Verizon Foes Ground & Pound in New York

Phil Harvey
News Analysis
Phil Harvey, US Bureau Chief

How badly does Verizon Communications Inc. (NYSE: VZ) want its New York grounding controversy to go underground?

So much so the company is now offering to shell out what could amount to millions of dollars to FiOS customers across several counties where the carrier has repeatedly returned to homes to fix electrical problems identified by state officials, Light Reading has learned from a study of documents filed with the New York Department of Public Service (NYDPS).

"Verizon will issue the corresponding product credit to each customer account…", that was improperly installed or cited as being problematic, the carrier wrote in a document filed with the NYDPS on Aug. 15. The point of the account credits is to "compensate such customers for the inconvenience of the inspection (and, where applicable, remediation) process," the document stated. "The total amount of credits required... may be in the millions of dollars, depending upon the level of compliance that is achieved."

What's going on?
Over the past two years, New York State officials have conducted several field audits of Verizon FiOS installations and most weren't bonded or grounded properly, as mandated by the National Electrical Code. The carrier is now in the process of auditing its own work and correcting the issues identified by the NYDPS, and those fixes won't have any bearing on Verizon's New York State video franchise, which has already been approved.

Since the spring of 2006, the NYDPS has documented numerous examples of Verizon installations in Nassau, Orange, Rockland, and Westchester counties that it says weren't properly grounded. The following photos, extracted from the state's April 2008 installation audit, show the extent of some of the ugliness that Verizon now says it is committed to cleaning up:

NYDPS officials say the grounding issue poses a "potential safety risk to the premises and its occupants" in the case of FiOS homes, according to one report sent to Verizon two years ago. "We tentatively conclude that FiOS may form an electrically conductive path both to the outside world as well as other electrically powered devices inside the building," that report stated.

Verizon, in July, laid out a Network Review Plan, where it discussed an extensive effort to check its installers' work and fix and document any problems it discovered. After Light Reading posed questions about this quandary, Verizon commented that it has been working on the issue for a while and that it puts safety first.

Industry analysts say this issue is probably more political than it is an issue of public safety. And the point of being political is to chip away at a competitor's reputation. "As an old Bell System Installation and Repair foreman, I'd say that Verizon-New York has some serious quality problems," says Kermit Ross, principal at Millennium Marketing. "If the problems are Verizon-wide, FiOS' momentum is bound to be affected."

Meanwhile, cable companies must be snickering at the fits they're giving the big telco. One document filed with New York State even acknowledges that the impetus to inspect the FiOS installations came "in response to concerns expressed by consumers, municipalities, and competitors."

"The only thing that strikes me as out of the ordinary here is that it's usually the other way around," says Heavy Reading senior analyst Alan Breznick. "The phone guys have used public services commissions for years to keep cable guys snarled up, and now Verizon's getting a taste of its own medicine."

And now, we wait…
Two days ago, the NYPSC issued a notice that it will consider "whether to approve, modify, or reject, in whole or in part" Verizon's Network Review Plan. That will happen on Sept. 22.

— Phil Harvey, Editor, Light Reading

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