A lawsuit accusing Verizon of defrauding creditors of Idearc, Inc., Verizon’s telephone directory publisher can proceed to trial, a judge ruled Monday.

U.S. District Judge A. Joe Fish in Dallas denied a request by Verizon’s attorneys to dismiss the suit, which claims Verizon sought to “hinder, delay, or defraud” creditors of its former directory publishing business, spun-off in 2006.

“These detailed and particularized allegations show that Verizon had a motive and opportunity to commit the alleged actual fraudulent transfers, and they permit the court to draw a reasonable inference of Verizon’s intent,” Fish ruled.

Creditors are upset that Verizon may have breached its fiduciary responsibility when it sold off Idearc, keeping nearly $9.5 billion in assets for itself while ultimately leaving the newly-independent publisher insolvent.

Verizon used a legal maneuver called a Reverse Morris Trust that left Idearc with enormous debt, but a tax-free sale for the phone company.  A federal class action lawsuit called that “a massive, Enron-style debt off-loading spin transaction” and accused the company of fraud.

The track record for Verizon’s spinoffs have not been good.  Three of them resulted in quick bankruptcy for Hawaiian Telcom, Idearc, and FairPoint Communications.  The last — a spinoff of landlines to Frontier Communications, has left Frontier with substantial debt.

Idearc filed for bankruptcy in 2009.  In renamed itself SuperMedia in 2010 after exiting bankruptcy proceedings and still does business from its headquarters in Dallas.

Richmond's public access channels operate from offices like these in city hall. (Courtesy: WTVR)

City officials in Richmond, Va. are facing questions about where the tens of thousands of dollars in fees collected every year from cable TV customers in the city ultimately go.

WTVR-TV in Richmond received an anonymous tip suggesting most of the money collected isn’t being spent according to plan.

Ordinance 2007-32-44 requires that part of the city’s franchise fee collected from providers like Verizon and Comcast “will be used to support public, educational and government (PEG) programming.”

But a WTVR investigation found that most of the money collected since 2007 — nearly $1.2 million — was instead parked in a Richmond city bank account.

The city has only spent around $70,000 dollars of franchise funds on a new camera, microphones, some lighting and a video editing system; but only for government channel 17, the one showing the mayor and city council at work, according to the station.

That means local politicians look fine on government access channels even as public access and educational programming languishes.  In fact, nothing tells that story better than a look at the makeshift offices in place to support Public Access programming — one the size of a broom closet located inside City Hall.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WTVR Richmond Cable TV money and the city of Richmond 9-14-11.mp4[/flv]

WTVR in Richmond investigates where cable franchise fees collected by the city of Richmond are being spent.  (3 minutes)

Verizon Communications has fired six workers and suspended more than three dozen others in Taunton, Mass. for engaging in “illegal gambling.”

But some union workers suspect Verizon’s sudden interest in last winter’s Super Bowl office pool may have more to do with the company’s ongoing conflict with its union employees, who resumed work several weeks ago after a short strike.  The company and members of the Communications Workers of America and International Brotherhood of Electrical Workers are still trying to come to terms on a contract renewal agreement.

One sales representative at Verizon, wishing to remain anonymous, told Wicked Local she didn’t understand the company’s sudden interest in office pools, which have been commonplace among workers at Verizon for years.  In fact, Verizon was encouraging sales staff to participate in their own version of a Super Bowl contest tied to sales performance, although one that didn’t reward winners with cash prices.

The sales representative echoed the sentiments of many members of the Boston media who were wondering, “What’s the big deal?”

WBZ Radio’s NightSide Weekend Commentary features Dan Rea dismissing claims that the office pool crackdown had nothing to do with Verizon’s union troubles.  Aired: September 18, 2011. (2 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Verizon says illegal activity on company property is always forbidden, and adds it took a long time to complete the investigation before finally acting with termination notices for some, suspensions for many others.

Most of the affected workers belong to Local 2222 of the International Brotherhood of Electrical Workers.

Eric Hetrick, business manager for Local 1400, another union with affected members, issued a press release late Friday afternoon stating that his local is conducting its own investigation into the circumstances of the firings and suspensions.

