dslreports logo

story category
Verizon Again Threatens Massachusetts Investment
Despite having run out of things to threaten the state about...
by Karl Bode 01:03PM Thursday Aug 06 2009 Tipped by Cabal See Profile
In 1915, in order to spur deployment of phone service to under-served areas of the State, Massachusetts lawmakers exempted phone company poles and cables from property taxes when they passed through public property. Nearly a century later, the state is trying to change that and as you can imagine -- it doesn't sit well with Verizon. According to the Boston Globe, Verizon's tax exemption was deemed unnecessary and set aside back in 2008. Verizon's been fighting them ever since.

Click for full size
Verizon has a long history of threatening States with scaled back infrastructure investment if lawmakers don't pass the laws Verizon lobbyists want passed (and frankly, in many instances, have they themselves written). Sticking with standard procedure, Verizon lawyers are threatening the State by saying they "may" pass the taxes on to consumers, and may scale back state investment:
Santoro also warned that if his company ultimately loses, it may recoup the taxes by charging customers higher rates for telephone or Internet service. "It may very well affect customers’ bills,’" he said, "but I don’t know yet.’" Santoro said Verizon is still committed to building its FIOS fiber-optic broadband service in Massachusetts, but that other big-ticket network upgrades might be shelved if its property tax bill increases.
This carrot and a stick approach to lobbying usually works pretty well, particularly considering that Verizon's lobbying budget well exceeds the amount they currently owe. Verizon threatened to stall FiOS when talk of charging Verizon property taxes first bubbled up back in 2007, and it's a very common tactic in other states.

The only reason Santoro doesn't specifically threaten FiOS deployment here is because Verizon already played that card, recently telling Massachusetts they'd stop FiOS deployment if the State didn't pass Verizon-friendly franchise "reform" laws. The State obliged, despite the fact the laws made it easier for Verizon to cherry pick FiOS deployment markets across the State. Given their FiOS threat well had run dry, apparently all that's left is the threat of nebulous reductions in "other big ticket network upgrades."

With States and cities facing tight budgets, it's not clear whether lawmakers will buckle this time. In a press release, Verizon insists the tax exemption was designed to "encourage technology deployment, investment and innovation," while complaining that repealing the taxes would "undermine investment and innovation." But Massachusetts, like most of Verizon's New England markets, has struggled with Verizon's unwillingness to wire rural markets -- despite tax incentives. Much of Verizon's state copper infrastructure is antiquated.

The traditional problem with such incentive programs and telcos is that well-lobbied lawmakers, not-coincidentally, never quite remember to hold incumbent phone companies accountable should they ignore deployment promises. But when state and city money is at play and not your taxpayer dollars -- suddenly politicians become much more interested in holding Verizon's feet to the fire. Whoever wins here, you'll still see higher bills and limited next-gen broadband deployment.

76 comments .. click to read

Recommended comments


Belvedere Tiburon, CA

2 recommendations

reply to stevek1949

Re: Ultimatum

Yes, but to pass these costs along, a landline telco may have to undergo a rate case or similar proceeding.

No big deal in a normal world, but a cardinal rule in these cases is that ALL costs get examined--strangely, utilities always bring up rising costs but forget about dropping costs unless prodded.

What Verizon really wants to avoid is having all of its costs examined, for the regulators may find that -SURPRISE!- in a world of decreasing costs for electronic equipment, some of Verizon's costs may be overstated....

VoIP--the death knell of remaining voice monopolies!

We're not in Kansas anymore
Virginia Beach, VA

2 recommendations

reply to iansltx
There is no such thing as a business tax. It is treated as a cost of doing business. The costs are always passed on to the consumer as increased rates. Nothing new here.