Bloomberg News

Verizon’s Service Swap in Catskills Must Be Blocked, N.Y. Says

June 27, 2013

Verizon Communications Inc. (VZ:US) must be stopped from pushing customers in New York’s Catskill Mountains onto a wireless service it wants to use to replace landlines, the state attorney general said in a regulatory filing.

New York Attorney General Eric Schneiderman, a Democrat, filed a petition with the New York Public Service Commission yesterday, asking that Verizon be blocked from “illegally installing” its Voice Link service for customers in the region about 130 miles (223 kilometers) north of Manhattan. The wireless system cuts Internet access, home alarm systems and is susceptible to power failures, Schneiderman has said.

The commission granted Verizon permission last month to install Voice Link for customers on western Fire Island off the coast of Long Island, where landlines were destroyed when Superstorm Sandy struck Oct. 29. That permission explicitly denied a request by the phone company to expand the wireless service beyond the island, Schneiderman said in the petition.

“Verizon’s provision of Voice Link outside the confines of western Fire Island is illegal,” he wrote. “Its open defiance of the commission’s May 16 order must be met with effective sanctions.”

Verizon should be subject to a $100,000 penalty for each violation, with each day counting as a separate offense in the case of a continuing violation, the state said in its petition.

“The commission did not allow Verizon to use Voice Link elsewhere in the state as its sole service offering,” James Denn, a Public Service Commission spokesman said in an e-mailed statement. “We will investigate the allegations raised in this petition.”

Old Copper

Verizon is moving customers from old copper wire phone systems to fiber optic cable in areas where it offers FiOS service. Outside those areas, especially in rural territories, the company has drawn a line on what it is willing to spend and has been pushing for replacement with wireless.

“In some of these situations, we’re not going to rebuild copper,” Fran Shammo, Verizon Chief Financial Officer said on an April 18 earnings call. “It doesn’t make financial sense to lay fiber to some of these remote areas. So wireless may be a better solution here, and we’re working with regulatory agencies on that.”

People in the Catskills don’t have to have the wireless service if they don’t want it, Jim Gerace, a Verizon spokesman said.

Sandy destroyed or damaged 40 percent of the lines on western Fire Island, and Verizon has been using that as an opportunity to put customers on Voice Link rather than replacing them, Manuel Sampedro, a regional vice president, wrote in a May 3 filing with the PSC.

Landline Jack

Voice Link uses the same technology as a mobile phone, linking household phones through their landline jack to a transmitter that’s about the size of an Internet router, Sampedro said in the filing. The transmitter has a battery backup that can provide two hours of talk time.

Implementing the service, though, also means eliminating Digital Subscriber Line access to customers who rely on it to connect to the Internet, Schneiderman wrote in a May 15 filing with the PSC. In rural areas, where there’s no other option to connect to the Internet, customers won’t have access, he said. Fax machine transmissions, and medical alert and home alarm systems also don’t work on Voice Link. The two hours of talking time available through the battery backup isn’t enough, he said.

Critical Service

On May 16, the PSC determined Verizon could continue to put its customers on western Fire Island on Voice Link because “it is critical that service be available,” the commission’s order said. It said expansion to rural areas, as the company requested, would be the subject of further review after getting public comment.

In the Catskills, seasonal customers who own vacation homes typically shut off their telephone service when they aren’t there in the winter. Those returning to their homes this summer are being put on Voice Link if their landlines were damaged in the offseason, Schneiderman said in his petition. In cases where customers demand that they not be put on Voice Link, Verizon fixes the lines, according to the petition.

One of those customers was Joshua Michaeli, according to an affidavit that was included in Schneiderman’s petition.

“I declined Verizon’s Voice Link offer, noting that our unit is in a wooded area where wireless communications may not work well,” Michaeli said in the affidavit. After being transferred to the repair department, he was again offered Voice Link, and declined. A technician came to his home and fixed the wiring in a box attached to the building. Michaeli didn’t immediately respond to a phone message seeking comment.

Consumer Understanding

“It’s important consumers understand that, outside of western Fire Island, they do not have to accept Voice Link if they chose to keep their landline service,” Schneiderman said yesterday in an e-mailed statement.

Jim Rosenthal, a 51-year-old seasonal resident of Fire Island said in a telephone interview that he’s already coping with the loss of his landline and DSL.

“They’re basically saying to Fire Island to effectively drop dead,” said Rosenthal, whose family has owned a home there since 1975. “It’s creating a digital divide between those who will have reliable, robust broadband access and those that won’t.”

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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