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.

For more fixed broadband market coverage and insights, check out our dedicated gigabit/broadband content channel here on Light Reading.

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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msilbey 6/18/2015 | 2:03:19 PM
Re: Brilliant brooks7- I'm talking about  fiber wireline assets.
brooks7 6/18/2015 | 1:55:59 PM
Re: Brilliant msibley,

Actually, copper telephone lines are 0 value assets in the long term.  That is the point.  To maintain a viable network, lots of investment needs to get done.  So, is Residential Wireline where you would invest?


I am not going to evaluate the value of any specific deal like AOL, but do you want to put $1,500 per sub in to build a competitive network.  That is the question. Or are you better off focusing on OTT services, Business Services, and Wireless.  Let the cable guys absorb all the consumer wireline business.  We already know that the margins on it are terrible.  So again, why advocate spending billions for a low ROI?

And by the way, the point of this is why I think Net Neutrality was potentially the stupidest thing imagineable.  We put in rules to solve a problem that we did not have (especially since Cogent publicly admitted they were the ones slowing down Netflix).  We have no political capital left on the real issue...How do we encourage investment in residential networks?


jabailo 6/18/2015 | 1:54:24 PM
Re: Brilliant I was trying to find the available ISP choices for NYC and found this:


It seems like they just brought their own Broadband Map online.

Why is it that dense cities have a lag when bringing on new networking technologies.  I remember back when cable was getting started, Long Island had it way, way in advance and then it was only slowly rolled into the NYC neighborhoods.

Same where I live now.  I'm in a suburb of Seattle and have excellent broadband coverage.  My telco offereings are 6x that which the average Seattle homeowner can get, although they've only just started rolling out 1G in the city.

mendyk 6/18/2015 | 1:44:19 PM
Re: Brilliant The need for network connectivity isn't going away -- in fact, demand is only going to rise. Somebody -- and maybe it's not any of the current network operators -- is going to supply this basic service, and it will be done profitably. It's certainly a surer bet than putting any money into a second-tier content play like AOL. In any war, the one sure group of winners is the arms merchants -- which is a role that many operators are now determined not to play.
msilbey 6/18/2015 | 1:24:26 PM
Re: Brilliant We're always going to need wireline in one form or another, even with increasing wireless speeds. It's not like those assets are useless.
brooks7 6/18/2015 | 1:04:31 PM
Re: Brilliant So, Dennis.

If you were a strategy officer at Verizon.  What would be your position on how to invest money in Residential Wireline?  I think you would have to agree that betting the future on that business would be bad for Verizon.   The question then is how to play the inevitable decline and exit of the residential Wireline Business.  This is true for AT&T, CenturyLink, and Frontier as well.


mendyk 6/18/2015 | 12:15:43 PM
Brilliant The idea of disengaging from a core business (in this case, wireline service) and focusing instead on a "new opportunity" isn't new, and more often than not it doesn't result in a positive outcome. But the people who make these mission-changing decisions get rewarded no matter how things work out.
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