiderman wants the PSC to force the issue with Verizon, and not on the preferred terms of its senior executives.

“Rather than allow Verizon to provide inadequate Voice Link service to Fire Island and other New York customers, the Commission should compel the company to either maintain its wireline network throughout its franchise territory or sell
those parts where it is unwilling to do so to another provider that will provide adequate service,” Schneiderman wrote.

Currently there are 12 comments on this Article:

  1. James Cieloha says:

    Every Verizon customer in New York should be ashamed of Verizon for choosing to abandoned wireline service in favor of the Voice Link wireless service in New York very severely.

    This is an excuse for Lowell McAdam and Fran Shammo with Verizon wanting to try to be way too big being like the Wal-Mart’s, the Marlboro’s, the Joe Camel’s, the Paramount Pictures with the movie theater chain of the 1940’s, the Morris Levy’s when he was part of Roulette Records, the Clive Davis’s when he was at Columbia Records in the 1970′s, the Neil Bogart’s of Casablanca Records fame of the 1970′s disco era, the Trinity Broadcasting Network’s, the David Smith (one of the Smith brothers from Sinclair Broadcast Group), the Perry Sock and the Nexstar Broadcasting Group, the Harry Pappas as part of the Pappas Telecasting Companies, the Bernard Madoff’s, the Enron’s, the Worldcom’s, the Adelphia’s, the Tyco’s, the Martha Stewart’s, the Jill Kelley’s, the Orie sister’s, and the Jesse Jackson Jr’s, of the 2000′s by letting greed get out of control so all of the head employees and bosses at Verizon to be able to enjoy carefree lavishly spending to support carefree lavishly lifestyles with luxurious homes, luxurious jets, luxurious cars, luxurious furs, luxurious jewelry, join luxurious clubs, go to luxurious hotels, go to luxurious casinos to do gambling, go to horse races, throw luxurious parties, and have other luxurious items just to make them very happy then trying and willingness to improve the quality of all of their employees and making the customers very happy as well. I hope and I wish that Verizon goes out of business for their unwillingness to care for their customers and their employees. This is an excuse for Verizon trying to bribe like the General Tire/RKO General of the 1960′s and 1970′s by not being very honest of not only the customers and also on themselves.

    I hope and I wish that the FCC would allow all the television and telephone providers with internet broadband that has never ever impose usage caps to the internet broadband customers be allowed to purchase and acquired customers from Verizon and are being required to make a real big concession that they would promised not to have any difficulties with all the internet broadband providers competitors and their customers by not imposing usage caps and meters and raising prices for them to put them out of business sooner and without any interference for 12 straight whole years.

    This is an excuse for Lowell McAdam and Fran Shammo with Verizon wanting to be too big being way too busy trying to act like the Baauer’s, the PSY’s, the Carly Rae Jepsen’s, the Nicole Westbrook’s, the Rebecca Black’s, the Double Take’s, and the Guns N Roses Axl Rose as well as trying to be the Conrad Murray’s, the Jerry Sandusky’s as the assaulters, the Jodi Arias’s, the Casey Anthony’s, the Charles Starkweather’s, the Charles Manson’s, the Lyle and Erik Menendez’s, the O. J. Simpson’s, the Scott Peterson’s, and the Drew Peterson’s as the greedy murderers, the Amanda Bynes’s and the Lindsay Lohan’s as the drunk and the drug abusers, the Rodney Dangerfield’s, the John Belushi’s, and the Chris Farley’s as the comedians, the Gordon Gekko’s, the Victoria Grayson’s, the Victor Newman’s/the Jack Abbott’s, the J. R. Ewing’s/the Cliff Barnes’s, the Charles Montgomery Burn’s/the Mayor Quimby’s, the Homer and Bart Simpson’s, the Peter Griffin’s, the Mickey Mouse’s/the Minnie Mouse’s, the Bugs Bunny’s/the Daffy Duck’s/the Porky Pig’s, the Garfield cat’s, the Cookie Monster’s, the Miss Piggy’s, and the Pillsbury Doughboy’s, of the television, telephone and internet broadband industry of preferring to make it’s customers be forced to have Voice Link wireless service in New York.

