Verizon VP Leecia Eve Should Not be the Next Attorney General of New York

By Bruce Kushnick New Networks Institute Sept 3, 2018 | Original Medium article here.

Leecia Eve is currently the Verizon Vice President of State Government Affairs for New York, New Jersey and Connecticut, since 2013. Prior to that, she served as the Deputy Secretary of Economic Development for NY and Governor Cuomo’s Chief Economic Development Adviser.

Ms. Eve is running to become the next Attorney General of New York, yet there have been no news reports about Eve’s work at Verizon.

As one of the people in charge of Verizon NJ, Eve helped to close down/erase the multi-billion dollar requirement to have the state upgraded to fiber optics with a bait-and-switch to substitute wireless at DSL speeds.
Next, Eve got new deregulation to significantly raise landline telephone rates.
In New York, Eve most likely was responsible, with the help of Governor Cuomo, for shutting down a multi-billion dollar investigation into the cross-subsidies between and among Verizon New York, the state utility, and Verizon Wireless, a separate subsidiary.

While a vice president does need to defend the company that they are working for, Eve’s track record to make sure that Verizon succeeded over the public interest used testimony where the facts were more made up than factual. What we need at this time is a serious New York Attorney General that is going to fight for our rights, which are now being erased by Verizon et al.. There is a clear line between a fact and a public policy half truth or sound byte. Here are some details.

In New Jersey

This is how Leecia Eve categorized the NJ state consumer advocate’s (Division of Rate Counsel) analysis of a stipulation agreement between Verizon NJ and the New Jersey Board of Public Utilities, (“NJBPU”) — “fear mongering and misleading assertions”. This agreement allowed Verizon NJ to remove basic regulations on the remaining utility services, like phone service, and to raise rates, among other consumer harms.

NJ.com ran Ms. Eve’s opinion piece, May 18th, 2015.

“These are the facts. Fear mongering and misleading assertions, including those by the Division of Rate Counsel, an organization funded with tax-payer dollars, are a disservice to New Jerseyans. The stipulation is smart public policy that is good for New Jersey. The board should therefore approve it.”

This was the second stipulation agreement in New Jersey in just a few years. The previous stipulation agreement in 2014 killed off the existing state law, known as “Opportunity New Jersey”, (“ONJ”), that required Verizon NJ to have 100% of their territory covered with fiber optic services, capable of 45 Mbps in both directions to be completed by 2010. Instead of finishing this, Verizon was allowed to execute a bait-and-switch to substitute Wireless, at the speed of DSL, for the home-based high speed broadband connection.

Leecia Eve’s testimony just made stuff up. Her testimony from March 24th, 2014, included:

“Another false assertion is that Verizon’s broadband obligation could only be met through the deployment of fiber facilities. The fact is, as the Board has recognized for years, DSL deployment satisfies the broadband commitments in Opportunity New Jersey . . . of course, FiOS as a broadband service did not exist in 1992, when Opportunity New Jersey was developed.”

“Furthermore, the Verizon Wireless 4G LTE network provides broadband at average data rates that in many cases exceed those provided by DSL”

Her testimony was deceptive and this literally stopped billions of dollars that should have been dedicated to fiber optic build outs in New Jersey that customers paid for via rate increases and tax perks since the 1990’s.

In addition, the wireless service Verizon offers is based on capped wireless “by-the-gigabyte” pricing and on “unlimited” plans that aren’t actually unlimited but experience major slowdowns and throttling. While Verizon et al. keep telling everyone that their new 5G wireless can handle wondrous things — 5G requires a fiber optic wire to every block — another ‘fact’ that Verizon et al. have not fully disclosed. This will prove to be another mirage.

In New York;

Under Ms. Eve, Verizon-NY, the state utility, was able to close down a multi-billion dollar investigation into the cross-subsidies between itself and Verizon Wireless.

On July 14, 2018, a settlement with Verizon NY was completed and it appears that Verizon, with the help of New York Governor Cuomo, killed the investigation of Verizon New York’s cross-subsidies between the state utility and Verizon Wireless , this investigation was based, in part, on research by New Networks Institute and the IRREGULATORS which found that the Wireless company not only used the Wireline construction budgets of the state utility, instead of wiring homes and offices, but also the Wireless company pays only a fraction of the fees to use the utility networks — causing the losses of the state utility, which resulted in ill-gotten saving on taxes. This also created rate increases on local phone customers who will never get upgraded. Verizon NY was even given more money via Cuomo’s broadband grants to do work that should have already been done.

