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Big Headaches for Frontier Takeover of Verizon Landlines/DSL/FiOS in Texas, Florida, and California

As of late Monday afternoon, Downdetector.com still shows widespread outages for Frontier customers in North Texas, western Florida and parts of California.

As of late Monday afternoon, Downdetector.com still shows widespread outages for Frontier customers in North Texas, western Florida and parts of California.

Despite promises this past weekend’s transition from Verizon Communications to Frontier Communications would result in little more than “a logo change,” countless customers in the affected states of Florida, Texas, and California reported long service outages, website problems, and long holds waiting to talk to customer service representatives about when service would be back.

The outages were most widespread on Friday morning, April 1, when many subscribers awoke to discover they no longer had phone, television, or broadband service. A blitz on social media directed at Frontier quickly followed on Facebook and Twitter, many summing up their first experience with Frontier to be like “dealing with a third-rate phone company.”

Louise Thompson called the transition “a total fiasco” and some businesses lost thousands of dollars on Friday alone. The “Happy Grasshopper” was one of them, after losing Internet and phone service.

“We have 20 employees who can’t get any work done here today,” said owner Dan Stewart.

Gerard Donelan, a real estate appraiser who works from home in South Tampa, was still without service Friday afternoon. “I talked to customer service about 10:30. … He told me service was down in the Tampa Bay area, and he didn’t know when it was coming back, and there was nothing he could do,” Donelan told the Tampa Tribune. “What a joke. These guys were telling us just yesterday how seamless this was going to be. My next phone call is to Bright House.”

welcome frontierThe popular Zudar’s sandwich shop downtown was still unable to swipe credit cards or take phone or Internet orders at mid-afternoon. “It’s having a terrible effect on business,” said owner Eric Weinstein. “It’s absolutely an epic failure on their part. An amazing lack of customer service and communication.”

frontier texasThe City of Plano (Tex.) lost its website in the transition. Frontier shared its failure with AT&T mobile customers in parts of Florida, who found cell service not working because Frontier also took control of fiber links connecting many of AT&T’s cell towers to AT&T’s network. Many of those were down too.

“During the early morning of April 1, 2016, a technical issue occurred during the integration of the systems Frontier acquired from Verizon that impacted service to some enterprise and carrier customers in Florida, Texas and California.  As of 9:30 am eastern, the issue was resolved,” the company’s statement said.  “In addition, an unrelated fiber cut occurred that impacted customers in the Tampa market.”

Across all three states, Frontier officials hurried to downplay the impact of the service outages, which are continuing to this day for some customers. In some statements, Frontier claimed only about 500 business customers lost service, and there were no widespread problems. But many of the 3.7 million customers in Texas, Florida and California enduring the transition say those outages and problems affect residential accounts.

“There is ‘absolutely nothing widespread going on?'” asked Eric Petty, an adjunct professor at St. Petersburg College. “What a bunch of liars. How stupid do they think their customers are?”

One of the biggest problems customers are encountering is the procedure to transition their online access from Verizon to Frontier. To begin that process, customers need a new Frontier ID, but that is easier said than done if you lack landline service. As part of the registration process, customers need to enter the account PIN number usually displayed on landline bills, but often missing from broadband-only service bills.

frontier floridaLee Allen of Dallas was one of many frustrated customers. He spent an hour trying to manage the Frontier MyAccount registration process and when he tried to sync his Verizon and Frontier account together, it was a flop.

Two calls to Frontier customer service and still no joy reports the Dallas Morning News.

“I’m in limbo,” he said Friday afternoon.”I’m self-employed and work from home. They are supposed to be a technology company. They should have been ready.”

Frontier says they are aware of this problem and are working on a solution.

In Los Gatos, Calif., it was an Internet-free weekend for most of the city’s former Verizon Internet customers, who also lost service on Friday. As of Sunday morning, they still didn’t have service, according to the San Jose Mercury News:

Los Gatos customers were assured the transition on April 1 would be smooth with no interruption to service. But that hasn’t been the case, said Beau Graeber, Fenesy’s neighbor who’s helping him contact the company and reconfigure his Internet.

“It’s a little frustrating,” Graeber said, adding that Verizon — now Frontier — is the only option for Internet and telephone service in Los Gatos, outside of cable or satellite providers. “For Ralph and some of my other neighbors, it’s a terrible inconvenience.”

frontier californiaConcerned customers with bills due this week are finding they don’t have enough access on Frontier’s website to arrange payment of their bill. Frontier says not to worry – “Until this process is completed on April 8th, you will only have very limited account access, even with a Frontier ID,” Frontier reports. “You can still use your Frontier ID to download the Frontier TV App, HBO GO, Watch ESPN, Disney and other popular entertainment Apps. If your bill is due during this period, rest assured that all late fees will be waived.”

Beyond total service outages and interruptions, other customers are reporting various problems with Frontier’s version of FiOS TV:

  • Frontier began migrating their 100,000 title On Demand library to FiOS on April 2. The process was supposed to be complete Saturday afternoon, but some customers are still having problems. Frontier: “We understand how important Video on Demand is to our customers. We apologize for the inconvenience and are working diligently to ensure the content is available as soon as possible. If you get a message that the service is ‘temporarily unavailable,’ you should reboot your set-top box to refresh the VOD service. To reboot, unplug your set-top box, wait at least 10 seconds, and then plug it back in. Please note, a reboot can take up to 3 minutes as the system refreshes your settings. If you continue to experience any issues accessing VOD, please call our Tech Support team at 1-877-600-1511.”
  • The Nickelodeon Jr. FiOS TV Widget/App was retired by Nickelodeon on March 31 prior to the transition to Frontier. It is, therefore, not available. Customers can still watch Nick Jr. on their home television. Customers can also access Nick Jr.’s programming via the web, at www.nickjr.com, or through Nickelodeon’s mobile apps for iOS and Android.
  • When searching for a Video on Demand title with the FiOS TV remote, customers may notice due to the transition from Verizon to Frontier, many of the movies and TV shows are not appearing in either “New Releases” or “Collections”. However, they can be found by scrolling down to “By Title” and then selecting “All” in order to find your choice. You can also search for your VOD by selecting the “B” button on your FiOS TV remote.

frontier new logoFrontier promised regulators things would go better for new Frontier customers after the company botched a similar transfer of AT&T customers in Connecticut that went so poorly, the company had to offer $50 service credits to affected customers.

“We have lessons to learn,” Frontier spokeswoman Kathleen Abernathy told Connecticut regulators at the time.

“They didn’t learn a thing,” said Stan Rogers, a transitioned Frontier customer outside of Allen, Tex. “I was there for the Connecticut switchover two months before I moved down here and now I get to experience the same thing all over again. To give you an idea of where Frontier is on the technology curve, they have sent me information about how to transition my Verizon e-mail address to AOL. Hello!”

North Texas resident Larry Allen agrees, “I didn’t think anything could drive me back to Comcast, but Frontier may do it. TV issues, email issues, Frontier can’t process my information to set up an account, horrible/outdated selection of movies on demand, [and] Frontier [is] not responding to emails for assistance.”

http://www.phillipdampier.com/video/WTSP Tampa Frontier transition not as smooth as promised 4-1-16.mp4

WTSP in Tampa reports Florida area customers didn’t get the easy transition from Verizon to Frontier they were promised. (2:22)

http://www.phillipdampier.com/video/KTVT Dallas Frontier service problems persist for some 4-3-16.mp4

KTVT in Dallas reports Frontier service outages created headaches for customers across North Texas. (2:08)

FairPoint’s ‘Moosepoop’: Abdicating Its Responsibilities One Customer at a Time

Phillip Dampier: One customer calls FairPoint's deregulation logic "moosepoop."

Phillip Dampier: One customer calls FairPoint’s deregulation logic “moosepoop.”