    This is an excuse for Lowell McAdam and Fran Shammo with Verizon trying to turn into the 1919 Chicago White Sox’s baseball team and the Southern Methodist University football team of the 1980′s to force all the customers to accept whether or not the customers will be willing to deal with Verizon customer service and making them deal with just having Voice Link wireless service in New York by the use of extortion. I urge all the Verizon customers in New York to boycott Lowell McAdam and Fran Shammo with Verizon right now for making all the customers suffer from having to deal with being forced to be stuck with having Voice Link wireless service in New York in a big huge ugly game of baw baw baw baw baw baw baw baw baw baw baw baw chicken in the future of the telephone industry.

    Wireline phone and internet is useful for web users to look at for news and weather reports as well as for important emergencies. I feel that all of the fat cat politicians and the fat cat phone and internet providers want to see wireline service to go away and force all of the wireline customers to pay up a lot more money for the right to keep phone and internet service so all of the fat cat politicians and the fat phone and internet providers can have carefree lavish spending to fully support their endless greedy lavish lifestyles for their own political gain by way of block booking and extortion is so very shameful and so very disgraceful in my own personal opinion and theory. I feel that all of the fat cat phone and internet providers and the fat cat politicians have never learned from various scandals happening in the past. Have those fat cat phone and internet providers and fat cat politicians learned from the Paramount Pictures practice of block booking with theatrical theatres of the 1940’s, No, the General Tire/RKO General broadcasting license scandal of the 1960’s and the 1970’s, No, the Southern Methodist University football team scandal of the 1980’s, No. These are examples of what I feel that all of the fat cat phone and internet providers and the fat cat politicians are trying to do to attack wireline phone and internet service in the United States Of America in a few years into the future.

    I’m commented in response to all Verizon customers who are very sick and tired of all the ways Lowell McAdam and Fran Shammo with Verizon to make sure that communities don’t build their own broadband networks and have fears to see Verizon internet service deteriorate very much rapidly in a heartbeat in New York.

    I gracefully would support all community internet broadband providers and would want all of them to be able to be allowed to provide the fastest internet speeds of up to 1GB very fairly by the communities being allowed to build their own fiber optics cable lines without interference from Lowell McAdam and Fran Shammo with Verizon with the fact that Verizon is already providing very limited internet broadband service at way less broadband speeds to all of their own customers.

    I hope and I wish that Lowell McAdam and Fran Shammo with Verizon is willing to allow all the communites to build out their own fiber optic cable networks for their superior mega fast internet broadband service that beats out Verizon internet service and speeds to all of their own customers in New York.

    I would like that the locally based phone and internet service providers from New York State to fully be allowed to take over all of Verizon’s wireline service areas with Frontier picking up Verizon’s wireline service areas that are closer to Frontier’s existing wireline service areas in New York, New Jersey, and New York including those that are closer to their headquarters in Rochester.

  2. Steevo says:

    The AG is exactly right, except for making Verizon pay back the money they have been sucking from everyone for the expressed purpose of maintaining those wire lines.

  3. Scott says:

    Wow, way to go for the NY AG, it’s nice to see someone finally stand up to the corporate interests and call them out.

    If Verizon doesn’t back down, I seriously think they should publish a total of all the tax breaks, public funds, and grants paid to Verizon to maintain and expand their copper lines in NY to this very day along with their history of fees and rate hikes.

    Verizon has zero justification to say they can’t afford to upgrade or maintain these services. It’s only after you get accustomed to taking ‘free’ money at the public’s expense and squandering that, you only get more greedy, yet rather than try and ask for me, they figure out how they can give less.

  4. Steevo says:

    These are regulated monopolies.

    For 100+ years they were
    1. Protected from competition
    2. Guaranteed a profit
    3. Guaranteed a return on investment

    Remember those rate cases? The would apply to the regulators for rate increases to build a new central office, maintain and replace lines, even to achieve a specified level of profit.

    What kind of business gets a guaranteed profit? This kind, regulated monopolies.

    Except for that in the specific case of wireline telephone there are now alternatives, and *everyone* has a cellphone today. Some people don’t think a wired home phone is necessary at all, the major exception being business phones which are not replaceable with any cellphone technology. Fax, credit card machines, etc. Not to mention the DSL that half my neighbors have.

    So for all those years they had protection by law, and now that they are huge companies they don’t want to be regulated anymore.

    But you can’t un-ring the bell!

    They derived huge benefits being regulated all those years!

    Maybe the answer is that these same companies run both a regulated monopoly and an unregulated cellphone network.

