Are Wireline Assets Being Neglected?
December 15, 2015 Greg Facemyer and Joe Derella’s article in www.nj.com stresses real life challenges of businesses in rural New Jersey towns impacted by Verizon’s service availability.
Can you imagine trying to conduct business in today’s world with no high-speed Internet access, no cellular phone service, and landline telephone service that fails during wet weather? This is exactly the state of affairs in many rural communities, and this is exactly why 16 South Jersey municipalities have filed a petition for relief from the state Board of Public Utilities…
In the most densely populated state in the nation, it is unfathomable that there are still areas totally reliant upon decades-old copper telephone lines for communication. This is not by choice, but by default because there are no alternatives in many of these areas. There is no fiber optic wire or cable TV wire for high-speed Internet access or Internet telephone line service, and cellular service is nonexistent or spotty at best. Our under-served areas are saddled with antiquated and deteriorating copper-based, wireline assets as their infrastructure. We are on the dark side of the digital divide.
Contrast this with the other side of the digital divide, affluent areas with fiber-based infrastructure where people and businesses can access the Internet at data speeds exceeding the federal standard, as well as communicate via mobile smart devices.
www.dslreports.com reports that 16 municipalities from four counties in South Jersey have filed a petition with the New Jersey Board of Public Utilities to prevent Verizon from abandoning its copper POTS and DSL customers in the state.
Verizon Blasts CWA Copper Network Claims
In February of 2015, Frontier purchased Verizon’s wireline footprint with $10.5B Verizon purchase. It seems obvious that Frontier is acquiring wireline assets networks and Verizon is shedding them. Is FairPoint next?
According to Fierce Telecom’s Sean Buckley’s November 30th article, Verizon is quoted as saying “the Communications Workers of America (CWA) union’s claims that the telco is abandoning its copper networks in various states is just a labor negotiation tactic”.
By moving customers from copper wireline assets to fiber, Verizon maintains that the greater reliability of fiber provides a number of benefits to customers. Verizon said that it experienced 1.4 million fewer repair or troubleshooting dispatches than would have been required had these customers remained on copper wireline assets’ facilities.
The CWA has continued to blast Verizon for taking part in what is referred to as “de facto” copper wireline assets retirement, a practice where a telco would let copper wireline asset factilities degrade to the point where they would have no choice but to replace them with fiber.
The service provider and workers represented by the CWA have been operating without a contract since September.
“CWA’s assertions here are straight out of its announced labor negotiation playbook, in which it calls on its members to ‘build political and regulatory pressure on the company’ as a negotiation strategy,” Verizon said in an FCC filing. “CWA admits as much, acknowledging that its ‘survey’ of technicians it relies on in its comments was conducted in connection with forming its strategy ‘for pending negotiations’ with Verizon. CWA’s allegations should be reviewed in context with its efforts to further its own parochial interests in ongoing labor negotiations with Verizon.”
Verizon maintains that has continued to enhance its last-mile network by performing necessary maintenance on its copper network while “currently passing approximately 20 million premises with fiber.”
On November 21, 2015, the FCC issued a news release. The news release states that where it proposed facilitating technology transitions by modernizing consumer protection and competition rules.
What this means for consumers is that the FCC put several new rules in place to regulate telecom companies looking to move away from the old copper wires that have carried voices across town and around the world for more than a century. Prior to this ruling by the FCC, if you wanted to know what was going on with your carrier’s network decisions, you’d need to go online to the FCC’s website and try to find your answers. Gratefully, now your phone company has to tell you, directly.
The FCC states that its proposal is meant to preserve access to 911, increase transparency, and maintain competitive choices.
The FCC is taking steps to facilitate the ongoing transitions in the nation’s communications networks, the Federal Communications Commission is seeking comment on modernizing its rules to ensure access to 911 service, protect consumers, and preserve competition as the transitions move forward. The nation’s communications networks are shifting from copper networks using legacy technologies to fiber, coaxial cable, and wireless networks using Internet Protocol (IP)-based technologies to carry voice, data and video.
