TURN Complaint Against Verizon Latest Attack Telco Faces at State Commissions

No regulatory body has ruled against the company. The DCPSC found Dec. 29 (http://tinyurl.com/nbhumj2) that customer complaints produced by the Office of the People’s Counsel (OPC) weren’t sufficient evidence Verizon is intentionally moving people from copper against their knowledge or consent. The company denied the allegations to the CPUC and DCPSC.

Verizon won a split decision in D.C. and remains under fire in several cases involving what consumer advocates say in interviews and filings is the need to protect phone customers amid rapid technological changes. In a separate case, the DCPSC stopped short of finding, as the OPC alleged, that Verizon intentionally allows its copper lines to deteriorate to get customers to make the switch to other technologies. The DCPSC said Dec. 9 there was sufficient concern about Verizon’s maintenance of its copper network to order the company to submit a plan showing how it will fix problems in the network faster and prevent repeat problems (http://tinyurl.com/nbhumj2). The commission also reopened the customer migration case initially decided in the Dec. 29 ruling. The OPC on Feb. 10 submitted more customer complaints (http://tinyurl.com/pqxt76v), including one from a past DCPSC chairwoman saying a technician tried to shift her to FiOS when all she wanted was to have her wall phone mounting, which runs on copper, moved a few inches. And TURN is waiting to see if the CPUC will take up a motion that raises many of the same allegations as in D.C.

Verizon was also forced this last month to fend off Maryland’s HB-447 (http://tinyurl.com/q8edtmc). The bill, reflecting the same concerns as those expressed in California and in D.C., would have placed a one-year moratorium on companies being allowed to shift customers from copper to IP-based phone service. Maryland People’s Counsel Paula Carmody said in an interview that the bill, which she supported, died in a House committee last month. She said her staff is sifting through complaints filed by phone customers with the state attorney general or the Maryland PSC to determine whether her office should take action. Verizon Maryland opposed the bill. It “would constitute bad public policy by limiting service options for Maryland customers and limiting competition by singling out a single company for a moratorium in a competitive market where similar services are offered by a variety of other companies without concern or issue,” said the telco.

In a response (http://tinyurl.com/ose24so) filed with the DCPSC in the case on migration of copper customers, Verizon Washington, D.C., said the OPC allegations involve a handful of customer complaints. It said it’s not in the company’s interests to let the copper network deteriorate because it would hurt its competitiveness with customers and would create problems that Verizon Washington, D.C., would only have to fix. Verizon California believes “TURN’s motion misstates the facts and the law. Verizon California does not have a policy or plan to force customers to take VoIP service or wireless Voice Link service,” said a company spokesman. “We continue to maintain our copper network, even as fewer customers are served over that network each day.” Responses to the TURN motion are due April 1.

The controversies come as Verizon has migrated 700,000 customers, including 330,000 last year, to fiber, leaving fewer than 1 million customers served by copper in FiOS markets, a spokeswoman said in an email. In areas with recurring service issues on the copper network, customers are offered to be moved to fiber phone service at no charge and at the same rate, the spokeswoman said. “Technology has dramatically changed the communications market,” she said. “Verizon’s goal is always to provide customers with service over the best, most reliable network available. And, for many customers, that service is best delivered over our all-fiber or wireless networks.” Some customers want to stay on the copper network solely because they are in areas with frequent or lengthy power outages, the spokeswoman said. “Should Verizon maintain two networks -- copper and fiber -- because of the frailties of the power companies? I'd think the power companies should step up and do more to improve service to their customers."

TURN and OPC have a differing view, alleging Verizon has been contributing to the service problems, citing anecdotal evidence from competitive carriers in California that maintenance of the copper network has been scaled back, and in D.C. claiming that maintenance records show Verizon emphasizes repairs over keeping up the network. Rather than giving customers the choice of changing, TURN and OPC cite customer complaints of being shifted to fiber without their knowledge or of being told service problems will not be fixed for weeks if they remain on copper.

