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Interested In Pretending You Have Influence On Verizon/NYC Deal?
Public gets last minute 'input' on largely signed and sealed franchise agreement

Verizon spent much of the past year negotiating a deal to bring FiOS to NYC with Mayor Bloomberg's office. At no point have the closed door negotiations involved input from the public, and the actual franchise agreement appears nowhere on the NYC website -- though it is hosted by one of the three NYC residents actually paying attention to what city residents are agreeing to. Now with the deal all but wrapped up, the city is holding a public hearing today, but gave attendees all of 22 hours notice.

Verizon has promised to have the whole city wired with FiOS by 2014, but the franchise agreement deserves a closer look than it's getting. For instance, Verizon is pushing a $200 early termination fee on city residents, and as usual, the 5% franchise fee is simply being pushed through to consumers. The penalties Verizon faces for failing to reach deployment checkmarks also aren't exactly steep when compared to overall Verizon profits.

Brooklyn, the Bronx and Queens aren't scheduled to see much FiOS deployment until at least 2011, and by then Verizon's liability for wimping out on their promise will be severely weakened. Here's the penalty fees Verizon (who just won a $679 million contract from the Department of Homeland Security) has to pay by year:

quote:
2008: Thiry-Five Million Dollars ($35,000,000)

2009: Thirty Million Dollars ($30,000,000)

2010: Twenty-Five Million Dollars ($25,000,000)

2011: Fifteen Million Dollars ($15,000,000)

2012: Ten Million Dollars ($10,000,000)

2013: Five Million Dollars ($5,000,000)

2014: One Million Dollars ($1,000,000)


I'm sure Verizon, who pays $16 million every year on lobbying alone, is terrified of only having to pay a few million to skip out on their obligations once the city's most lucrative areas are wired (not that they'd ever, in a million years dream of doing that). And they only have to pay those penalties if their lawyers can't negotiate an endless stream of extensions. Consumer advocate Bruce Kushnick, every telco employee's least favorite person for his relentless poking into telco finances, also notes that nobody at city hall bothered to think about retired copper:
quote:
The basic read is Verizon can pull out whenever it wants by paying chump change. It is allowed to pass-through costs, including franchise fees, and there is absolutely no reference to the underlying question - What happens to the utility when Verizon starts pulling out the copper or it uses for 'local' phone products and services to deploy FiOS...
For those in NYC who care about your broadband future, the hearing is to be held today at the NYC College of Technology, 285 Jay Street, Brooklyn, NY. The hearing begins at 3:00pm and is anticipated to run until at least 6:00pm. City resident Joshua Breitbart notes that after the Franchise and Concession Review Committee (FCRC) hearing today, there's a second public meeting scheduled for 11am next Tuesday, May 27 at 22 Reade Street.

It's unlikely your bullhorn will have much of an impact on the final agreement at this late juncture, but it might make you feel better to pretend the NYC government gives a damn about what you think.
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pnh102
Reptiles Are Cuddly And Pretty
Premium Member
join:2002-05-02
Mount Airy, MD

pnh102

Premium Member

Hey Verizon

There are plenty of other places in Verizon's service area that would not bother with such silly BS as this. Why not deploy there instead?
SKYWARP
join:2005-02-02
Portland, OR

SKYWARP

Member

Re: Hey Verizon

It's about population density/passings and ease of deployment. If it costs x-dollars to deploy 1 mile of fiber and you only pass 100 customers you make less than if you pass 10,000.

Very simple. . .NYC has great population density and better than average access to underground plant. NYC has good underground infrastructure, you can reach utility lines without too much dig work. Many large cities do not have that access and construction costs are incredible.

Cheap to deploy and more passings per mile than most other cities. You bet Verizon wants that! It's going to be worth crazy money.
EPS4
join:2008-02-13
Hingham, MA

1 recommendation

EPS4

Member

Franchise Fee

The franchise fee always gets pushed through to consumers, doesn't it?

pnh102
Reptiles Are Cuddly And Pretty
Premium Member
join:2002-05-02
Mount Airy, MD

1 recommendation

pnh102

Premium Member

Re: Franchise Fee

said by EPS4:

