The three companies that control 90 percent of Canada’s cell phone marketplace have set what they argue is ‘cut-throat’ competition aside to team up in a multi-million dollar lobbying campaign to discourage Verizon Wireless from entering the country.

Bell, Rogers, and Telus have maintained what critics charge is a “three-headed oligopoly” in the wireless business for years, leading to findings from the OECD that Canada is among the ten most expensive countries in the world for wireless service in almost every category and has among the highest roaming rates in the world.

Americans also pay high cell phone prices, and customers of both countries will find somewhat comparable pricing when comparing prices north or south of Lake Ontario. A shopper in Niagara Falls, N.Y. can find the Samsung Galaxy S4 from a Verizon reseller for $120 with a two-year contract. A shared data service plan runs as little as $80 a month for 500MB of data and unlimited domestic calling and global texting. Travel across the Rainbow Bridge to Niagara Falls, Ontario, walk into a Rogers store and the same phone runs $199 with a two-year contract (most Canadian carriers used to offer three-year contracts until the government banned them earlier this year) and a service plan running $80 a month offering the same 500MB of data and unlimited domestic calling and texting. Rogers charges extra if customers want to text a customer outside of Canada, however.

Verizon is no discount carrier. Verizon management has repeatedly stressed it offers premium service and coverage and can charge commensurately higher prices for access to that network. So the idea that Verizon’s interest in entering Canada is to launch a vicious price war is suspect, according to many telecommunications analysts.

Keep Verizon out of Canada at all costs!

They are coming.

In June, the Globe and Mail reported Verizon had shown serious interest in acquiring Canadian cellular upstart Wind Mobile with an early bid of $700 million. Wind Mobile, one of the three significant new “no-contract” entrants vying for a piece of the country’s cell phone market, has limped along since opening for business in 2009, unable to attract much interest from customers concerned about coverage gaps and the poor choice of mobile devices.

More recently, Wind Mobile’s new owner — the Russian mobile giant Vimpelcom — has expressed an interest in selling off the carrier because it cannot gain traction against the biggest three, which also control 85 percent of mobile wireless spectrum.

News that Verizon had taken an interest in the carrier leveled shock waves across the Canadian financial markets. Shares in the three largest telecom giants fell sharply on the news. Earlier this month, Bell CEO George Cope reported that Bell, Telus and Rogers have taken a $15-billion cumulative hit on the capital markets since Verizon hinted interest in Wind Mobile.

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The CBC reported earlier this summer that Verizon Wireless was interested in acquiring the 600,000 customers of independent wireless provider Wind Mobile, which has an insignificant share of the Canadian wireless market. (2 minutes)

Spending a few million, or even a billion dollars, to keep Verizon south of the Canadian-U.S. border is well worth it to the three big players who have launched an expensive campaign to block the proposed transaction and are willing to pay premium prices to keep struggling carriers from being sold to deep-pocketed American telecom companies.

Telus had already done its part, attempting to scoop up another scrappy upstart carrier that wanted out of the wireless business. But the Canadian government rejected Telus’ proposed acquisition of Mobilicity, claiming it would harm efforts to expand Canadian wireless competition. Not to be deterred, Rogers is now attempting a cleverly structured deal to acquire Wind Mobile out from under Verizon with a proposed buyout worth more than $1 billion.

To avoid the anticipated rejection of the deal by Canadian regulators on competition grounds, Rogers has reportedly joined forces with Toronto-based private equity firm Birch Hill Partners that would make that firm the owners-in-name. Although Rogers wouldn’t get a direct equity stake in Wind, it would finance a good part of the deal and win access and control of Wind’s mobile spectrum for its own network. More importantly, it could keep Verizon out of Canada.

“The government is handing out loopholes to Verizon to beg them into Canada”

Cell phone companies in Canada are particularly angry that the government has set aside certain spectrum and guaranteed access for upstart providers to successfully establish themselves without having to outbid the cash-rich big three for wireless frequencies or have to build a nationwide network from scratch. Bell, Rogers and Telus have consistently opposed spectrum set-asides for small carriers, deeming them “unfair.” They argue Canadians’ voracious needs for more wireless service are unending, and it would be unfair not to sell the spectrum to benefit their larger customer bases. But hearing that Verizon, a company larger than Bell, Rogers, and Telus combined, could get preferential treatment and spectrum to enter the country has them boiling mad.

