New York City Sues Verizon For Fiber Optic Bait And Switch

from the a-sucker-born-every-minute dept

For years now, we’ve highlighted Verizon’s tendency to grab all manner of tax breaks and subsidies from a town or city — in exchange for fiber optic upgrades that are often never delivered. All up and down the eastern seaboard, Verizon was given the keys to the kingdom in franchise and other agreements filled with loopholes that let the telco, time and time again, promise one thing, then deliver another. And because the company enjoys immense lobbying power over regional regulators and state legislatures, Verizon has never really been held accountable for this behavior.

New York City has been a particular point of contention. In 2008, former mayor Mike Bloomberg and Verizon signed (behind closed doors) a new franchise agreement promising “100% coverage” of FiOS across the city by 2014. As some local reporters had warned at the time (and were promptly ignored), the city’s deal with Verizon contained all manner of loopholes allowing Verizon to wiggle over, under and around its obligations. And wiggle Verizon did; a 2015 city report found huge gaps in deployment coverage — particularly in many of the less affluent, outer city boroughs.

New York City had long promised to sue Verizon over its failures, and this week made good on that promise. A lawsuit filed by the city (pdf) says that Verizon only ultimately reached 2.2 million out of the city’s 3.3 million residences with FiOS. The city is seeking a declaration that Verizon is in breach of its deployment obligations, as well as an order to complete the project as promised. The contract required that Verizon “pass” nearby apartments and buildings with fiber. But according to the city, Verizon’s definition of “pass” meant “getting the fiber line somewhere close to the building, maybe”:

“Verizon’s current position, as stated in correspondence and meetings with the City, is that fulfilling the “premises passed” obligation does not, with respect to a given premises, necessarily involve running fiber immediately in front of or behind the premises. Rather, Verizon has asserted, it should be deemed to have’?assed” an individual building if it has run fiber to a nearby intersection and could access the building with further deployment of fiber.”

This is pretty much the standard MO for Verizon, and any city surprised by it hasn’t been paying attention. In addition to the flaky definition of “passed” (long a fluctuating, morphing determination in telecom for just this purpose), Verizon’s agreement contained numerous provisions allowing it to buy or wiggle its way out of deployment obligations if certain television adoption metrics weren’t met. All told, countless cities have signed contracts just like this one without really reading them. They then turn around in a few years feeling swindled (like Philadelphia just did).

As such, it’s not entirely clear how much luck New York City will have in the courts, but Mayor Bill De Blasio’s office has apparently had enough of playing deployment patty cake with the company:

“Verizon must face the consequences for breaking the trust of 8.5 million New Yorkers. Verizon promised that every household in the city would have access to its fiber-optic FiOS service by 2014. It’s 2017 and we’re done waiting. No corporation – no matter how large or powerful – can break a promise to New Yorkers and get away with it.”

The problem is Verizon has “gotten away with it” pretty much constantly — across a wide swath of its territory — with zero repercussions, for the better part of a generation. In town after town, state after state, the most “punishment” Verizon tends to see is belated, toothless public hearings that serve little purpose other than to let swindled residents vent. That’s because while Verizon’s known for building networks, its expertise is really legacy turf protection and lobbying, and those campaign contributions go a very, very long way.

Ideally, cities could avoid all of this by actually reading contracts before they sign them (and making negotiations public and transparent, which didn’t happen in New York). On a “positive” note, now that Verizon’s busy gobbling up failed 90s internet brands in an apparent quest to pivot to slinging ads at Millennials — it has largely given up on fixed-line broadband entirely, meaning that its bunk FiOS deployment promises are also taking an extended hiatus.

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Companies: verizon

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Comments on “New York City Sues Verizon For Fiber Optic Bait And Switch”

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18 Comments
That One Guy (profile) says:

You can't change the past, but the future...

Assuming the city doesn’t prevail in court and is able to force Verzion to uphold the spirit, rather than the letter of the contract, it seems a good response would be to make a clear statement that once any contractual obligations they can’t get out of lapse the city will no longer be doing any business with the company, and will be looking for other companies to fill in the void.

Losing out on an entire major city like that would certainly be a good response to the sleaze that Verizon and the former mayor pulled on the public, and provide incentive for the replacements that they can be replaced if they don’t uphold their end of the deal as well.

Ninja (profile) says:

Re: You can't change the past, but the future...

Who? Muni broadband? Are there laws to prevent such implementation? Google Fiber? Are there regulations allowing twisted pole dancing? Jesus? Are there regulations preventing Jesus from performing miracles that go against the incumbent players best interests?

The solution can be rather complex once you take all the ways the telcos can screw a city into account.

I suspect Jesus would scream around and kick some businessmen desks if He was here today. The only difference is it wouldn’t be in a temple.

Anonymous Coward says:

Whatevha

This dog and pony show again? Something, Something, bullshit is going to happen and Verizon will get out for pennies on the dollar.

This deal is going to land somewhere along the lines of Verizon settles with Screw York City and they split the windfall. Screw York is just pissed they didn’t make out like Verizon did.

streetlight (profile) says:

Has anyone in NYC been refused FiOS service?

It seems a good test would be whether anyone who requested FiOS service in NYC been told by Verizon that it’s not available. Of course Verizon may just stumble around and just never manage to get the install done which may or may not indicate lack of availability. There likely will be places where folks either don’t want it or can’t afford it and never have asked for FiOS so it can’t be concluded it’s not available in those areas.

Anonymous Coward says:

Re: Has anyone in NYC been refused FiOS service?

I asked for it and was told it is not available at my address, in a brownstone in one of the nicer areas of Manhattan. If I recall correctly, I entered my address on their website and it said FiOS was not available to me. This was mid-2013, not far out from their target completion date.

Anonymous Coward says:

Telecoms and promises

Ideally, cities could avoid all of this by actually reading contracts before they sign them (and making negotiations public and transparent, which didn’t happen in New York).

It’s difficult to get people to understand something when their profits depend on failing to understand it.

Verizon’s actions are nothing new to Verizon, as you point out. However, it’s also nothing new for AT&T and other major telecom/cable providers. The real issue is monopoly regulation.

The funny thing is that the telco/cable companies try desperately to get themselves out of "common carrier" status. We should let them. The CC status grants protections for such things like rate collusion, conveyance of pornographic materiel, and competition. So, let’s let them have their cake, but insist that they cannot eat it as well.

Funny thing – municipal or regional government internet problems stem from laws in the states that prevent government providing burglar alarm monitoring if there is a for-profit in the area. That’s kind of nuts because the for-profit only has dial up monitoring, whereas banks and other high value operations require dedicated copper phone lines. So they can’t go to government, they must go to private, which frequently does not offer that service in their area. So they either have to pay ridiculous sums for the monitoring line, or move to the big city.

Well, that is in the past. Now you can get AA grade line security without dedicated copper lines from the phone company, but it’s the root of what we see for internet competition. But it just shows that once these people learn a trick to prevent anyone from escaping paying their monopoly rents, they will use it. The solution is to not allow a monopoly, or if you do, don’t let them write their own laws.

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