The franchise fee always gets pushed through to consumers, doesn't it?
Every fee, tax, impost, tariff, etc. that is imposed by government onto business always gets pushed down to the consumer.
patcat88
join:2002-04-05
Jamaica, NY

patcat88

Member

Re: Franchise Fee

Perhaps instead of being based on gross revenue, the tax should be based on net revenue. Let the shareholders pay for it.

pnh102
Reptiles Are Cuddly And Pretty
Premium Member
join:2002-05-02
Mount Airy, MD

pnh102

Premium Member

Re: Franchise Fee

said by patcat88:

Perhaps instead of being based on gross revenue, the tax should be based on net revenue. Let the shareholders pay for it.
And the costs incurred by the shareholders will again be passed down to the consumers in the form of higher prices.
Austinloop
join:2001-08-19
Austin, TX

1 recommendation

Austinloop

Member

Franchise fee

"the 5% franchise fee is simply being pushed through to consumers"

And how is this different from any telco or cableco in the country??

Check your bills from AT&T, TW, Comcast, etc and see if there isn't some sort of fee on it that goes to cover the franchise fee.

toby
Troy Mcclure
join:2001-11-13
Seattle, WA

toby

Member

Re: Franchise fee

said by Austinloop:

"the 5% franchise fee is simply being pushed through to consumers"

And how is this different from any telco or cableco in the country??

Check your bills from AT&T, TW, Comcast, etc and see if there isn't some sort of fee on it that goes to cover the franchise fee.
There is no franchise fee for telephone and internet, just the tv so far.

Check your bills.
Austinloop
join:2001-08-19
Austin, TX

Austinloop

Member

Re: Franchise fee

Sorry, misread the bill, however that doesn't change that the franchise fees are passed thru from my ex-provider, TW. I guess this is what I thought was the franchise fee on my bill:

Municipal Charge 1.25

Anyway, another fee that gets passed along just like every other fee put on the telco and cableco.

Matt3
All noise, no signal.
Premium Member
join:2003-07-20
Jamestown, NC

Matt3

Premium Member

7 Years for all of NYC?

7 years is a good number if Verizon can actually meet it.
openbox9
Premium Member
join:2004-01-26
71144

1 recommendation

openbox9

Premium Member

Re: 7 Years for all of NYC?

I find it ironic that some believe 7 years to wire a city is good, but other believe ISPs aren't doing their jobs if they don't wire the whole country in less than a year.

Matt3 See Profile, not directed at you, just tagging along with your comment.
MrSpock29
join:2008-02-09
Hammonton, NJ

1 edit

1 recommendation

MrSpock29

Member

679 million dollar contract

I'm trying to figure out why this is now mentioned in every Verizon news piece on here.
Also, a cumulative 121 million dollars in penalties for not hitting milestones seems very steep to me. I think most businesses would look for areas that didn't have the potential to be so costly.

morbo
Complete Your Transaction
join:2002-01-22
00000

morbo

Member

Re: 679 million dollar contract

why do you think it isn't relevant?

Karl Bode
News Guy
join:2000-03-02

Karl Bode

News Guy

Re: 679 million dollar contract

Actually it's only been mentioned twice for scale, and I can use another metric if you'd like.

The amount made on just fees in the last month by the company nationally?
MrSpock29
join:2008-02-09
Hammonton, NJ

MrSpock29

Member

Re: 679 million dollar contract

said by Karl Bode:

Actually it's only been mentioned twice for scale, and I can use another metric if you'd like.

The amount made on just fees in the last month by the company nationally?
Karl,

This is a slippery slope. Every company that tries to do business should have prior deals held against them?
What does it have to do with NYC?

Karl Bode
News Guy
join:2000-03-02

1 recommendation

Karl Bode

News Guy

Re: 679 million dollar contract

The scale of the penalties are even not remotely in line with the company's overall revenues. Verizon spends $4 million per quarter on lobbying alone. Those penalties are a gift.
MrSpock29
join:2008-02-09
Hammonton, NJ

MrSpock29

Member

Re: 679 million dollar contract

said by Karl Bode:

The scale of the penalties are even not remotely in line with the company's overall revenues. Verizon spends $4 million per quarter on lobbying alone. Those penalties are a gift.
In your opinion. But I guess we are at a time where we look to heavily penalize companies for trying to do business. A 121 million dollar penalty is a 121 million dollar penalty. If they lost that big deal, should the penalties go down?