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Bell’s CEO George Cope appeared on “The Lang and O’Leary Exchange” to debate the fairness of Verizon’s possible entry into Canada’s wireless market. Cope argues Verizon is getting special favors. (9 minutes)

Cope

The idea of luring a company to move or begin offering service in a barely competitive marketplace is hardly new. Cities have offered preferential policies to airlines to fly in and out of particular cities, local governments have offered tax abatements to get companies to set up shop, and providing exemptions for zoning and infrastructure have been familiar to telecommunications companies for decades.

In 1880, the National Bell Telephone Company had incorporated, through an Act of Parliament, the Bell Telephone Company of Canada (today also known as BCE), which was given the right to build telephone lines over and along all public property and rights-of-way without compensation to the public or former owners. Through a series of mergers and acquisitions, Bell would later become the dominant monopoly provider of telephone service across much of eastern Canada.

When the phone companies were handed wireless spectrum to launch their wireless businesses in the 1980s, they didn’t have anything to complain about either.

None of that history impressed Bell’s current CEO George Cope, who took to the airwaves to complain Verizon was being given preferential treatment:

• Verizon could bid on two blocks of Canadian spectrum set aside for new entrants to the market in auction later this year. Because the big three Canadian firms are not permitted to bid on these blocks, they are likely to be sold at a lower price.
• Verizon would not have to build its own networks to remote or rural communities, but would be able to piggyback on existing networks.
• Verizon can bid to acquire small Canadian companies such as Mobilicity or Wind, but Bell, Telus and Rogers are forbidden from bidding on them.

“A company of this size certainly doesn’t need handouts from Canadians or special regulatory advantages over Canadian companies,” Bell said in a full-page newspaper ad. “But that is exactly what they get in the new federal wireless regulations. We’re ready to compete head to head, but it has to be a level playing field,” Cope said in a TV interview, echoing Rogers CEO who also called for a “level playing field.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CBC Is Verizon really the bogeyman Canada’s telecom giants claim 8-19-13.flv[/flv]

Bell, Telus, and Rogers have launched a lobbying campaign designed to make life difficult for Verizon Wireless if it chooses to enter Canada. The CBC reports Verizon will be able to bid on more spectrum than Canadian carriers and will have the right to roam on Canada’s incumbent wireless networks. (2 minutes)

Industry Minister Moore

Telus went further, claiming Verizon’s entry into Canada would result in a “bloodbath” for Canadian workers, laid off by the three largest Canadian providers to cut costs to better compete with Verizon.

But Cope said at least one Canadian carrier won’t be able to compete at all, because preferential treatment for wireless spectrum will result in at least one of the big three to lose at a forthcoming spectrum auction, guaranteeing degraded wireless broadband speeds and worse service.

The three companies have found little sympathy in Ottawa, particularly from Industry Minister James Moore, now on a road tour across Canada to promote the government’s wireless competition policies. He called the big three’s loud campaign self-serving and announced a new website sponsored by the Conservative Party of Canada to prove it.

“I think that the public instinctively knows that when they have more choices that prices go down and more competition they’re well served by that,” he told CBC News in Vancouver on Monday. “The noise that we’re hearing is about you know companies trying to protect their company’s interest. Our job as a government is larger than that, our job is to serve the public interest and make sure that the public is served in this so that’s one of the reasons why I’m pushing back a little bit.”

Industry Minister James Moore appeared on CBC Radio this morning to contest the wireless industry’s claims that Verizon is getting special treatment and will bring unfair competition to the Canadian wireless market. (7 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Oppose Verizon Wireless. Do it for Canada!

But the wireless companies show no signs of backing down and have turned towards appealing to Canadian nationalism and fairness.

“The U.S. government is not giving Canadian wireless carriers any special access to the U.S. market,” says a website launched by the big three cell providers to drum up support for a “level playing field.” “Then why is it that our own government is giving American companies preferential treatment over our own companies?”

This week, a Reuters report citing unnamed sources suggests Bell, Telus, and Rogers are about to target Verizon directly with a new campaign warning Canadians the American giant has been implicated in allowing the U.S. government open access to network and customer data, which would represent a profound privacy threat to Canadian customers.

