Verizon’s FiOS expansion is still as dead as Francisco Franco.

Verizon is prepared to watch up to 30% of their copper landline customers drift away because the company is adamant about no further expansion of its FiOS fiber to the home network.

Fran Shammo, chief financial officer at Verizon, told attendees of the Jefferies Global Technology, Media & Telecom Conference that Verizon will complete the buildout of its fiber network to a total of about 19 million homes, and that is it.

“Look, we will continue to fulfill our FiOS license franchise agreements,” Frammo said. “[We will] cover about 70% of our legacy footprint. So 30%, we are not going to cover. That is where we are still going to have copper.”

That is bad news for Verizon customers stuck with the company’s copper network because Verizon isn’t planning any further significant investments in it.

“We will continue to harvest that copper network and those customers and keep them as long as we can,” Frammo said. “But we will not be building FiOS out for those areas.”

In fact, Frammo admitted ongoing cost-cutting at Verizon’s landline division is allowing the company to shift more money and resources to its more profitable wireless network.

Verizon CEO Lowell McAdam doesn’t want to spend money on non-FiOS areas when more can be made from its wireless network.

“It is also taking cost structure out,” Frammo said.  “As I mentioned, the migration of copper to fiber has been very big for us. Our Lean Six Sigma projects have really significantly helped us in our capital investment in the wireline which is why I can put more money into the wireless side of the business.”

Verizon has shifted an increasing proportion of its capital investments towards its wireless division year after year, while cutting ongoing investment in wireline. Ratepayers are not benefiting from this arrangement, and critics contend Verizon landline customers are effectively subsidizing Verizon’s wireless networks.

Verizon will still complete the FiOS buildouts it committed to earlier, particularly in New York City, but it is increasingly unlikely Verizon will ever start another wave of fiber upgrades.

In fact, Michael McCormack, the Jefferies’ Wall Street analyst questioning Shammo at the conference foreshadowed what is more likely to happen to Verizon’s legacy copper customers.

“We have talked extensively in the past about the non-FiOS areas and I guess in my second reincarnation as a banker, I will try to help you get rid of those assets,” said McCormack.

Frontier is enticing Rochester-area customers to “say goodbye to Time Warner Cable.”

Time Warner Cable’s relentless rate increases, particularly on its broadband service, are leading to calls for more competition in the upstate New York cities of Buffalo and Rochester, now dominated by Time Warner, Verizon Communications (Buffalo), and Frontier Communications (Rochester).

“Bloodsuckers,” came the terse reply of Cathy Slocum.

Frontier Communications is making the most out of the cable company rate increases with a new “Goodbye Time Warner” ad campaign (that incidentally includes a link to Stop the Cap!’s coverage of TWC’s modem fee). It is pitching $19.99 broadband price-locked for two years — an improvement over its earlier offers thanks to a major reduction in sneaky fine print.

Customers can get up to 6Mbps service (up to 12Mbps available in limited areas) at the special offer price as long as they keep a Frontier landline active with a qualifying calling package. There are no contracts with this promotion, but Frontier’s pesky $9.99 “Broadband Processing Fee” applies if customers ever choose to disconnect Internet service. A free Wi-Fi Internet router is included and the company claims it offers “free Internet activation.” But an installation fee still applies, discounted if customers choose the self-install option. Taxes, governmental and other Frontier-imposed surcharges also apply and new Frontier customers are subject to credit approval, which will show up as an inquiry on your credit report.

In the past, we have taken Frontier to task for its expensive early termination and modem rental fees, as well as its bundling requirements, but the company has since ditched most of these as part of its new self-proclaimed reputation as “BS free.”

Unfortunately, Frontier’s DSL speeds can wildly vary, so if you take advantage of their offer, be sure to verify the speed actually get at your home or office. If the service proves too slow to your liking after installation, you can negotiate canceling within the first two weeks without any termination fees.

Where FiOS is available in Buffalo, Verizon is offering promotional pricing on its bundled services, including an $84.99 offer including 50/25Mbps Internet with a Verizon landline offering unlimited calling. This is cheaper than Time Warner’s offer with considerably faster upload speeds and no modem fees. In parts of Buffalo, Verizon is authorized to offer broadband and phone service only, although several suburbs have franchise agreements that allow the phone company to also sell television service. A large part of the city and other suburbs are still stuck with Verizon’s copper network, however, which means DSL is the best they can offer.

Time Warner Cable’s new customer promotions, useful when negotiating a customer retention deal, have resumed bundling Standard tier (15/1Mbps service) Internet speeds into most offers. Previously, the company bundled 3Mbps service in many of its promotions. Broadband-only customers can pay as little as $34.99 a month for a year of Internet service at 15/1Mbps speeds, assuming one buys their own cable modem. A double play offer of broadband basic television (around 20 channels, mostly local over-the-air) with 30/5Mbps Internet service is now priced at $94.97 a month after a $5.99 mandatory modem rental fee is included (not optional with this package).

