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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.

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James Cieloha
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James Cieloha

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… Read more »

Derek
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Derek

James, are you on drugs? Your rambling post makes no sense whatsoever.

Steevo
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Steevo

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.

Scott
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Scott

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… Read more »

Steevo
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Steevo

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… Read more »

Tim
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Tim

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… Read more »

Tim
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Tim

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… Read more »

jon
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jon

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
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me

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.

Lee Cook
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Lee Cook

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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