Karl Bode
News Guy
join:2000-03-02

1 recommendation

Karl Bode

News Guy

Re: 679 million dollar contract

quote:
I guess we are at a time where we look to heavily penalize companies for trying to do business.
Yes. Just to be mean. Good insight.
MrSpock29
join:2008-02-09
Hammonton, NJ

1 edit

MrSpock29

Member

Re: 679 million dollar contract

said by Karl Bode:

quote:
I guess we are at a time where we look to heavily penalize companies for trying to do business.
Yes. Just to be mean. Good insight.
It was sarcasm.
Feel free to delete what you wish.

Pathfinder5
Dazed Confused
Premium Member
join:2000-03-26
New York, NY

Pathfinder5 to Karl Bode

Premium Member

to Karl Bode
said by Karl Bode:

The scale of the penalties are even not remotely in line with the company's overall revenues. Verizon spends $4 million per quarter on lobbying alone. Those penalties are a gift.
And they shouldn't be. The company does business in many states and that state should be the gauge not the nation.

dvd536
as Mr. Pink as they come
Premium Member
join:2001-04-27
Phoenix, AZ

dvd536 to Karl Bode

Premium Member

to Karl Bode
said by Karl Bode:

Those penalties are a gift.
which are a pittance after all the lucrative areas are cherry picked. and the 30 million? written off as a biz loss.
typical big biz practices. * y a w n *
dvd536

dvd536 to Karl Bode

Premium Member

to Karl Bode
said by Karl Bode:

Actually it's only been mentioned twice for scale, and I can use another metric if you'd like.

The amount made on just fees in the last month by the company nationally?
its mind boggling. specially the "my service sucks so i gotta pay $200 penalty to get off it" fee.
MrSpock29
join:2008-02-09
Hammonton, NJ

MrSpock29 to morbo

Member

to morbo
said by morbo:

why do you think it isn't relevant?
What does it have to do with NYC? Nothing. Businesses go out and "do business". Because a company gets one contract totally unrelated, does that mean it should be held against them?
This is supposed to be a capitalistic society.

morbo
Complete Your Transaction
join:2002-01-22
00000

morbo

Member

Re: 679 million dollar contract

it has to do with VERIZON, which is the company set to wire NYC. it's also a huge government contract, so it's good to know just for general information.
MrSpock29
join:2008-02-09
Hammonton, NJ

1 edit

MrSpock29

Member

Re: 679 million dollar contract

said by morbo:

it has to do with VERIZON, which is the company set to wire NYC. it's also a huge government contract, so it's good to know just for general information.
A Federal contract has nothing to do with a contract for NYC at all, IMHO, it is irrelevant to the point.
It is similar to saying that "Comcast is deploying DOCSIS 3.0 in their markets, the same company who had an issue with a traffic accident......". One has nothing at all to do with the other.

morbo
Complete Your Transaction
join:2002-01-22
00000

morbo

Member

Re: 679 million dollar contract

said by MrSpock29:

One has nothing at all to do with the other.
I disagree. News is news, and this website's purpose is to provide the news and tie together relevant themes that exist.
SD6
join:2005-03-26
Pittsburgh, PA

SD6

Member

Re: 679 million dollar contract

said by morbo:

said by MrSpock29:

One has nothing at all to do with the other.
I disagree. News is news, and this website's purpose is to provide the news and tie together relevant themes that exist.
I sometimes wonder whether the intention is to tie news themes together or to create themes. Using the size of an unrelated government contract to support criticism of the size of the penalties in the NYC FIOS agreement is not appropriate. This website is valuable to me as an aggregator of broadband related news. I can deal with the various editorial slants.

The appropriate factors to judge the size of the penalties:
1) their proportion to the value of the franchise (to VZ)
2) the extent of competition to execute a similar franchise
3) the penalties in similar franchise agreements

I can only comment on 2) and 3) now. Not much competition because there are very few companies that could even hope to wire all of NYC for TV in six years (or even 10 years). Very few franchise agreements explicitly include large monetary penalties for failure to complete the buildout.

morbo
Complete Your Transaction
join:2002-01-22
00000

morbo

Member

Re: 679 million dollar contract

said by SD6:

I sometimes wonder whether the intention is to tie news themes together or to create themes. Using the size of an unrelated government contract to support criticism of the size of the penalties in the NYC FIOS agreement is not appropriate. This website is valuable to me as an aggregator of broadband related news. I can deal with the various editorial slants.
I'm not sure what website you're reading, but dslreports and its readership has been accused of being OVERLY supportive of Verizon, with its long-term business plan and use of future-proof technology.