In 2007, Verizon Communications announced it was selling its landline telephone network in Northern New England to FairPoint Communications, a North Carolina-based independent telephone company. Now, nearly a decade (and one bankruptcy) later, FairPoint wants to back out of its commitments.

In 2015, FairPoint stepped up its push for deregulation, writing its own draft legislative bills that would gradually end its obligation to serve as a “carrier of last resort,” which guarantees phone service to any customer that wants it.

The company’s lobbyists produced the self-written LD 1302, introduced last year in Maine with the ironic name: “An Act To Increase Competition and Ensure a Robust Information and Telecommunications Market.” The bill is a gift to FairPoint, allowing it to abdicate responsibilities telephone companies have adhered to for over 100 years:

  • The bill removes the requirement that FairPoint maintain uninterrupted voice service during a power failure, either through battery backup or electric current;
  • Guarantees FairPoint not be required to offer provider of last resort service without its express consent, eliminating Universal Service requirements;
  • Eliminates a requirement FairPoint offer service in any area where another provider also claims coverage of at least 94% of households;
  • Eventually forbids the Public Utilities Commission from requiring contributions to the state Universal Service Fund and forbids the PUC from spending that money to subsidize rural telephone rates.

opinionSuch legislation strips consumers of any assumption they can get affordable, high quality landline service and would allow FairPoint to mothball significant segments of its network (and the customers that depend on it), telling the disconnected to use a cell phone provider instead.

FairPoint claims this is necessary to establish a more level playing ground to compete with other telecom service providers that do not have legacy obligations to fulfill. But that attitude represents “race to the bottom” thinking from a company that fully understood the implications of buying Verizon’s landline networks in a region where some customers were already dropping basic service in favor of their cell phones.

FairPoint apparently still saw value spending $2.4 billion on a network it now seems ready to partly abandon or dismantle. We suspect the “value” FairPoint saw was a comfortable duopoly in urban areas, a monopoly in most rural ones. When it botched the conversion from Verizon to itself, customers fled to the competition, dimming its prospects. The company soon declared bankruptcy reorganization, emerged from it, and is now seeking a legislative/regulatory bailout too. Regulators should say no.

fairpointLast week, even FairPoint’s CEO Paul Sunu appeared to undercut his company’s own arguments for the need of such legislation, just as the company renewed its efforts in Portland to get a new 2016 version of the deregulation bill through the Maine legislature.

“We’ve operated in and we have experience operating basically in duopolies for a long time,” Sunu told investors in last week’s quarterly results conference call. “Cable is a formidable competitor. Look, they offer a nice package and a bundle and they – in certain areas, they certainly have a speed advantage. So we recognize that and so our marketing team does a really good job of making sure that our packages are competitive and we can counter punch on a both aggregate and deconstructive pricing.”

“Our aim is not to be a low cost, per se,” Sununu added. “What we want to do is to make sure that people stay with us because we can provide a better service and a better experience and that’s really what we aim to do. And as a result, we think that we will be able to change the perception that people have of Fairpoint and our brand and be able to keep our customers with us longer.”

Paul H. Sunu

Paul H. Sunu

Of course customers may not have the option to stay if FairPoint gets its deregulation agenda through and are later left unilaterally disconnected. In fact, while Sunu argues FairPoint’s biggest marketing plus is that it can provide better service, its agenda seems to represent the opposite. AARP representatives argued seniors want and need reliable and affordable landline service. FairPoint’s proposal would eliminate assurances that such phone lines will still be there and work even when the power goes out.

At least this year, customers know if they are being targeted. FairPoint is proposing to immediately remove from “provider of last resort service” coverage in Maine from Bangor, Lewiston, Portland, South Portland, Auburn, Biddeford, Sanford, Brunswick, Scarborough, Saco, Augusta, Westbrook, Windham, Gorham, Waterville, Kennebunk, Standish, Kittery, Brewer, Cape Elizabeth, Old Orchard Beach, Yarmouth, Bath, Freeport and Belfast.

At least 10,000 customers could be affected almost immediately if the bill passes. Customers in those areas would not lose service under the plan, but prices would no longer be set by state regulators and the company could deny new connection requests.

FairPoint argues that customers disappointed by the effects of deregulation can simply switch providers.

fairpoint failure“The market determines the service quality criteria of importance to customers and the service quality levels they find acceptable,” Sarah Davis, the company’s senior director of government affairs, wrote. “To the extent service quality is deficient from the perspective of consumers, the competitive marketplace imposes its own serious penalties.”

Except FairPoint’s own CEO recognizes that marketplace is usually a duopoly, limiting customer options and the penalties to FairPoint.

Those customers still allowed to stay customers may or may not get good service from FairPoint. Another company proposal would make it hard to measure reliability by limiting the authority of state regulators to track and oversee service complaints.

Company critic and customer Mike Kiernan calls FairPoint’s legislative push “moosepoop.”

“FairPoint has been, from the outset, well aware of the issues here in New England, since they had to demonstrate that they were capable of coping with the conditions – market and otherwise – in their takeover bid from Verizon,” Kiernan writes. “Yet now we see where they are crying poverty (a poverty that they brought on themselves) by taking on the state concession that they are trying desperately to get out from under, and as soon as possible.”

Vermont Public Radio reports FairPoint wants to get rid of service quality obligations it has consistently failed to meet as part of a broad push for deregulation. (2:23)

You must remain on this page to hear the clip, or you can download the clip and listen later.

Kiernan argues FairPoint should be replaced with a solution New Englanders have been familiar with for over 200 years – a public co-op. He points to Eastern Maine Electrical Co-Op as an example of a publicly owned utility that works for its customers, not as a “corporate cheerleader.”

Despite lobbying efforts that suggest FairPoint is unnecessarily burdened by the requirements it inherited when it bought Verizon’s operations, FairPoint reported a net profit of $90 million dollars in fiscal 2015.

Verizon: Ignore Our Adamant Denials of Not Being Interested in Selling Our Wired Networks

carForSaleDespite denials Verizon Communications was interested in selling off more of its wireline network to companies like Frontier Communications, the company’s chief financial officer reminded investors Verizon is willing to sell just about anything if it will return value to its shareholders.

In September, rumors Verizon planned to sell more of its wireline network where the company has not invested in widespread FiOS fiber-to-the-home expansion grew loud enough to draw a response from Verizon CEO Lowell McAdam at the Goldman Sachs 24th annual Communicopia Conference.

“When people ask me, and I know there’s some speculation that we might be interested in selling the wireline properties, I don’t see it in the near-term,” McAdam said.

Today, Shammo seemed to clarify McAdam’s pessimistic attitude about another Verizon landline sell off in the near future.

“We’re extremely happy with the asset portfolio we have right now, but as we always say we continue to look at all things,” Shammo said. “Just like the towers, we said we would not sell the towers and then we got to a great financial position and we sold our towers. If something makes sense [and] we can return value to our shareholders and it’s not a strategic fit we’ll obviously look at that.”

Shammo

Shammo

For most of 2014, Verizon denied any interest in selling its portfolio of company-owned wireless cell towers. In February 2015 the company announced it would sell acquisition rights to most of its cell towers to American Tower Corporation for $5.056 billion in cash.

Some analysts believe the early indicators that suggest Verizon is ready to sell include its lack of upgrades in non-FiOS service areas and Verizon’s willingness to walk away from up to $144 million from the second phase of the FCC’s Connect America Fund to expand Internet access to more of Verizon’s rural landline customers.

Verizon’s decision to take a pass on broadband improvement funds infuriated four southern New Jersey counties that claim Verizon has neglected its copper network in the state. As a result of allegedly decreasing investment and interest by Verizon, customers in these areas do not get the same level of phone and broadband service that Verizon customers receive in the northern half of New Jersey.

More than a dozen communities have signed a joint petition sent to the Board of Public Utilities, New Jersey’s telecom regulator, insisting the BPU take whatever measures are needed to preserve the availability of telecommunications services in southern New Jersey. The towns also want the BPU to consider funding sources to help improve broadband service that public officials claim is woefully inadequate. Outside of Verizon FiOS service areas, Verizon offers customers traditional DSL service for Internet access.

