After Hurricane Sandy, Verizon Takes Hostages

The disaster allows a phone company to provide inferior service at a higher cost

"I've been on the phone with Verizon all day," says Jason Little, the tan, sinewy owner of the popular Fire Island haunt Bocce Beach. The restaurant's phone and Internet are down. Little made an appointment, a customer service rep scheduled it, but it doesn't matter. He knows Verizon won't show up. "They never come."

The same thing happened last week. And three weeks before that. Sometimes service will come back on its own, but until it does, Bocce Beach can't process credit cards. Losing that ability would hurt any small business. But on remote Fire Island, where there aren't many ATMs and the few that exist charge huge premiums, it's a major blow. "I have to tell everyone who comes in we're cash-only today," Little says.

Last fall, Fire Island took Hurricane Sandy square in the jaw. Shortly after, residents were hit by a second sucker punch: Verizon, the sole provider of landline phone and Internet service on the island, announced that it would not repair damage to wires connecting homes and businesses to the outside world.

USACE/flickr
Verizon VP Tom Maguire says it’s too expensive to repair Fire Island’s landlines, but residents say Voice Link service is spotty and unreliable.
Verizon VP Tom Maguire says it’s too expensive to repair Fire Island’s landlines, but residents say Voice Link service is spotty and unreliable.

The company could—but it won't. Verizon is using Sandy as an opportunity to abandon a basic

public infrastructure that has been around since Alexander Graham Bell. Instead, the company is offering more expensive, less reliable substitutes with a single, express purpose: fattening Verizon's bottom line.

Fire Island customers who lost service after the storm have been given the option of adopting a new Verizon product called Voice Link. It essentially turns a home phone into a cell phone, routing calls over Verizon's wireless network. But according to residents, reception is bad and calls are often dropped or missed altogether. The reviews have been so dismal that islanders with severely damaged landlines stubbornly cling to them, despite Verizon's refusal to service them.

Just down the street from Bocce Beach, Roberta Smith stands behind a glass display case at the beachwear boutique A Summer Place. She has owned the store for 16 years and, since Sandy, has used a single phone line for both calls and credit card transactions. "I had two here, but one was crackly—you couldn't really hear anybody, and it wouldn't transmit the credit card data."

As a backup, she purchased a wireless credit card machine, but "half the time" the wireless network on the island is so slow that the machine won't work. If all else fails, Smith says, "we have the old-fashioned, physical, knuckle-buster swipe machine, but you still have to call up and give the vocal authorization." And that requires a working phone line—something the folks on Fire Island no longer take for granted.

Verizon, it turns out, had plans in place to stop providing landline service to communities like Fire Island long before Sandy hit, but the storm provided an opportunity to accelerate the pace.

Last year, CEO Lowell McAdam spoke candidly about the company's strategy during a private symposium arranged by the financial firm Guggenheim Partners.

McAdam spelled out Verizon's plans to sunset old technology—cheap copper landlines—in favor of more expensive fiber optic lines and wireless networks. The decision wasn't motivated by customer demand so much as McAdam's interest in increasing Verizon's profit margins.

"We are going to kill the copper," the CEO told investors. "We are going to just take it out of service." The move would be a "pot of gold, in my view."

A few months later, when Hurricane Sandy swept through Fire Island, unearthing and corroding copper lines, Verizon asked the New York State Public Service Commission for permission to kill its copper lines and offer Voice Link as an alternative.

But Voice Link has proved a lesser alternative. It's not just that its customers can't process credit cards; home security systems and medical alert systems don't work, either. The device also requires power to provide a dial tone. If there is a protracted outage—which often happens on Fire Island—the inability to reach help in a timely fashion could be life-threatening.

It's 14 minutes by police boat to the mainland and another three minutes, via exchange ambulance, to the hospital. "It's really scary," says Gretchen Stegner, an EMS captain on the island. "To not be able to get through to 911? That's malarkey." Firefighters also say the system makes it more difficult to pinpoint the location of 911 calls.

Yet Tom Maguire, a Verizon vice president, says Voice Link is the future for Fire Island, whether residents like it or not. Demand for landlines has plummeted over the last decade. In 2000, Maguire says, Verizon had 53 million access lines. "That number is down closer to 17 million today."

"Imagine if you were any business and you lost 67 percent of your customer base," he says. Verizon, he says, is simply adjusting to realities presented by the market.

Maguire's statistics provide little comfort to residents who are still rebuilding their homes, and shopkeepers are struggling to make enough money this summer to stay in business.

Maguire isn't troubled by the fact that shopkeepers can't process credit cards. They should try the iPhone app Square, he says, or rely on cash—though it's doubtful Verizon would be pleased by such payment limitations on its own business.

