Verizon’s FiOS expansion is still, still, still, still, and still dead.

Despite the passage of favorable legislation deregulating the state’s largest telecom companies, Verizon has thumbed its nose at New Jersey’s efforts to convince the company to expand its fiber-to-the-home service.

“Verizon does not plan to expand its FiOS service footprint,” wrote Tanya Davis, a Verizon franchise service manager for FiOS in New Jersey and New York. “The company remains focused on continuing to meet its franchise obligations, and delivering competitive services, and enhanced consumer choices, where the services are available.”

More than a decade after passing the 2006 Cable TV Act in New Jersey, designed to convince telecom companies to compete more vigorously with each other, Verizon remains uninterested in further expanding its fiber network in New Jersey and beyond.

After successfully lobbying the state to adopt a statewide cable TV franchise policy, making life easier for Verizon by not requiring the company to negotiate a contract with each town serviced, Verizon suddenly stopped caring after announcing a pullback in further FiOS expansion in 2010. The change in heart appears to have started at the top. Then CEO Ivan Seidenberg, who approved FiOS, retired and was replaced by Lowell McAdam, who preferred Verizon invest mostly in its wireless networks.

Vergano

As a result, New Jersey has a telecom industry-friendly deregulatory policy in place with nothing to show for it.

“People want to see competition,” Wayne Mayor Christopher Vergano told the North Jersey Record, citing complaints his office has received about Altice USA’s Optimum service. “Over the years, they’ve seen their cable bills increase. We’re trying to give residents options.”

Wayne’s Township Council passed a resolution asking state lawmakers to review the 2006 Cable TV Act to find a way to coerce Verizon to do more fiber upgrades in the state. In 2006, then Gov. John Corzine got Verizon to commit to wiring 70 towns across New Jersey, and Wayne was not one of them.

Verizon agreed to expand its fiber network to all county seats, as well as areas with a population density in excess of 7,111 residents per square mile.

New Jersey’s Board of Public Utilities (BPU) is still allowed to report on Verizon’s progress, but little else, thanks to deregulation. A BPU report stated deployment of FiOS slowed to a crawl between 2010-2013, when only three new towns were reached with fiber upgrades. What little interest Verizon still had in FiOS expansion ended after 2012’s Superstorm Sandy, after which Verizon ended expansion in urban areas of New Jersey as well.

“It’s solely Verizon’s discretion to add municipalities to its system-wide franchise,” a BPU spokesman told the newspaper.

Prior to deregulation, utility boards and regulators could compel companies to offer service instead of shrugging their shoulders and telling state lawmakers ‘it’s all up to Verizon.’

Although continued traffic growth would seem to indicate companies like AT&T and Verizon will need to continue major spending initiatives to keep up with demand, technological advancements and upgrade programs have made networks more efficient than ever, allowing AT&T and Verizon to report cost declines as much as 40% annually.

Wireless One’s Dave Burstein spoke with Andre Fuetsch, AT&T’s chief technology officer about current telco cost trends. Feutsch said a lot has changed with AT&T’s networks over the last several years.

“We’ve gone from 10 gigabits to 100 gigabits to now 400 gigabits on our fiber,” Feutsch told Burstein. “MIMO and massive MIMO are extremely productive. Yes, I think 40% per year is a reasonable estimate of how our costs are going down. AT&T’s leadership in open white box and SDN will continue to drive that number higher, which is needed as network demand increases.”

Burstein notes Verizon similarly estimated their costs were also falling about 40% annually.

“I have been able to confirm that the 40% Verizon efficiency savings figure is on target if not exact,” Burstein said. “You can replicate my thinking. Traffic has been growing 40% per year. Sales have been roughly flat for the similar time period. If productivity growth hadn’t been a similar 40%, profits likely would have trended down. In fact, they have been flat or slightly increasing.”

While AT&T has been embarked on a costly major fiber network buildout in its local phone service territory, Verizon has been focused on rebuilding and modernizing its core network. The “One Verizon” project is retiring a large percentage of the 200,000 legacy routers, switches, and other hardware in use across Verizon’s network and installing about 20,000 very efficient network box replacements. Verizon estimates its first year cost savings are about 50%.

Although network traffic growth, expansion, and upgrades come at a cost to carriers, technological improvements are covering much of those costs by making networks more efficient and capable of carrying much more data than ever before. When companies talk about their network investments in terms of justifying rate increases, that clearly does not tell the full story.

Virginia officials cannot get broadband providers to reveal full details about their actual service areas, so the state now believes cable and phone companies will be more forthcoming if they can quietly share that information with each other, keeping the state government in the dark.

