Backroom New Jersey Verizon Deal Will Hurt Landline Customers: One Example of How Government Now Exists to Service Corporations at the Expense of the Citizenry

NewJerseyBy Elaine Magliaro

On Sunday, Pulitzer Prize-winning investigative journalist David Cay Johnston reported that the telephone is going to become “much more costly and intermittently available in the Garden State, thanks to a backroom deal between New Jersey governor Chris Christie’s administration and Verizon.” David Johnson (NJSpotlight) said that the five Board of Public Utlilities commissioners could approve the agreement as early as today “at the agency’s regularly scheduled monthly meeting.”



Regardless of where you live in America, the New Jersey deal illustrates how the old promise of universal access to telephone service is quietly being replaced with new rules that give all the power to telecommunications giants. From Alabama to Texas, from California to Kentucky, the telephone giants have been pouring millions of dollars into new laws and regulations that strip customers of agency and rights.

Under the New Jersey deal, Verizon will only be required to provide basic landline home and business service, and to continue repairing lines, for the next three to possibly five years. After that Verizon can take its sweet time or altogether refuse to make repairs.

In addition, Johnston said that Verizon could also “impose unlimited charges for any one-time service, such as an installation or upgrade.” He noted, “This way it would be able to turn away any customer it deems unprofitable simply by demanding huge fees.”

According to Johnston, telephone rates would also increase a whopping 36 percent by the year 2019. Johnston said, “If rates were allowed to increase at last year’s inflation rate, the total increase by 2019 would be less than one-tenth of that.” He continued by saying that the huge rate hike was “not listed as a purpose of the four-year-old proceeding under which the backroom deal was made.”

Johnson said that “a public inquiry known as a ‘rate case,’ which includes expert testimony and requires economic analysis, would need to be conducted in order to determine whether any price increases are justified” is typical in deals such as this. He added that the deal “violates the basic economic and legal principle of utility regulation”—noting that owners “are entitled to just and reasonable profits and customers to just and reasonable prices.”

Democratic Assemblyman Dan Benson said that economic damage would be widely felt—especially in lowly populated areas—“if the deal goes through.” He said that small towns without a reliable telecommunications infrastructure are “going to be left behind, as they try to attract jobs and businesses.”


You might think Republicans, as the party that claims to support business, would be looking out for this sort of thing. But so far in New Jersey it is Big Business, with all of its campaign money and perks, like the corporate jets that ferry Christie around the country, that has won the hearts of the Republican governor and Republican state legislators.

This deal to diminish and ultimately take away consumer rights while jacking up prices was done largely without public hearings or much notice to the public at all. (There were two short hearings — three years ago.)

The list of people who received copies of the deal, which was signed May 6, does not include any consumer groups or news organizations. Only state officials, Verizon, and CenturyLink, which serves a small part of the state, were sent copies — a solid indicator that the fix is in.

According to Johnston, the “New Jersey state office that looks out for the interests of telephone customers” was not involved in the Verizon deal. He said that Stefanie Brand, the Director of the Division of the Rate Counsel, “filed a petition Friday protesting the deal, which she said is being done in violation of state law.”

Brand said that based on the original case, “the public would have no way of knowing the central changes being proposed.” She told Johnston that the original case made no mention of “costs and rate increases” or the other changes that go far beyond the issues the public had been told about.

Brand said that the phone system will fail unless there is “continual maintenance to switches and other equipment.” She added that utility workers had told her staff that fewer repairs were being made, “effectively guaranteeing that the system will fail.”

“Defending the old system is not an example of Luddite opposition to new technology,” Johnston wrote. He noted that “Internet calls that use coaxial cables, fiber optic lines, and wireless networks are the future.” He added, however, that the phone giants, “which grew rich as regulated monopolies, want freedom to charge any price, refuse any customer, limit any access as they think best serves their bottom line.”


The need to reach first responders in a medical emergency, fire, or crime, gets no regard under such a system. AARP recorded complaints from people whose relatives died because they could not contact medical help after Christie’s administration relaxed rules that regulated telephone companies in New Jersey.

Mayors have complained that local businesses are being hurt and jobs are being lost because of inadequate and worsening Verizon service.

Spencer Kent (

Opponents of the deal believe it could greatly affect rural areas throughout the state like Cumberland and Salem counties by allowing Verizon to neglect certain service quality standards for landline-only telephone customers. They also claim it could allow Verizon to increase rates by 36 percent over a five-year period.

Hopewell Township Councilman Greg Facemyer said, “The backbone of the phone system was built on the statuary obligation … of (maintaining) the landline system.” He added: “So what is the farmer, the person who lives in a rural area, what are Salem and Cumberland counties going to do, how can businesses, students compete today?”

Kent said that the New Jersey Board of Public Utilities (BPU) that is in charge of authorizing the measure had declined to comment, saying it was a “pending matter.”

