CASE 16-C-0122

Proceeding on Motion of the Commission to Consider the Adequacy of "Verizon-New York Inc.’s" Retail Service Quality Processes and Programs.

 
Issued and Effective: July 12, 2018

Selected Quotes from CASE 16-C-0122 Settlement Agreement

pp.1-2

"On March 21, 2016, the Commission issued an Order initiating this proceeding to examine . . . what efforts Verizon-New York Inc. (V-NY) is making to ensure the continued viability of the copper network.¹. The Commission noted that this investigation would necessarily include an examination as to the state of the copper system and whether Verizon’s investment in its network has been sufficient to provide adequate levels of service to consumers of regulated services."

"In this Order we consider and approve the terms of a joint proposal (Joint Proposal or JP) filed on March 2, 2018, by and on behalf of

• Verizon-New York Inc. (V-NY),
• the Department of Public Service trial staff (Staff),
• the Communications Workers of America, District 1 (CWA), and
• the Public Utility Law Project of New York, Inc. (PULP)

. . . (collectively the Signatory Parties).²

p. 4-5

"With the advent of the Performance Regulatory Plan in 1992, rate-of-return regulation of Verizon ceased, and its service quality was subject to a series of performance metrics enforced by rebates or penalties.³ The Performance Regulatory Plan was followed by the Verizon Incentive Plan, which sought to maintain adequate service quality through a structure of rate flexibility and customer credits tied to minimum State-wide service quality requirements.⁴ Several years later, to address the Company’s poor service quality performance in many of its repair service areas, the Commission implemented a Service Improvement Plan (SIP) that, among other things, targeted Verizon’s maintenance, repair and investment in areas of Queens, Nassau, Suffolk, and Westchester Counties.⁵

In December 2009, after Verizon experienced ongoing problems in responding to requests for out-of-service repairs within 24 hours, the Company filed a Service Quality Improvement Plan (SQIP) to address the timeliness of its repair performance. In 2010, after Verizon filed a revised SQIP pursuant to a Commission order,⁶ the Commission approved the Company’s revised SQIP with modifications.⁷

p. 5

". . . in response to Voice over Internet Protocol (VoIP) and wireless competition in New York, the Company made capital investments to deploy its advanced fiber-to-the-premises (FTTP) network, branded as “FiOS.”⁸

p. 7

When it commenced this proceeding, the Commission explained that the record adduced in Case 14-C-0370 ^{9 10}ultimately formed a basis upon which the Commission can take actions in this proceeding that are designed to ensure continued access to state of the art telecommunications services, for all New York consumers.¹¹

p.8

Commission’s focus is on whether Verizon’s customers will or are able to exercise competitive options, and whether Verizon is actively taking measures to retain these customers and keep the copper network viable.

p. 11

SAPA and Public Comments

The most extensive comments were filed on behalf of an organization called New Networks Institute – IRREGULATORS (New Networks). New Networks has alleged generally that Verizon has intentionally allowed its copper-based utility networks to deteriorate. New Networks also asserts that, by taking advantage of outdated Federal Communications Commission cost accounting rules, Verizon has, beginning in 2012, diverted billions of dollars from its state-regulated wireline businesses and used those funds to improperly cross-subsidize Verizon’s wireless affiliate businesses.

Opposing the JP because its terms do not address Verizon’s financial practices, New Networks argues that proceeding was supposed to involve an investigation into Verizon’s claimed financial losses. New Networks asserts that, instead of investigating Verizon’s financial abuses, the JP instead covers up the most egregious issues that directly affect all Verizon customers.

New Networks asserts that, by siphoning resources from its wireline businesses in order to subsidize its unregulated wireless businesses, Verizon has harmed wireline customers on a massive scale and in every state, by allowing wireline service quality to deteriorate, by frustrating the more widespread deployment of broadband, and in multiple other ways.