“Many of the affected workers have exemplary records with Verizon and some are long-term employees,” he told the Taunton Daily Gazette in an e-mail, adding that additional comment at this time would not be appropriate.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WWLP Springfield Verizon Workers Fired Over Office Pool 9-12-11.flv[/flv]

WWLP-TV in Springfield covers the firings of Verizon workers over a Super Bowl office pool.  Bonus: A completely incomprehensible interview with one local resident commenting on the potential impact on office pools elsewhere.  (1 minute)

AT&T and Verizon: The Doublemint Twins of Wireless

Mirroring AT&T’s announcement last month that it would begin implementing speed throttles for wireless unlimited data plan customers who are among the “top 5% of users,” Verizon Wireless quietly made changes last week allowing the company to throttle its own unlimited data plan “heavy users” who consume more than 2GB of usage per month on its 3G network.

But Verizon claims it isn’t actually throttling the speeds of customers, it is simply engaging in “network optimization practices” and using “network intelligence” to reduce speeds (sometimes to near-dial-up) while connected to a “congested cell site.”

That will prove a distinction without much difference to customers who rely on 3G data usage using cell sites Verizon deems congested.  They may also find the time spent in Verizon’s penalty box unusually long.

“You may experience [reduced speeds] for the remainder of your then current bill cycle and immediately following bill cycle,” Verizon’s FAQ states.

That can mean customers paying $30 a month for an “unlimited data plan” may find 3G usage a very slow experience for a maximum of two months before they are off Verizon’s throttle list.

The new speed throttle policy began Sept. 15.  Verizon:

Network Optimization practices and throttling is network intelligence.  With throttling, your wireless data speed is reduced for your entire cycle, 100% of the time, no matter where you are. Network Optimization is based on the theory that all customers should have the best network possible, and if you’re not causing congestion for others, even if you are using a high amount of data, your connection speed should be as good as possible. So, if you’re in the top 5% of data users, your speed is reduced only when you are connected to a congested cell site. Once you are no longer connected to a congested site, your speed will return to normal. This could mean a matter of seconds or hours, depending on your location and time of day.

Verizon has not said exactly how many of its cell sites it deems as “congested,” at what times that congestion is most likely to occur, and admits there is currently no way customers can learn when they are connected to a congested site so they can make an informed decision about their usage.

But the company does say customers can avoid the penalty:

1. Upgrade to a 4G phone and hope for good 4G LTE coverage.  Customers using Verizon’s 4G network are not currently subject to a speed penalty for “excessive use.”
2. “Upgrade” to a tiered data plan with usage allowances.  Verizon will not throttle the speeds of customers who are not on unlimited data plans.
3. Reduce your data usage, especially in areas where congestion is likely.

Choke collars are in season at AT&T and Verizon Wireless, leaving Sprint's unlimited service looking more consumer-friendly by the day.

Those suggestions require potentially pricey new handsets, require customers to abandon their existing unlimited data usage plan, or simply get you thinking twice before launching a data session, fearing being grounded for up to two months with a dramatically reduced level of service.

The biggest impact of the network speed throttles will be among data-heavy iPhone users.  Apple’s iPhone doesn’t support 4G, and is likely to continue to rely on 3G network coverage when the next version of the popular phone is introduced in October.  Ultimately, Verizon’s new policy means iPhone devotees using more than 2GB per month may have to abandon their phone or their unlimited data plan if they want to avoid the throttle.

Verizon also found a way to keep customers from canceling penalty-free, noting contract changes that reserved the right to implement network management techniques were made in February.  The 60-day window for the “materially-adverse” contract change cancellation policy expired in April.  Verizon:

By alerting customers in February 2011, and including the notice in our terms and conditions as of February 3, 2011, we made sure customers knew we began reserving the right to implement Network Optimization practices.  In February 2011, we began alerting customers:

• Data Management – (note: now named “Network Optimization” to more accurately describe the tools) – Verizon Wireless may reduce data throughput speeds in a given bill cycle for customers who use an extraordinary amount of data and fall within the top 5% of data users.  The reduction will only apply to those using congested cell sites and can last for the remainder of the current and immediately following billing cycle.  The reductions will only apply when appropriate in locations and at times of peak demand.
• Data Optimization – (note: now named “Video Optimization” to more accurately describe its function) – Verizon Wireless is implementing optimization and transcoding technologies in its network to transmit data files in a more efficient manner to allow available network capacity to benefit the greatest number of users, and although unlikely, the process may minimally impact the appearance of the file as displayed on the mobile device.