    Perhaps they should be forced to divest their cellphone operations, then they would be able to see clearly and the wireline company would be more interested in maintaining their customers.

    Obviously Verizon thinks getting all their wireline customers on wireless is more profitable to them. Because they still make money, whereas if they competed with wireless they would at least have their head right.

  5. Tim says:

    A couple of things to keep in mind.

    1. Schneiderman is proposing Verizon do what they already did with the Fairpoint and Frontier divestitures. In fact given that Frontier already has a big presence in upstate NY there is already a case to be made for selling upstate NY territories to Frontier. Having said that I doubt a majority of Verizon’s upstate customers would prefer the likes of Frontier and Fairpoint compared to sticking with VZ.

    2. Even back in the NYNEX and NYTel era there were always some people who lived completely out in the sticks that never had landline service(In the Adirondacks for example). I clearly remember NYNEX Mobile promoting wireless alternatives to these people circa 1993 and 1994.

    3. Under NY State law and NY PSC rulings there is very little benefit left to being an ILEC. Since the early 1980s at the behest of Wall Street and other NYC monied interests the NYS PSC has been promoting facilities based competition(In its earliest days through companies like MFS and Teleport). In fact the NY Port Authority was one of the earliest customers of Teleport(now consumed into legacy ATT) and the NY State government actually invested money in Teleport at the behest of creating competition for large enterprise customers.

    4. Another company could come into to Fire Island and wire it up with copper/fiber. One question I am researching is under the law would they be an ILEC or CLEC. As recently as the early 1970s new ILEC’s have been created, Vista United Communications in Florida for example(serving the Walt Disney World resort). In the electricity industry a new greenfield electric utility was created in Texas a few years back. Note: Electric Utilities don’t really like new distribution companies being created and in Texas they got the law changed afterwards to prevent any “new” utilities from being created. I believe though Florida still allows “new” electric and presumably phone companies.

    5. I don’t believe Fire Island or the affected areas of the Catskills are part of a CATV franchise area. So VZ can say the competition is not required to serve them either.

    6. The PSC really works for the governor not the attorney general and the governor and attorney general really don’t like each other. So don’t hope for much.

    7. I wonder if Frontier will jump into this at all with what their opinion of what NY State should do. Frontier of course doesn’t have a wireless affiliate so it is not in their interest as much to propose copper decommissioning. However they are a lean and mean operation that doesn’t really like to take orders from anyone. My guess is Frontier given some of the legacy FIOS build acquired from VZ is probably in favor of copper decommissioning in favor of FTTH(A separate issue though).

    • Tim says:

      The other thing that concerns me upon further reading of the NY AG brief is that no where in it does it contain any citation of a legal argument under NY State law that says Verizon is required to maintain its copper plant in order to provide basic residential service. I suspect VZ’s lawyers will quickly grasp this. What is interesting is I suspect if go back long enough and did the research you could probably find old rate cases from the 1950s and 1960s where NYTel was required to expand the penetration of the copper network to previously unserved residences. Back in that era there were still many rural areas without copper phone service. Of course back then you were in the era of AT&T and basically a national monopoly.

      If the NYAG really cared about this case I suspect his staff would have done the leg work to actually find previous commitments by Verizon’s predecessor companies to expand the copper network to certain amounts of service penetration. While NY AG might have a compelling case from a public policy standpoint I suspect VZ’s lawyers will quickly make mincemeat of whatever legal arguments are made.

  6. jon says:

    I’m kinda surprised that Google hasn’t made a move to New York. I’m fairly certain they could get a speedy green light since verizon is pretty much useless in this case.

    • me says:

      What I see as sad, is that Verizon in their own backyard do not have the best service around. They went from selling a product everyone wants (fios) to selling one everyone is pretty meh on (wireless). They are looking at 2-3 year ROI when they if they want to be around in 30 years need to be looking at the 15-20 year projects…

      Why would you want to give your customers over to wireless? That opens them up to moving to one of 5 other carriers? Just in that area alone.

  7. Lee Cook says:

    The defend, indemnify, and hold harmless clause in that contract is not one that I would want to sign on for. I have seen this clause in the contracts for newspaper delivery. You the customer of Verizon are agreeing to pay legal expenses, pay judgments, and agreeing to not sue Verizon for that if it happens.

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