New Networks also argues that, because Verizon covers about 9 million households and businesses, the limited broadband fiber deployments to be performed by Verizon under the terms of the Joint Proposal are insignificant. By imposing only modest obligations on Verizon, and by leaving out the more critical investigation of the wireless cross-subsidies, New Networks argues that the terms of the JP fail to accomplish the purposes of this proceeding. Instead of adopting the terms of the JP, New Networks urges the Commission to continue investigating Verizon’s financial practices, and asks that Verizon be required to reimburse its wireline customers for the monies Verizon has diverted to its wireless affiliates.

Twenty other commenters urged the Commission to require Verizon to adequately maintain existing telephone land lines, pay phones and related infrastructure because they are more reliable in an emergency than cell phones. Commenters complained that, rather than maintain its copper-based systems in response to customer complaints about bad service, Verizon has instead knowingly failed to maintain landline service in order to force customers to switch to more expensive wireless service. They allege that Verizon has used bully tactics to aggressively sell its fiber-based service to customers that prefer traditional service

The terms of the JP, if approved by the Commission, would obligate Verizon to

(1) extend its high-speed broadband service to approximately 32,000 additional premises in New York State;

(2) identify 100 copper-fed building locations in New York City with a high incidence of repair visits by technicians and replace the existing copper facilities to those locations with fiber optics (either fiber-to-the-premises or digital loop carrier;

(3) actively cooperate with CWA-represented service technicians in remediating Upstate copper plant; and

(4) remedy 64,000 double pole conditions throughout Verizon’s New York service territory.

pp. 15-16

LEGAL AUTHORITY Under PSL §91(1), “[e]very…telephone corporation shall furnish and provide with respect to its business such instrumentalities and facilities as shall be adequate and in all respects just and reasonable . . .

PSL §98 provides that “[w]henever the commission shall be of opinion, after a hearing…that repairs or improvements to…any telephone line ought reasonably to be made … in order to promote the convenience of the public … or in order to secure adequate service or facilities for…telephonic communications, the commission shall make and serve an order directing that such repairs [or] improvements … be made within a reasonable time and in a manner to be specified therein and every … telephone corporation is … required and directed to make all repairs [or] improvements … required….”¹²

pp. 17-18

"DISCUSSION Under the terms of the JP, Verizon will expand its fiber and hybrid fiber-copper networks in areas of upstate New York, the Hudson Valley, and on Long Island. Verizon will also upgrade its existing copper system in numerous locations within New York City. These changes and others will result in the availability of higher quality, more reliable telephone service and will increase Verizon’s competitive presence in several economically important telecommunications markets in New York State . . . As described, these measures include remediation of existing copper-based outside plant, the deployment of substantial amounts of new fiber-optic facilities (with the increased reliability, resistance to deterioration, and capability of supporting a broader range of services that are characteristic of such facilities), and a “Plant Pride” program that will encourage Verizon technicians to report plant problems observed on a day-to-day basis, and will impose on Verizon specific obligations concerning its responses to such reports. As such, through this Order, the Commission finds that approval of the JP is in the public interest . . . Under other terms of the JP, Verizon would be further committed to provide fiber-based broadband services (including fiber-based voice services) to 10,000-12,000 additional residential and business customer premises on Long Island and within Verizon’s Upstate Reporting Region.

As a result, in total, the JP will lead to the extension of Verizon’s broadband network to a total of approximately 32,000 additional households, in upstate New York, on Long Island, and in the Hudson Valley . . . Verizon will bring these fiber and hybrid fiber-copper networks to currently underserved customers in New York State.[^35] ."

p. 21-23

As Staff points out, the proposed copper plant remediation program would ensure that customers in New York City, served by copper networks needing the most repairs, will gain access to more reliable service through incremental deployment of fiber optics.

. . . Within two years of Commission adoption of the terms of the JP, Verizon would be obligated to identify and remediate copper plant conditions in 54 COEs that failed, during 2017, to meet customer service metrics for CTRR.42

. . . Verification of Verizon’s remedial work will be achieved through periodic reporting by Verizon.

