Cities Blast Verizon

fios vanIn the attached letter the mayors of twelve northeast cities with populations over 12 million blasted Verizon for not expanding FiOS. In some of the cities the complaint is that Verizon never finished the expansion they had promised. But in other cities on the list the complaint is that Verizon never came to their cities at all.

You certainly can understand the pain felt by these mayors. Verizon was first on the scene in the US with fiber and at one point in time most of these cities felt like it was just a matter of time until Verizon brought fiber to their cities. But to a large degree Verizon built in suburbs more than in cities, and last year they announced that they were done expanding FiOS. These mayors, like mayors in cities all across the country, have citizens demanding a broadband solution.

But I think these mayors are barking up the wrong tree; perhaps they know this and the letter is just a way for them to demonstrate their frustration to their constituents. I have been watching Verizon for many years and I am not so sure that Verizon even wants to be in the landline business any longer. There are numerous signs of this:

  • First is the fore-mentioned end of the FiOS expansion. One has to consider that broadband penetration rates are much higher than when Verizon first started fiber expansion and they are surrounded by money-making expansion opportunities that would land them large number of new high-margin fiber customers.
  • They recently sold a large swath of landlines, including a sizable number of FiOS lines, to Frontier. Verizon has been selling copper lines to Frontier for a number of years, but these were the first sizable FiOS sales.
  • One only has to look at their annual report to see that all that they talk about to investors is their cellular business. The entire landline business is buried deep inside the report and gets no emphasis.
  • They are the only major telco to refuse large amounts of free money from the FCC to help expand rural DSL. The Connect America funds gives telcos six years to upgrade rural DSL, and Verizon’s indifference to this money tells me that they hope to not own those properties before the end of six years.
  • There are numerous documented complaints, including from their employee’ unions, that Verizon is spending the bare minimum needed to keep their copper networks functional. I’m not sure that this makes them very different than AT&T or CenturyLink. Until the recent Connect America Fund money, rural copper has largely been neglected by every large telco.
  • All of their negative press comes from the landline business. This letter from the majors is just another in a long line of complaints about the way Verizon is ignoring their landline business. Their press from the cellular business is much more positive.

I don’t have any inside information, but it’s my bet that if somebody offered to buy their entire landline business Verizon would take it. They have been selling chunks of landlines to Frontier over the last decade, but I doubt that Frontier can put together the funding to buy the rest of the Verizon landline business. I am not sure that anybody other than AT&T could pull off such a large purchase, and AT&T certainly would not want to inherit all of the copper markets that Verizon has been neglecting for decades.

I doubt that these mayors think that this letter, or any political pressure, is going to change Verizon’s behavior. Verizon has been ignoring these same cities now for literally decades, and in my estimation they will continue to do so. These cities all want better broadband and it’s probably time for them to consider some other solution than Verizon, as is being done by cities all over the rest of the US. The cities with the biggest problems are the ones that Verizon has only partially built – those markets are not very attractive to Google or any other fiber overbuilder. The cities with no FiOS are basically in the same position as thousands of other cities around the US, all of which are pondering if they need to find their own broadband solution.

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