Virginia Public Radio reports that there are more than 600,000 residents that have no access to high-speed internet, because the state’s dominant telecom companies — Verizon, Cox, and Comcast, choose not to provide service. But the state’s efforts to fund rural broadband projects to reach the unserved have been repeatedly complicated by the lack of accurate information about who actually has access to broadband, and who does not.

“If you call them and say, “I live at this address can I get connected?’ They can tell you yes or no. They will not share that information nationally,” Evan Feinman, Virginia’s chief broadband advisor, told VPR.

State officials cannot get straight answers because telecom companies treat their service areas as confidential and proprietary business information. Broadband availability maps have been criticized as inaccurate as well, with providers volunteering the information with little, if any, independent verification. That creates problems when a would-be provider for an unserved area completes a broadband grant application that results in immediate objections from incumbent providers that claim they already offer service in the proposed project’s service area.

Feinman believes that if the state steps out of any referee roll of verifying what areas actually get service, providers will suddenly begin sharing service information with each other.

Feinman

“Comcast is interested in helping us avoid having to fund an overbuild… if they don’t bid on covering the rest of the county then they’re not interested in covering the rest of the county,” Feinman explains. “So when another ISP comes in I have high confidence that when that ISP asks Comcast ‘Hey I want to cover the rest of this county, how much of that do I need to do?’ Comcast will share that information.”

That is not the experience of other states, where providers like Charter Communications treat any disclosure of their rural broadband service areas and intended expansion areas as “highly confidential information.” In New York, companies will share information with the state, especially when state taxpayers are helping to subsidize their costs, but under no circumstances will they share service and expansion intentions with other providers, calling them competitors.

That would leave Virginia taxpayers footing the bill for rural broadband funding, without the state being a fully informed partner, able to audit projects and their service areas.

This year, Virginia intends to spend $19 million on rural broadband funding, a comparatively tiny amount for the number of residents still lacking service (New York spent over a half billion dollars), but still an increase over earlier years. But where those funds are spent may now be up to the same cable and phone companies that have never been willing to offer service in those areas before, and may not be too interested in letting someone else serve those areas either.

The stakes are high, as Feinman pointed out.

“I have conversations with corporate leaders who say, ‘Well am I going to be able to get in touch with my manager at 1 am and will he or she be able to send me a document?’ If the answer is no that community’s off the list,” says Feinman.

Virginia could follow the lead of Wall Street analysts that have conducted detailed studies by using a provider’s own website to query service availability and information for each individual address in a proposed service area. It would be a labor intensive project, but one that would put providers on record about whether they actually offer service or not.

Virginia Public Radio reports the state’s goal for universal broadband has been hampered by a lack of accurate broadband mapping. Now the state proposes to allow cable and phone companies to sort it out themselves. (1:43)

Verizon Communications has indefinitely suspended plans to charge customers an extra $10 a month for access to Verizon’s extremely spotty and uneven 5G service, which launched earlier this month in Chicago and Minneapolis.

Early adopters were told Verizon would waive the extra $10 fee for the first three months of service. But after receiving mixed reviews about Verizon’s 5G performance and very limited coverage area after launch, Verizon decided to withdraw the charge until further notice.

“This is some of the blowback you get from being first” in offering smartphone 5G service, John Hodulik, an analyst at UBS Group AG, told the Wall Street Journal. “It didn’t make sense to charge people extra money for a service that they’re rarely going to use.”

AT&T’s CEO Randall Stephenson sent signals to shareholders AT&T was also considering charging a premium rate for customers upgrading to 5G technology in the next two or three years.

Verizon’s not-quite-ready-for-prime-time mobile 5G network hurriedly held a public launch event April 3rd using a small network of 5G millimeter wave small cells installed in downtown Chicago and Minneapolis, despite employee admissions there were significant issues with the network’s reliability, coverage, and stability.

Driving Verizon was a chance to win bragging rights by claiming ownership of the world’s first, publicly available, mobile 5G network. In a company-produced video intended for employees, it quickly becomes apparent Verizon was preoccupied by South Korea’s own race to launch mobile 5G, and daily meetings at Verizon’s offices in New Jersey hinted at pressure to announce Verizon’s own 5G launch day as soon as possible.

It was also clearly a priority for Verizon’s new CEO, Hans Vestberg.

“Since I came into Verizon, this is the first thing I wanted to do,” Vestberg said. “I want to be first on 5G in the world.”

