The great Verizon FiOS ripoff [View all]

[DainBramaged]

After decades of demanding and getting rate hikes and tax breaks in return for promising to deliver broadband internet access to schools, libraries, hospitals and every home and business in their territories, Verizon is now making it clear that it is no longer expanding FiOS, its fiber optic cable service.

So what did they accomplish? What did they build? And how much did it cost? Verizon claims that the company spent $23 billion dollars in rolling out FiOS since 2004. (See, for instance, this message from Tim McCallion, President of Verizon’s West Region.) That's a lot of money.

But as I stare at a decade’s worth of Verizon annual reports, I notice something odd. Where, exactly, is that $23 billion? Specifically, where are the construction budgets to support this claim?

This chart shows Verizon’s construction budgets for 2000 through 2011, taken directly from the Verizon annual SEC-filed reports. It also shows an imaginary “FiOS Bump” -- about $3.8 billion dollars per year in addition to the baseline that should have been spent annually over a 6-year period if the company had really been paying out $23 billion dollars for the construction. But the numbers show no bump in construction for FiOS; no major increases in capital expenditures in general. In fact, Verizon, on average, spent more on construction from 2000 to 2004 than from 2005 to 2011.

http://www.niemanwatchdog.org/index.cfm?fuseaction=background.view&backgroundid=631

A N.J. state commission report from June 2010 saw this coming, and noted:

"While it is possible for Verizon to extend service throughout its authorized territory, to an additional 155 municipalities in the state that are not included in its current application of 369 towns, Verizon has indicated it will now concentrate its capital expenditures, expected to be between $16.8 billion and $17.2 billion in 2010 on its wireless telephone network. Further FiOS expansion will be limited to increasing penetration in those communities where FiOS is currently available, according to the company."

(The $16.8 and $17.2 billion are the companies’ total annual construction budgets, not New Jersey only.)