Broadband services

NYC Scolds Verizon for FiOS Shortfall

Verizon has failed to deliver FiOS service throughout New York City, and the Big Apple isn't happy about it.

Seven years ago, Verizon Communications Inc. (NYSE: VZ) promised former NYC Mayor Michael Bloomberg that it would offer FiOS to everyone in the city as part of a franchise agreement. The payout on that promise, however, came due in 2014, and Verizon still hasn't wired a big chunk of the five boroughs for FiOS service.

According to a city audit cited by the Wall Street Journal, there are currently more than 40,000 requests for FiOS from NYC residents that haven't been answered. Plus, roughly three quarters of them have been outstanding for at least a year.

As DSLReports has noted, Verizon was careful to include caveats in its contract that allowed the company to back away from its deal if adoption rates were low, and/or if it was willing to pay certain fines. However, the city's audit appears to paint a pretty bleak picture of just how far Verizon has fallen short of its stated FiOS goal.

According to one telecom analyst, Bruce Kushnick, Verizon's coverage of NYC falls somewhere between 46% and 59%.

For its part, Verizon has repeatedly pointed out that it has already exceeded the number of households it promised to pass with FiOS service on a national basis. At launch, Verizon said it would pass 18 million premises. According to the company's latest earnings report, it has now passed close to 20 million households across the US.

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On the other hand, it's become increasingly clear that Verizon is more interested in focusing on its wireless business than its wireline one. While bulking up on digital media assets and expertise with a plan to purchase AOL Inc. (NYSE: AOL) for $4.4 billion, the company has geared its strategy toward putting content assets to work in a mobile-first, over-the-top video service that is expected to launch this summer… not toward improving its established FiOS offering. (See Verizon's $4.4B AOL Buy a Digital Media Play and Verizon Focuses on Cashing In on LTE.)

Also, Verizon recently sold off a large piece of its FiOS wireline business to Frontier Communications Corp. (NYSE: FTR). That transaction added up at $10.54 billion for Verizon's FiOS markets in California, Florida and Texas. (See Verizon Sells Towers & Wireline Assets for $15B.)

A Verizon spokesperson has promised a statement on the situation in New York City, but a response hadn't arrived by press time. We will update this story when a response is available.

UPDATE: Verizon provided the following statement regarding its NYC deployments.

"First and foremost, it is important to note that it's not a mere coincidence that the report is made public today, and labor negotiations with our largest union begin on Monday. It's well known the union has ties to the city administration, and things like this are a familiar union tactic we have seen before.

We disagree with many parts of the report. The review was based on erroneous factual conclusions and incorrect interpretations of the Agreement, particular its conclusions on Verizon's passing all of the households in the City with fiber-optic facilities. We indeed have met the requirement to install fiber optics through all five boroughs. Our 3.5 billion investment and the 15,000 miles of fiber we have built have given New Yorkers added choices and a robust set of advanced, reliable and resilient services. The challenge we have is gaining access to properties which of course would expand availability. We look forward to working with the City to seek solutions to this issue."

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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