Time Warner Cable executives have repeatedly told investors its higher priced promotions are intentional to increase revenue and profits even if the company loses customers by charging higher prices.

Verizon FiOS offers in the Buffalo area.

“I moved here from the New York City area a year ago where we had two cable companies — Cablevision and Verizon FiOS,” noted Stephen O’Brien. “Competition changes everything. Not only were the rates much lower than here, the companies would offer you all kinds of incentives to switch from one to the other. One time we switched and got a free iPod Touch. The argument that the rate increase is needed to cover investment is the biggest red herring of all — Cablevision and FiOS spent many times more on infrastructure, yet their rates were much lower.”

Stop the Cap! recommends Time Warner Cable customers check out our guide to getting the best deal possible from TWC.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WGRZ Buffalo Time Warner Rate Hikes 8-6-13.flv[/flv]

WGRZ in Buffalo reports upstate New York residents are upset about two recently announced broadband rate hikes. Time Warner Cable says it needs the money to keep up its broadband service’s reliability. What alternatives do customers have?  (2 minutes)

Despite warnings from public safety officials the wireless landline alternative proposed by Verizon is unreliable and potentially a threat to the safety and well-being of customers, Verizon is moving full speed ahead to deploy Voice Link service in New York and New Jersey communities where existing Verizon landlines have deteriorated and FiOS fiber optics is a distant dream.

On July 12, the Communications Workers of America reported that Verizon’s repair call centers in New York City are now assigning employees to Voice Link-related jobs.

“In addition, CWA members report that technicians are receiving specialized Voice Link installation training and are being assigned to carry out installations in the Buffalo and Watertown areas,” said Chris Shelton, vice president of CWA District 1.

The union also confirmed no further expansion work was being done on Verizon’s FiOS fiber network outside of the areas already committed by the company. Verizon FiOS is only available in a few Buffalo suburbs and not available in Watertown at all.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CWA District 1 VP speaks about Verizon Voice Link 6-13-13.mp4[/flv]

CWA District 1 vice president Chris Shelton summed up Verizon’s aggressive deployment of Voice Link: “We can’t allow these dirty bastards to do this to their own customers, who they don’t give a s**t about….” (Warning: Strong Language) (3 minutes)

Sullivan County

More than 130 county executives, legislators, mayors, town supervisors, and councilors representing 68 New York State communities including Albany, Syracuse, Rochester, Binghamton, Plattsburgh, Ithaca, Jamestown, Poughkeepsie, Rome, and Elmira called on the PSC to declare Voice Link an experimental service and not allow it to serve as the sole service offering on Fire Island or anywhere else:

The Commission stated that “[it] has been the Commission’s policy that utilities determine how to provision service via any combination of facilities – wires, fiber optics, electronics – so long as the tariffed service meets the Commission’s prescribed rules and customer expectations.”

Voice Link, as currently offered, does not meet Municipalities’ expectations. Instead, Voice Link would jeopardize municipalities’ ability to fulfill their responsibility to protect the safety of the citizens who reside and work in their communities. The broad and significant implications of Verizon’s proposed tariff warrant a full investigation. New technology should be deployed after solutions are found, not before.

Municipalities urge the Commission to develop a full factual record and to offer interested stakeholders the opportunity to participate fully in this important proceeding. Municipalities rely on the Commission to guide the evolution of the state’s telecommunications infrastructure in a manner that protects citizens’ safety and promotes economic development.

The legislators called Voice Link a threat to public safety and its installation hampered communities from protecting local residents.

In Sullivan County, where Verizon is attempting to introduce Voice Link as an option for seasonal residents, Undersheriff Eric Chaboty said using wireless service carries risks in an emergency.

Chaboty

At a press conference covered by the Mid-Hudson News Service, Chaboty made it clear homeowners should not feel pressured to sign up for Voice Link. Chaboty recounted a story of his neighbor’s house catching fire and the owner called 911 from a cell phone using the same wireless network Voice Link would use. The call was mistakenly routed to another county instead of Sullivan County 911, and by the time the call reached the correct emergency responders, the family’s home burned to the ground.

Stories like that may explain why Verizon has taken great pains to disclaim responsibility for a customer’s inability to reach 911 or be connected to the correct public safety operator.

Assemblywoman Aileen Gunther (D-Forestburgh) was incredulous Verizon would even attempt to introduce Voice Link in the rural Catskill Mountains, which is notorious for lousy cell reception.