Verizon-logoThe communities:

  • Atlantic County: Estell Manor and Weymouth Township.
  • Gloucester County: South Harrison Township.
  • Salem County: Alloway Township, Lower Alloways Creek, Mannington Township, Township of Pilesgrove, and Upper Pittsgrove Township.
  • Cumberland County: Commercial Township, Downe Township, Hopewell Township, Lawrence Township, Maurice River Township, City of Millville, Upper Deerfield Township, and Fairfield Township.

Officials claim Verizon has pushed its wireless alternatives to customers in the region, including its wireless landline replacement. But officials suggest Verizon’s wireless coverage and the quality of its service is not an adequate substitute for wireline service.

Verizon's Home Phone Connect base station

Verizon’s Home Phone Connect base station

Verizon has proposed decommissioning parts of its wireline network in rural service areas and substitute wireless service in the alternative. At issue are the costs to maintain a vast wireline network that reaches a dwindling number of customers. Verizon reminds regulators it has lost large numbers of residential landline customers who have switched to wireless service, making the costs to maintain service for a dwindling number of customers that much greater.

But for many communities, the focus is increasingly on broadband, especially in areas that receive little or no cable service. Telephone companies serving rural communities are surviving landline disconnects by providing broadband service.

For companies like Frontier Communications, CenturyLink, and Windstream, investments in providing broadband service are among their top spending priorities. At larger phone companies like Verizon and AT&T, highly profitable wireless divisions get the most attention and are top spending priorities.

Speaking this morning at the UBS 43rd Annual Global Media and Communications Conference, Shammo told investors Verizon will continue to allocate the majority of its capital allocation around Verizon Wireless to help densify its wireless network. Verizon, Shammo noted, plans further spending cuts for its wired networks next year as FiOS network buildouts start to taper off.

This will make expansion and improvement of Verizon DSL unlikely, and may put further cost pressure on maintaining Verizon’s wireline networks, which could further motivate a sale.

Verizon’s chief financial officer Fran Shammo is likely looking at three alternatives for the future:

  1. Increase investment in Verizon Communications to further expand FiOS fiber optics;
  2. Look at cost savings opportunities to improve the books at Verizon Communications, including decommissioning rural landline networks (if Verizon can win regulator approval);
  3. Consider selling Verizon’s non-core wireline assets in areas where the company has not made a substantial investment in FiOS and refocus attention on serving the dense corridor of customers along the Atlantic seaboard between Washington, D.C. and Boston.

Verizon Wireless Cutting Jobs, Regional Centers and Passing the Savings on to Themselves

Phillip Dampier October 28, 2015 Consumer News, Verizon No Comments

610px-Verizon-Wireless-Logo_svgVerizon Wireless has informed employees Wednesday that its national operation will be reorganized resulting in significant job cuts.

The nation’s largest wireless carrier also operates 20 regional offices to handle everything from operations to call center functions. Verizon intends to cut that number to six, with employees likely offered a limited number of positions if they agree to relocate. Verizon has a workforce of 177,900 as of the end of the third quarter. Sales and retail store employees will be unaffected in this round of job cuts.

Verizon will not be passing any savings from the cost cuts on to customers. In fact, the company recently announced rate increases of $20 a month for its remaining unlimited data plan users.

With almost 70 percent of Verizon’s revenue now coming from its highly profitable wireless operations, a reduction in regional offices could prove disruptive, especially if it results in a reduction in customer service representatives. Verizon would not specify exactly how many positions will be cut or how much was likely to be saved by consolidating offices, or which would be closed.

Sanders: ‘Verizon’s Greed Has No End;’ Company Accused of Declaring War on Middle Class

cwa sanders

Sanders

Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) called out Verizon’s employment practices in a speech Monday delivered in solidarity with Verizon workers conducting informational picketing as they continue to fight for a new contract with the phone company.

“Their greed knows no bounds,” Sanders told the crowd in Manhattan. “Verizon is a metaphor. You got corporate America making huge profits, their CEO’s getting huge compensation packages, and then with all of their money what they do is hire lawyers in order to make it harder for workers to survive in this country. Workers need decent pay raises, they need decent health care, and they need decent pensions.”

It was the first time any major presidential contender joined a worker protest since Jesse Jackson joined a protest against a strike-breaking firm in 1988.

“Let me get to the point,” Sanders said at a picket line outside of a Verizon Wireless store. “The middle class in this country is disappearing and what Verizon is doing to their workers is exactly what has got to be fought if we are going to rebuild the American middle class. What this campaign is about is that corporate America can’t have it all.”

verizon-protest“I think Verizon needs to hear from the American people,” Sanders added. “We want them to create more broadband. We want them to pay their workers a decent wage. We want them to sit down and negotiate a decent contract.”

A Verizon spokesperson dismissed Sanders’ speech as “a stunt.”

Sanders is no stranger to telecom issues in the northeastern U.S. He remains a fierce critic of FairPoint Communications, which acquired Verizon landlines in the northern New England states of Vermont, New Hampshire and Maine. After the company declared bankruptcy reorganization, FairPoint workers went on strike after the firm imposed the elimination of all retirement benefits, health care coverage, pensions, and job security.

Sanders sponsored a Thanksgiving dinner for the strikers and their families in Vermont at the Burlington High School. He is a frequent critic of corporate mergers in the telecommunications marketplace.

http://www.phillipdampier.com/video/Bernie Sanders Verizon Rally 10-26-15.mp4

Sen. Bernie Sanders (I-Vt.) attacks Verizon’s corporate policies at a union picket outside a Verizon Wireless store in Manhattan. (5:25)

New York Attorney General Launches Investigation Into Broadband Speeds and Performance

Schneiderman

Schneiderman

(Reuters) – New York state’s attorney general is probing whether three major Internet providers could be shortchanging consumers by charging them for faster broadband speeds and failing to deliver the speeds being advertised, according to documents seen by Reuters.

The letters, sent on Friday to executives at Verizon Communications, Cablevision Systems, and Time Warner Cable ask each company to provide copies of all disclosures they have made to customers, as well as copies of any testing they may have done of their Internet speeds.

“New Yorkers deserve the Internet speeds they pay for. But, it turns out, many of us may be paying for one thing, and getting another,” Attorney General Eric Schneiderman said in a statement.

In statements, spokesmen for the three companies expressed confidence in the speeds of their Internet services.

“We’re confident that we provide our customers the speeds and services we promise them and look forward to working with the AG to resolve this matter,” Time Warner Cable spokesman Bobby Amirshahi said.

Cablevision spokesman Charlie Schueler said the company’s Optimum Online service “consistently surpasses advertised broadband speeds, including in FCC (Federal Communications Commission) and internal tests. We are happy to provide any necessary performance information to the Attorney General as we do to our customers.”

A Verizon spokesman said the company would cooperate with Schneiderman’s office. “Verizon is confident in the robust and reliable Internet speeds it delivers to subscribers,” the spokesman said.

BroadbandMap_rev1The attorney general’s investigation is particularly focused on so-called interconnection arrangements, or contractual deals that Internet service providers strike with other networks for the mutual exchange of data.

In the letters, Schneiderman’s office says it is concerned that customers paying a premium for higher speeds may be experiencing a disruption in their service due to technical problems and business disputes over interconnection agreements.

A 2014 study by the Measurement Lab Consortium, or M-Lab, found that customers’ Internet service tended to suffer at points where their broadband providers connected with long-haul Internet traffic carriers, including Cogent Communications Group.

“Internet service provider interconnection has a substantial impact on consumer Internet performance – sometimes a severely negative impact,” the study said, adding that business relationships rather than technical issues were often at the root of the problem.

A spokesman for the attorney general’s office said the 2014 study’s findings, coupled with consumer complaints and internal analysis, prompted the inquiry into Internet speeds.