The Notice of Proposed Rulemaking adopted by the FCC today includes proposals to update rules ensuring access to public safety, protecting consumers faced with network changes and discontinuation of services, and preserving wholesale access to last-mile networks by competitive providers serving businesses and large institutions.This modernization of FCC rules will help expedite the transition to next generation networks byprotecting core network values in order to give consumers and businesses the confidence they need to embrace technological change and all its benefits.
Excerpts of the proposed FCC ruling include:
- Greater transparency, consumer protection, and opportunities for consumer input when carriers are planning to shut down (or “retire”) their existing copper networks.
- Sets in motion a process to ensure that new services meet the needs of consumers before carriers are allowed to remove legacy services from the marketplace.
- Asks for facts and data about whether carriers are, in effect, retiring copper networks without giving notice simply by failing to maintain them.
- Asks about allegations that carriers are not being clear with consumers about the options available when the copper network is shut down.Preserving and Encouraging CompetitionSmall and medium-sized businesses, schools, hospitals, and other government institutions often rely on services delivered by competitive broadband and phone providers. Yet competitive providers may no longer be able to reach customers if incumbent carriers withdraw certain “last mile” services.
- Tentatively concludes that carriers seeking to discontinue a service used as a wholesale input should be required to provide competitive carriers equivalent wholesale access going forward.
- Proposes to update the FCC’s rules so that competitive carriers receive sufficient notice of when copper networks are being shut off, so that they can continue to serve their customers effectively.
The FCC also adopted a Declaratory Ruling clarifying that the circumstances in which a carrier must seek approval to discontinue a service depend upon the practical impact of its actions, not the fine print of an aging tariff filing. This ensures that there will be a public process to evaluate a proposed discontinuance before a choice is removed from the market, regardless of how the carrier has written its tariff.
Verizon’s Wireline Assets Copper Network is the Subject of Complaints.
Verizon Land Line Equipment
The Communications Workers of America have been quoted as saying that Verizon has neglected Maryland’s copper network according to Fierce Telecom‘s Sean Buckley’s article today.
November 16, 2015 Verizon is being called to task about its copper network in Maryland by the Communications Workers of America (CWA) union, which has filed a letter with the state’s Public Service Commission to investigate the quality of the telco’s copper network.
CWA said in its letter that it examined Verizon’s network equipment in areas of Maryland where it has not built out FTTH FiOS service and only offers copper-based DSL and POTS voice services.
In its investigation (PDF), the CWA reported there are a number locations “that are so damaged as to impact service quality.” Amongst the various issues it cited were poles that were damaged, unsecured and broken, damaged and exposed cable and splice terminals, bypassed damaged cable, and equipment that shows evidence of damage caused by animals.
In a similar report in October by Philly.com, a line worker reported photographic evidence implying that Verizon has been depriving
its aging copper network of money for maintenance and repaira throughout parts of Pennsylvania.
The Verizon Union, which represents 4,980 lineman, technicians, and customer service representatives in the State of Pennsylvania,
filed a petition with the Pennsylvania Public Utility seeking an investigation.
“Debbie Goldman, CWA’s telecommunications policy director in Washington, said Verizon could be fined $1,000 a day per violation if the PUC finds that the company violated state utility laws by not providing a ‘safe and reliable’ network for customers and employees.
The CWA has not reported any workers hurt because of the condition of Verizon’s copper network. But the union told Pennsylvania utility regulators in a letter in September that thousands of people had complained about copper line-related service problems, based on state regulatory data.
‘We know this is endemic across the footprint,’ Goldman said, saying similar conditions existed in other Verizon states.”
As Verizon’s traditional copper network deteriorates and the company fails to extend FiOS to those areas, the union says, Verizon could force customers to its wireless products over time.
Verizon’s wireless division workforce is mostly nonunion, while the employees in its wire-line division – the copper and FiOS networks – are mostly union.
The FCC approves sale of Verizon’s wireline assets to Frontier Communications for $10.54 billion.
September 3, 2015 More Verizon wireline assets approved for sale to Frontier by FCC. Frontier will now acquire wireline assets properties in California, Florida, and Texas.