Kent noted that the Verizon deal “would remove pricing regulations for residential basic telephone service, single-line business telephone service, nonrecurring charges for residential service connection and installation, and residential directory assistance services.”

According to Kent, “Brand’s biggest concern is her claim that the agreement would remove the BPU’s oversight authority of service quality standards.”


She said seniors, low-income residents, and residents located in rural communities are a large portion of landline-only telephone customers.

“What is going to cause them to lose their service is if the company doesn’t maintain their wires,” she said.

Tim Johnson (NJSpotlight) reported on Monday that consumer advocates were urging the state to scrap the proposed deal “that would reclassify Verizon New Jersey’s basic telephone service and instead schedule extensive public comment on the issue.” He said that critics of the deal argue that “the draft stipulation agreed to by the staff of the New Jersey Board of Public Utilities and the telecom company earlier this month would boost costs for seniors, the disabled, and low-income residents.”

According to Tim Johnson, what really irks the Verizon deal critics “is that they only learned about the stipulation less than two weeks ago and had no part in the private negotiations between the BPU staff and Verizon.”

David Cay Johnston said that up to this point “both individual mayors and the New Jersey State League of Municipalities have been ignored.” The League said that “many New Jersey towns have poor landline telephone service, particularly in those towns that lack FiOS services. When it rains, or when the air is humid, these telephone lines do not work. This deteriorating infrastructure is a security, health, and safety hazard.”

Johnston noted that Verizon has already collected “billions of dollars in increased rates for services that millions of New Jersey residents and businesses will never see.” He added that even though “the state legislature had issued requirements that Verizon wire most of the state with fiber optic service, the Christie administration released the company from those obligations.”

Johnston said that the phone giants’ determination “to get rid of any consumer protection rules across the nation is illustrated by two salient facts.”:

AT&T, the dominant California carrier, hired 120 lobbyists, one for each member of the state legislature, to get the law rewritten in its favor and to the detriment of customers.

In much smaller Kentucky, AT&T hired 37 lobbyists and spent years advancing a bill that stripped customers of their rights. It passed in March and was signed by Governor Steve Beshear, a Democrat.

The New Jersey deal and the efforts to keep the public in the dark about it until it’s too late reveal how much government now exists to service corporations at the expense of the citizenry. That will continue unless people demand responsive government.


NJ Landline Users About To Get Screwed In Secret Deal (Crooks and Liars)

More Than Phones Are On The Line ( The National Memo)

Officials say N.J. deal with Verizon will hurt landline phone customers (

Advocates Want Consumers to Be Part of Conversation About Verizon Rates (NJSpotlight)

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7 Responses to Backroom New Jersey Verizon Deal Will Hurt Landline Customers: One Example of How Government Now Exists to Service Corporations at the Expense of the Citizenry

  1. swarthmoremom says: “A proposal that would change how local phone companies are regulated at the Minnesota State Capitol is facing opposition amidst concerns that it would lead to higher prices and less service in rural areas.

    The bill’s advocates say less regulation would allow them to stay competitive with newer technologies.

    Attorney General Lori Swanson said the proposal that’s being pushed by telecommunication companies would “eviscerate” 100 years of state law protecting consumers, including a requirement that phone companies provide access in far-flung rural areas.

    “We’re very concerned that they’ll just drop people who are too expensive to serve,” Swanson said. “And we’re very concerned that if they don’t drop you, they’ll say, ‘Great, it will be $250 a month.'”

    The bills are opposed by former Minnesota Attorney General Skip Humphrey and Mike Hatch, who called it a “metro-centric” bill that would hurt the elderly and the poor.

    Minnesota Telecom Alliance President Brent Christensen said he views the proposal more as re-regulation than deregulation. The bills would change the threshold under which landline phone companies are required to provide service and remove some price caps.

    “That would allow incumbent carriers to be regulated the same as their competitors if they pass a competitive test,” Christensen said. “It’s a really, really small step.” “

  2. rafflaw says:

    Is ALEC behind this basic change in how telephone companies are regulated?

  3. Elaine M. says:

    March 11, 2014
    Telecom Giants Drag Their Feet on Broadband for the Whole Country
    By David Cay Johnston

    “Can you stream me now?”

    If the answer is no, you’re probably going to be looking at the spinning wheel of death on your laptop for a very long time. After making a big, bold promise to wire every corner of America, the telecom giants are running away from their vow to provide nationwide broadband service by 2020. For almost 20 years, AT&T, Verizon and the other big players have collected hundreds of billions of dollars through rate increases and surcharges to finance that ambitious plan, but after wiring the high-density big cities, they now say it’s too expensive to connect the rest of the country. But they’d like to keep all that money they banked for the project.