“Too much of this county has no service at all and no hope on the horizon,” she told the audience. “Until the time comes when companies like Verizon are willing to make the investment to ensure reliable and thorough coverage, products like Voice Link are an insult and a danger to our community.”

Legislators across the state also suspect Voice Link will create an incentive for Verizon to neglect its already-deteriorating copper wire network, accelerating the need to deploy its preferred wireless solution. But the thought of achieving business priorities at the possible cost of public safety bothered the 134 legislators who signed a petition sent to the PSC.

“When outside plant is inadequately maintained, consumers’ safety is jeopardized because their dial tones may not function when they need to reach emergency services,” the petition explained.

Brookhaven town supervisor Edward P. Romaine held his own news conference at the Davis Park Ferry Terminal in Patchogue last week. He worried that Verizon was attempting to get its foot in the door with Voice Link, and will use any approval to quickly expand it as a “sole service option” elsewhere.

“Our concern isn’t only for Fire Island,” Romaine said. “Our concern is while they’re impacting a few communities in Fire Island, this . . . will spread to all of Fire Island and possibly to the main island.”

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/CBS This Morning No more landlines Verizon wont fix storm damaged wires 7-19-13.flv[/flv]

CBS’ This Morning covered Verizon’s plans to drop landline service in Mantoloking, N.J., on an off shore barrier island. Residents really don’t want Voice Link as the replacement, but at least they have an alternative. Unlike on Fire Island, Mantoloking is served by a cable company – Comcast. (3 minutes)

Verizon Communications is cutting investment in its landline and fiber optic networks, spending the money on improving the company’s more profitable wireless business, which now accounts for 67 percent of Verizon’s total revenue.

Verizon reported second-quarter results this morning, meeting most Wall Street analysts’ expectations. The company reported a minor increase in capital spending to bolster its wireless LTE 4G network which is seeing strong growth in data traffic.

Verizon Wireless added one million new wireless customers in the last quarter, many transferring from Sprint’s now-discontinued Nextel network shut down last month. Among the new customer additions, 941,000 signed two-year postpaid contracts.

A growing number of Verizon Wireless customers are also migrating to the company’s Share Everything plan. At least 36 percent of Verizon’s wireless customers are now on shared, usage-limited data plans. Verizon expects more customers to switch, especially when legacy plan customers discover they will not receive a subsidized phone upgrade unless they abandon the grandfathered, all-you-can-eat data plan. Verizon believes the Share Everything plan will keep the company in a strong place to accelerate earnings as customers find they must regularly upgrade to higher capacity data allowances to handle increasing data usage.

Verizon’s wired success story

The growing adoption of more expensive data plans means higher bills for Verizon Wireless’ 35 million contract customers. The average Verizon Wireless customer now pays $152.50 per month, an increase of 6.4 percent. In total, over 100 million Americans now use Verizon’s prepaid and postpaid wireless services.

In June, Verizon Wireless reported its nationwide upgrade to LTE 4G service was now essentially complete, with 99 percent of 3G service areas also covered by 4G. Verizon reports 59% of its total data traffic is carried on the 4G LTE network, which is five times more efficient than the 3G network.

Wireline: Success When Verizon Invests in Upgrades, Ongoing Customer Defections Where Verizon’s Copper Network Continues to Deteriorate

Verizon’s success story in wireless is not repeated on its wireline network. Verizon lost another 5.2 percent of its residential copper landline customers during the quarter, down from 6.6 percent at the same time last year. In contrast, where Verizon’s fiber optic network FiOS is in place, customer numbers are growing along with revenue.

In fact, 71 percent of the revenue Verizon now earns from its wired residential network now comes from FiOS. The fiber network helped Verizon boost revenues by another 4.7 percent in the second quarter. With an average Verizon FiOS bill now at over $150 a month, the company saw a 9.4 percent increase in the average revenue per wireline customer over last year.

Verizon added 161,000 new FiOS Internet customers and another 140,000 new video customers in the second quarter. FiOS Quantum, which offers a broadband speed upgrade to 50/25Mbps for $10 more a month, has continued to be a hit with customers. More than one-third of all FiOS Internet customers have upgraded to faster Quantum speeds.

Shammo

With continued growth possible in the wired network business, Verizon could increase investment in expanding FiOS fiber into more markets, but instead the company continues to divert its attention and money to Verizon Wireless.

Verizon’s legacy copper wire phone and FiOS businesses saw a further reduction of 5.9 percent in capital expenditures in the second quarter — just $1.5 billion spent in the quarter and $2.9 billion year to date. Verizon’s full-year capital spending outlook which includes wireless, in contrast, is on track to spend between $16.4-16.6 billion this year. The majority of Verizon’s capital investments are aimed at improving its wireless network. Verizon’s aging copper wire network will continue to see a declining percentage of investment, and the company continues to leave FiOS fiber expansion on hold.

