NYC Says Verizon Defaulted On Its Agreement To Make FiOS Available Citywide

Image courtesy of Alec Taback

Ask just about anyone in New York City what they think of Time Warner Cable and you’ll probably hear swear words that aren’t anatomically possible. The city hoped to improve things by opening up the market to competition from Verizon FiOS in 2008, but more than a year after an audit called out FiOS for apparently failing to live up to its obligation, the city says Verizon has defaulted on its agreement, meaning the company could face legal action.

Ars Technica reports that the city sent Verizon a notice of default [PDF] on Tuesday, saying the telecom titan had violated its agreement with the city on multiple fronts.

Section 5.1 of the FiOS franchise agreement [PDF] states that by July 1, 2014 [later extended to Dec. 31, 2014], Verizon’s fiberoptic service would “pass all households” that are also served by Verizon’s landlines, which is a huge swath of New York City. Buildings and customers don’t need to connect to the FiOS network, per the agreement, but the network does have to be near enough to connect.

The city’s June 2015 audit of the FiOS concluded that significant chunks of the city had not been connected by the deadline. The auditor also said field inspections found blocks where Verizon had falsely claimed to finish installing the fiber service.

In a response to the audit, Verizon argued that the city had made “incorrect interpretations of the Agreement.” More precisely, the company said its obligation was to pass the fiberoptic lines throughout the entire city, not that it would have working fiberoptic facilities (meaning the rest of the construction required to actually make service available on a block) throughout the entire city.

“We indeed have met the requirement to install fiberoptics through all five boroughs,” the company said in 2015.

Another section (5.4) of the franchise agreement obliges Verizon to “make Cable Service available to all residential dwelling units in the Service Area,” but according to the default notice, as of Oct. 2015 there were nearly 39,000 requests for service that the city says had been outstanding for at least a year.

In the audit report, a number of NYC residents said that Verizon reps told them their address would never be connected to the FiOS network. In an Oct. 2015 hearing, a Verizon executive claimed that “There is no area in the city [where anybody] should be being told that,” but admitted that in a company of 12,000 people customers will occasionally get bad information.

The city also accuses Verizon of violating Section 11.1 of the franchise agreement, which gives the city the right to “inspect Franchisee’s books and records pertaining to Franchisee’s provision of Cable Service in the Franchise Area at any time during Normal Business Hours and on a nondisruptive basis.”

The 2015 audit noted that Verizon had not lived up to this obligation to make the relevant information available, and the default notice claims that the company has continued to deny the city’s requests.

According to the Wall Street Journal, Verizon has favored residents in the less densely populated areas of the city. A resident of Staten Island can get a FiOS installation with seven days 90% of the time. In densely packed parts of Brooklyn and Manhattan, the likelihood of getting FiOS in that timeframe is around 11-12%.

A rep for Verizon tells that Journal that “It is unfortunate and disappointing that the City is taking an adversarial approach to the only company that has challenged New York City’s cable monopolies… The City should be working with Verizon to make choice available to more residents, not discouraging competition.”

The Journal notes that Verizon could face legal action if the city feels that the company isn’t doing more to expedite the rollout.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.