Some of the letters also raise questions about speeds delivered by Time Warner Cable and Cablevision to consumers over “the last mile,” a term that refers to the point where a telecommunication chain reaches a retail consumer’s devices.

(Reporting by Sarah N. Lynch; Editing by Peter Cooney, Christian Plumb and Jonathan Oatis)

Stop the Cap! Testimony to N.Y. Public Service Commission Advocating Major Telecom Study

logoOctober 20, 2015

Hon. Kathleen H. Burgess
Secretary, Public Service Commission
Three Empire State Plaza
Albany, NY 12223-1350

Dear Ms. Burgess,

New York State’s digital economy is in trouble.

While providers claim portions of New York achieve some of the top broadband speeds in the country, the vast majority of the state has been left behind by cable and phone companies that have never been in a hurry to deliver the top shelf telecom services that New Yorkers need and deserve.

The deregulation policies of the recent past have resulted in entrenched de facto monopoly and duopoly markets with little or no oversight. Those policies, instead of benefiting New Yorkers, are ultimately responsible for allowing two companies to dominate the state’s telecommunications marketplace.

In virtually all of upstate New York, the services consumers receive depend entirely on the business priorities of local incumbent providers, not market forces or customer demand. As a result, New Yorkers face relentless, unchecked rate increases, well-documented abysmal and unresponsive customer service, and inadequate broadband provided by a workforce under siege from downsizing, cost-cutting, and outsourcing.

Certain markets, particularly those in the New York City area, have at least secured a promise of better broadband from Verizon’s FiOS fiber to the home upgrade. But at least 100,000 New Yorkers have languished on Verizon’s “waiting list,” as the company drags its feet on Non Standard Installation orders.[1] In upstate New York, Verizon walked away from its FiOS expansion effort five years ago, leaving only a handful of wealthy suburbs furnished with fiber service while effectively abandoning urban communities like Buffalo and Syracuse with nothing better than Verizon’s outdated DSL, which does not meet the FCC’s minimum definition of broadband – 25Mbps.[2]

Cablevision’s broadband performance dramatically improved because of investment in network upgrades, and the company has been well-regarded for its broadband service ever since.[3] But the proposed new owner of Cablevision – Altice, NV — has sought “cost savings” from cuts totaling $900 million a year, which will almost certainly devastate that provider’s future investments, its engineering and repair crews, and customer service.[4]

At least downstate New York has the prospect for +100Mbps broadband service. In upstate New York, three providers define the broadband landscape for most cities and towns:

  • Time Warner Cable dominates upstate New York with its cable broadband service and has the largest market share for High Speed Internet. As of today, Time Warner Cable’s top broadband speed outside of New York City is just 50Mbps, far less than the 1,000Mbps service cities in other states are now on track to receive or are already getting.[5]
  • Verizon Communications is the largest ILEC in upstate New York. Outside of its very limited FiOS service areas, customers depend on Verizon’s DSL service at speeds no better than 15Mbps, below the FCC’s minimum speed to qualify as broadband;[6]
  • Frontier Communications has acquired FiOS networks from Verizon in Indiana and the Pacific Northwest, and AT&T U-verse in Connecticut. Frontier has made no significant investment or effort to bring FiOS or U-verse into New York State. In fact, in its largest New York service area, Rochester, there are significant areas that can receive no better than 3.1Mbps DSL from Frontier. The vast majority of Frontier customers in New York do not receive service that meets the FCC’s minimum definition of broadband, and some investors predict the company is “headed for financial disaster.”[7]

The competitive markets the DPS staff envisions in its report to the Commission are largely a mirage. When an ILEC like Frontier Communications admits its residential broadband market share “is less than 25% in our 27 states excluding Connecticut,” that is clear evidence the marketplace has rejected Frontier’s legacy DSL service and does not consider the company an effective competitor.[8]

While incumbent cable and phone companies tout ‘robust competition’ for service in New York, if the Commission investigated the market share of Time Warner Cable upstate, it would quickly realize that ‘robust competition’ has been eroding for years, with an ongoing shift away from DSL providers towards cable broadband.[9]

Frontier’s primary market focus is on rural communities where it often enjoys a monopoly and can deliver what we believe to be inadequate service to a captive customer base. The company is currently facing a class action lawsuit in West Virginia, where it is alleged to have failed to provide advertised broadband speeds and delivers poor service.[10]

Verizon’s ongoing investment in its legacy wireline network (and expansion of DSL to serve new customers) has been regularly criticized as woefully inadequate.[11] From all indications, we expect the company will eventually sell its legacy wireline networks, particularly those upstate, within the next 5-10 years as it has done in northern New England (sold to FairPoint Communications) and proposes to do in Texas, California, and Florida.[12] (Verizon also sold off its service areas in Hawaii, West Virginia, and much of its territory acquired from GTE.)

Across New York, service problems and controversial deals between telecom providers have made headlines. Here are just a few:

  1. Superstorm Sandy’s impact on Verizon’s legacy wireline network on Fire Island and in other downstate communities left many without service. Instead of repairing the damage, Verizon proposed to scrap its wireline network and substitute inferior wireless service with no possibility of wired broadband.[13] The DPS received a large number of comments from the public and local elected officials fiercely opposed to this proposal, one that Verizon eventually withdrew in the face of overwhelming opposition.[14]
  2. There are growing allegations Verizon may be underspending on its legacy wireline network and even worse, may be misallocating costs and revenues to deceive the Commission.[15] Some allege much of the company’s ongoing investments, charged to the wireline operation, in reality are for the benefit of its wireless network. This may have allowed Verizon Communications/New York to claim significant losses on its wireline books the company then argued justified rate increases on ratepayers.[16] A full scale accounting of Verizon’s books is essential for all concerned and corrective action may be necessary if these allegations are proven true.
  3. Verizon’s foot-dragging on FiOS buildouts in New York City led to a damning audit report commissioned by New York City Mayor Bill de Blasio this summer and oversight hearings were held last week by the City Council of New York.[17] [18] Despite Verizon’s creative definition of “homes passed,” a substantial number of New Yorkers cannot receive the benefits of “today’s networks” the DPS staff refers to. Instead, many are stuck with poorly-performing DSL or no service at all.[19] Regardless of whether fiber passes in front of, over, in between, or behind buildings, Verizon signed an agreement compelling them to give customers a clear timeline to establish FiOS service. It is apparent Verizon is not meeting its obligations.[20]
  4. The proposed sale of Time Warner Cable to Comcast led the Commission’s staff to admit the majority of respondents to requests for public input were strongly opposed to the merger and without substantial modifications concluded would not be in the public interest.[21] Comcast eventually withdrew its proposal in the face of overwhelming opposition.
  5. The proposed sale of Time Warner Cable to Charter Communications, where the DPS staff concluded as the application stood, there would be no public interest benefits to the transaction.[22]

Those are just a few examples of why aggressive oversight of telecommunications is critical for all New Yorkers. In most of these examples, the DPS never ruled one way or the other. The companies individually made their own decisions, and we believe they would have decided differently if they did not face grassroots opposition from consumers.

New Yorkers deserve an active DPS prepared to aggressively represent our interests, ready to investigate what Verizon is doing with its legacy wireline network, legacy wired broadband services, FiOS and Verizon Wireless. With Time Warner Cable having such a dominant presence in western and central New York, its sale should never be taken lightly, as it will impact millions of New Yorkers for years to come.

While the DPS seems prepared to passively wait around to discover what Time Warner Cable, Frontier and Verizon are planning next, the rest of the country is getting speed upgrades New York can only dream about.

Google Fiber and AT&T, among others, are aggressively rolling out 1,000Mbps fiber service upgrades in other states, while a disinterested Verizon refuses to invest further in FiOS expansion, leaving millions of New York customers with nothing better than DSL.