Leecia Eve says:

“I’m the person with the experience who knows best how to go after bad corporate actors and hold them accountable.”

In the Telecom world, what this shows is that she has protected the interest of Verizon over the public interest, which, as a Vice President, she is supposed to do.

In New Jersey, Eve killed a multi-billion fiber build out pushed through rate increases and more deregulation.
In New York, Eve helped to block the continued investigation into billions in cross-subsidies that stopped broadband build outs in New York .
The public lost big time in each round, in both states.

We should be very clear; Verizon-NJ and Verizon-NY are state-based telecommunications utilities; they are not “ISPs” or Wireless companies — they are utilities, just like water, gas, or electricity. This fact has been obscured continuously.

Utilities are not like other ‘free market’ companies; they get state-based perks, access to rights-of-way. Verizon Corporate, the holding company that owns the State Utilities and separate private Wireless companies have figured out how to use gain significant advantages over the public interest. In fact, all of the Wireless companies use the Wirelline networks owned by the State Utilities — but have somehow gotten out of paying market prices for the use of the infrastructure.

Moreover, Verizon is now pushing Wireless — not because it is better — but because doing so can get rid of its remaining utility obligations and treat the existing State Telecom Utility as its own private property in order to make lots more money through its cross-subsidies.

Verizon New York’s Cross-Subsidy Investigation Should Continue

Verizon-NY’s 2017 Annual Report was published in June 2018.

It shows that NY’s State Telecommunications Utility had $5 billion in revenues in 2017 but showed losses of $2.6 billion. Local Service, the revenue from basic phone service, was about $1 billion in revenues but was responsible for most of the losses, racking up a whopping $2.9 billion in losses. Local Service, however, did not cause these losses.

Verizon NY Local Service was charged $1.8 billion in “Corporate Operations” expense (61% of the total ). Why was Local Service charged the majority of the expenses for Verizon’s executive pay, lobbyists and lawyers? This one expense item made Local Service look unprofitable.

Why did the other lines of business, like the fiber optic FiOS or the Business Data Services pay a fraction of costs, even though they represented $4 billion in revenues and are also part of the existing state utility?

Verizon NY’s losses also had tax benefits. Verizon New York has shown losses of over $23 billion since 2006, and while they are mostly attributed to ‘Local Service’, they are, in reality, caused by a massive financial shell game. Verizon accrued $10.3 billion in tax benefits over this timeframe.

This is a serious shell game.

All of the Verizon subsidiaries in New York State, like Verizon Wireless or Verizon Online, are bringing in an estimated $9-$13 billion in revenues, which are not on any state-based financial books, yet many of the expenses of these subsidiaries have somehow ended up in the belly of the state utility — adding to Verizon-NY’s losses.

A few questions:

Does anyone really think that Ms. Eve is going to start an investigation as Attorney General about these financial cross-subsidies?
Did Ms. Eve get Governor Cuomo to block the investigation of Verizon’s cross-subsidies and go after Spectrum, since Cuomo needed different communications scapegoat?

New Jersey was Supposed to be the First Fully Fiber Optic State.

In 1993, “Opportunity New Jersey” was passed and it required Verizon NJ (then New Jersey Bell) to replace the existing copper wires of the state utility with fiber optic wire to 100% of their territory, including rural areas, and completed by 2010.

Verizon-NJ got paid to do it. In 1993, Verizon NJ was granted alternative regulation, known as “price caps” that changed state laws and regulations to give the company more profits — which was supposedly to be used for this massive new fiber optic infrastructure. Verizon NJ’s profits went from the traditional 12–14% per year to 29%, and the company was able to take a $1 billion tax deduction, supposedly because they were replacing the existing copper. And this was on top of a continuous stream of various rate increases, which we will explain shortly.

We have been tracking this commitment since its inception and filed and testified with the NJBPU multiple times. By the end of 2013, we estimated that Verizon had collected over $15 billion — and had left less than half the state completed.