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Bell, Telus, and Rogers paid to produce this ad calling on Canadians to protest unfair competition from an American wireless company.  (1 minute)

So far, Canadians’ hatred of their telecommunications providers has trumped the companies’ public relations and scare tactics. The Conservative government in Ottawa is winning support for its wireless competition war, even from unlikely places.

“Someone mark the date,” Tweeted one Halifax woman not inclined to vote Conservative. “Stephen Harper has done something I mostly support.”

“Eat it Telus/Bell/Rogers,” wrote a Calgary man fed up with the lack of competition in Canadian wireless.

John Lawford, executive director of the Public Interest Advocacy Centre in Ottawa, says opposition from the big three telecom companies is obvious because they don’t want to face a fourth, powerful competitor.

“They should be scared because chances are they’re going to have more competition in the Canadian market if Verizon comes in and they are going to have to lower their prices and compete harder,” Lawford told CBC News. “It’s pretty rich of them to be talking about unfairness” when they already control 90 per cent of Canadian spectrum, he added.

Iain Grant of the SeaBoard Group, a telecommunications consultancy, said government policies to open up more competition are designed to shake things up.

“[The new rules weren’t] meant to be a level playing field,” said Grant. “[They were] meant to give a leg up [to new competitors].”

“To talk of loopholes, as some do, is to not understand that the same companies who complain most loudly about loopholes in 2013 were the recipients of even greater public largesse in 1985 when the government gifted their initial spectrum as an incentive to build a wireless business in Canada,” said Grant.

Few companies have taken on the Canadian big three telecom providers because of their enormous market share, at least inside Canada.

Nine out of ten Canadian wireless users are subscribed to Bell, Telus or Rogers. Trying to convince a banker to extend capital loans to effectively confront a wireless oligopoly in a country with an enormous expanse of land but not people and find enough airwaves among the 15% not controlled by the big three is an uphill battle.

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CBC reports Industry Minister Moore believes increasing competition is the best way to cut Canadian cell phone bills. Regardless of whether Verizon enters Canada, the current government will continue to push for more competition. Even the threat of Verizon coming to Canada has already reduced prices. (2 minutes)

Why does Verizon want to enter Canada?

Analysts suspect Verizon’s interest in Canada has little to do with wooing Canadians to Big Red. Many suspect Verizon’s true interest is to make life easier for its traveling American customers who head north for business or pleasure.

Chief among the possible benefits is the elimination of roaming charges for Verizon customers.

“Verizon’s customers come into the country every day through all the bridges and ports of entries and they want to roam where they want to roam, whether that’s fishing in Saskatchewan or hunting in northern Ontario or wherever,” said Grant.

There are other apparent impediments that could limit the usefulness of Wind’s mobile network to Verizon. In addition to only operating in the largest Canadian cities, Wind’s infrastructure is built by Chinese firm Huawei and is not compatible with Verizon’s technology.

Huawei has been the subject of significant controversy because of its reported ties to the Chinese military. Fears that data could be intercepted by the Chinese government have kept many North American firms from doing business with the company.

Verizon also lacks bundling options for Canadian customers. The biggest three Canadian providers can offer telephone, television, and wired broadband service to their customers. Verizon can only offer wireless service.

Verizon has second thoughts

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CBC reports Verizon may be having second thoughts about entering Canada. Verizon may not be interested in entering a political battle to win licenses to provide service and may want to acquire its own spectrum before considering buying either Wind Mobile or another competitor like Mobilicity. (2 minutes)

Time Warner Cable admitted this morning extracting more revenue from existing customers was more important than attracting new ones, and long time subscribers responded by canceling service in above average numbers.

In a conference call largely hosted by incoming CEO Robert Marcus, a number of Wall Street analysts listened to Marcus’ vision for Time Warner under his forthcoming leadership. Marcus offered competing, potentially incompatible visions in his defense of a lackluster quarter: charge existing customers higher prices for service to boost average revenue per subscriber (ARPU) while also improving the customer-company relationship.

For most of 2013, Time Warner has been aggressively moving away from heavily discounted promotional offers to attract customers. Both outgoing CEO Glenn Britt and Marcus have repeatedly stressed heavy discounting of service during the past two years is now over, and the company is looking forward to resetting prices higher when the promotions end later this year.