Fran Shammo, Verizon’s chief financial officer, this morning told investors they should expect to see a continued decline in spending on Verizon’s wired networks and more cost savings wrung out from Verizon’s declining unionized workforce, which has been asked to make concessions in labor contracts and increase work rule flexibility.

Other highlights:

• 51 percent of new phone activations were Apple iPhones during the second quarter;
• Over 64 percent of all activated phones on Verizon Wireless’ network are now smartphones;
• Verizon’s 3G network will increasingly be used by prepaid and reseller (MVNO) customers not allowed on Verizon’s LTE network;
• Verizon’s proposed entry into the Canadian wireless market is primarily focused on serving southeastern Canada from roughly Montreal to Toronto;
• 60 percent of Verizon’s revenue declines in its enterprise division were due to the federal government’s sequestration — automatic spending cuts, and declining spending by state and local governments;
• Verizon has no interest in competing with AT&T to acquire Leap Wireless (Cricket);
• The impact of Verizon’s agreement with cable operators to sell each other’s products has underwhelmed, at least so far;
• Voice Over LTE service, which will dramatically improve sound quality on voice calls, will arrive in Verizon handsets later this year with an aim to introduce the service sometime in 2014. But Verizon Wireless wants to be certain 4G LTE coverage is robust, because if reception deteriorates, VoLTE calls are not backwards-compatible with its current CDMA network and the call will get dropped. Getting it right is more important for Verizon than getting the service out quickly.

“I will be dead in the ground before Verizon gets around to restoring my phone line, and I have been their customer for 72 years,” says Irene, 95, one irate now-ex Verizon customer in New Jersey.

She, like many others, lost her Verizon landline during Hurricane Sandy and has waited for its return ever since.

“She has the patience of a saint, but if Verizon was in charge of admitting people beyond the Pearly Gates, there would be a line stretching endlessly across the heavenly clouds,” shares Irene’s daughter Agnes.

Irene and her late husband had their telephone hooked up by Verizon’s predecessor three days before Pearl Harbor. For the non-history initiated, that was Dec. 4, 1941.

President Franklin D. Roosevelt called Dec. 7, 1941 a Day of Infamy. Irene’s family calls Oct. 29, 2012 “The Day After Infamy” after Hurricane Sandy slammed ashore in the northeast and wiped out phone service up and down the tri-state coastal area. She is still waiting for her dial tone to return on her 1972 rotary dial phone.

“Everyday I pick it up just to see if there is anyone there, and of course there isn’t,” Irene tells Stop the Cap! “I used to worry about the cat knocking the phone receiver on the floor, but it does not make much difference anymore.”

Irene cannot understand why Verizon is allowed to get away with such shoddy service.

“Just a few years ago, if your phone was out for three days you would have a supervisor apologizing and sending repairmen out even if their supper was waiting on the table getting cold,” Irene remembers. “Those days are over I suppose.”

Irene lives with her daughter in a home that escaped the worst of the storm, but unfortunately her phone service was not so lucky. Verizon has not provided fiber optics in her part of New Jersey yet either, so FiOS is not an option.

“You call Verizon and they are very apologetic on the phone and keep writing up service calls, but unfortunately nobody ever comes and nobody will tell us anything,” Agnes said. “We even tried praying, but Verizon answers to a different God.”

Irene’s great-grandchildren visit with cell phones in hand and cannot understand why Irene still bothers with her home phone, and the family purchased her a cell phone for Christmas to use in the interim but Irene has thrown it in a drawer.

“My phone has been with me since Richard Nixon was in the White House and it is all I have ever needed or wanted,” Irene says. “Agnes will answer the cell phone and hand it to me but the sound on it is terrible, like everyone is in the shower when they are calling.”

Agnes also dials outgoing calls for Irene, and her grandchildren helped her compose the e-mail sent to Stop the Cap! asking if we could help.

“My kids told me Verizon has installed these wireless boxes and screwing them into the wall and I don’t want that,” Irene insisted. “I just want them to fix the phone line and leave it be.”

Irene adds she has paid The Phone Company more than her fair share during the last seven decades.

But during a recent emergency family meeting, a decision was made to deal with a half-year of the “Verizon Problem” once and for all. After corresponding with us, they are signing up for Comcast phone service instead.

“The man at Comcast said I could keep my current phone and I don’t have to have an ugly box screwed into my wall, which suits me fine, but they should know I don’t care for their prices or all of that nonsense they put on the television.”

Comcast installed the family’s phone service yesterday and all is well, at least until the cat knocked the phone off the hook again.

Irene asked her last name be omitted for privacy.