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11 comments
DavidSmithers
DavidSmithers

When I called Verizon to report the outage, what was supposed to be a technical call started off as a very aggressive pitch to upgrade to Fios fiber optic phone service, with the rep saying, "This isn't a sales pitch. Why would you not upgrade to a faster service for the same price?" I told them Fios will go down in a power outage and copper lines are 99% reliable by law and design, the rep said "well you also get a 8 hour power backup battery and if you live in an area with lots of power outages just get a generator." They also claimed the phone company isn't obligated to maintain the outside copper wires and eventually the whole infrastructure is going to deteriorate  from age. 

fratdawgg23
fratdawgg23 topcommenter

One might wonder if the NY State Public Service Commission is prone to favoring Verizon and the big telcos over We the People. The public service commissions in many states seem to have a habit of granting the requests/proposals of the big companies regardless of the impact to the citizens/consumers. Surely there is a way to increase the power of the cell tower on Fire Island and add an automatic backup generator for power failures.

SlightlyLost
SlightlyLost

People, you might as well get ready for this all across the country. The price to maintain individual copper wires to every home in America is incredibly large. It is not so bad in large urban areas where there are hundreds of users in a single building and hundreds of these buildings a few yards from each other. By law the phone companies were forced to provide service in rural areas at a huge loss because they were making money in the urban areas. As the urban areas convert to wireless service the whole model is turned upside down. If Fire Island had to pay 100% of the cost of it's copper land line phone service without subsidy from Manhattan, Brooklyn,  etc. the user would probably pay $300-400 per month per phone. This is why all of the phone companies are working to completely get rid of conventional copper wired phone service within the next five to ten years. They are losing more and more money on it as urban copper line service is being killed by wireless service. They are spending big $$$ in Washington for approval to pull the plug and of course they will get it. What you are experiencing on Fire Island will be spreading across the whole country in the next few years, rural areas first. You might as well learn to live in a completely wireless world because that is all you will have by about 2020. Fire Island should consider themselves as cutting edge early adaptors. Have you tried to find a good cheap blacksmith or saddle maker lately? Same concept.

ElleSturm
ElleSturm

What I don't understand is how Verizon is allowed to be the SOLE service provider for the entirety of Fire Island. I don't understand this as also I don't understand why and how Time Warner is allowed to be the sole cable provider for a large chunk of Manhattan. I know this may not be the place, but does anyone have any recent articles or sites that would explain how these monopolies are allowed to exist - particularly in such populous and um, outspoken, locations?

aliasetc
aliasetc topcommenter

Fire Island is primarily a gay island and everybody knows Verizon management is anti-gay

bgaby1
bgaby1

I am a year round resident of Fire Island and would like to thank you for reporting the facts as they are. I would like to add that even though the NYS Public Service Commission has given Verizon permission to trial Link on Fire Island, Verizon has now started cutting the wires on the poles into the homes that have installed Voice Link, thereby severing the customer's landline connection. What happens when/if the PSC makes the correct decision and bars Voice Link? Verizon is complaining that the cost of repairs is too high?! What a joke. They have ignored their infrastructure on FI for years and are hiding behind Sandy and the fact is they were just waiting for the opportune moment to put their plans into place. Now they are cementing this by actually cutting the wires into people's homes. Residents have begun documenting this with photos of the cut wires on the telephone poles. How much lower can Verizon sink? As for Tom Maquire's comment regarding paying with cash - remember what happened to Marie Antoinette when she said "let them eat cake". Unfortunately for us on Fire Island, the issue is compounded by the fact that there is absolutely no competitive alternative, something that the both the PSC and FCC must do something to correct. Gordon Gecko got it wrong greed is NOT good, especially when people's lives and livelihood depend upon reliable phone service.

SlightlyLost
SlightlyLost

@ElleSturm 

Think of it as 'federally mandated monopoly'. The entire country is divided into 'rate centers' and only one telco can install infrastructure and operate in each one. It is federal law. This is not some evil plot against a few flamboyant dialers in a few isolated areas. Do a little research on the breakup of the Bell system in the 1974-1982 period for the whole sad story. Cable services have a similar regulatory setup. So do gas and electric utilities. Congress did create a rather bizarre way to have 'competition' inside the telco monopoly. Only one company (the ILEC) can install equipment in the rate center. Competitors (CLEC's) can then lease service from the ILEC and try to resell it under their own name.

SlightlyLost
SlightlyLost

@aliasetc  Was it a gay island before people moved to it? Does it have peninsula envy? Does it lust after a sweet little bay? Does it feel that it faces an ocean of opposition? Are the tides against it? Is it a promiscuous island seeking any port in a storm?

SlightlyLost
SlightlyLost

@aliasetc 

Actually, Verizon is anti-island, not anti-gay. They love money, regardless of who spends it. They are losing massive amounts of money on all rural phone service and working as hard as they can to get out of that business. They are doing the exact same thing in rural areas all across the country, gay or straight.

hudson.pomd
hudson.pomd

@aliasetc Fire Island is a gay island? There are over twenty individual communities on Fire Island, two of which are gay. What are you talking about?

aliasetc
aliasetc topcommenter

That's the reputation of Fire Island

 
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