The lack of significant competition upstate is why we believe Time Warner Cable has not yet chosen any market in New York except New York City for its Maxx upgrade program, which offers substantially faster speeds and better service.[23] There is no compelling competitive reason for Time Warner to hurry upgrades into areas where they already enjoy a vast market share and no threat of a broadband speed race. So much for robust competition.

Charter’s proposed acquisition of Time Warner Cable proposes a modest upgrade of broadband speeds to 60-100Mbps, but as we wrote in our comments to the DPS regarding the merger proposal, upstate New York would be better off waiting for Time Warner Cable to complete its own Maxx upgrades over what will likely be 100% of its footprint in the next 24-30 months.[24] Time Warner Cable Maxx offers maximum broadband speeds three times faster than what Charter proposes for upstate New York, while also preserving affordable broadband options for those less fortunate. Approving a Charter buyout of Time Warner Cable will only set upstate New York back further.

We confess we were bewildered after reviewing the initial staff assessment of telecommunications services competition in New York. Its conclusions simply do not reflect reality on the ground, particularly in upstate communities.

It was this type of incomplete analysis that allowed New York to fall into the trap of irresponsible deregulation and abdication of oversight that has utterly failed to deliver the promised competition that would check rate hikes, guarantee better customer service, and provide New York with best-in-class service. In reality, we have none of those things. Rates continue to spiral higher, poor customer service continues, and New York has been left behind with sub-standard broadband that achieves no better than 50Mbps speeds in most upstate communities.

This summer, the American Customer Satisfaction Index told us something we already know. Americans dislike their cable company more than any other industry in the nation.[25] A survey of more than 14,000 customers by ACSI found service satisfaction achieving a new all-time low, scoring 63 out of 100.

“Customers expect a lot more than what the companies deliver,” said ACSI managing director David VanAmburg, who called poor customer service from cable operators “endemic.”

This year, Time Warner Cable again scored the worst in the country. As the only cable provider for virtually all of upstate New York, if residents in New York are given a choice between Time Warner Cable and the phone company’s slow-speed DSL, they are still likely to choose Time Warner Cable, but only because they have no other choices for broadband that meets the FCC definition of broadband.

Providers are quick to suggest consumers can turn to so-called competitors like satellite broadband or wireless Internet from mobile providers. They conveniently ignore the fact satellite-delivered Internet is such a provider of last resort, less than 1% of New Yorkers choose this option. Those that have used satellite broadband tell the companies providing it they rarely achieve the claimed speeds and are heavily speed throttled and usage capped.[26] It’s also costly, particularly when measuring the price against its performance.

Mobile Internet, which some ILECs have advocated as a possible replacement for rural wireline networks, is also a very poor substitute for wired Internet access. Wireless broadband pricing is high and usage allowances are low. Attempts to convince New Yorkers to abandon Verizon landline service in favor of Verizon’s 4G LTE wireless replacement have led to consumer complaints after learning their existing unlimited Verizon DSL service would be substituted for a wireless plan starting at $60 a month with a 10GB usage allowance.[27]

A customer with a 6Mbps DSL line from Verizon consuming 30GB of usage a month – hardly a heavy user – pays Verizon $29.99 a month for DSL service during the first year. In contrast, that same customer using Verizon Wireless’ home 2-5Mbps wireless LTE plan will pay $120 a month – four times more, with the added risk of incurring a $10 per gigabyte overlimit fee for usage in excess of their allowance.[28]

None of this information is a secret, yet it seems to have escaped the notice of the DPS staff in its report. Part of the reason why may be the complete lack of public input to help illuminate and counter incumbent providers’ well-financed public and government relations self-praise campaigns. If only actual customers agreed with their conclusions, we’d be well on our way to deregulation-inspired broadband nirvana.

Except New Yorkers do not agree all is well.

Consumer Reports:

Our latest survey of 81,848 customers of home telecommunications services found almost universally low ratings for value across services—especially for TV and Internet. Those who bundled the three services together for a discount still seemed unimpressed with what they were getting for their money. Even WOW and Verizon FiOS, which got high marks for service satisfaction, rated middling or lower for value, and out of 14 providers, nine got the lowest possible value rating.

What is it about home telecommunications that leaves such a sour taste in customers’ mouths? When we asked Consumer Reports’ Facebook followers to tell us their telecom stories, the few happy anecdotes of attentive service technicians and reliable service were overwhelmed by a tidal wave of consumer woe involving high prices, complicated equipment, and terrible service.[29]

The effective competition that would rely on market forces to deter abusive pricing and poor customer service is simply not available in a monopoly/duopoly marketplace. New entrants face enormous start-up costs, particularly provisioning last-mile service.

The nation’s telephone network was first constructed in the early half of the last century by providers guaranteed monopoly status. The cable industry developed during a period where regulators frequently considered operators to be a “natural monopoly,” unable to survive sustained competition.[30] Many cable operators were granted exclusive franchise agreements which helped them present a solid business case to investors to fund a costly network buildout. The end of franchise exclusivity happened years after most cable operators were already well established.

Today, those marketplace protections are unavailable to new entrants who face a variety of hurdles to achieve success. Some are competitive, others are regulatory. Google Fiber, which provides competitive service in states other than New York, publishes a guide for local communities to make them more attractive prospects for future Google Fiber expansion.[31]

For many overbuilders, pole attachment issues, zoning and permitting are significant obstacles to making new service available to residential and commercial customers. New York must ensure pole owners provide timely, non-discriminatory, and reasonable cost access. Permitting and zoning issues should be resolved on similar terms to speed network deployment.

Because a long history of experience tells us it is unreasonable to expect a competing telephone or cable company to enter another provider’s territory, in many cases the only significant possibility for competition will come from a new municipal/co-op/public-owned broadband alternative.

The hurdles these would-be providers face are significant. Incumbent provider opposition can be substantial, especially on a large-scale buildout. In rural areas, incumbents can and do refuse to cooperate, even on projects that seek to prioritize access first to unserved/underserved areas currently bypassed by those incumbents.

The effort to wire the Adirondack Park region is a case in point. Time Warner Cable has refused to provide detailed mapping information about their existing network, making it difficult to assess the viability of a municipal and/or a commercial broadband expansion project into these areas. Time Warner Cable maintains it has exclusivity to granular map data showing existing networks for “competitive reasons,” effectively maintaining an advantageous position from which it can strategically apply for state broadband expansion funding to expand its network using public funds.

Time Warner Cable benefits from access to publicly-owned rights of way and sanctioned easements. Without this access, their network would likely be untenable. As a beneficiary of that public access, making granular map data available to broadband planners is a fair exchange, and nothing precludes Time Warner from building its network into those unserved/underserved areas – something that might deter a would-be competitor’s business argument to overbuild a high-cost, rural area. The Commission should ask itself how many rural New York communities have two (or more) competing cable companies serving the same customers. If the answer is none, Time Warner Cable does not have a valid argument.

There is ample evidence the Commission needs to begin a full and comprehensive review of telecommunications in this state. It must build a factual, evidence-based record on which the Commission can build a case that oversight is needed to guarantee New Yorkers get the high quality telecommunications services they deserve.

Broadband and telephone service is not just a convenience. In September 2015, the Obama Administration declared broadband was now a “core utility,” just as important as telephone, electric, and natural gas service. Isn’t it about time the Department of Public Service oversee it as such?[32]

Respectfully submitted for your consideration,

Phillip M. Dampier

Director, Stop the Cap!

