Thread regarding Verizon Communications Inc. layoffs

Wireline pays for wireless

The Story: Massive Cross-Subidies Go Unchallenged.

Verizon claims it is now a ‘wireless-first’ company. But Verizon also controls, state by state, the state-based wired utilities and business networks from Massachusetts to Virginia, with only a few exceptions. Verizon has no serious plans to upgrade or even maintain the existing retail copper wires. Even Verizon’s FiOS fiber to the home deployments stopped in 2010-2012, except for areas with existing license agreements. And while Verizon claims that in Boston they are finally doing fiber to the home to deliver wireline broadband, it is a ‘trial’ to instead deploy and substitute wireless broadband, which still requires many wireless antennas to be connected to a fiber optic wire. (As of now, 5G is more a hyped next-generation mirage than a working service to replace fiber to the home.)

But there are more troubling issues. What should be of major concern to all Verizon municipalities and cities is that Verizon has diverted billions per state to build out its wireless networks by having the wireline state utility take over the capital expenditures’ (“capex”) budget, thus phone customers, pay for the capex. In just New York, Verizon built 5,515 cell towers and charged local phone customers and the state wired utility an estimated $2.8 billion for just 2010-2012. On top of this, Verizon Wireless pays a fraction of what its competitors, such as Sprint, pay for the use of the Verizon networks, known as “special access”.

This diversion of funds is one of the primary reasons why the work in most cities along the East Coast abruptly stopped around 2010-2012, or the municipalities were never even offered service. And, this lack of payment back to the wired networks is also one of the primary reasons the local phone networks are ‘unprofitable’; the financial books are manipulated to make local phone service pay the majority of expenses.

In fact, throughout the East Coast, from Massachusetts to Virginia, Verizon has left the majority of municipalities with a deteriorating copper network, which, depending on the state, should have been replaced with fiber optics. This has left most areas without direct, very fast broadband and thus cable competition, but also left most cities without serious upgrades of their town, or even working reliable service.

In 2015, DSLReports summed up the current situation based on recent calls for broadband deployment in cities across the East Coast.

“With the exception of major city franchise obligations (and even those have lots of wiggle room), Verizon all but ended their FiOS expansion plans around five years ago. With so many un-served cities still begging to be upgraded Verizon continually has to remind folks that they’re simply not interested in upgrading their fixed line networks any more. If you live in one of those un-upgraded cities like Buffalo, Boston or Alexandria, that’s a tough pill to swallow.”

NOTE: The opening picture is of a Verizon Central Office (CO) in Kingston, New York. That is testimony of this abrupt changeover. According to union personnel, the CO could have been ‘lit’ to deliver service, but was never implemented. Instead, the staff was deployed to do wireless deployments. (Note: Every city has a number of Central Offices, which are buildings where the wires and services are aggregated in the community.)

Unknown to most, depending on the state, Verizon was able to manipulate the accounting to charge local phone customers extra to fund the fiber-build out as well as to pay, via cross-subsidies, for the deployment of Verizon’s other lines of business, such as special access, which has unchecked ‘Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA), profits. Meanwhile, “Local Service” was left holding the proverbial bag to pay most of the expenses and thus loses money.

(In fact, as documented in “The Book of Broken Promises”, the lack of fiber optic broadband can be traced to changes in state laws in the 1990’s to have entire states, from New Jersey or Pennsylvania, completed with 45 Mbps bi-directional services.)

Verizon and the other incumbent phone companies have also been able to hide the majority of access lines, all of the “special access” wires. These are the wires that go to the cell sites (sometimes called “backhaul”) or carry retail data services, like alarm circuits and to ATM machines. Yet these wires are actually part of the state utility and are the same as phone wires, but, since they are under a different regulatory covenant, they have high profits because the accounting could be manipulated.

The Consumer Federation of America’s 2016 report found massive special access overcharging and estimated the encompassing larger economic harms; the overcharging doesn’t just harm the competitors or business users, but impacts consumers as well.

“Consumer Federation of America (CFA) estimates that large incumbent telephone companies have engaged in abusive pricing practices for high-speed broadband “special access” services, with overcharges totaling about $75 billion over just the past five years. As a result, CFA estimates that the indirect macroeconomic loss to American consumers doubles that damage to a total in excess of $150 billion since 2010.”

New Networks Institute and Consumer Federation have combined analyses and filed comments and reply comments in multiple FCC proceedings pertaining to special access.

We believe that the first step is to document the cross-subsidies, then stop the diversion of the billions going to fund wireless and ‘redirect’ it. Wireless and all other affiliates would be paying market prices, which would not only supply money to build out the networks to residential and business customers, but dramatically lower rates, especially for the low income families and the elderly that funded the wired networks and FiOS through rate increases in New York. Unfortunately, the cross-subsidies appear to have occurred in every state telephone utility, as many were set via the FCC federal cost allocation rules.

The irony is - wireless densification requires fiber optic wires. All of the “loss of lines” stories have been manipulated, as they do not count the growing special access markets—or the actual lines in service.

Why It Matters Now:

First, the ability to block a municipality from offering services in a growing number of states has been upheld by the courts after the FCC decided to take actions to change this situation and lost. The agency has decided not to appeal.

No city has asked for an audit of the accounting to deal with the cross-subsidies of wireline and wireless.

Most people don’t like being gouged, among other complaints. From overcharging of special access to many states raising rates multiple times, which ended up going to fund the wireless business, the customers, the state economy—and the cities throughout the East Coast, have all been harmed.

While the cable companies have deployed more coverage areas in many states, (as opposed to the telco’s broadband-TV deployments) they are also the “most hated companies in America”, year after year, survey after survey. Worse, even where Verizon has rolled out its FiOS service, this is only a ‘duopoly’ at best; it is still not competition.

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| 2563 views | | 24 replies (last March 30, 2018) | Reply
Post ID: @OP+Soe6nic

24 replies (most recent on top)

I understand that node antenna fed 5G is being tested. If this is correct, regarding the nodes that will be serving buried developments without telephone poles, how high are the lawn-mounted antennae? Is there a need for direct line of sight with the receiver at the individual homes and, if the antennae are not particularly high, would a vehicle such as a landscaper's truck or a moving van parked in front of one be problematic? Would the nodes be above the snow line, or is the plan to retain buried service wire in non-pole-fed environs?

Thanks.

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Post ID: @3wpj+Soe6nic

"Content costs are not controllable and the labor to maintain the pipe is too high." -- @2sjg

Two questions.

How does conversion of the method of delivery (i.e., node antenna versus a service-wire to the home) change the content cost factor?

Secondly, it's true delivering a signal from the node to the home bypasses the necessity for that last piece of fiber wire, the service-wire. Fair enough. However there will be labor costs associated with maintaining a fiber to every node, and to supplying metered electricity to each node, if that is the plan. There will also be upfront labor cost in building out this new network. Poles, fiber optic cables and, I presume, nodes will still get destroyed in storms, by snow plows, lightning, falling tree limbs, and as the result of vehicular accidents. So, it's possible your estimate on the "savings" is being overly optimistic, at least in non-urban settings, and needs reconsideration and adjustment?

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Post ID: @2rrz+Soe6nic

Wireline will be here longer than those wireless stores. Phones will be sold at box stores like Best Buy or over the internet.....customers will do their own data transfers. It’s happening now. All those Verizon wireless stores will close. No more stealing from the elderly. I hear line gang is hiring.

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Post ID: @2bmn+Soe6nic

Wireline is dead, has been and is not coming back anytime soon.. The only fiber needed will be for backhaul for 5g. it is just a change in deployment. Instead of running around trying to sell/repair fios to end consumers, the resources will be redirected to support all of the 5g nodes. 3 years tops and we wont need or want to own anything of what is left of the current landline residential markets, bad thing is that it will not be worth anything. I don't think there is another Frontier out there to sell swamp land to. If the AT&T/Time Warner deal goes through, we will need to consolidate to compete. Hope you like the new G Suite being implemented. Now that all of the user data we overpaid for with the Yahoo purchase is not going to be able to be sold/used, that will be a nice loss/write off and Google will be able to get a discount on us. We have no meaningful content and Google needs/wants the transport. I am not the first to predict it..

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Post ID: @2uoe+Soe6nic

There are just so many points in the OP that are simply not true. The company has not diverted any capex, other than to reward the parts of the business that generate the highest return. FiOS is just not a sustainable product, in or out of franchise. Content costs are not controllable and the labor to maintain the pipe is too high. Other than your cynical view, most knowledgeable people are very comfortable with the way the business allocated costs, including the NE Regulators. Altice and other competitors could have had FIOS, But they selected Cablevision instead. VZ should dump non-profitable lines of business, including special access lines which incur too much expensive labor to maintain.

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Post ID: @2sjg+Soe6nic

2tfo is just stupid. Nope can't fix that!