It is part of the company’s plan to “drive better performance in the residential business.” An unfortunate side effect is that the company continues to lose video and phone customers and its broadband service growth has been so slow, one analyst called it “anemic.” The company’s quarterly results show Time Warner added only 8,000 new broadband customers in the last three months. The company still earned $1.42 billion from broadband sales alone over the last three months, mostly because of rising broadband bills.

Courtesy: Jacobson

Offsetting that growth, TWC lost 191,000 residential video subscribers, leaving it with about 11.9 million video customers. At least 56,000 customers also pulled the plug on Time Warner Cable telephone service.

“As we discussed before, this [new pricing] approach represents a conscious decision to pursue subscribers with higher ARPU, higher profit and lower churn even if that means fewer connects,” said Marcus as he defended the results. “So it’s not a surprise that as in the first quarter of 2013, subscriber net adds were down in the second quarter on a year-over-year basis.”

As customers deal with increasing prices for cable television and broadband service and the irritation of modem rental fees, many are cutting back on their packages to keep their bill stable.

Marcus admitted customer sign ups of triple play — phone, broadband, and cable TV service — were way down in the second quarter and a lot fewer single and double-play customers were convinced to upgrade. The company’s promotional offers have come with a higher price and slower broadband service, often only 3Mbps.

In a number of markets, especially in the midwest, customers are shopping around for other providers. They are finding AT&T U-verse to be a formidable competitor.

“Throughout the quarter, U-verse was pretty aggressive with a beacon price of $79 for their triple play and $49 for their double play,” said Marcus. “I would characterize those as aggressive promotional prices, and they had an impact. I would say that the impact was more pronounced as the quarter wore on. We’ve now responded to that in the market, and I expect that our relative performance should improve there.”

But for much of the rest of the country where competition is less robust, Time Warner intends to continue to hold the line on pricing and resist discounting even if it means subscribers threaten to cancel.

Time Warner Cable has gotten itself ready for an onslaught of unhappy customers, assigning nearly 1,000 employees to staff four national customer retention centers dedicated to trying to persuade customers not to leave. But these specially trained representatives have a dual mission — keep customers with Time Warner Cable, but don’t give away the store doing so.

Stock buybacks and shareholder dividends were a major priority for Time Warner Cable’s cash on hand.

“Not only are our reps saving more customers, they are also preserving more ARPU among the customers they save,” said Marcus. “As promotional roll-offs peak in the second half of 2013, we expect that our new retention capabilities will drive better revenue growth.”

In the broadband market, Time Warner changed little in the second quarter except to raise prices on service and equipment. Marcus could only point to the addition of 3,500 new Wi-Fi hotspots, mostly in New York City, as its signature achievement over the past three months.

On the residential side, broadband revenues were up 12.5%, but most of that growth came from a combination of the modem lease fee, an increase in the number of 30/5 and 50/5Mbps customers and a successful Turbo promotion.

Results for video and voice were considerably worse. Revenues were down about 4%.

But the company managed to report its highest ARPU ever, with customers now paying an average of more than $105 a month for Time Warner service. Most of that increase came from rising broadband prices.

Time Warner Cable has also been preoccupied with spending excess cash on hand to buy back its own stock, which creates shareholder value. Time Warner expects to spend at least $2.5 billion on stock buybacks this year. Shareholders also received $829 million in dividends (113% of Time Warner’s free cash flow).

“We repurchased 6.6 million shares for $638 million, and through July, we have repurchased approximately 83 million shares at an average cost of around $78.50 per share since we began the program in November of 2010,” reported chief financial officer Arthur T. Minson.

Time Warner Cable’s Board of Directors recently approved increasing spending up to $4 billion on stock buybacks.

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WRGB in Albany reports Time Warner Cable customers are angry about another price hike on the company’s modem lease fee effective Aug. 18. WRGB recommends customers buy their own modems to avoid the fee. Time Warner Cable’s Glenn Britt admitted earlier the fee is really just a hidden rate increase. (3 minutes)

The general counsel of the Federal Communications Commission predicts your landline will stop working within the next ten years, abandoned by companies like AT&T and Verizon in favor of wireless service in rural America or fiber (if you are lucky) in the cities.