Interestingly, AT&T’s own speed throttle penalty was estimated to kick in after 4GB of usage, not the 2GB Verizon is using as its benchmark for “network optimization.”  Verizon also says customers with their Mobile Hotspot feature will find that usage exempted from counting towards the 2GB threshold.

Verizon has opened up a new web page explaining the throttling policy.

[Thanks to Stop the Cap! reader Mileena, among many others, who shared the news with us.]

Verizon Wireless has announced a new $50 unlimited talk, text, and web prepaid plan for price sensitive new customers who don’t mind being stuck with a lower-end feature phone.

The new Verizon Unleashed unlimited plan has been test-marketed since April to prepaid customers in southern California and Florida, but will now be available nationwide from Verizon stores, Best Buy, Wal-Mart and Target.

Although existing Verizon Wireless prepaid customers may be able to sign up for the plan on their existing phones, new customers in test markets were limited to a selection of just a handful of “feature phones” that make web use and texting cumbersome:

• LG Cosmos™ 2 — Now into its second generation, this basic feature phone slightly improved its slide-out keyboard.  The phone was rated “adequate” for an entry-level feature phone, but CNET’s detailed review notes it lacks 3G EV-DO service.  That means you will be web browsing on Verizon’s painfully slow 1xRTT data network.  Verizon has no worries customers using this phone will chew up a lot of wireless data.  Customers rated the build quality as adequate, but found the keys on the first generation of this phone did tend to wear out with a lot of use.  It’s a true “throwaway” phone once the warranty expires.  Repairs always cost more than buying a new phone.  Verizon’s website prices the phone at a stiff $189.99 for month-to-month customers, but it will probably remain priced at around $99.99 for prepaid customers choosing the Unleashed plan.
• LG Accolade™ — A real workhorse basic phone for Verizon Wireless, the Accolade is much better for making and receiving calls than doing anything with texting or web use.  The phone has no QWERTY keyboard to type on, and no 3G service either, so its usefulness for data and texting is extremely limited.  But it is cheap, routinely selling for under $40.  CNET has a video review.  We suspect this phone will not be major part of the nationwide rollout of Unleashed, as Verizon appears to have discontinued it recently.
• Pantech Caper — A front facing tiny keyboard features prominently on this phone, which would have been considered cutting edge five years ago.  Now, it’s considered a ho-hum “feature phone” for the non-smartphone crowd.  It received a fair rating from most reviewers, with the biggest complaints coming from unintentional pocket dialing and button pressing, and a lousy built-in camera.  No 3G service.  The Caper also won’t win any awards for its ergonomics.  Verizon Wireless had been selling this phone in test markets for $80 earlier this year.  CNET’s video review is here.

There is a good chance a few different, more current feature phones will be introduced for the Unleashed plan later this week.  But they will all likely dispense with support for 3G service and lack features many customers increasingly seek on smartphones.

Verizon Wireless has traditionally done poorly in the prepaid market, because its plans are considerably more expensive that those offered by competitors, especially T-Mobile and Sprint.  Verizon Wireless had been charging $95 a month for unlimited talk/text prepaid service plus $0.99 per day for web use.  At those prices, Verizon has been losing prepaid customers, now down to 4.4 million.  Many of those customers fled to providers like Sprint’s Virgin Mobile, which saw a 23 percent increase in its customers, which now number 13.8 million.

Verizon’s $50 unlimited plan matches AT&T’s $50 prepaid unlimited GoPhone plan.  Analysts suggest both companies have set prices (and limitations on the phones that work with the plans) at a level that allows them to compete with lower-priced rivals, but does not encourage their contract customers to switch to a cheaper prepaid plan.

For data-hungry smartphone users, there is little here to persuade anyone to downgrade to a $50 prepaid plan.