. . . Staff states that the PPP will certainly result in the identification and repair of additional copper network troubles and therefore, directly support enhanced service quality, which is the overall goal of Staff and the Commission in this proceeding.

p. 28-30

The Commission did recognize an expectation that the Company will continue to invest in its New York regulated operations as the Public Service Law unequivocally requires Verizon to provide adequate service. The Commission also made it clear that it would take the necessary action under the Public Service Law to address shortcomings if the market fails to provide Verizon an appropriate incentive to meet its statutory obligations . . . The Commission has also recognized that, in evaluating Verizon’s performance, it must consider the extent to which investment in the legacy copper network would be cost effective when that network is becoming competitively and technologically obsolete.¹³ . . . Commission is free to review Verizon Service Quality Improvement Plan at any time and initiate an investigation to determine if further actions by the Commission are necessary . . . we find that adoption of the terms of the JP is in the public interest.

. . . The Commission orders:

1. The terms of the Joint Proposal filed on March 2, 2018, by and on behalf of Verizon, the Department of Public Service trial staff, the Communications Workers of America, District 1, and the Public Utility Law Project of New York,
   Inc., attached to this order as Appendix A, are adopted and made part of this order.

2. In the Secretary’s sole discretion, the deadlines set forth in this order may be extended. Any request for an extension must be in writing, must include a justification for the extension, and must be filed at least one day prior to the affected deadline.

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Exhibit A

JOINT PROPOSAL

ADDITIONAL FIBER DEPLOYMENT

I. Participation in State’s Broadband Program.

Verizon has bid for grants under the State Broadband Program Office/CAF auction. To the extent that any such grants are awarded to Verizon, the company commits to making fiber-based broadband service available to certain additional households in the areas covered by such grants, beyond the households to which Verizon is required to make service available under the terms of the grants (the “Additional Households”). Based on grants awarded by the BPO to date, Verizon estimates that the total number of Additional Households will be a minimum of approximately 14,000, and a maximum of approximately 20,500. The 6,500-household difference between the minimum and maximum represents Additional Households to which Verizon will make service available if it is awarded a grant for certain census blocks in the Mohawk area. Grants for those census blocks have not yet been awarded by the BPO, and they may be awarded to Verizon. These approximately 6,500 premises will be included as Additional Households if, but only if, Verizon is awarded the grants for the Mohawk-area census blocks referred to above.

II. Deployment in Long Island and Upstate.

Verizon will make fiber-based services available to a total of 10,000 – 12,000 residence and business customer premises in the Long Island and Upstate Reporting Region within one year of Commission adoption of the Joint Proposal. These premises are in addition to any residences or businesses receiving such services pursuant to BPO grants or “Additional Households” as set forth in Section I. Approximately 7,000 of those premises will be in Long Island and approximately 4,000 will be in Midstate and Upstate

REMEDIATION OF COPPER PLANT

III. Targeted Remediation Program for New York City Copper Cables.

Verizon will identify 100 copper-fed building locations in New York City with a high incidence of repair visits by technicians and will replace the existing copper facilities to those locations with fiber optics (either fiber-tothe-premises or DLC). Verizon will make reasonable efforts to prioritize such deployment.

Verizon’s obligations under this provision will be subject to the company’s ability to secure access to buildings to perform the necessary work. Verizon will use reasonable efforts to secure such access. If Verizon is unable to obtain access to some of the locations, those locations will be deleted from the list and an equal number of other locations will be added to the list of premises covered by this section.

Subject to delays caused by access issues, Verizon’s target for completing this work will be two years from Commission adoption of the Joint Proposal

IV. CTRR Remediation Plan.

Under this initiative, Verizon will identify and remediate copper plant conditions in central office entities (“COEs”) that meet the criteria set forth below. Verizon has reviewed CTRR data for the period January 2017 to December 2017. Based on that data, 54 offices were identified that either missed the CTRR 5.5 performance standard in four or more months, or missed the standard in three months and had at least one CTRR Service Inquiry Report. The CTRR remediation plan will apply to those 54 offices.

