N.J. May Ease Verizon's Broadband Obligation

The Record ( — Friday, March 14, 2014

By Hugh Morley
Staff Writer
The Record

A battle over broadband Internet access is pitting Verizon New Jersey and the state Board of Public Utilities against town officials, a union and public interest groups that say the company hasn't fulfilled its promise to provide statewide service despite millions of dollars in rate increases aimed at funding the project.

A deal struck between the state and Verizon more than 20 years ago — dubbed Opportunity New Jersey — was heralded as a plan to make the state one of the most wired in the nation, financed in part by a dollar-a-month surcharge on customers' phone bills that some say has brought in billions. The deal, announced in 1993, also allowed the company looser regulatory oversight than it would otherwise have.

But 21 years later — four years beyond the project's 2010 deadline — portions of the state remain unserved, and the Board of Public Utilities is about to sign off on an agreement that would modify some requirements of the original deal, including allowing the company to provide only high-speed wireless Internet in some areas.

The question of the company's compliance with the deal came under scrutiny after officials in two towns, Greenwich and Stow Creek, in Cumberland County, complained to the state BPU about poor phone service and their lack of access to broadband.

The BPU concluded in March 2012 that "to date, full deployment of broadband has not been achieved," as required by the Opportunity New Jersey agreement. Then earlier this year, the BPU proposed a modified deal. Verizon says the amended deal recognizes dramatic changes in technology. Critics say New Jersey is letting Verizon off the hook.

"The settlement on the table right now completely guts the agreement and allows them to evade every promise that they made," said Seth Hahn, political director for the New Jersey branch of the Communications Workers of America, which represents about 1,500 Verizon employees, mostly call center workers.

The proposed new agreement defines broadband as "any technology medium" that is as fast as Verizon's DSL, or digital subscriber line service, which is far slower than its high-speed, fiber optic FiOS service and most other broadband connections. This definition includes 4G-based wireless, which brings Internet access to cellphones.

Verizon began installing its high-speed fiber optic FiOS service, which includes phone, TV and Internet, in New Jersey in 2006. Critics say the biggest change in the new agreement is that it allows Verizon to provide consumers who have yet to get broadband with a far slower Internet connection.

A Verizon spokesman on Friday rejected the criticism, saying it has invested heavily in the state — $13 billion — to make it one of the country's most wired states in terms of broadband infrastructure — far exceeding what was contemplated by Opportunity New Jersey," said Lee Gierczynski, a spokesman for Verizon. He said the company originally expected to spend $5.4 billion to fulfill the Opportunity New Jersey deal.

Gierczynski said there is nothing wrong with the speed of DSL or 4G connections. He said the market has changed dramatically since 1993, with a host of new options and competitors, and the original agreement "never envisioned a rigid and inflexible standard" such as bringing broadband to every home and business.

The BPU, which declined to answer questions about the proposed new agreement, will accept public comments on its website until March 24. It will then review any submissions and determine whether or not the agreement with Verizon should be adjusted, before a final decision is made.

The revised deal was first reported in Newsweek, which cited it as an example of the way big telecommunications companies have for 20 years "collected hundreds of billions of dollars through rate increases" but have decided that, having brought high-speed Internet connections to densely populated cities, they will not provide it to more difficult-to-connect areas.

Hahn said that when the original agreement was struck, New Jersey allowed Verizon to charge every customer in its territory $1-a-month to help pay for the installation of the statewide broadband system. He estimated that the $1-a-month charge alone generated $300 million for Verizon.

Ann Vardeman, associate director of Organizing and Advocacy for New Jersey Citizen Action, a watchdog group, said Verizon is far from compliant with the original agreement, having failed to provide broadband in rural areas and in some cities because to do so would be expensive, and not profitable, for Verizon.

"Our real main concern is that ratepayers have been paying for something that Verizon said they would do — and now Verizon is saying to ratepayers, 'Even though you have been paying for it, we are not going to do the work," Vardeman said.

Staff Writer Linda Moss contributed to this article.

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