FCC Decision Empowers Verizon, Costing Workers and Consumers
August 28, 2012
By Marc Bussanich, LaborPress City Reporter
The Communication Workers of America has been negotiating with Verizon for over a year to reach a new labor contract. Both sides are still meeting with a federal mediator, but as CWA members await the outcome of the mediator’s decision, the Federal Communications Commission gave the green light last week for Verizon to purchase unused spectrum from a consortium of cable companies, which will prove harmful to both consumers and the CWA.
Pete Sikora of CWA District 1, which represents telecom workers in New York, New Jersey and New England, said that the decision by the FCC to allow Verizon to purchase spectrum (the public airwaves over which broadband data is transmitted) unused by most of the major cable companies amounts to a bad deal.
“The deal is an end run around anti-trust laws that allows Verizon Wireless and big cable companies such as Time Warner, Comcast and Cox Communications to sell each other’s products. By allowing the largest wireless provider, Verizon Wireless, to cross market their former rivals’ products and vice versa ends competition for consumers. For telecom workers, it means the death knell of FiOS development into new areas, which will result in job losses, a lack of economic development and consumers paying more for less service.”
He added, “The downside of the deal for consumers is obvious as former rivals become partners, competition is reduced or eliminated and there’s no cross platform competition between wireline and wireless providers. This will have huge implications for economic development and local economies.”
The CWA called on Verizon, the FCC and the Department of Justice to require a FiOS build-out of up to 95 percent of Verizon’s footprint as a condition of the deal, which would have created 72,000 jobs nationally, but the five-member board didn’t incorporate that requirement into its final decision.
“The DOJ and FCC imposed weak and nearly meaningless conditions on the monopoly Verizon and the cable companies have cooked up,” said Sikora.
Verizon has claimed that it is not abandoning the fiber-optic FiOS network, but it’s now obvious after the FCC ruling that Verizon has no interest, let alone plans, to build a profitable network that will provide fast and reliable TV, Internet and phone service to consumers in rural areas.
“The FCC made a big gamble by approving this deal for wireless technology, which can’t achieve the same speeds as a fiber optic wireline network. It’s very clear that Verizon’s plan is to focus on consumers with the means to pay for the technology and forego providing the service in areas with little or no economic potential,” Sikora said.
The CWA had worked tirelessly with regulators and different pols to persuade them that the deal would not benefit consumers or workers. But, essentially, the FCC reasoned that Verizon’s purchase of unused spectrum from the cable companies would benefit consumers because used spectrum is better than unused spectrum.
The problem, however, is that neither Verizon nor the cable companies have the incentive to build-out their respective networks if they can simply cross-sell each other’s products.
“What’s the incentive for Time Warner to build a high-speed cable network where it doesn’t have a wireline competitor and can simply offer a bundled package via wireless transmission,” Sikora questioned.
Indeed, while the suburbs of Syracuse, Buffalo, Albany, Boston and parts of eastern Suffolk County on Long Island enjoy the benefits of a high-speed wireline network (FiOS), the cities themselves do not.
According to Sikora, these cities essentially will not have any good alternative, and true rural areas will be permanently locked out of a FiOS network as a result of the FCC decision.
“Verizon’s FiOS is the only fiber-to-the-home network, but the company has made the choice to avoid certain areas,” said Sikora.
LaborPress spoke with a Verizon spokesman, Rich Young, several months ago before last week’s FCC decision. He said then that “We explicitly said that we’d spend $23 billion on FiOS and pass 18 million homes. We’re almost at that point.”
Sikora noted that while FiOS is a profitable product, it’s not nearly as profitable as a virtual unregulated monopoly. Supposedly, Verizon and the consortium of cable companies have created a joint operations entity that will be responsible for developing proprietary technology that both Verizon and cable will be able to use, which also presage possible monopolistic practices.
“This is what happens when consumers and workers face a de-regulated world. By entering into a more and more unregulated wireless world, as we currently are, certain areas and consumers get left behind,” said Sikora.
He mentioned that the union is contemplating its next move, but stressed that it will keep fighting to get FiOS built in areas that don’t have it.
“This deal, however, is a big blow to jobs and consumers.”