Despite glowing media reports about Time Warner Cable’s announcement it is investing $25 million to expand its fiber optic network in parts of Brooklyn and Manhattan, in fact the fiber expansion is part of a previously-reached franchise agreement with New York City officials and will only be available to large business customers that can afford the asking price.

Time Warner Cable’s press release, which generated favorable media coverage in The Wall Street Journal and Bloomberg News, focused considerable attention on fiber upgrades for the Brooklyn Navy Yard, since reborn as a modern tech-friendly business park.

TWCBC also announced that the Brooklyn Navy Yard Development Corporation, a 501(c)(3) organization, will receive a state-of-the-art Time Warner Cable Learning Lab in its Employment Center, located inside the massive complex and accessible to the public.

“We are very pleased to work with the City of New York to make significant investments to ensure that this city has the technology infrastructure to successfully compete in a worldwide marketplace,” said Ken Fitzpatrick, President of Time Warner Cable Business Class, East Region. “Our fiber optic network provides dedicated Internet access at incredible speeds and high-bandwidth capabilities to serve the communications needs of any business.”

Time Warner Cable was required to make its investment in the Brooklyn Navy Yard as part of its franchise agreement with NYC officials.

Time Warner Cable did not, however, provide this investment out of the goodness of their heart. They were required to under the terms of the current franchise agreement the company signed with city officials:

[Time Warner Cable] will install, at its own expense, the fiber optic and coaxial cables and related facilities and equipment needed to provide its service to the buildings and occupants throughout the Brooklyn Navy Yard facility.

Time Warner Cable is also extending its network to more commercial establishments throughout the city, in keeping with its previously-announced interest in expanding services to business customers. Nothing new to see here either.

That did not stop Bloomberg News from comparing Time Warner’s network expansion with Google’s gigabit network in Kansas City:

Time Warner Cable Inc. will expand fiber-optic lines to businesses in New York, a move that boosts Internet speeds as much as 20 times and provides an East Coast counterpoint to Google’s ultrafast network in Kansas City.

The company faces a threat from Google more than 1,000 miles away in Kansas City, where the Internet-search giant is building a fiber-optic network as a test project. Time Warner Cable is the main broadband provider for the area, which spans parts of Missouri and Kansas. While Google’s network will be available to both companies and households, Time Warner Cable’s New York fiber network is focused on businesses.

Google’s network initially will only be sold to residential customers, which are the primary targets for the service. Time Warner Cable’s fiber backbone network primarily works in tandem with its coaxial cable network and does not provide a fiber to the premises connection except for the company’s largest corporate customers.

Time Warner Cable Business Class sells different speeds and services to commercial clients. Most choose speeds considerably lower than 1,000Mbps because of the cost.

What was missing from the coverage is the fact ordinary residential Time Warner Cable customers in New York City will not benefit from these fiber upgrades — they are targeted only to commercial clients. Residential customers will continue to receive the same hybrid fiber-coax service they always have from the cable company.

If New York customers want fiber service, they will have to buy it from Verizon, assuming FiOS has made its way to your borough and neighborhood.

Rutledge

Charter Communications is on an executive raiding mission, poaching at least four senior executives from Bethpage, N.Y., based Cablevision Industries this year alone.

So far, ex-Cablevision executives switching allegiance to Charter:

• Chief Executive Officer Tom Rutledge
• Chief Operating Officer John Bickham
• Chief Marketing Officer Jon Hargis
• Executive Vice-president of Network Operations Scott Weber

But senior management has not been packing bags for St. Louis, corporate home of Charter. Instead, the company has opened a new executive office in New York City. In fact, several existing Charter executives already in St. Louis are being moved to New York to continue their employment there. Weber will be based in Denver, where Charter maintains an engineering office.

St. Louis officials are worried the increasing emphasis on New York may eventually cost their city the corporate headquarters of Charter, which has at least 600 employees. It would not be the first time St. Louis has faced such a loss. Southwestern Bell, which later became AT&T, left St. Louis at the behest of then-CEO Ed Whitacre, who wanted the company run from Dallas. He got his wish.

Verizon has a moratorium on further expansion of its fiber to the home service except in areas where it has existing agreements to deliver service.

