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New reports detail Verizon's financial, policy manipulation in New York

Two new reports detail Verizon’s financial and regulatory manipulation in New York and help explain the current condition of the telecommunications industry in that state. In thefirst two reports from its “Fixing Telecommunications” series, the New Networks Institute explains how Verizon manipulated its financial accounting to appear unprofitable to regulators, and then used that manipulation to achieve policy goals that benefit the company instead of consumers.

According to the report, Verizon overpays corporate overhead with revenue generated by local service: “In 2003, Verizon NY’s Local Service brought in 65% of revenues and paid 65% of the ‘Corporate Operation’ expenses. In 2014, Local Service generated only 27.6% of revenues, about $1.4 billion, but it paid the majority of the ‘Corporate Operation’ expense, over 60%, which came to $1.6 billion.” This revenue not being reinvested into the local network, even as Verizon uses this “financial shell game” to appear unprofitable to regulators.

The report continues: “In NY State, Verizon used this excuse [of unprofitability] to raise rates multiple times, stopped deploying and upgrading the fiber optic-based wired networks and even stopped maintaining the copper networks with the plan to shut off the copper and force customers onto wireless. This has left most cities with deployment gaps or no upgrades at all.

The second report details how Verizon used financial misinformation to raise rates and win deregulation in New York. A timeline of Verizon announcements and NY state deregulation shows how Verizon manipulated regulators to gain profit while leaving consumers with broken promises and subpar service – all in less than a decade:

  • In 2004, Verizon announced FiOS, the [all-fiber] cable TV and broadband Internet service.

  • In 2005, Verizon claimed that the fiber optic wire it uses for FiOS was nothing more than an enhancement and part of the state telecommunications utility -- and the [NY PSC] agreed.

  • In 2006, the [NY PSC] granted Verizon 'deregulation' to raise rates due to 'massive deployment of fiber optics' (FiOS) and 'losses';

  • By 2009, Verizon received three rate increases on local phone customers -- which led some to drop their phone line and use wireless.

  • In 2010, Verizon announced it would not expand its FiOS deployments.

  • By 2012, Verizon announced it would 'shut off the copper'.

  • In 2013, Verizon refused to rebuild landlines on Fire Island after Superstorm Sandy, offering an inferior wireless services VoiceLink or Jet Pack. Fire Island revolted.

Read the full reportshere andhere.



New Reports Expose Verizon NY's Financial Shell Game and the State Commission's Role (Huffington Post, Feb. 22, 2016

Part 1: Verizon’s Manipulated Financial Accounting & the FCC’s Big “Freeze” (New Networks Institute, Feb. 22, 2016)

Part 2: Exposing Verizon NY’s Financial Shell Game & the NYPSC’s Role (New Networks Institute, Feb. 22, 2016)