But was the network ready for launch and fit for purpose? As of April 1, there were still coverage, latency, and speed issues. Garima Garg, from Verizon’s Network Performance, said the 5G network was “very unstable” early in the first week of April. Attempts to test every smart cell in Chicago were unsuccessful. Garg said the team couldn’t connect to several of them.

Besides beating South Korea, Verizon’s goal was to launch 5G with speeds better than its 4G LTE network and AT&T’s enhanced 4G LTE service it calls “5Ge.” To test network performance, Verizon employees ran countless speed tests, often just across the street from light pole-mounted smart cells around 100 feet away. Just a day or so from launch, Verizon testers were still trying to address network problems, including packet loss and delayed acknowledgments on the TCP side of the uplink, which ‘really hurt speed.’ Verizon claims it resolved some of these problems in the final hours before launch with a custom software build.

Verizon’s efforts almost came to naught, because SK Telecom, South Korea’s largest wireless operator, suddenly surprised the public with a star-studded “5G Launching Showcase” the morning of the 3rd. SK Telecom technically beat Verizon’s attempt to be first to launch, but Verizon pointed out only a handful of celebrities, social media influencers and so-called “brand promoters” were given smartphones capable of connecting to SK Telecom’s 5G network. Verizon’s spin was that South Korea’s launch was effectively a publicity stunt, as no consumer could walk into a store and buy 5G capable devices on that date. Verizon’s launch, however, would be different. Any customer could immediately walk into a Verizon store in the two launch cities and walk out with a smartphone capable of connecting to 5G on the first day the network was switched on. Just in case SK Telecom had any other surprises planned, Verizon decided to move up its official launch date.

Garg (Image courtesy of: Verizon)

On the morning of April 3, Vestberg appeared in a friendly and exclusive CNBC interview announcing the launch of Verizon’s 5G mobile network. By the following day, tech reporters in Chicago gave the network its first thorough test, and found many of the same issues that had concerned Verizon engineers earlier that week. Not only was Verizon’s 5G service area miniscule, several small cells appeared not to be working at all (or at least were not available for connections), and after a day using Verizon’s 5G network, the service was deemed “unreliable” by PC.

Reporters used Moto Z3 phones with the new 5G Moto Mod back panel, which snaps on the back of the phone and delivers 5G connectivity to the Z3. The Mod concept is neither an elegant or inexpensive solution, turning the Z3 into a bulky and heavy handset. The Moto Mod also has its own battery, and not a high-capacity one at that. Testers reported it was dead after five hours of significant use. It cannot be recharged by the phone either. At some locations, reporters were able to verify Verizon’s 5G network did deliver a significant improvement in speed — up to 600 Mbps peaks on small cells that likely had few, if any other customers connected at the time. But the densest parts of Chicago’s downtown were already well-served by Verizon’s 4G LTE network, which capably peaked at 400 Mbps.

Verizon’s mobile 5G network relies on millimeter wave frequencies, which are very short-range and sensitive to solid objects, which can block or degrade the signal. Despite Verizon’s earlier claim that it saw better than anticipated range and performance from the company’s millimeter wave fixed wireless service running in a few other cities, real world testing showed the effective range of Verizon’s smart cells was less than expected for mobile users. Verizon claimed up to 800 feet of range from each 5G small cell, but testing found that claim wildly optimistic.

“I saw more like 300 feet of effective range, with speeds dropping below LTE levels beyond that, even though my 5G indicator would dutifully flicker on until about 450 feet,” reported PC’s
Sascha Segan. “The Mod seems unable to judge when a 4G connection would be better than a 5G one, so it hangs on to 5G for dear life even if it’s just eking out a few megabits. A phone should probably prefer a good lower-gen connection over a poor higher-gen one.”

Real world testing also revealed the expected shortcomings of mobile 5G — it can be downright terrible indoors.

“Stand under the cell site, you get 600 Mbps down. Go into the Starbucks, through glass, and that’s cut to 218 Mbps,” Segan wrote. “Go around the corner and duck into the lobby of a stone building that doesn’t face onto the site, and you’re down to 41.5 Mbps. Lower frequency bands do not have this behavior.”

Of course, it is early days for Verizon’s 5G and network and software improvements are likely to significantly improve service. But Verizon’s experience strengthens the theory that small cells are likely to thrive only in dense population areas where there is already a high traffic demand. It seems unlikely that Verizon’s 5G network will make economic sense to deploy in outer suburbs and rural areas. It may not even play well in the suburbs.

Verizon produced this video covering the challenges launching their mobile 5G network in Chicago and Minneapolis in early April. (12:34)