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Post ID: @2lol+Soe6nic

@2tfo

Obviously you wireless people can’t comprehend what is stated in the article or can’t retain what you are reading. I’ve copied one paragraph to make it easy for you...

But there are more troubling issues. What should be of major concern to all Verizon municipalities and cities is that Verizon has diverted billions per state to build out its wireless networks by having the wireline state utility take over the capital expenditures’ (“capex”) budget, thus phone customers, pay for the capex. In just New York, Verizon built 5,515 cell towers and charged local phone customers and the state wired utility an estimated $2.8 billion for just 2010-2012.

So you stated wireless has funded Verizon for the past decade....the above paragraph shows 2.8 billion...not million, BILLION...in JUST NY from 2010-2012 were spent on wireless from the wireline side....never to be paid back!! How much do you think they took from wireline in the Verizon footprint over JUST those three years? Do you think that the company just all of a sudden stopped financing wireless by taking from the wireline side after decades of doing this? They still do this today! Wireless is the reason that wireline is in the red. Think of it this way...wireline is your parents...wireless is you living in their basement rent free. They pay your bills, you drive around in a fancy new car, thinking that you are a success while at the same time looking down on them for being in debt.

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Post ID: @2uxe+Soe6nic

what about the 35,000 or so sites with non verizon fiber? you union shills cant see outside the northeast corridor

wireline built the company, but the past decade has been funded by wireless

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Post ID: @2tfo+Soe6nic

@1yak not pretentious at all just fact. These "reps" deserve no respect as professionals. The selling of handsets does not equate to having any real knowledge of how a telecom network is engineered any more than the selling of a blood pressure monitor would make one a cardiologist. These register jockeys think they know it all and consider themselves in a high tech skilled field. The only skills they possess is bald faced lying and the bait and switch scam. The average reseller is more trustworthy.

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Post ID: @1rhb+Soe6nic

Wireless has been making a profit, because wireline pays the bills. Reread the article.

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Post ID: @1cji+Soe6nic

1VAH you must be a union puke who believes everything your union steward tells you. Wireless has been making a profit forever while wire line doesn't even know what that word means. Try a Google search and you will discover the union is lying to you about everything. It is too bad Vodaphone left and the crappy wire line took over and ruined it.

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Post ID: @1jsq+Soe6nic

Register jockey (LoFL) Obviously said by a "I know everything Pretentious Engineer "

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Post ID: @1yak+Soe6nic

You mean wireless hasnt been as great as weve all been told? My life is a lie?

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Post ID: @1rko+Soe6nic

Yawn...

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Post ID: @1ivo+Soe6nic

This is not news nor false in fact. Anyone with any knowledge of the telecom industry has been aware of all of the RBOC's behavior. Funds have been diverted since the late 1980's from the regulated wireline side of the business to build out and create unregulated businesses. The only problem the companies have is how to unravel the two sides into separate functioning entities. Anyone with telecom engineering experience (not a register jockey hawking smartphones) will tell you the two sides of the business are interwoven so deeply and are so interdependent in their functionality that true separation is not even possible. One could make an argument it might be possible to create separate legal entities in various franchise areas but in an actual physical sense wireless can not exist without a wired world. The future 5G network will be even more wired than today's. Anyone who believes otherwise is either delusional or plainly ignorant to the realities of how telecommunications work.

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Post ID: @1gep+Soe6nic

Read it and weep.

http://newnetworks.com/wp-content/uploads/Muniwirelesssept13FINALLY-3.pdf

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Post ID: @1hfu+Soe6nic

Typical. Shoot the messenger.

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Post ID: @1gex+Soe6nic

https://www.huffingtonpost.com/bruce-kushnick/verizons-wireline-network_b_12022492.html

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Post ID: @1ycm+Soe6nic

"The Story: Massive Cross-Subidies Go Unchallenged."

"Subidies"

Spelling is hard.

I'm gonna guess this article comes from a less than reputable site.

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Post ID: @1iis+Soe6nic

yeah and we should certainly believe Lowell. bwahahahahaha.

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Post ID: @1izg+Soe6nic

Fake news. This doesnt exist anywhere on the WWW... Wireline is dying and wireless makes millions, per lowell and the CFO. TROLL POST.

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Post ID: @1wwk+Soe6nic

Huffington post

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Post ID: @1ewb+Soe6nic

Please provide the source for this article.

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Post ID: @znb+Soe6nic

About time ,someone put up facts on this board..all you wireless trolls read the above....

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Post ID: @zfg+Soe6nic

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