The Stakes

To TURN and OPC, the cases are a pushback in the rapid technological advances affecting phone customers, with both saying technology needs to advance, but regulatory agencies need to protect consumer interests. Both say the shift to IP involves shortcomings such as the fact VoIP can go out during power outages. To TURN, the actions in different states point to a national strategy by Verizon to divest itself of copper.

The California and D.C. cases, Maryland bill and last year’s controversy over Verizon’s actions in New York after Superstorm Sandy (CD June 27/13 p6) show “all is not well in customer migration land,” said TURN Telecommunications Director Regina Costa in an interview. New York Attorney General Eric Schneiderman, a Democrat, has accused Verizon of using the damage caused by Sandy as a pretext to get rid of copper lines (http://tinyurl.com/p5veh7p).

"The issues being raised [in the cases] almost always occur during an infrastructure transition,” said Steve Wildman, director of Michigan State University’s Quello Center for Telecommunication Management and Law. Providing copper-based phone service is a “dying business,” said Gerald Faulhaber, professor emeritus of business economics and public policy at the University of Pennsylvania’s Wharton School. “What you see in a dying business is companies saying we need to get out of this business.” There’s no customer right for maintaining a technology, he said. Customers can adapt to concerns like losing fiber phone service during power outages. They can make sure they have backup batteries, he said. The days of cheap copper phone service are ending, Faulhaber said. As the number of copper line customers goes down, the cost of maintaining the network stays the same and rates for the service will go up, he said. In the absence of a regulatory policy for how the transition should occur, “companies are doing it by themselves and that’s going to cause problems. ... It’s just going to encourage cheating,” said Faulhaber, speaking in generalities.

In the interim, consumer advocates like Public Knowledge Senior Vice President Harold Feld said regulators should be involved. “There is now enough of a pattern across Verizon’s footprint that this can’t be dismissed as [problems affecting] a single division or a few consumers who ‘don’t like change,'” said Feld in an email. “It needs investigation at the state level and, frankly, at the FCC level. We have Verizon saying one thing and a fair number of reports from customers saying something else.” An FCC spokesman did not comment. “If these allegations are substantive, then we are doing a serious disservice not merely to the specific customers, but to the phone network as a whole,” Feld said. The allegations also raise “serious concerns about whether ’the market’ is genuinely ‘choosing’ alternatives to copper or not -- the much touted selling point for many cheerleaders of the IP Transition.”

Executive Comments

At stake also is whether Verizon will be subject to stringent requirements from local regulatory bodies. TURN asked the CPUC to require that Verizon make any copper repairs requested by customers, allow anyone who no longer has copper to be able to get it back, and for the commission to study whether the company is allowing its copper network to deteriorate. OPC is asking the DCPSC to require Verizon to notify customers of the differences between copper and IP phone service before switching them from one technology to another, give customers a replacement backup battery for FiOS phone service, prohibit the deterioration of the copper network and create benchmarks to see if that’s happening.

OPC and TURN cite comments by top Verizon executives about a corporate strategy to shift customers away from the expensive-to-maintain copper-based network. “We are really on a concerted effort to really spend our capital and our dollars more efficiently from getting people off of the copper network over to the FiOS network,” Verizon Chief Financial Officer Fran Shammo said Sept. 12, 2012, according to an edited transcript of an investor conference (http://tinyurl.com/pwsxzd8) cited by TURN. Shammo said Verizon had shifted its emphasis from going after new customers to trying to get its current customers to switch to FiOS, particularly targeting “chronic” current customers whose service complaints generate “two truck rolls in a period of six months for that copper line.”

Verizon loses money on chronic copper customers, said Shammo. “When we go out to repair” copper-customer issues, “we are actually moving you to the FiOS product,” he said at another investor conference in 2012 (http://tinyurl.com/nv7pef9). “We are not repairing the copper anymore.” OPC cited CEO Lowell McAdam’s June 2012 comments to investors (http://vz.to/1hWpPbi) that his vision is “going into the copper plant areas and every place we have FiOS, we are going to kill the copper.” (kmurakami@warren-news.com)