According to a report today by bidnessetc.com, “Fran Shammo, CFO Verizon plans to sell its non-core assets which the company thinks do not align well with the company’s long-term goals. Along with wireline assets, the company is also looking to offload even more assets, however, no new deals have been announced yet. The current sale will reduce wireline assets by roughly 21%.
Verizon’s public policy and government affairs senior VP and deputy general counsel, Michael E. Glover, appreciated FCC’s approval and said that the deal is in the best interest of users located across the three regions, and that it will not result in increased competition in the market.
The wireline assets sale is expected to be finalized in the first quarter of 2016 (1QFY16).
The report states the reason Verizon is selling its wireline assets is that the segment is not generating growth in its net earnings. Although the wireline assets segment generated year-over-year (YoY) growth of 4.5% in 2QFY15, it reported a YoY decline of 2.1% in its EBITDA”.
prnewswire.com announced that the FCC also reported the approval of the proposed $10.54 billion sale of local wireline asset operations in California, Florida, and Texas to Frontier Communications on September 2nd.
The FCC states – “The following statement should be attributed to Michael E. Glover, senior vice president and deputy general counsel, Verizon public policy and government affairs:
‘We appreciate the FCC’s thorough review and timely approval which confirms that this transaction is in the public interest and will benefit customers in California, Florida and Texas. Last May, the U.S. Department of Justice also reviewed and cleared the proposed sale, further confirming that the transaction does not present market competition issues. With these approvals in hand, we look forward to promptly receiving the remaining regulatory approvals in the coming months’.
The proposed sale of Verizon’s wireline properties in California, Florida, and Texas, to Frontier Communications was announced on February 5, 2015. The companies anticipate the completion of the transaction by the end of the first quarter of 2016”.
Earlier this week, Sean Buckley of Fierce Telecom reported that Verizon passed on $144M in CAF II funding feeding speculative rumors of the wireline assets sale.
The Fierce Telecom article announced that “Verizon is not accepting funding of $144 million total per year for six years to expand broadband in the rural areas it serves from the second phase of the FCC’s Connect America Fund (CAF-II), fueling new rumors that it’s considering a sale of another large piece of its wireline asset portfolio.
According to a Broadband DSL Reports article, speculation has emerged that Verizon is in talks with an unnamed service provider to sell more of its wireline assets, with a deal that could be announced early next year.
Fellow Telco’s AT&T and CenturyLink opted to accept $472 million and $500 million respectively to extend broadband services in hard-to-reach rural parts of their territories.
News of Verizon refusing to accept the CAF-II funding should not be of any great surprise. Verizon was offered $19.7 million in 2012 but did not give a specific reason for turning down the FCC’s CAF-I funding other than to say that the amount they were offered was ‘relatively small’.
However, Verizon, which is in the process of selling off its wireline assets to Frontier in California, Florida and Texas, said in an FCC filing that it conditionally accepted the CAF-II offer of $32 million in California and a $17 million annual amount in Texas.
Verizon accepted the CAF-II funds, which will be set aside for Frontier when it completes its acquisition of Verizon’s assets in these three states. While Verizon and Frontier are still working to obtain necessary state and federal regulatory approvals to close the deal, the date to accept the CAF-II funding is happening before Verizon and Frontier obtained all of these approvals. Verizon turned down CAF-I funding when it was offered to them in 2013.
For its own part, Frontier accepted $283 million in annual CAF-II support from the FCC that it says will enable it to build out broadband service to over 650,000 rural locations.
‘Verizon’s track record is clear,” said Bob Master, assistant to the vice president of District One of the CWA, in a statement. ‘Even while raking in a billion dollars per month in profits, Verizon is turning its back on underserved communities by refusing federal subsidies to expand high-speed internet access’.
The Communications Workers of America (CWA) union, which has been engaged in a contentious union contract negotiation process with Verizon, said that the telco is putting its rural customers at a disadvantage”.
News stories about the fate of our nation’s wireline assets is a topic worth following.