Pointing out that VZ received a very large government contract is interesting both as VZ stockholder and citizen of this country. I was unaware of the news so I followed the link to learn more.

The financial penalties for Verizon for failing to meet FIOS rollout targets in NYC is 100% laughable. That amount of money is chump change, not the "large monetary penalities" you called it.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5 to morbo

Premium Member

to morbo
said by morbo:

it has to do with VERIZON, which is the company set to wire NYC. it's also a huge government contract, so it's good to know just for general information.
Yes, but that isn't WHY it was included.
EPS4
join:2008-02-13
Hingham, MA

EPS4 to morbo

Member

to morbo
Probably the former MCI side of the business though, not the former NYNEX/Bell Atlantic division that's responsible for FiOS... Still the same parent company I guess though.

Shamayim
Premium Member
join:2002-09-23

2 edits

Shamayim to MrSpock29

Premium Member

to MrSpock29
said by MrSpock29:

This is supposed to be a capitalistic society.
Capitalism is the best economic system in the world. It is not a license to rip off the consumer.

•••

1 recommendation

Joe Taxpayer to MrSpock29

Anon

to MrSpock29
said by MrSpock29:

I'm trying to figure out why this is now mentioned in every Verizon news piece on here.
Evidently, you haven't been following the "Hate Bush" campaign for the past 7.5 years.

What I'm trying to figure out, is why none of these same critics ever questions the Al Gore Tax / E-Rate Program, which steals billions from us annually.
Expand your moderator at work
UofMiamiGrad
Premium Member
join:2001-02-03
Syosset, NY

UofMiamiGrad

Premium Member

Do your homework!

It would be nice if Karl did his homework before telling people to run to the meeting. Perhaps learn how the NYC Franchise process is done. The Franchise & Concession Review Committee (FCRC) is in charge of these public hearings now, before sending it off to the Mayor to sign, if passed by the FCRC. New flash folks, there is going to be another meeting on Tuesday the 27th @ 11AM where they will adopt the Franchise to pass to the mayor for signature. It is on the agenda, if Karl had bothered to look it up.

»home2.nyc.gov/html/mocs/ ··· 7_08.pdf

So for those not able to attend this meeting, the next meeting on the 27th at 11AM. Location 22 Reade Street, New York, NY where the FCRC will vote to adopt the agreement. So if you can't get to the Brooklyn meeting today, clear your schedule for Tuesday AM.

I have added the meeting to my NY Franchise List thread where anyone in NY should look for the status of FIOS TV agreements, as I read of them or are PMed to me.

»NY TV Franchise List #2

•••

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5

Premium Member

You had influence - you elected the Mayor

Interested In Pretending You Have Influence On Verizon/NYC Deal?
The people of NYC did have influence over the franchise agreement - they ELECTED the officials that did the negotiations, especially the Mayor. Isn't that the purpose of elected officials instead of having a direct vote on each proposal before the city. Representative government is how this works. Direct democracy only works for VERY small political units(several hundred or less). It won't work in NYC.

••••••

ddg4005
Premium Member
join:2001-08-22
Bronx, NY
ARRIS TM1602
Asus GT-AC5300

ddg4005

Premium Member

NYC/Fios love-in

I had a feeling my area in the Bronx wouldn't see Fios deployment anytime soon. I'm scheduled for the 7.1 DSL upgrade this Friday so that was a major hint (Verizon wouldn't waste time and resources upgrading DSL if they're planning on deploying Fios soon).
mike31mets1
join:2004-10-30
Bronx, NY

mike31mets1

Member

Provisions in the deal

A person I know that worked in the negotiations between the city and Verizon said this:

"Verizon has 66 central office facilities to upgrade to video across the City, and although there is a schedule in the agreement showing what numerical percentage of the households in each borough will be passed each year, the schedule does not prescribe the build by specific neighborhood. We do have a provision in the agreement that requires Verizon to show, as of 2010, 2011 and 2012, that the homes in the City where it has wired do not in the aggregate have an average household income that exceeds the Citywide average household income. That's to make sure Verizon doesn't wire all the rich neighborhoods first."