Phillip “Did you know your landline will be dead within ten years?” Dampier

Sean Lev, the FCC’s general counsel, said in a blog post that “we should do everything we can to speed the way while protecting consumers, competition, and public safety.”

But the FCC seems to be abdicating its responsibility to do exactly that by singing the same song some of America’s largest phone companies have hummed since they decided to get out of the copper landline business for fun and profit.

Traditional boring telephone service is regulated as a utility — a guaranteed-to-be-available service for any American who wants it. Hundreds of millions of Americans do, especially in rural areas where America’s cell phone love affair is tempered by dreadful reception, especially in mountainous areas. Oh, and the nearest cable company is ten miles away.

AT&T and Verizon — two of America’s direct descendants of the Bell System, just don’t want to pay to keep up a network most of urban America doesn’t seem to want or need anymore. In addition to a dwindling customer base, providing a regulated legacy service means having to answer to unions and government-types who make sure employees are fairly compensated and customers are given reasonable service at a fair price. The alternatives on offer from AT&T and Verizon carry no such regulatory (or union) baggage. Prices can change at will and customers have no guarantee they will receive service or have someone to complain to if that service is sub-standard.

While in the past regulators have taken the lead to make sure telephone companies meet their obligations, the new FCC seems to spend most of its time observing the business agendas of the companies themselves.

Lev implied to the Associated Press the FCC is not exactly leading the parade on the future of landlines. He seems more comfortable trying to analyze the intentions of AT&T and Verizon’s executives:

Most phone companies aren’t set to retire their landline equipment immediately. The equipment has been bought and paid for, and there’s no real incentive to shut down a working network. He thinks phone companies will continue to use landlines for five to 10 years, suggesting that regulators have some time to figure out how to tackle the issue.

Lev

AT&T is more direct: It wants to switch off all of its landline service, everywhere, by 2020. Customers will be given a choice of wireless or U-verse in urban areas and only wireless in rural ones. Where U-verse doesn’t serve, AT&T DSL customers will be in the same boat as Verizon customers on Fire Island: pick an expensive wireless data plan, satellite fraudband, or go without.

Verizon prefers a “gradual phase-out” according to Tom Maguire, Verizon’s senior vice president of operations support.

Verizon claims it has no plans to shut down working service for customers, but it does not want to spend millions to continue to support infrastructure fewer customers actually use. That means watching the gradual deterioration of Verizon’s copper-based facilities, kept in service until they inevitably fail, at which point Verizon will offer to “restore service” with its Voice Link wireless product instead.

For voice calls, that may suffice for some, especially those comfortable relying on cell technology already. But at a time when the United States is already struggling with a rural broadband problem, abandoning millions of rural DSL customers only makes rural broadband an even bigger challenge. The wireless alternative is too variable in reception quality, too expensive, and too usage capped.

New York State residents have until July 2 to share their views about a proposal by Verizon Communications that would allow the company to drop landline service in rural upstate New York and other locations and replace it with a wireless substitute — Voice Link, as its sole service offering.

Stop the Cap! has covered the issue of rural landline service extensively since 2008. In the past few years, while CenturyLink, Windstream, FairPoint, and Frontier have developed business plans to sell lucrative landline telephone and broadband service in rural areas, AT&T and Verizon have proposed abandoning their landline networks in certain areas in favor of wireless.

Verizon has sought to stop offering rural landline service in areas where it feels no longer economically justified providing it. It ultimately means dismantling communications infrastructure that has provided reliable voice telephone service for more than 100 years.

Voice Link is first being introduced as Verizon’s “sole service” for beleaguered residents living on the western half of Fire Island, which was devastated by last fall’s Hurricane Sandy. Verizon does not want to foot the bill to rebuild and repair the damaged copper wire infrastructure and does not believe installing its fiber optic network FiOS is economically justified either. That leaves residents with one option for basic phone service: Voice Link.

Unfortunately, many of the residents now encountering Voice Link have told the Public Service Commission it has proven unreliable or unsatisfactory and represents a downgrade from the landline service they used to have. (Stop the Cap! has repeatedly offered to test Voice Link’s workability and sound quality ourselves, but Verizon has not taken us up on that offer.)

