POP QUIZ: Can You Answer Basic Questions about the Verizon NY 2019 Annual Report

ONLINE AT: http://www.irregulators.org/popquiz

How Do We Solve the
Digital Divide?

Dear business
reporters, investors and CPAs, biz schools and academics, lawyers,
economists, politicians, public policy wonks, activists, non-profits, and
regulators, including the FCC, congressional staffers, state advocates, Attorney
Generals, Comptrollers and those who can examine a financial report…

The IRREGULATORS offer up this:  POP QUIZ: Can You Answer Basic
Questions about the Verizon NY 2019
Annual Report, published, June 8th, 2020. Click
for Report. This is an excerpt (see page 25).

Click for the Complete
POP QUIZ Questions and Answers

  • Virtually no one knows or has acknowledged that there are still state telecommunications utilities.
  • Verizon NY is NY State’s primary public telecommunications utility, and this includes New York City.
  • It is just like other state-based utilities, such as water, gas or electric.
  • Virtually no one has examined these financial books or the implications, published June 8th, 2020.
  • And virtually no one knows that these are based on deformed FCC accounting formulas that were set in 2001, were never changed, and are still in use.

The current pandemic has exposed that the Digital Divide is much
larger and more harmful than previously discussed. From rural areas or even
inner cities that were never properly upgraded to high speed broadband, or
worse, that low income families can’t afford broadband  even if it is available, America is now calling for
answers. 

Moreover, there have been no investigations or anything
resembling a deep-dive as to why America’s
prices for all services are 3-14 times higher than, say, the EU countries,
much less how to fix our inflated broadband and wireless costs.

Worse, there is now this knee-jerk reaction to call for WiFi and 5G  wireless as a solution, including an FCC $9
billion 5G plan. Ironically, both wireless services require a fiber optic wire
to work.

This financial report shows billions in cross-subsidies, diverting the state
utility construction budgets for the wireless cell sites, while charging local
phone customers. And it shows a massive dumping of corporate operations
expenses into the state utilities. These financial machinations made America’s
entire wireline infrastructure appear unprofitable. Thus, upgrades to the
wireline networks didn’t occur—and it is now called the “Digital Divide”.

Every State is Impacted: New York is the only state we know of that still requires a full annual report and these financials and cross-subsidies are based on FCC federal rules that are still in use. However, it appears that every state is using identical FCC deformed formulas, even if the State doesn’t realize it.

Every FCC  Proceeding & Decision is Impacted. From the FCC’s $9 billion dollar 5G giveaway to the attempt to raise basic phone rates in multiple ways, the FCC is not examining the financial cross-subsidies presented in this Verizon NY Annual Report.

THE POP QUIZ:  See Page 25 from the Verizon NY 2919 Annual Report. (We modified the opening chart to add simplicity.)

Click for the Complete
Questions and Answers:

Questions: (Q1, Q2,
etc.)

  • Question 1: If Local Service revenues are mainly from the copper-based phone lines, which have been barely maintained, why did it pay $1.2 billion in Construction & Maintenance expenses in just 2019? (valorhealthcare.com)
  • (Traditionally, only $75-125 million annually is directly related to Local Service.)
  • Question 2: If Backhaul is 48% of revenues, more than double the revenues of Local Service, why did it pay ½ of what Local Service paid for construction and maintenance?
  • Question 3: If Local Service is only 21% of revenues, why is it paying 61%, or over $½ billion, of Corporate Operations expense? And –Why is Local Service paying 54% of Marketing, $205 million, when the company no longer advertises the service?
  • Question 4: How much of the Verizon NY construction budgets, especially those charged to Local Service, were diverted to build-out the wireless networks?
  • Question 5: How did Backhaul (also called “Special Access” or “Business Data Services”)  end up with EBITDA (Earnings Before Income Taxes, Depreciation & Amortization) profits of 55%, while Local Service lost $1.9 billion?  
  • Question 6: If Local Service expenses were reset to pay actual expenses incurred, how much of Local Service, in just 2019, based on just these factors, was overcharged and could be used to solve the Digital Divide and bring fiber optic services to the entire state?
  1. No Change
  2. $965 million dollars
  3. $1.6 billion dollars
  4. There needs to be an audit
  5. These FCC legacy formulas do not matter (whatever that means?)