State’s Deal With Verizon On High-Speed Internet Service Finds Few Friends in NJ

Tom Johnson | March 27, 2014 | Energy & Environment
Cities, towns, rural communities -- as well as Division of Rate Counsel -- all argue that telecom company reneged on agreement to provide broadband to entire state

The state and Verizon New Jersey have hammered out an agreement to settle a dispute on how the telecom company will comply with a two-decades-old law requiring it to provide high-speed broadband service to all of its customers.

But will it fly?

The settlement — reached between the staff of the state Board of Public Utilities and Verizon earlier this year — is drawing widespread opposition from consumer advocates, many communities, and the New Jersey Division of Rate Counsel.

The so-called stipulation settlement will not take effect unless approved by the BPU commissioners, who have not decided yet when to take up the issue, a source of controversy for years.

Opponents argue Verizon has not complied with a 1993 law, requiring 100 percent of its territory to be upgraded to high-speed broadband service by 2010. That failure has left some rural towns and poorer communities without access to meaningful broadband service, according to critics.

Verizon responds that New Jersey is the most wired state in the nation, with 99 percent of it having access to broadband service. New Jersey is one of only five states where 81 percent to 97 percent of the rural population has access to high-speed Internet service, the company argued in briefs filed in the case.

“Verizon has satisfied its regulatory commitment under Opportunity New Jersey,’’ said Lee Gierczynski, a spokesman for Verizon New Jersey, referring to the 1993 law.

Division of Rate Counsel Stefanie Brand contested that view, acknowledging a substantial part of the state has been wired, but more remains to be done to meet the 100 percent commitment made 21 years ago.

“The last part of it is less profitable,’’ Brand said, adding “A deal is a deal. The board should not accept anything less that what was bargained for and paid for by New Jersey ratepayers.’’

Under Opportunity New Jersey, Verizon won approval to deregulate many of the phone services it offers to its customers in exchange for providing 100 percent of its customers access to fast broadband service. Just what form that service would entail remains a big source of dispute.

Critics say the law requires the company to install fiber optic-services, a high-speed line that can deliver telephone services, Internet access, and TV programming. Gierczynski disputed that assessment, saying the BPU recognized that DSL (digital subscriber line) satisfied that requirement.

Brand disagreed, primarily because she accused Verizon of not maintaining its traditional copper wireline system. DSL broadband service is delivered over traditional phone lines, which some argue cannot consistently match the speed of fiber-optic service.

In part, the settlement would allow the company to meet those obligations through a wireless transmission medium, a system not as reliable and more costly than traditional copper and fiber-optic services, according to Brand.

Others have argued Verizon has profited from the Opportunity New Jersey law, while failing to live up to its commitments. Bruce Kushnick, executive director of New Networks, a telecom consulting firm, claimed the company has collected $15 billion from customers for its upgrade of the system, a charge Verizon disputes.

The board never authorized and Verizon never charged a surcharge for doing this,’’ Gierczynski said.

Brand argued otherwise. “They certainly profited from this,’’ she said. “They definitely made money from this.’’

Towns large and small also opposed the settlement.

In comments filed by Newark, the city said any settlement must further the public interests’ goals. “The proposed stipulation does not do so — not even close,’’ according to a brief filed by Newark.

The New Jersey State League of Municipalities also weighed in against the settlement, saying it runs counter to Verizon’s obligation under Opportunity New Jersey.