New capital and operating expenditures will be made by Verizon with respect to outside plant and/or central office equipment associated with those COEs, to the extent necessary to eliminate the failure to meet the performance standards set forth above.

The expenditures will be prioritized to remediate conditions affecting the greatest number of customers first.
Remediation efforts will be completed within two years of Commission adoption of the Joint Proposal.

PLANT PRIDE PROGRAM

V. Plant Pride Program.

Within 60 days of Commission adoption of the Joint Proposal, Verizon will implement a Plant Pride Program (“PPP”) through which technicians can submit plant conditions needing additional maintenance through Verizon’s National Operations Quality Inspection (“NOQI”) system or a successor system.

Verizon will review the submissions to NOQI, and within 90 days of receiving a submission under the PPP, will, in accordance with the following paragraph, perform plant rehabilitation or maintenance as deemed necessary by Verizon to address the reported conditions.

Verizon will resolve at least 75% of the submissions within the 90-day period, but that percentage may be reasonably adjusted by Verizon based on the number of submissions received and the CTRR results achieved. Final resolution may consist of repair, replacement, or a reasonable conclusion that no further action is appropriate as Verizon determines. Reporting employees will be advised of the final resolution.

Verizon will also maintain detailed records concerning the status of each submission, and will review the results with CWA on a quarterly basis. The issues to be discussed at such reviews will include the volume of submissions, their quality, the number of conditions remedied and, in general, whether the program is achieving its objectives. These meetings will be led by the applicable Verizon region leaders and the CWA Area/District leadership, and no more than three additional representatives each from Verizon and the CWA will attend.

Technicians will be educated on the availability of this system and will be kept informed of the results through communications at the garage level, including dedicated space to publish local results (such as before and after photographs).

Garage communications sessions will continue to be held and additional measures will be taken to ensure technicians are aware of the NOQI system and the ability to report plant conditions through it. NOQI will be the primary mechanism for reporting and tracking activity for the PPP.

Absent agreement of CWA and Verizon to continue it, the Plant Pride Program will end at the earlier of four years after it is initiated, or upon completion of all of Verizon’s other obligations under this Joint Proposal

OTHER MEASURES

VI. Remediation Program for Batteries Providing Back-up Power to Remote Terminals (“RTs”) during Commercial Power Outages.

Batteries at RTs serving critical customers (hospitals, PSAPs, police stations) will be identified and will be inspected within six months of Commission adoption of the Joint Proposal.

New batteries will be ordered and installed as necessary.

VII. Double Pole Removal Effort.

Verizon will remedy 64,000 double pole conditions over a four-year period commencing with the Commission adoption of the Joint Proposal.

VIII. Consolidation of Central Office Entities (“COEs”).

In order to prevent single incidents in small COEs from unduly influencing reported CTRR metrics, remote COEs serving ≤ 500 lines will be consolidated into host switches for CTRR reporting purposes.

MISCELLANEOUS

IX. Force Majeure.

Verizon may, with notice to other parties, ask the Commission to delay its obligations under this Joint Proposal in the event that its full performance is prevented by circumstances beyond the company’s reasonable control.

X. Reporting Obligations.

Verizon will periodically submit to Staff a Report of its progress in meeting its obligations under this Joint Proposal. The content and frequency of such Reports will be determined through discussions between Staff and Verizon, after consultation with other Parties, following the adoption of the Joint Proposal by the Commission. The Reports will also be made available to parties to this proceeding consistent with the terms and conditions of the Revised Protective Order, subject to the provisions of that order. No designation by Verizon of the contents of a Report made pursuant to this paragraph as confidential pursuant to the Revised Protective Order, will affect, prevent or limit in any way the discussion of or disclosure by any person of any information not derived from such report, including such information discussed at a meeting held pursuant to Section V of this Joint Proposal.