Virtually every mayor in the urban centers of upstate New York is accusing Verizon Communications of redlining poor and minority communities when deciding where to provide its fiber-to-the-home service FiOS.

Now they are telling the Federal Communications Commission and Department of Justice to become more closely involved in reviewing a proposed anti-competitive marketing partnership between the phone company and some of the nation’s largest cable operators.

The mayors are upset that Verizon has chosen to target its limited FiOS network primarily on affluent suburbs surrounding upstate New York city centers.

“Verizon has not built its all-fiber FiOS network in any of our densely-populated cities. Not in Albany, Buffalo, Syracuse, Binghamton, Kingston, Elmira or Troy,” the mayors say. “Yet, Verizon has expanded its FiOS network to the suburbs ringing Buffalo, Albany, Troy, and Syracuse, as well as many places in the Hudson Valley, and most of downstate New York. As a result, the residents and businesses in our cities are disadvantaged relative to their more affluent suburban neighbors who have access to Verizon’s FiOS, providing competitive choice in high-speed broadband and video services.”

The mayors fear the reduced competition that will come from the marketing partnership between the phone and cable industry will eliminate any pressure on Verizon to expand its fiber optic network into more New York cities. The agreement allows Verizon Wireless customers to received significant bundled discounts when they sign up for cell phone service and a cable package from Comcast, Time Warner Cable, Cox, or Bright House Networks. No corresponding discount is available to a Verizon Wireless customer choosing to bundle Verizon FiOS, putting the fiber service at a competitive disadvantage.

“These commercial agreements appear to eliminate any incentive that Verizon might have had to expand its all-fiber network to our high-density urban centers,” the mayors say. “After all, Verizon Wireless, a subsidiary of Verizon Communications, will now be able to sell Time Warner’s video and broadband service as part of their bundled package in our communities.”

That leaves most with Verizon’s DSL service, a product Verizon has been marketing less and less to its customers. The company recently announced it would no longer sell standalone DSL broadband, another point of contention for the mayors.

The mayors are concerned that Verizon’s deteriorating landline network will have profound implications for city centers, where tele-medicine, education, business, and entertainment services will all be left lacking if the fiber network is not extended.

“As you are well aware, high-speed broadband is critical to economic development and job creation, as well as improvements in health care, education, public safety, and civic discourse which is so essential to communal life,” say the mayors. “The economic health of our cities and our upstate region depends upon access to the same first-rate communications infrastructure available to the New York City metropolitan region and the suburban communities that ring our cities.”

The nine mayors are also questioning whether Verizon executives misled them when they claimed Verizon’s strong financial performance would allow the company to reinvest profits into further expansion of its FiOS network. Verizon executives have since admitted the company is indefinitely finished with FiOS expansion, except in areas where it already committed to build the fiber network.

Signing the letter were:

• Byron W. Brown – Mayor, City of Buffalo
• Stephanie A. Miner – Mayor, City of Syracuse
• Gerald D. Jennings – Mayor, City of Albany
• Matthew T. Ryan – Mayor, City of Binghamton
• Shayne R. Gallo – Mayor, City of Kingston
• Susan Skidmore – Mayor, City of Elmira
• Brian Tobin – Mayor, City of Cortland
• Robert Palmieri – Mayor, City of Utica
• Lou Rosamilla – Mayor, City of Troy

(The city of Rochester is served by Frontier Communications, which has no plans to deliver a fiber to the home network within its local service area.)

Waiting for FiOS

For those who admire the apparent pervasiveness of competition between Time Warner Cable and Cablevision Industries vs. Verizon Communications’ FiOS, the idea the Big Apple has a broadband problem seems a bit ridiculous, particularly if you can’t get your local cable company to pick up their phone and AT&T will only hand you a 1.5Mbps DSL line, if you can get it.

But according to the Village Voice, New York City broadband “sucks,” and it will continue to suck for at least the next eight years.

“Though entrepreneurs in most parts of the city can access a fast broadband connection today, many of those we interviewed said that New York’s telecom infrastructure is well behind where it should be for a city vying to be one of the nation’s two leading technology hubs,” the study notes.

What it comes down to is that New York — despite being the world’s media capital — does not have adequate access or bandwidth to support tech companies’ needs.

For example, some companies might be able to get either FiOS or Time Warner Cable, but not both, which means they can’t have broadband backup.

“It’s like the elephant in the room is that bandwidth here sucks,” one entrepreneur told the researchers. “You should be able to walk into any building and have at least 150 megabit connection available to you. There has to be ways for the city to construct much better bandwidth availability for start-ups.”

Many cited told the researchers that their internet routinely goes down. And startups who want to set up shop in cheaper, industrial districts often can’t, because the cable companies would rather provide service to more lucrative residential areas. Sometimes, telecom concerns are willing to dig up streets and lay cable, but at a hefty price — around $80,000.

That $80,000 bill is handed to a prospective customer and does not come from cable operators’ capital expense fund.

Researchers gave New York a broadband grade of B to B-, which isn’t too bad considering what broadband is like in the mid-south, the midwest, and the rural west. But it doesn’t cut it for helping New York become a bigger tech city.

Waiting for "Business Class"

While Time Warner Cable and Cablevision have wired multi-dwelling units and homes across New York City, cable operators have only recently started to turn their serious attention to corporate business customers.  Time Warner Cable agreed, as part of its franchise renewal deal with the city, to invest $1.2 million per year for fiber connections to commercial buildings yet to be wired for cable. Cablevision, which can be found in boroughs like Brooklyn and out on Long Island, agreed to spend a more modest $600,000 a year for the same purpose.

Time Warner Cable has already warned investors its capital spending on wiring commercial office buildings across the country is increasing as the company sees lucrative new revenue opportunities competing with their usual nemesis — the phone company.

Verizon treats FiOS deployment in New York City as a long, long-term project. There are neighborhoods in Manhattan that can’t wait much longer for the fiber optic network as Verizon increasingly lets its old copper wiring go to pot, leaving some New Yorkers without phone service for weeks.  The city of New York has given Verizon until 2014 to wire the city, and the company appears likely to need those two additional years at their current pace, and that agreement only covers residential properties, not commercial ones.

Robust broadband is essential for many high technology startups and the multi-million dollar data centers that support them. New York mayor Michael Bloomberg considers it a top priority to reduce the city’s economic dependence on Wall Street, which generates considerable tax revenue for both the city and state. High tech enterprises fit that bill. But the city’s broadband grades do not.

“For a city that’s trying to be a tech powerhouse, we need to have an A,” said Jonathan Bowles, the author of the study, “New Tech City.”

New York State Attorney General Eric Schneiderman is convinced Verizon Communications is abandoning quality landline service for millions of New Yorkers while diverting money and resources to its more profitable cell service Verizon Wireless.

Last week, Schneiderman blasted the state’s largest landline provider for mounting complaints about poor service that now impact 92 percent of its customers, calling deregulation a failure for consumers and businesses in New York.

“Verizon customers deserve the high-quality service they’ve been promised,” Schneiderman told The Associated Press.

The attorney general reports that the number of customers enduring service outages for more than 24 hours has increased, while landline infrastructure — particularly wiring — is allowed to deteriorate.

Schneiderman suspects Verizon is shortchanging landline service as an increasing number of wired phone customers disconnect service, often in favor of Verizon’s more lucrative cell phone service.  The state Public Service Commission (PSC) fined Verizon $400,000 in March for similar concerns, pointing to the company’s intentional workforce reductions lengthening repair windows and creating repair backlogs in some regions.

Schneiderman’s office filed comments with the PSC requesting changes to Verizon’s Service Quality Improvement Plan, which was originally launched in 2010:

At best, New York’s telephone service market is a duopoly, and contrary to theoretical expectations of market controls, the presence of a single competitor has not in fact prevented Verizon from allowing customer service to continue to degrade. Rather than meet its obligations to provide wireline telephone customers with minimally adequate telephone service, Verizon is continuing to drastically reduce its workforce with the result that the company cannot meet its customers’ repair needs in a timely manner.

Verizon’s management has demonstrated that it is unwilling to compete to retain its wireline customer base, and instead is entirely focused on expanding its wireless business affiliate. It is incumbent on the Commission to take appropriate regulatory action to ensure that customers receive reliable telephone service with adequate repair performance. Therefore, the Commission should modify Verizon’s service plan to ensure customers receive adequate service quality in the future.

Verizon defended its service in New York pointing out the company has invested $1.5 billion in the state for infrastructure, including its FiOS fiber to the home network.  Verizon spokesman John Bonomo questioned Schneiderman’s claim that 92 percent of Verizon New York customers had poor service, noting 98 percent of its landline customers don’t have service problems.

Schneiderman’s highlighting of a $400,000 service fine imposed by the PSC did not account for unprecedented damage from both Hurricane Irene and Tropical Storm Lee late last summer, Bonomo added.

But the state’s attorney general notes Verizon’s service problems in New York have been ongoing well before last summer.

Service complaints, charted here from 2008-2011, show a major spike last summer and fall and remain higher than normal.

Schneiderman

“Since at least 2008, Verizon has frequently failed to meet these PSC telephone service standards essential to safe and reliable telephone service,” Schneiderman says. “Even as the number of telephone lines needing to be maintained has dwindled to half those of a decade ago (as customers choose to rely instead on wireless and/or cable telephony), Verizon’s continues to fail to meet the PSC’s service standard.”

Customers on the upper west side of New York City don’t need to be reminded of Verizon’s service failures.  Hundreds of Verizon landline customers in New York’s largest city were left without basic phone service for more than a week, only made worse by the fact Verizon told many of them they’d be without service for at least one additional week while the company worked on repairs.

Phone and Internet service went dead in multiple buildings along Central Park West April 10, but customers wanted to kill when they learned the phone company wanted more than two weeks to get service restored.

“I was like, excuse me, are you serious? Two weeks?” Iram Rivera, a concierge at 262 Central Park West, told DNAinfo.  His building was hard hit by the service outage — 80 percent of the building’s 80 apartments were affected.

“I just don’t get the feeling that there’s much of an appreciation on Verizon’s part that this is a hardship for people,” said Ken Coughlin, who lives on West 87th Street and Central Park West. “There’s no communication, there’s no updates, it’s infuriating.”

The outage only affected traditional landline service and DSL broadband over copper phone wiring. The more modern fiber-optic FiOS network that provides TV, Internet and voice service wasn’t affected, Bonomo said.

Schneiderman notes landline outages have an especially hard impact on small businesses:

In the current recession, the fragile economic condition of many small businesses puts them at risk of financial disaster if they suddenly lose telephone service, and their provider is unable to restore service promptly. Each day that these businesses are without service they lose significant revenues that many simply cannot survive without.

Small businesses depend on functional telephone service to meet the needs of their customers in numerous ways. When customers are unable to reach a business by telephone, they may assume the business is closed and purchase the goods or services they want elsewhere. Restaurants are prevented from giving reservations to prospective customers who call. Many types of businesses depend on working telephone lines for processing credit card charges, and may lose substantial sales by limiting transactions to cash or checks. Professional offices can be prevented from providing medical, legal or accounting services to their clients without working telephone service.

In Schneiderman’s view, the deregulation policies now in place in New York have failed consumers, leaving them with a duopoly of phone providers with insufficient oversight.

For competition to benefit customers with improved service, lower prices, and more innovation, there has to first be a willingness to compete, which is significantly absent from Verizon-New York’s policies and practices.

Rather than robust competition, New York’s telephone market is at best a duopoly, with as many indicators of cooperation between the two providers as robust contest for customers. Furthermore, the actual behavior of consumers in the real world is markedly different from the PSC’s theoretical assumptions about the telephone market.

When a Verizon customer experiences a prolonged service outage or installation delay, the option to switch carriers to a cable provider is of no immediate use. Finally, even if consumers wanted to compare Verizon’s service performance with cable provider alternatives, the lack of available information prevents consumers from making educated choices.

In New York, most customers are served by Verizon Communications, Time Warner Cable, or Cablevision.  Time Warner Cable and Verizon recently agreed to cross-market the other’s products and services as part of a wireless spectrum transfer.