Like Silicon Valley, New York City purports to be a bastion for emerging technology, yet, just like Silicon Valley, it suffers from a pitiful lack of broadband options and competition. In New York, Time Warner Cable enjoys notable market dominance, with either spotty Verizon FiOS or DSL coverage providing the barest semblance of real market competition for the cable giant. It wasn’t supposed to be this way: in 2008 Verizon struck a closed-door franchise agreement with then NYC Mayor Mike Bloomberg, one which Verizon strongly implied would result in 100% FiOS coverage for all five boroughs of the city by the end of 2014.
The agreement, both Bloomberg and Verizon tried to proclaim at the time, would mean uniform fiber for the whole city, putting an end to the broadband “cherry picking” that plagued franchise agreements of years past:
“Our investment in the City is historic, which is reflected in the citywide nature of our plan,” (Verizon’s Monica) Azare said. “When our fiber deployment project is completed it will reach to each and every borough, neighborhood, boulevard, avenue and street, without regard to the demographics of a particular area. More importantly, City residents will be able to take advantage of the power of fiber optics delivered straight to their doors.”
2014 has of course come and gone, and most estimates peg New York City FiOS penetration at somewhere between 45 and 55%, with most of the city’s least affluent areas left in the broadband dark. Despite plenty of warning signs from reporters at the time, and the fact that city lawyers could have read the agreement at any time, New York City officials are only just starting to realize that the deal allowed Verizon ample room to wiggle around and under most of the uniform deployment obligations.
A new city report (pdf) released last week has found, shockingly, that Verizon went right ahead and used these loopholes to cherry pick only select neighborhoods, just as the company had intended. The biggest trick Verizon used to bluff its way past obligations was by bringing fiber somewhere close to many residences (as in buried in the street one block over), then declaring that these users could get fiber. Of course when the city began to look, they found Verizon refused to finish the job:
“As 2014 progressed, and Verizon’s (supposed) build-out approached 100 percent, DoITT began to receive anecdotal evidence, largely in the form of consumer complaints, suggesting that Verizon was simultaneously taking credit for “passing” households and declining to accept orders for nonstandard service installations from those households. The anecdotal evidence, in combination with discussions of the particular households involved with Verizon personnel, led DoITT to be concerned that these anecdotes did not reflect occasional irregularities, but possibly broader failures by Verizon to fulfill the obligations it undertook in the 2008 franchise agreement.”
Possibly! Again, this was all pretty much spelled out in the franchise agreement Bloomberg’s office signed with Verizon years earlier. As we’ve often covered, Verizon also has a long, proud, history of similar shenanigans in New Jersey and Pennsylvania, getting significant tax breaks and subsidies in exchange for fiber optic service that never winds up getting deployed. Verizon, as you might expect, denies that it in any way failed the city, and blames difficult city landlords for its failure to deliver promised fiber to roughly half the city:
“We indeed have met the requirement to install fiber optics through all five boroughs,” a Verizon spokesperson told Ars. “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.”
Verizon had been trying to blame crotchety landlords for these expected FiOS coverage gaps for some time, and while there certainly are some difficult building managers, reporters have found in many of these instances that Verizon incompetence was actually to blame. In some instances, Verizon was accused of telling building owners that it would only actually connect buildings to the FiOS network if every resident in the building was required to get service through Verizon and nobody else.
So, the better part of a decade later New York City officials are annoyed at the sweetheart deal their predecessors signed, and insist that they’ll be holding Verizon’s feet to the fire:
“Through a thorough and comprehensive audit, we have determined that Verizon substantially failed to meet its commitment to the people of New York City,” said Mayor Bill de Blasio…”What the audit reveals is an alarming failure on the part of Verizon to deliver on its franchise agreement with the City,” said Counsel to the Mayor Maya Wiley. “Verizon must make good on its commitment and do so with transparency, accountability and better service delivery going forward. New Yorkers deserve no less.”
The agreement says the city “may “seek and/or pursue money damages” if Verizon fails to live up to its side of the agreement, but the loophole-filled wording of the contract will likely make that impossible. If Verizon’s business history is any indication, what will actually happen is the company’s lawyers will keep the bureaucratic wheels spinning indefinitely, while the city spends another decade paying lip service to the transformative power of broadband. That New York City is at least making a stink about it is at least marginally promising; Pennsylvania and New Jersey officials threw billions of dollars at the company, let it off the hook for any and all obligations, and then just hoped nobody would notice.