[1] http://stopthecap.com/2015/10/19/n-y-city-council-investigates-verizon-foot-dragging-fios-possible-contract-violations/
[2] http://www.wsj.com/articles/SB10001424052702303410404575151773432729614
[3] https://www.fcc.gov/reports/measuring-broadband-america-2014
[4] http://variety.com/2015/biz/news/altice-group-patrick-drahi-cablevision-bid-1201599986/
[5] http://www.pcmag.com/slideshow/story/310861/if-you-want-gigabit-internet-move-here/1
[6] https://www.fcc.gov/document/fcc-finds-us-broadband-deployment-not-keeping-pace
[7] http://seekingalpha.com/article/2888876-frontier-communications-headed-for-financial-disaster
[8] http://seekingalpha.com/article/2633375-frontier-communications-ftr-ceo-maggie-wilderotter-q3-2014-results-earnings-call-transcript?part=single
[9] http://www.leichtmanresearch.com/press/051515release.html
[10] http://www.wvgazettemail.com/article/20141020/GZ01/141029992
[11] http://www.cwa-union.org/news/entry/cwa_calls_for_regulators_to_investigate_verizons_refusal_to_invest_in_landl
[12] http://stopthecap.com/2015/05/05/fla-utility-says-negotiations-with-verizon-make-it-clear-verizon-will-exit-the-wireline-business-within-10-years/
[13] http://money.cnn.com/2013/07/22/technology/verizon-wireless-sandy/
[14] http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?Mattercaseno=13-C-0197
[15] http://www.cwa-union.org/news/entry/cwa_calls_for_regulators_to_investigate_verizons_refusal_to_invest_in_landl
[16] http://newnetworks.com/publicnn.pdf/
[17] http://www1.nyc.gov/office-of-the-mayor/news/415-15/de-blasio-administration-releases-audit-report-verizon-s-citywide-fios-implementation
[18] http://arstechnica.com/business/2015/10/verizon-tries-to-avoid-building-more-fiber-by-re-defining-the-word-pass/
[19] http://www.nytimes.com/2015/08/27/nyregion/new-york-city-and-verizon-battle-over-fios-service.html?_r=0
[20] http://www.nyc.gov/html/doitt/downloads/pdf/verizon-audit.pdf
[21] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={0A5EAC88-6AB7-4F79-862C-B6C6B6D2E4ED}
[22] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7BC60985CC-BEE8-43A7-84E8-5A4B4D8E0F54%7D
[23] http://www.timewarnercable.com/en/enjoy/better-twc/internet.html
[24] http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={FCB40F67-B91F-4F65-8CCD-66D8C22AF6B1}
[25] http://www.marketwatch.com/story/the-most-hated-cable-company-in-america-is-2015-06-02
[26] https://community.myhughesnet.com/hughesnet?topic_list%5Bsettings%5D%5Btype%5D=problem
[27] http://www.verizon.com/home/highspeedinternet/
[28] http://www.verizonwireless.com/b2c/lte-internet-installed/
[29] http://www.consumerreports.org//cro/magazine/2014/05/how-to-save-money-on-triple-play-cable-services/index.htm
[30] http://www.citi.columbia.edu/elinoam/articles/Is_Cable_Television_Natural_Monopoly.pdf (p.255)
[31] https://fiber.storage.googleapis.com/legal/googlefibercitychecklist2-24-14.pdf
[32] http://thehill.com/policy/technology/254431-obama-administration-declares-broadband-core-utility-in-report

N.Y. City Council Investigates Verizon Foot-Dragging FiOS, Possible Contract Violations

fios_logo182More than 100,000 Verizon customers in New York City asking for FiOS fiber optic service are still waiting — 75% of them for more than a year — for a service Verizon promised would be available to every city resident by 2014.

In many of those cases, Verizon gave customers nothing but excuses and false information, sometimes in apparent violation of Verizon’s contract with the City of New York.

That was the opening contention of Vincent J. Gentile, chairman of the New York City Council’s Committee on Oversight and Investigations, in a four and a half hour-long hearing on Verizon FiOS availability held Oct. 14.

City officials are frustrated with Verizon’s performance under its FiOS franchise. Complaints about service availability have persisted for years and Mayor Bill de Blasio has been critical of Verizon’s foot-dragging to make fiber service available to every New Yorker that wants the service. As little as 30 minutes before the hearing, complaints continued to reach public officials from customers being told FiOS was not available. In fact, many were instead steered to a Verizon package that bundled satellite television instead of fiber optics.

special reportNew York City is Verizon’s largest market for FiOS fiber optic service. Verizon’s Leecia Eve, vice president of government affairs for the Tri-State Region, claimed the company has invested more than $3 billion upgrading New York City for fiber service and took umbrage at suggestions the company was reneging on its commitments, telling committee members Verizon fulfilled its FiOS commitments “one thousand percent.”

Such claims cause Verizon FiOS-less customers across New York City to bristle. In August, the New York Times reported Barbara Cooke-Johnson, a resident on Putnam Avenue in Bedford-Stuyvesant, Brooklyn had waited for two years for Verizon to reach her block. She isn’t alone. City Council members have been inundated with complaints from residents unable to get FiOS service, even after placing orders well over a year ago.

“For years, I have heard complaints from residents in my district, who have attempted to sign on to the Verizon FiOS service, but learned their area did not provide coverage, “said council member Annabel Palma, who represents the neighborhoods of Parkchester, Soundview, Castle Hill, Clason Point and Harding Park in the Bronx. “New Yorkers need affordable and reliable high-speed broadband access throughout all the five boroughs, but especially in the Bronx.”

Several council members blamed the prior Bloomberg Administration for negotiating a broadly Verizon favorable contract that maintained a largely hands-off policy on oversight of the company’s fiber optic deployment, with few penalties at the city’s disposal to keep Verizon to its word. The Bloomberg Administrated granted multiple requests made by Verizon between 2008-2011 to reduce the performance bond the company agreed to secure as an assurance to city officials it would meet the terms of its franchise agreement.

Kevin Service (L), vice president, region operations - New York City and Leecia Eve, vice president of government affairs - New York, New Jersey, and Connecticut testify before the City Council of New York.

Kevin Service (L), vice president, region operations – New York City and Leecia Eve (R), vice president of government affairs – New York, New Jersey, and Connecticut testify before the City Council of New York.

Verizon’s agreement with the city required it to “pass all households” with fiber optic service within the franchise service area by June 30, 2014. Verizon blamed Hurricane Irene and Superstorm Sandy for missing that deadline, but claims it finally achieved it in October 2014.

Councilman Gentile pressed Service for more information about the gap between what city officials consider to be “homes passed” and what Verizon considers that term to mean.

“We do consider it to be passed if we’re in the realm of ‘substantial fiber placement,'” responded Kevin Service, Verizon’s vice president of region operations – New York City. “I’m not a lawyer, so here is what I would say. We’ve passed a household if when we get a request for service and have the necessary rights of way, what we have left to do does not create a delay in bringing service to that customer. Under that ‘Kevin Service definition,’ we’ve passed every household in New York City.”

Gentile countered that Verizon officials sent documents to the city admitting 23.6% of New York City blocks that Verizon deems “passed” have no buildings with Verizon FiOS service installed.

Much of the dispute between Verizon and New York City officials now centers on a widening gap between the city’s definition of “homes passed” and the one Verizon is now relying on to defend itself against charges it is violating its agreement.

Both sides agree nobody bothered to precisely define “premises passed” in the contract. The term is commonly used by the cable industry to reflect availability of cable service. Nielsen Media, among others, defines it to mean, “households with the ability to receive a particular cable service, and which may opt to subscribe.” The Fiber to the Home Council offers a more detailed definition, one used by the city’s auditors reviewing Verizon’s performance:

“The number of “Homes Passed” is the potential number of premises to which an operator has capability to connect in a service area, but the premises may or may not be connected to the network. This definition excludes premises that cannot be connected without further installation of substantial cable plant such as feeder and distribution cable (fiber) to reach the area in which a potential subscriber is located.” (emphasis added).

Verizon dismissed the Fiber to the Home Council’s definition as one prepared only “for purposes of its ‘market research,'” and claimed it had no standing because the organization is not party to the agreement between Verizon and the city.