The company does admit Voice Link is incompatible with basic data services, which means Verizon customers using Voice Link will lose DSL and dial-up Internet access. It also does not work with fax machines, home alarms, and medical monitoring services. Verizon has promised to address these issues in the future, but has offered no timeline or guarantees. Instead, it suggests customers consider purchasing added-cost services from Verizon Wireless, which could cost some residents hundreds of dollars a month for phone and broadband service.

Stop the Cap! believes Voice Link should be offered only as an optional service for customers who wish to use it. In its current form, it is unsuitable, unproven, and insufficient to serve as Verizon’s sole offering, particularly when the company is the carrier of last resort for many rural residents, as well as those on Fire Island.

At the very least, Verizon must be compelled to offer an equal or better level of service, not diminish it. That means better voice quality, rock solid cell coverage, an equivalently priced, unlimited wireless broadband service option for DSL customers, and compatibility with the data services that are now supported over the plain old telephone network.

The Commission should also explore the true costs of repairing and/or replacing wired infrastructure before allowing the company to dismantle it. Once the wired infrastructure is removed, the costs to provision rural New York with fast, reliable, wired broadband service in the future will become prohibitive. Wireless service is no panacea for rural New York, where coverage issues abound, especially in the mountainous areas upstate and across the rolling hills of the Southern Tier. Verizon’s lawyers admitted as much when they wrote the terms and conditions governing Voice Link and other wireless services, walking away from significant liability if calls to 911 go unconnected:

“In the absence of gross negligence or willful misconduct by Verizon, our liability to you, to anyone dialing 911 using the Service, or to any other person or party, for any loss or damage arising from any acts, errors, interruptions, omissions, delays, defects, or failures of 911 services or emergency personnel, whether caused by our negligence or otherwise, shall not exceed the amount of our charges for such Services during the affected period of time. This limitation of liability is in addition to any other limitations contained in this Agreement.”

In other words, Verizon’s only responsibility is to credit your account for the time you could not reach 911 or your call summoning help was dropped. You will see that credit reflected on a future bill, assuming you are still among the living when the emergency is over.

We strongly urge our fellow New Yorkers to share their personal views about Voice Link as a landline substitute with the PSC. This issue is important not only to Fire Island but to the rest of rural upstate New York as well, particularly pertaining to whether customers will have broadband service or not. Verizon management has clearly stated their agenda is to retire copper landline service and replace it with wireless in non-FiOS areas deemed too costly or unprofitable to keep up or upgrade.

Sharing your views is fast and easy and can be done in several ways. Be sure to reference “Matter/Case: 13-00986/13-C-0197” in your comments and include your contact information. All submissions will become publicly viewable on the Commission’s website under the “Public Comments” tab. You can find submissions from Stop the Cap! there as well.

Write (U.S. Mail):

Hon. Jeffrey C. Cohen, Acting Secretary
New York State Public Service Commission
Three Empire State Plaza
Albany, New York 12223-1350

E-Mail:

[email protected]

Online Comments:

You can post comments directly to the Commission’s Document and Matter Management System (DMM). Choose the “Post Comments” link on the upper-right of your screen. An online submission form will appear asking for your contact information. You can include your comments in the provided text box on that form or attach a .PDF, .DOC, or .TXT file.

Stop the Cap! has received information from customers and anonymous employees that Verizon Communications is allegedly attempting to pressure seasonal residents in the rural Catskill Mountain region of upstate New York to give up their landline phone service in favor of the company’s wireless alternative, Voice Link, in potential violation of an order from the New York Public Service Commission limiting its deployment to sections of Fire Island.

Two Verizon customers who own vacation property in the mountainous region of upstate New York in and around Monticello separately contacted Stop the Cap! after doing online research on the wireless product Verizon representatives attempted to sell them.

Both reported they were pressured by Verizon’s service/repair department to accept the landline alternative after attempting to reconnect their seasonal telephone service. In one case, a customer had to call Verizon three times to attempt to reconnect her disconnected phone line after a missed appointment.

“They wanted nothing to do with coming out here to put my old phone line back in service,” says the customer, one of two we have been asked to leave unidentified in light of certain forthcoming legal proceedings. “I got transferred twice and finally ended up talking to someone pushing something called Voice Link.”