So as far as Verizon just wiring up the wealthy areas, and then forgetting the rest and paying the associated fees, that most likely won't happen.
patcat88
join:2002-04-05
Jamaica, NY

patcat88

Member

Re: Provisions in the deal

So whats the punishment, and likely hood of City Hall to execute it, if Verizon only wires rich, and pays fines on not wiring the poor?

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

1 edit

FFH5

Premium Member

Have to dump on Verizon - it is mandatory

said by MrSpock29:

I'm trying to figure out why this is now mentioned in every Verizon news piece on here.
Also, a cumulative 121 million dollars in penalties for not hitting milestones seems very steep to me. I think most businesses would look for areas that didn't have the potential to be so costly.
I'd like to know the reason also. Because the fact is totally irrelevant to the story. It is just an attempt to inflame some posters against Verizon by painting them as some EVIL corporation that should be condemned.

Kylemaul
Lovin' My Firefox
Premium Member
join:2001-03-30
Puyallup, WA

3 edits

Kylemaul

Premium Member

Here's How The Fines SHOULD HAVE Read....

2008: One Million Dollars ($1,000,000)
2009: Five Million Dollars ($5,000,000)
2010: Ten Million Dollars ($10,000,000)
2011: Fifteen Million Dollars ($15,000,000)
2012: Twenty-Five Million Dollars ($25,000,000)
2013: Thirty Million Dollars ($30,000,000)
2014: Thiry-Five Million Dollars ($35,000,000)

Edit: Ooops! I'm sorry, Dr. Evil. That should have been:

2008: One BILLION Dollars ($1,000,000,000)
2009: Five BILLION Dollars ($5,000,000,000)
2010: Ten BILLION Dollars ($10,000,000,000)
2011: Fifteen BILLION Dollars ($15,000,000,000)
2012: Twenty-Five BILLION Dollars ($25,000,000,000)
2013: Thirty BILLION Dollars ($30,000,000,000)
2014: Thiry-Five BILLION Dollars ($35,000,000,000)
EPS4
join:2008-02-13
Hingham, MA

EPS4

Member

Re: Here's How The Fines SHOULD HAVE Read....

Why? Honestly, this would just be moronic. There's no reason to want to bankrupt Verizon- there are plenty of reasons for the company to not be able to deploy on time, and not all of them are malicious.

Verizon would never sign that deal, and then NONE of NYC would be able to get the FiOS TV service, and the internet deployments underway would probably be halted- is that somehow better?

Kylemaul
Lovin' My Firefox
Premium Member
join:2001-03-30
Puyallup, WA

3 edits

Kylemaul

Premium Member

Re: Here's How The Fines SHOULD HAVE Read....

Is it somehow better? -- YES!!!
(the millions part anyway--the BILLIONS part is just to show what it would really take to TRULY be an incentive to deploy ON TIME.) As metioned earlier, EVERY single 'penalty' in the MILLIONS is just chump change to Verizon. I hope you noticed that the values are reversed from the original--the incentive to hurry it up should be greater the longer it takes, not smaller, if it's results you're after.

Feeling bad for the victims of NYC corruption.
ebubman
join:2002-01-17
Mechanicsburg, PA

ebubman

Member

the public's opinion?

please---------when they want the public's opinion they will give it to us.

bub

Doktormark
@direcpc.com

Doktormark

Anon

government allows public utilities to hook up profit areas

I live in the country and I believe if the town fathers would make deals to install things like cable, phone, elec, natural gas, dsl, fios, to every resident, business and property before turning on the service to anyone in the area they have authority over, we would not have the situations in this country that exist. In my town there is cable but not at my house it is 1 mile down the road so no cable and no road runner, they want 12,000 to come up road I pay 59.99 a month for hughes sat internet(not very fast. 86.88 for Directv. We have propane gas, no sewers no water, use well and septic I was lucky to get the electric in ten years ago before they changed those rules for off road charges we paid 1200.00 to bring in 600 ft. now would cost 15,000.00 yes thats right. I am 2.5 miles from the switch to get dsl.and they have no plans to upgrade lines so I got rid of landline and added a cell to my sisters cell acct. for 14.00 per month.