Verizon used a dictionary to create its own definition of the phrase in a rebuttal to the city audit:

“General dictionary definitions of the term refer to going by, past, beyond, or through a place (such as a building), and include no requirement as to how close a place must be approached in order to constitute a “passage.” Thus, there is nothing inherent in the word itself that would require Verizon to run cable directly in front of every building in the City in order to “pass” those buildings.”

NYCDOITT.svg“The argument that ‘passing’ a premises with fiber optic cable includes no requirement of any proximity to that premises is manifestly untenable,” city auditors concluded.

If the dispute ends up in court, Verizon’s definition loophole may not prove much of a defense when a judge reviews the rest of the agreement. Whether Verizon has fiber facilities sufficiently nearby or not may not matter once a customer requests service. Under the terms of the contract, Verizon generally has to deliver FiOS within 6-12 months of a customer request, and there is ample evidence Verizon is not meeting that obligation.

The auditors found Verizon customer service agents were quick to tell customers FiOS service was unavailable to them and often failed to offer customers a “non-standard installation” (NSI), which starts the 6-12 month deadline to provide service. Even requesting an NSI was no guarantee of getting fiber service. Auditors found 74.68% of the 41,928 customer requests for an NSI were still outstanding as of Dec. 31, 2014, more than 12 months after the order was taken.

A raucous audience in the hearing room frequently jeered Verizon’s claims it was in full compliance with its franchise contract. Verizon officials defended the company’s performance, noting it was the first in New York City to offer service to every borough to compete with Cablevision and Time Warner Cable (and their predecessors) — cable companies that built their networks under the protection of a monopoly and given more favorable terms to gradually expand their infrastructure over a decade or more. Eve said Verizon achieved success despite the obstacles that have arisen, including objections from some building owners that have refused to admit Verizon technicians to install FiOS service for tenants.

Service admitted Verizon currently has a backlog of at least 100,000 requests for Verizon FiOS service in the city it has not yet met. Service blamed that number mostly on building access disputes, an excuse that allowed him to insist Verizon was in compliance with its agreement.

Service also suggested the city’s Department of Information Technology and Telecommunications (DoITT – pronounced “Do-It”) and some of the company’s unions have sought to muddy the waters by unilaterally redefining Verizon’s contract with New York.

http://phillipdampier.com/video/WNBC New York Verizon FiOS Not Installing High-Speed Internet for 25 Percent of NYers Who Want It 7-15-15.flv

WNBC-TV in New York reported 25% of New Yorkers seeking Verizon FiOS Internet were turned away by the company. [Report originally aired: July 15, 2015] (2:01)

“To simplify the issue, the pass all homes obligation involves strategically placing fiber optic cables throughout the streets of New York City such that the fiber optic network can then be extended into specific buildings upon request, provided that we can get access to the building and into that building,” Service said. “It does not mean, contrary to some public confusion, that Verizon’s network would have been extended into every New York City household. Where we have not brought our FiOS service to a customer that has requested it, it’s because we haven’t yet secured all the necessary rights of way to do so.”

Verizon workers install fiber optic cables in New York City.

Verizon workers install fiber optic cables in New York City.

“I think it’s important to note that the city’s franchise agreements with Cablevision and Time Warner included an express obligation to run facilities in front of each building in the city,” Service reminded the audience. “In stark contrast, Verizon’s agreement does not include that language. This is no accident. The parties recognized while the agreement was being negotiated that Verizon would deploy its all-fiber network as an upgrade to its existing copper network, running the fiber along the same routes as it historically used to serve the buildings in the city. […] Although there are now attempts by some to unilaterally and retroactively revise the intent and meaning of the agreement, the word ‘passed’ was always understood and used by Verizon and the city in that context.”

Service explained getting FiOS service involves a multi-step process and it is not as simple as passing a fiber cable through a neighborhood.

“In order to fulfill [our] obligation [to provide FiOS] to a resident in an [multi-dwelling unit] not only does the building have to be passed by Verizon’s facilities, as all buildings are today, it also must be network created,” Service said. “In other words, the deployed fiber used to serve the building must be extended into the building from the street or backyard, or is frequently the case, through adjoining buildings to provide service to the individual units in the building.”

Customers can expect delays if they are the first in a building to request FiOS service.

“When a single resident requests service, it is Verizon’s policy to make the entire building ready for FiOS service. After that is complete, subsequent requests for service will no longer be considered NSI requests. Instead they are standard installation requests,” Service added, noting this is more efficient than simply provisioning service one customer at a time.

Union members who work for Verizon scoffed at Service’s explanations, accusing the company of systematically cutting back on FiOS spending and diverting money into its more profitable Verizon Wireless operation.

“They tend to blame landlords,” CWA representative Pete Sikora told Gothamist. “They tend to blame everyone but themselves. They didn’t have a gun held to their heads; they signed that agreement willingly, because they want to make more money. What they’re doing here is effectively picking and choosing which streets to serve.”

http://www.phillipdampier.com/video/CWA Verizon FiOS Broken Promises 10-13-15.mp4

The Communications Workers of America have begun running ads criticizing Verizon for failing to bring FiOS service to New Yorkers. (0:30)

Customers didn’t readily accept Verizon’s explanations either.

“As a board member of my co-op, I’ve been trying to get FIOS in our building for four years now,” wrote one Gothamist reader. “I’ve spoken with everybody at Verizon about this and the outcome has been that Verizon will wire the block and its buildings when Verizon feels like it.

Council member Brad Lander

Council member Brad Lander

Most of those seeking FiOS service and not getting it learn FiOS is “not available” from Verizon’s website or a customer service agent. When asked when the service might be available, it is common for representatives to answer they have no idea. Critics say that violates the terms of the contract, which requires Verizon to make a good faith effort to give an estimated wait time before an installation can be made. Service was on the defensive explaining why customers are routinely told no service is available.

“There is no area in the city [we do not service] and nobody should be told that,” Service said. “Having said that, we have 12,000 employees — we have a large employee body that we are constantly training and retraining and to the extent that they have told somebody that service is not available, that’s an indication that we have more to do in that area.”

“I must tell you that Councilman Lander just whispered in my ear that he was told 30 minutes ago that where he lives in Brooklyn is not serviced,” responded Councilman James Vacca.

Councilman Brad Lander, the deputy leader of policy, later confronted the two Verizon representatives about his own unsuccessful attempts to get FiOS service at his own home in Park Slope and questioned their solution to the problem.

“It sounds to me like you are saying the problem is not that FiOS is unavailable at my house, the problem is that Stacy [a Verizon customer service representative] didn’t say to me ‘Mr. Lander it’s available in your neighborhood, just not to you.'”

http://www.phillipdampier.com/video/Council Member Brad Lander Takes Verizon Apart.mp4

Council member Brad Lander shares his experience not being able to get FiOS service from Verizon at last week’s City Council hearing. (2:45)

AT&T Charges Customers $40 More for Gigabit Service In Cities Where Google Doesn’t Compete

In Bexar County, Texas Public Radio found only a small number of customers qualify for AT&T GigaPower service. (Image: TPR)

In Bexar County, Texas Public Radio found only a few customers (shown in green) qualify for AT&T GigaPower service. (Image: TPR)

AT&T charges customers $40 a month/$480 a year more for its U-verse with GigaPower gigabit broadband service in cities where it does not face direct competition with Google Fiber.

AT&T has announced six new cities will eventually get gigabit speed service, including Chicago, Atlanta, Nashville, Orlando, Miami and San Antonio. Whether customers will pay $70 or $110 for the same service depends entirely on one factor: Google Fiber.

The Consumerist notes communities with forthcoming competition from the search engine giant will pay $40 less for gigabit service from AT&T than communities without Google Fiber.

In San Antonio, Nashville, and Atlanta — all forthcoming Google Fiber cities, customers will pay AT&T $70 a month. In Google Fiberless Orlando, Chicago, and Miami, customers will pay $80 for a 300Mbps tier or $110 for 1,000Mbps service.