Ironically, in 2012, two small New Jersey towns, Stow Creek and Greenwich, complained to the State and they issued a ‘Show Cause Order’, detailing that there was still a commitment on the books. (Note: We helped get the towns upgraded based on the law.)

Here is part of the Show Cause Order. Notice that the speed is 45 Mbps in both directions. Also, notice that Verizon NJ was also supposed to bring this technology to ALL schools and libraries. (Note: “ONJ” is “Opportunity New Jersey”).

From 1993 to 2006, Verizon had not upgraded homes to fiber optics, yet had submitted annual reports claiming that they had fulfilled their obligations. By 2001, they claimed that 52% of their territory was finished — it was actually zero.

FiOS (a brand name for their cable and broadband service) deployment didn’t start until 2006–2007, and it was done as a cable TV franchise to only cover part of the Garden State. Moreover, the State had ignored that there were already commitments that the company never fulfilled.

In 2010, Verizon announced that it was slowing down/stopping the FiOS deployments in all of its territories. In New York, we tracked that Verizon had illegally moved massive amounts of the Wireline construction budgets to their Wireless company, a separate subsidiary. This happened in every Verizon state, we assume. Verizon stopped publishing basic financial information in all of its states in 2010; New York was one of the only states with full financial data.

However, because of all of the filings to shut down Opportunity New Jersey, we were able to create a full case study about the promise to deploy fiber optic broadband, and then the failure to deliver on that promise. Verizon able to collect billions along the way. We put together a collection of our filings here.

Leecia Eve Accomplishments; Harm to Customers

In the end, the fiber optic promise in New Jersey was killed off with an agreement to be able to substitute a slow wireless or DSL service for a fiber optic wire that, in 2018, can do 1 Gbps speeds. — That’s 1,000 Mbps. This was done to shut the door so that all of the other municipalities that did not get upgraded previously under the state law were out of luck. (There was even a next step to this — -and the other towns lost.)

In New York, killing a multi-billion dollar cross-subsidy shell game, documented by us, harms all customers — as this relates to the basic price of the primary infrastructure that all of these services, including Wireless, use. It even relates to who gets high speed broadband and who doesn’t.

Just a Few More Points: Hiding Major Rate Increases in NJ; Claiming No Increases for 23 Years.

Verizon’s Eve claimed that there had been no rate increases from 1985–2008.

“In fact, the regulatory plan adopted with Opportunity New Jersey allowed a modest amount of pricing flexibility for certain services while imposing a price cap that resulted in Verizon not increasing the price for basic phone service in New Jersey for twenty-three years (between 1985 and 2008).“

Written by a lawyer, notice the phrase “price of basic service”. This is one line item on the bill, which Verizon claims did not go up for 23 years. At this time, our group had a communications auditing firm in New Jersey — and we collected thousands of bills.

Local phone service had gone up about 440% from 1982, at the time of the break up of AT&T, through 2014, when all is said and done — based on actual bills.

Read Huffington Post: “Verizon NJ Local Service Increases, 1982–2014–440 Percent”

The difference is that the Verizon statement is a manipulation of every aspect of the bill and it ignores major increases like the removal of ‘credits’, additions, or the rise of the FCC Subscriber Line Charge — not to mention increases in the taxes, fees and surcharges.

In New York, Stop the Cap reported that Ms. Eve claimed in 2015 that Verizon was not dragging their feet to complete New York City’s FiOS Fiber optic requirement to have 100% of the city done a few years ago. This is currently in court.

“Verizon’s Leecia Eve, vice president of government affairs for the Tri-State Region, claimed the company has invested more than $3 billion upgrading New York City for fiber service and took umbrage at suggestions the company was reneging on its commitments, telling committee members Verizon fulfilled its FiOS commitments ‘one thousand percent’.”

We can go on about the continuous stream of statements that she presented — obviously being handed to her to read.

If Verizon New York’s Local Service can be charged $1.8 billion in Corporate Operations expense in just 2017, which was 61% of the total, while Local Service only had $1.1 billion of revenues — and these artificial losses were used over the last decade to raise rates multiple times in New York . . . and her salary and those of her staff are part of these ‘excess’ Corporate Operations expenses on Local Service . . . and the Leecia Eve says: