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.

Time Warner Cable's office on Mt. Hope Avenue in Rochester, N.Y.

A major service outage Sunday disrupted cable-TV, phone, and broadband service for a large number of Time Warner Cable customers in the Rochester, N.Y. area.

Starting at around 8am, cable channels started to pixelate and freeze, broadband service began to fail, and calls to and from Time Warner Cable phone customers were, in some cases, disrupted.

Time Warner’s local service number was quickly jammed with calls, and the company placed a recording on that line indicating they were aware of the problem, which later was described as a “router problem.”

Service was finally restored in the mid-afternoon.

Time Warner Cable customers can receive credit for the service outage, but only if customers request it.

Customers can call, chat, or e-mail the cable operator and let them know credit is requested for yesterday’s outage.  A customer service representative will usually respond to e-mail requests within hours, with service credits appearing on the next bill.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WHAM Rochester Time Warner Cable Service Restored In Rochester Area 4-29-12.mp4[/flv]

WHAM-TV led Sunday’s evening news with a report about the service outage’s impact on Rochester residents and businesses.  (2 minutes)

Fibrant, a community-owned fiber-to-the-home provider in Salisbury, N.C., has discovered the importance of redundancy. A major service outage knocked out phone and broadband service for several hours Monday, due to a fiber cut between Concord and Salisbury.  Fibrant’s provider, DukeNet, restored service after four and half hours by rerouting around the cable cut, but the incident left Fibrant looking for a backup provider to reduce the chance such a service outage will occur again.

City Manager Doug Paris, who was instrumental in getting Fibrant up and running in Salisbury, said the incident underlined the need to have redundancy to keep customers online.  While the city asks DukeNet for an explanation of the most recent service outage, Salisbury is taking bids for backup service.

Redundancy is a lesson virtually every service provider learns — commercial or otherwise.  What company has not suffered a significant service outage from an errant backhoe or construction crew severing a vital fiber link? Without a backup provider, service fails and customers howl.  Those companies experiencing multiple outages soon learn having a second provider can keep service disruptions to a minimum and more importantly make them invisible to customers.

Salisbury is located northeast of the city of Charlotte, N.C.

Paris told the Salisbury Post the city’s intent to contract with a second supplier has its benefits. A large educational institution has now signed up for service, with several potential new business customers considering Fibrant as well.

Fibrant has won a 13% market share in Salisbury, supplying phone, Internet, and cable TV to more than 1,700 customers.  Fibrant offers the fastest broadband service in the city and competes primarily with Time Warner Cable.  It also faces perennial opposition from anti “government broadband” critics, many nipping at the provider for political reasons.

Opponent John Bare has compared Fibrant to welfare, opposing it because it is not operated by the private sector.

But Fibrant has kept its competitors on their toes, forcing both the local cable and phone company to offer cut-rate deals for new customers and those threatening to switch.  Those low prices and retention deals have cut into Fibrant’s projected share of business in the community, but city officials note the customers who do sign up stay with the provider.  Fibrant has a 99% customer retention rate.

Fibrant’s biggest challenge remains its start up costs and debt.  The provider spends nearly $1,350 for each residential installation, for which it charges customers nothing unless they depart within a year of signing up.  Fibrant recoups installation and network construction costs from customers over time.  But the company does have plans to more aggressively market its service to Salisbury’s 34,000 residents in light of competitive offers from cable and phone companies.  Fibrant manages to win around 30 new customers a week.

Salisbury’s fiber network does not pitch customers “teaser rates” that rise considerably after the promotion expires. It prefers to market its superior speeds and service, and notes all of the revenue earned by Fibrant stays in the local community instead of being pocketed by Wall Street banks and investors.

Frontier Communications left dozens of businesses in the city of Rochester without phone service for well over a week because of a flooded cable the company struggled to repair.

Frontier says a flooded manhole along Interstate 490 was responsible for the outage, which primarily affected customers in the Park/Meigs Avenue District in southeastern Rochester.

But businesses are wondering why it took more than a week to bypass the damage and get phone service restored.

“We haven’t been able to get calls at all,” Stacy Ercan, owner of Stacy K Floral told WHAM News. “They have to forward our calls to the cell phone. But the cell phone can only answer one call at a time, so we’re definitely missing calls.”

“I’ve called 27 times in the last week [about the outage] and every time I get a different answer,” reported another business owner.

Some businesses say the Frontier service outage cost them more than inconvenience.  One owner reported up to an 80% drop in her business while others complained they were unable to process credit card transactions.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WHAM Rochester Park Avenue Shops Still Waiting for Phone Service 2-28-12.mp4[/flv]

WHAM in Rochester covers Frontier’s extended service outage that afflicted customers in southeast Rochester for over a week.  (2 minutes)

Cable "Digital Phone" Subscriber Numbers (Source: SNL Kagan)

Rick Munarriz has a bone to pick with Comcast after discovering his cable television and broadband service was out of commission.  It was the fourth prolonged outage in four weeks.  But the Comcast customer of more than a dozen years was surprised when he called the cable company and they immediately tried to sell him Comcast’s “digital phone” service:

[…] An otherwise cordial representative tells me that he’s looking into my account. I could save some serious money if I switch my landline to Comcast’s XFINITY Voice offering.

“If I did that, how would I be reporting this outage?” I asked.

“Don’t you have a smartphone?” he responds, not realizing that he has just killed his own sales pitch.

Who needs a landline when you have a wireless phone? Who needs a Comcast triple play — especially when I’m already dealing with two outs?

Although not losing customers as fast as traditional landline phone companies, cable-delivered phone service is no longer growing as fast as it once did.  Most companies picking up “digital phone” customers are winning them these days from product bundling, with aggressively priced triple-play packages of phone, Internet, and cable service.  Many of these packages include the phone line for less than $10 a month more than a double-play package of Internet and cable-TV.

SNL Kagan collects statistics from cable operators who pitch phone service and documents the highest growth in cable-provided phone service came during 2004-2009.  Now that growth has slowed.  Customers who were willing cut their landline phone off in favor of a cell phone don’t need wired phone service from the cable company either.

It seems Comcast is willing to admit the same, even when pitching its own phone product.