Although AT&T is usually the first to market 1,000Mbps service in its service areas, actually qualifying to buy the service is another hurdle customers have to overcome. In San Antonio, most customers will have to wait.

In an informal survey conducted by Texas Public Radio on social media, about 60 Bexar County residents checked to see if their home addresses could connect to AT&T’s GigaPower. Only 11 could, most in far west Bexar County beyond Leon Valley. Other limited service areas south of Live Oak also qualified. Most of the rest of metro San Antonio does not qualify for GigaPower and AT&T will not say when customers can get the service.

AT&T later admitted gigabit service was available in “parts” of San Antonio, Leon Valley, Live Oak, Selma, Schertz, Cibolo, as well as portions of New Braunfels, Medina, and unincorporated Bexar County.

u-verse gigapowerThe Consumerist writes AT&T is proving the importance of robust broadband competition. Communities that have it pay less and get quicker upgrades for faster Internet speeds. Those without pay AT&T a premium or are long way down on the upgrade list.

In the northeastern United States, now a no-go for Google Fiber, broadband is often a feast or famine proposition. Those served by Verizon FiOS in New York City also have the competing options of network-upgraded Cablevision or Time Warner Cable Maxx. Those in New York not served by FiOS have a much poorer choice of Time Warner Cable (up to 50/5Mbps) or <10Mbps DSL service from Verizon, Frontier, Windstream, and other phone companies. In Northern New England, Comcast routinely outclasses DSL service from FairPoint Communications, but significant parts of Vermont, New Hampshire, Maine, and western Massachusetts often have no broadband options at all.

http://www.phillipdampier.com/video/KSAT San Antonio GigaPower Internet coming to San Antonio 9-21-15.mp4

KSAT-TV in San Antonio covered AT&T’s launch of U-verse with GigaPower in San Antonio. As elsewhere, AT&T routinely invites city officials to share the good news with local residents. But it may take a year or more for the service to become available to everyone in the area. Even when it is, a snap poll conducted by KSAT found just over half of its viewers had no interest in getting gigabit service from AT&T. (1:51)

Frontier Plans to Finance Acquisition of Verizon Lines With $6.6 Billion in Junk Bonds

frontier-fast-buffalo-large-2To complete an acquisition of landline assets in California, Florida, and Texas from Verizon Communications, Frontier Communications is hoping to raise $6.6 billion in “speculative-grade debt” to finance the deal.

Frontier will begin selling the securities better known as “junk bonds” starting today with a target date of Sept. 15 or 16 to complete the sale, according to Bloomberg News.

Wall Street raised its eyebrows at the amount of the transaction — the second largest junk-rated deal since Valeant Pharmaceuticals sold almost $10 billion in junk bonds in March.

Frontier plans to offer a high yield to attract investors, some already favoring the company’s stock for its reliable shareholder dividend payout. Frontier has been a popular choice for investors relying on dividend income — money Frontier distributes to shareholders — that critics contend limit Frontier’s ability to improve its network of largely rural landlines.

analysisCalifornian consumers are among those most concerned about a Frontier takeover of landline and FiOS service. Verizon ventured far beyond its original service area extending from Maine to Virginia after it acquired independent telephone networks operated by General Telephone (GTE) and Continental Telephone (Contel) in 2000. In 2015, the company wants to return to its core landline service area in the northeast.

junk1David Lazarus, a consumer reporter for the Los Angeles Times, wonders how ratepayers will benefit from a Frontier takeover.

“Financial analysts are generally upbeat about the deal, but that reflects the projected benefits to the corporate players, not consumers,” Lazarus wrote.

Verizon’s claims the sale will help refocus the company on its “core markets” in the east and Frontier’s suggestion the Verizon acquisition will enhance Frontier’s footprint with “rich fiber-based assets” didn’t seem to excite Lazarus.

“I honestly wonder if corporate leaders know how ridiculous they sound when they spout such gobbledygook,” he added.

Lazarus suspects Verizon is worried the Obama Administration may eventually extend universal service obligations to broadband, which would force phone companies to deliver broadband to any telephone customer that wants the service, regardless of how much it costs to offer it. Universal Service remains an important legacy of wireline landline telephone service. Your landline survives under a regulatory framework not applicable to the wireless business, where both AT&T and Verizon Wireless now make the bulk of their profits.

junk2As AT&T and Verizon ponder ditching high-cost landline customers, so long as there are companies like Frontier willing to buy, the deal works for both. Verizon gets a tax-free transaction that benefits both executives and shareholders. An already debt-laden Frontier satisfies shareholders by growing the business, which usually makes the balance sheet look good each quarter.

Even as Frontier takes on a massive new tranche of debt, in the short-term the more landlines Frontier acquires, the happier shareholders will be. More customers equal more revenue — revenue that can assuage fears of Frontier’s eye-popping debt load. That added revenue often also means a nice dividend payout to shareholders, unless that money has to be diverted to debt payments or network improvements.

Unfortunately, like a Ponzi scheme, Frontier will have to continue acquiring new landline customers from other companies indefinitely to make it all work. If it can’t, or if customers continue to flee Frontier for more capable providers, revenue numbers will worsen, only making the company’s large debt obligations look even more ominous. Some shareholders think Frontier’s days of paying very high dividends are already behind them as the company takes on even more debt. The value of Frontier stock has dropped 35% in the last six months. In the second quarter of 2015, Frontier reported losses of $28 million. Last year at the same time, Frontier reported $38 million in profits.

junk3Those losses have to be reflected somewhere, and customers complain they are paying the highest price. West Virginians are among those that regularly accuse Frontier of chronically under-investing in broadband service in the state. Many rural communities obtaining broadband for the first time initially appreciated Frontier’s efforts, but have since grown critical of the performance of Frontier’s DSL service, which can slow to 1Mbps or less during the evenings because Frontier has oversold its network and not kept up with usage demands.

Frontier’s deal with Verizon allows it to acquire a large state of the art FiOS fiber to the home network Frontier has never been willing to build itself. Keeping an existing fiber network up and running is considerably less expensive than building one from scratch. That explains why Frontier customers in ex-Verizon FiOS areas enjoy relatively good service while legacy customers still connected to copper phone lines that were installed in the 1960s (or earlier) are stuck with uneven and slow-performing DSL that rarely meets the FCC’s minimum definition of broadband — 25Mbps. Where customers have a choice between Frontier DSL and another wired provider, most choose fiber or coaxial-based Internet service. Frontier’s rural service focus protects the company by limiting the effects of that kind of competition.

In the near term, Frontier’s biggest threat could eventually come from wireless 4G LTE broadband from AT&T and Verizon Wireless, if the companies can deliver an affordable service for rural residents without a punishing low usage allowance. That remains a big “if.”

(Illustrations by Chris Serra.)

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  • David: I mostly read your blog to hear about item #4. I'm a Frontier customer and their service speed is really poor. I hope that they someday get around to ...
  • Christopher G.: I used to work in the industry for multiple companies. We are the richest country yet one of the lower tiers of speed for internet. Why? Internet c...
  • Joe V: Keep it up Phil. I just wrote a piece to Frontline PBS about the state of broadband duopolies in this country. I hope they read and respond....
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  • Duncan: Cut the cord today, and used this blog post as inspiration. TWC jacked my bill from $140 to $180, and that was the final straw. Goodbye, TWC, but ...
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  • Paul Houle: @Lee, it is worse than that. It is not that they cannot afford to give you fiber, it is that they can already make so much money selling you infe...
  • Lee: Frontier will not deliver that 5 Mbps to me. It will not matter what modem I have or what they have in the dslam located at the school. The copper lin...
  • Paul Houle: @Joe, don't buy the hype over G.Fast. Instead of "Fiber to the Press Release" it is just "Copper to the Press Release" G. Fast is a great techn...
  • Joe V: Here's the irony : I watched the Frontier go in front of California politicians broadcast play out and two things that got underneath my skin : I...
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