Verizon New Jersey and the NJ BPU Create ‘Stipulation Agreement’ to Erase All Obligations to have 100% of New Jersey Upgraded to 45 Mbps, in Both Directions by 2010.
New Networks & Teletruth File OPRA Requests and Call for an Investigation of Verizon NJ’s Financials and their Failure to Upgrade the State.
By 2010, 100% of Verizon NJ should have been upgraded to 45 Mbps in both directions. We estimate Verizon New Jersey overcharged customers by $15 billion and counting.
Verizon New Jersey and the NJ Board of Public Utilities (BPU) have proposed a ‘stipulation agreement’ to erase all obligations.
New Networks & Teletruth file OPRA Requests and call for an investigation of Verizon NJ’s financials and their failure to upgrade and maintain critical state infrastructure.
Over 1000 comments were filed, with the NJ Rate Counsel, League of Municipalities, communities, and citizens against this proposal.
In 1993, a law known as “Opportunity New Jersey” was implemented and it is a plan to upgrade the utility networks, the Public Switched Telephone Networks, replacing the aging copper wires with a fiber optic telecommunications network. By 2010, 100% of the Verizon NJ’s territory was to be upgraded to fiber optic services, capable of 45 Mbps in both directions.
This law allowed Verizon to charge customers for these upgrades via excess phone charges and tax perks. We estimate that by 2013, $15 billion dollars was collected to upgrades of the state utility and counting, as these charges are built into current rates.
In January 2014, Verizon New Jersey and the NJ Board of Public Utilities (NJBPU) cut a deal – a stipulation agreement – that essentially erases Verizon New Jersey’s commitments, even though Verizon has left 1/3 to 1/2 of the State not completed.
New Networks & Teletruth have filed multiple comments to have the ‘stipulation agreement’ dissolved immediately and we have submitted a series of ‘OPRA’ (Open Public Records Act) requests for Verizon NJ’s financials and other documents and are calling for investigations of Verizon New Jersey business practices.
How far did Verizon get? In 2013, information supplied by the State during Verizon New Jersey’s FiOS cable franchise renewal showed that only 70 of the 526 communities will be fully wired, while another 282 will be partially done. This leaves at least 1/3 of all municipalities not upgraded and about 50% who may never get fiber optic services.
This failure to properly upgrade and maintain critical infrastructure has harmed education, as schools and the kids at home couldn’t get high speed broadband at reasonable rates, raised cable rates, as there was no cable competition to lower them, and harmed the economic growth as New Jersey should have become a leading technology hub-it had the original Bell Labs and AT&T’s headquarters in the state.
Where did all the money go? Our research has uncovered massive cross-subsidization of Verizon New Jersey and Verizon’s affiliate companies which include Verizon Internet, Verizon Business, Verizon Services, Verizon Wireless, Verizon Long Distance and others.
Verizon has manipulated its financial reporting to the NJBPU to disguise the fact that the monies that were charged to customers for network upgrades were diverted to pay for other affiliate businesses, and for lobbying, executive bonuses, and dividends. Moreover, these other affiliate businesses have been privatizing publicly funded assets, property, and services that were paid for by Verizon New Jersey phone customers – in violation of the agreement with the BPU.
This request for an investigation is based on an ongoing investigation and FOIL request currently underway at the New York State Public Service Commission. On September 13th, 2013, Common Cause-NY, Communications Workers of America (District 1), Consumer Union and the Fire Island Association filed comments calling for an investigation into the influence of the wireless company over the wireline state-based networks provided Verizon New York.
“We assert that there is evidence that the reported losses are substantially the result of misallocation of revenues and expenses as between the landline and wireless systems. The evidence is strong enough to require the Commission to consider it, and seek such additional information as will prove or disprove the existence of systematic and intentional misallocation by the Company, with consequences for customers/ratepayers of both systems, the tax payments due to federal, state and local jurisdictions, and policy decisions made by the Commission.”
These actions were based, in part on New Networks’ research. Please note that the New York proceeding is ongoing and on December 2, 2013, Verizon lost the appeal to block the FOIL request to turn over information about these financial issues.
But it gets worse. Verizon will not only stop doing upgrades, but Verizon’s plan is to close down the copper wires in the areas that were not upgraded and force customers onto Verizon Wireless products.
OPRA REQUESTS AND A CALL FOR INVESTIGATIONS
Some of the issues include:
- Verizon claimed in their 2001 annual infrastructure report that it had completed 55% of the State and could deliver 45 Mbps in both directions. Verizon’s FiOS wasn’t deployed until 2006, and these printed and mailed reports were done every year; they are deceptive and possibly fraudulent.
- Verizon did no residential fiber optics upgrades from 1993 through 2006.
- Verizon NJ claims it spent $2 billion dollars on Verizon’s’ FiOS cable development and deployment. The money doesn’t show up in any SEC filed documents and appears to be cross-subsidized via local phone customers.
- Verizon New Jersey claims they spent $4 billion dollars on Verizon’s’ FiOS program and landline business for the same years. Again, it would seem that the budgets to upgrade the utility are being funded by phone customers.
- “Verizon Internet Service”, an affiliate, charged more expenses to Verizon, New Jersey than it gave in revenues and made no payments in one year.
- “Verizon Services” appears to be a garbage-pail of corporate expenses being dumped into the state utility, causing large losses.
- Verizon New Jersey paid no taxes in 2009-2010 *(the last published SEC report) and lost $786 million, with an income tax benefit of $321 million, which was used by the corporate parent to lower their tax base.
- Verizon Wireless appears to be charging wireline customers for their fiber to the cell towers.
- Verizon Wireless appears to be paying ½ to 1/3 what the other wireless competitors pay for ‘access fees.
In all of these cases, monies have been diverted to the affiliate companies are NOT paying their fair share for use of the telecommunications networks, as well as dumping expenses into the utility, thus raising phone rates.
For more information contact:
Bruce Kushnick [email protected]
Tom Allibone [email protected]