Verizon Voice Link

The customer tells us she never heard of Voice Link and Googled information about it, ending up on Stop the Cap!’s website which has maintained ongoing coverage of the product’s introduction on Fire Island.

“I called them back and told them they must be mistaken because I don’t own property on Fire Island and they told me it was no mistake and that they were preparing to distribute Voice Link all across the area and I was lucky to be among the first before they ran out,” the customer tells us.

The second customer, who has since taken his complaint to the Attorney General of New York, claims he was offered the same service from Verizon a week later.

“When I called to get my dial tone back, Verizon transferred me to a special repair representative who wanted to install Voice Link instead,” he tells us. “It was explained I would be better off with Voice Link and would get more calling features for less money and get national calling, free voicemail, and all of these other extras.”

The customer tried to turn the offer down, but Verizon made it difficult to refuse.

“You really had to argue with them and say no at least a dozen times,” our reader tells us. “The reason I said no is that I tried that same type of service from Verizon Wireless and it sucked. I raised my voice and they finally agreed to reconnect my phone.”

We have also received e-mail from individuals claiming to be Verizon employees represented by the Communications Workers of America indicating Verizon delivered a large shipment of Voice Link units for deployment in the Catskills, despite the fact Verizon is apparently not authorized by the PSC to offer the service to customers outside of the western half of Fire Island, and only on an interim basis.

Verizon’s use of Voice Link in upstate New York will almost certainly raise questions with regulators who negotiated the agreement with Verizon over the limited use of Voice Link during its evaluation, especially if customers report they were not offered the service only as an option.

If the allegations are true, Verizon may be signaling its confidence it will succeed adopting Voice Link as a mandatory rural landline replacement in parts of New York State and isn’t waiting for final approval from the PSC.

Verizon’s Jarryd Gonzales denied Verizon is responsible for any wrongdoing, noting nothing in the PSC’s Fire Island proceeding restricts Verizon’s ability to offer Voice Link service as an option, which he confirmed the company was doing in Monticello. (See PSC order here, reference page five: “Finally, the amendment will not apply in areas where Verizon offers the alternative wireless service as an optional service [i.e., traditional wired facilities are still in place].”)

“Verizon’s VoiceLink is an innovative and proven product that already is providing quality and reliable voice telephone service to residents of Fire Island and other areas,” Gonzales tells Stop the Cap! “It is a repair option for our customers who have had continued and lingering difficulties with their copper-based telephone service.  It uses wireless technology which has proven to be resilient, and which millions of people use millions of times each day.”

[Update 4:25pm ET]

The New York Attorney General’s office has announced they have filed an Emergency Petition with the New York Public Service Commission to prohibit Verizon from “illegally installing” Voice Link service in direct violation of its tariff.

Attorney General Eric Schneiderman has asked the Commission to sanction Verizon for its actions detailed in this formal complaint:

The Attorney General’s Office has recently learned that Verizon intends to require customers outside of the Fire Island pilot area seeking to have their wireline service installed accept instead wireless Voice Link service, notwithstanding the Commission’s May 16 Order. According to reports by representatives of the Communications Workers of America, Verizon has delivered a pallet load of Voice Link devices to its Monticello Installation/Maintenance Center, and has instructed its technicians in that region to provide summer seasonal customers returning to Catskill vacation homes, who have long been received Verizon wireline service, only Voice Link service.

The union’s report is corroborated by two complaints of Verizon seasonal customers who have been told Voice Link will be installed instead of repairing their wire line telephone service. Only by firmly refusing Voice Link were both customers able to keep their wireline service.

Unlike Fire Island, wireline network damage from Superstorm Sandy cannot be used as an excuse for substituting Voice Link for wireline service in the Catskills, where the storm had limited impact. Instead, it appears that in the Catskills, Verizon has chosen to pursue the company’s business strategy in blatant disregard for the Commission’s Order.

The Commission’s May 16 Order could not have been clearer in limiting Verizon’s substitution of Voice Link for wire line service to western Fire Island, to enable evaluation of this unproven technology on a pilot basis.

Verizon’s provision of Voice Link outside the confines of western Fire Island is illegal, and its open defiance of the Commission’s May 16 Order must be met with effective sanctions.

[Update 4:33pm ET]

[Article further updated at 5:17pm ET to include statement from Verizon Communications.]