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New York City Sues Verizon

The city of New York filed a lawsuit in state Supreme Court in New York County on Monday, claiming that telecom behemoth Verizon Communications failed to live up to its promise to make its fiber-based Fios TV service available to all Gotham residents.

News of the suit was first reported by The Wall Street Journal.

The city has been at odds with Verizon since 2015 regarding the telco’s buildout of its Fios fiber optic pay TV, broadband and telephone service. According to the franchise agreement Verizon signed with the city in 2008, the telecom company pledged to have Fios available to 100% of the City’s 8.5 million residents by 2014.

But the city’s own audit of that promise found the telco fell way short of that goal. In June 2015, Mayor Bill De Blasio, Counsel to the Mayor Maya Wiley and Department of Information Technology and Telecommunications Commissioner Anne Roest announced an audit report that found blocks in the city that Verizon had marked as completed in the fiber buildout had not installed the necessary equipment and service and that Verizon had failed to consistently document service requests. In addition, the audit said about 40,000 requests for service were pending, many for 12 months or longer.

"Verizon must face the consequences for breaking the trust of 8.5 million New Yorkers,” Mayor De Blasio said in a statement. “Verizon promised that every household in the city would have access to its fiber-optic FiOS service by 2014. It's 2017 and we're done waiting. No corporation -- no matter how large or powerful -- can break a promise to New Yorkers and get away with it."

Verizon has disputed the City’s position, and claims it has lived up to its agreement completely. The telecom company said it already provides service to about 2.2 million city residents, has proposed investing another $1 billion in fiber in New York City over the next four years, and has committed to expanding Fios availability to another 1 million homes and thousands of small businesses.

“At a time when communities across the country are seeking and encouraging broadband investments like these, the City is inexplicably turning its back on this investment and its residents by pursuing foolish litigation that will harm jobs, business growth and technology competition throughout all five boroughs,” Verizon said in a statement. "The De Blasio administration is disingenuously attempting to rewrite the terms of an agreement made with its predecessor and is acting in its own political self-interests that are completely at odds with what’s best for New Yorkers. We plan to vigorously fight the city’s allegations.”

According to a letter sent to Mayor de Blasio on March 10, Verizon EVP of public policy and general counsel Craig Silliman argued that the city is playing a game of semantics.

In the letter, Silliman wrote that when the franchise deal was reached with a previous mayoral administration, the parties had agreed to change the definition of a passed home.

“In negotiating the agreement, both parties understood and agreed that Verizon would generally place its fiber-optic network along the same routes as has been used for its copper network, and would use similar strategies for accessing individual buildings,” Silliman wrote. “The obligation to ‘pass’ all buildings in the city was based on and consistent with that approach. This is confirmed by the fact that the parties advertently and intentionally omitted language found in the City’s agreements with cable providers that specified that a household is passed when functioning system facilities have been installed in the street fronting the building in which the household is located. The very argument you are now making is this contradicted by both parties understanding of passed households at the time the agreement was executed.”

In New York, Verizon must obtain permission from building owners to bring its fiber network into the building, which the company claims is the reason its penetration is higher in single-family suburban homes in the outer boroughs.   

Silliman continued that Verizon has spent about $3.7 billion to install thousands of miles of fiber in the city, passes all households in the area and can provide service within seven to 14 days of receiving a request.