Friday, December 26, 2014

Will Verizon be allowed to break its FiOS promise to New Jersey?

Verizon customers in New Jersey have paid $15 billion in surcharges in return for the telecommunications giant's guarantee that it would deliver broadband internet to every resident of the Garden State by 2010.

Now, some critics say that Verizon won't ever have to deliver on the promise.  Four years past the deadline, wide swathes of New Jersey – especially in the southern portion of the state - remain without access to the fastest form of broadband - fiber optic service. One vocal critic says up to 50 percent of the state remains without and that Verizon is actively working to renege on its legal obligations.

According to a story in Newsweek this week by David Cay Johnston, New Jersey is not an exception. Telecoms are bailing on installing fiber optic cable nationwide:

 [I]nstead of spending that war chest digging up streets and laying fiber cable, the cable and telephone companies have invested in a massive and very successful lobbying push. They are persuading state legislatures and regulatory boards to quietly adopt new rules—rules written by the telecoms—to eliminate their legal obligations to provide broadband service nationwide and replace landlines with wireless. This abrupt change in plans will leave vast areas of the country with poor service, slow telecommunications and higher bills.

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  • In New Jersey, that means Verizon.  The state of New Jersey offered Verizon a deal in late January that critics claim would get the telecom off the hook.

    Verizon claims it has met its commitment.

    "Since 1993, Verizon has invested over $13 billion in the wireline infrastructure," said spokesman Lee Gierczynski. He said claims that Verizon was trying to duck its obligations were "way off base." 

    But last year, the NJ Board of Public Utilities decreed the "full deployment of broadband has not been achieved.” Bruce Kuschnick, a telecom analyst, told Philly.com this week that “only 55 percent of the state has been wired.”

    Kushnick notes that Dennis Bone, former President of Verizon New Jersey, was the co-chair of Gov. Christie's Economic Development Transition Team.

    According to Kushnick, the state has given Verizon an opportunity to "erase the law."  He said the roots of the Verizon issue stem from 1991. At that time, Verizon New Jersey said it would transform the state into the first completely wired with fiber optic cable in a plan known as Opportunity New Jersey. Customers paid Verizon about $15 billion dollars in excess phone charges and tax breaks to perform the construction over two decades - in addition to rate increases along the way. 

    Under the Christie administration's new proposal, Verizon can stop expanding FiOS internet and TV services in New Jersey. The proposal will allow Verizon to serve up 4G wireless service instead, “which is fast for wireless,” Newsweek points out, “but painfully slow compared to FiOS.”

    Verizon's Gierczynski said there was never a guarantee that FiOS would be made available to anyone who wanted it. 

    "Nobody knew what FiOS was 20 years ago," Gierczynski said. "It wasn't until 2004 when FiOS came on the scene." 

    Kushnick said that Verizon's original agreement with the state guaranteed data transfer rate of 45 Mbps in both directions. He said the new plan allows Verizon to only be as fast as DSL, which is about 5-10 Mbps and it is only fast in one direction.

    Verizon disputes that. "It didn't say a minimum of 45mbps," Gierczynski said, "it just says 'up to'." Though FiOS offers speeds up to 500mbs, with DSL or Verizon's 4G-LTE it is possible to download movies, he said.

    Kushnick, who also is the chairman of TeleTruth, a telecom watchdog, said the implications of New Jersey's proposed agreement with Verizon can't be underestimated. Without FiOS, cable will be able to preserve its monopoly in underserved areas, he said.

    “Essentially, they’re erasing the law,” Kushnick told Philly.com. “It’s a way of forcing customers onto wireless and getting rid of the traditional copper wiring.”  Copper wire and FiOS, he said, continue to operate when the electric grid is knocked out by floods and other natural disasters.  Not so with wireless. “They’re stranding one-third of the population.”

    Giercyznski said the company has no intention to do that. 

    "Verizon does not have any plans to replace its copper network with wireless, if that's what they're saying," Giercyznski said. "

    New Jersey customers can file comments about the proposed agreement until March 24, 2014 to the Board of Public Utilities. To do that, Kushnick said, email board.secretary@bpu.state.nj.us and include "Verizon New Jersey, Docket No. TO12020155".

     “People have no idea what they’re losing,” said Kushnick. “At some point you’d think the community would take notice.”

    This story has been updated to include comment from Verizon.


    Contact Sam Wood at 215-854-2796 or samwood@phillynews.com. Follow @samwoodiii on Twitter.

    Contact the Breaking News Desk at 215-854-2443; BreakingNewsDesk@philly.com. Follow @phillynews on Twitter.

    Sam Wood PHILLY.COM
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