    In 2010, the Federal Communications Commission announced the National Broadband Plan, which promised to provide 100 million American households with high-speed cable by 2020. Verizon has been expanding FiOS in major markets, and AT&T has been expanding its U-verse service. And now, instead of spending that war chest digging up streets and laying fiber cable, the cable and telephone companies have invested in a massive and very successful lobbying push. They are persuading state legislatures and regulatory boards to quietly adopt new rules—rules written by the telecoms—to eliminate their legal obligations to provide broadband service nationwide and replace landlines with wireless. This abrupt change in plans will leave vast areas of the country with poor service, slow telecommunications and higher bills.

    This is good news if you own stock in Verizon, but very bad news if you have a small business that’s not in a city already wired up.

    The federal government’s official broadband map shows vast areas of America still have little or no service, and many areas will never get it under the current plan. “Small business customers, people who work at home and rural communities across the country need to wake up before it is too late,” says Regina Costa, telecommunications research director for the Utility Reform Network in California. “Verizon and AT&T are aggressively moving to dump a large percentage of their landlines and force customers to wireless networks [that] are expensive, restrictive, incompatible with medic-alert services, less reliable for 911 calls and will not hold up during power outages—and in a lot of places wireless just won’t work.”

  4. Elaine M. says:

    Will Verizon be allowed to break its FiOS promise to New Jersey?

    But last year, the NJ Board of Public Utilities decreed the “full deployment of broadband has not been achieved.” Bruce Kuschnick, a telecom analyst, told this week that “only 55 percent of the state has been wired.”

    Kushnick notes that Dennis Bone, former President of Verizon New Jersey, was the co-chair of Gov. Christie’s Economic Development Transition Team.

    According to Kushnick, the state has given Verizon an opportunity to “erase the law.” He said the roots of the Verizon issue stem from 1991. At that time, Verizon New Jersey said it would transform the state into the first completely wired with fiber optic cable in a plan known as Opportunity New Jersey. Customers paid Verizon about $15 billion dollars in excess phone charges and tax breaks to perform the construction over two decades – in addition to rate increases along the way.

    Under the Christie administration’s new proposal, Verizon can stop expanding FiOS internet and TV services in New Jersey. The proposal will allow Verizon to serve up 4G wireless service instead, “which is fast for wireless,” Newsweek points out, “but painfully slow compared to FiOS.”…

    Kushnick, who also is the chairman of TeleTruth, a telecom watchdog, said the implications of New Jersey’s proposed agreement with Verizon can’t be underestimated. Without FiOS, cable will be able to preserve its monopoly in underserved areas, he said.

    “Essentially, they’re erasing the law,” Kushnick told “It’s a way of forcing customers onto wireless and getting rid of the traditional copper wiring.” Copper wire and FiOS, he said, continue to operate when the electric grid is knocked out by floods and other natural disasters. Not so with wireless. “They’re stranding one-third of the population.”

  5. bettykath says:

    And there is a kill switch for cell phone service. The wheels are turning slowly but surely.

  6. bigfatmike says:

    We would have paid extra for plain old copper line telephone service because is seems more reliable during times of natural disaster.

    For several years we have had telephone provided by the cable service. This kind of phone service is just a proprietary form of telephone over the internet – VoIP. We were spending about $50 a month for unlimited calls. But we hardly ever make or receive calls.

    For $40 we bought a VoIP adapter. We found several VoIP service providers that charge roughly $1.50 per month plus a penny per minute. We used exactly the same telephones in the house that we always did. Our telephone charges are now less than three dollars per month. We paid the for the VoIP adapter out of first months savings. Our annual savings on telephone charges are about $600 every year. And the service is as clear and reliable as what the cable service was providing.

    The cons are that the service does not work if you don’t have internet or electricity – just like the telephone service from the cable provider. If you need to connect a physical FAX machine you will need a special and more expensive version of VoIP adapter. Setting up the VoIP adapter is roughly as difficult as setting up a wireless router in your home. But all the VoIP service providers we checked have extensive directions explaining how to set up your VoIP adapter for their services and some of them have email and telephone support as well.

    I would rather have copper wire telephone service. But if I have to have telephone service based on the internet I would rather pay a few dollars per month rather than $50 per month.

    BTW, there are many versions of softphone software that run on smart phones. With softphone software you can access and make calls on your VoIP account anywhere you can connect to the internet via WIFI.

    I don’t usually use all my monthly cell phone minutes. But anytime I get close to using all my minutes I can dash into McDonalds, Starbucks or anywhere I can get access to a WIFI signal and make a call on my VoIP account.

    Much has been made of cable-cutters who have dropped cable TV and simply stream content from the internet. But more and more people are realizing they can cut the cable companies telephone service as well – as long as you have a fast reliable internet connection.

  7. Pingback: Verizon Intends to Get Out of FiOs/Landline Business | Anti-AOL

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