Verizon's copper cutoff traps customers, hampers rivals

PHILADELPHIA — When Henry Powderly II ordered Verizon's FiOS fiber-optic service, he knew he was about to be connected to the future of telecommunications.

He also got unplugged from its past. Which meant that while Powderly was gaining features, he was losing some telecommunications options.

Verizon's installer removed the copper wires that used to carry Powderly's phone calls, as he knew the company would. But for most of the world, copper still links homes and businesses, as it has for a century.

Verizon's new high-bandwidth fiber lines are capable of carrying not only calls but also Internet data and television with room to grow. But once the copper is pulled, it's hard to switch back to the traditional phone system or less expensive digital subscriber line service.

And Verizon isn't required, in most instances, to lease fiber to rival phone companies, as it is with the copper infrastructure.

What's more, the next owner of Powderly's house will face higher bills with FiOS than another home with copper. Right now, for instance, Verizon's DSL plans cost as little as $15 a month. FiOS Internet starts at $30 a month.

"I was not given an option," said Powderly, 30, a Long Island, N.Y., resident.

As it hooks up homes and businesses to its fiber network, Verizon has been routinely disconnecting the copper and, many subscribers say, not telling them upfront or giving them a choice.

More than 1 million customers have signed up for a FiOS service, offered mainly in the suburban areas of 16 states.

Verizon spokesman Eric Rabe said customers should have been told at least three times: by the sales representative when FiOS is ordered, by the technician before copper is cut, and through paperwork the customer gets. Some customers say that hasn't happened.

The New York-based company has made it clear its entire network is going to fiber-optics. Verizon has decided to spend $23 billion to make fiber available to 18 million homes by 2010. Network maintenance savings could top $1 billion a year, Verizon said.

Verizon is in the process of installing FiOS in Bellevue, Bothell, Everett, Kenmore, Kirkland, Redmond and adjacent service areas in King and Snohomish counties.

"It's a huge expense to maintain those copper networks," said Scott Randolph, federal regulatory director at Verizon. "At some point in time, it would not make sense to operate two networks."

Mark Cooper, research director at the Consumer Federation of America, says there are other reasons for snipping the wires.

"They don't want to maintain it. They don't want the expense and they don't want the competition," he said.

Under the Telecommunications Act of 1996, incumbent phone companies like Verizon must lease their copper network to rivals. That's generally not the case for next-generation fiber systems.

So far, Verizon has filed more than 100 notices with the Federal Communications Commission (FCC) to retire portions of copper throughout its network.

The FCC allows that to occur as long as public notice is given so the phone companies can work together to ensure the smaller companies' access.

But rivals say access at reasonable prices is not guaranteed and it's just a matter of time before they're cut off.

"It's a horrendous situation. ... We don't let General Motors build a highway and decide what size cars to let on the road," said Joe Plotkin, marketing director for Bway.net, a New York Internet provider. "The small guys have tried to fight this re-monopolization of the network infrastructure."

He and other smaller rivals contend the communications market is fast becoming a two-player game between giant phone and cable companies — diminishing consumer choice.

While AT&T and Qwest are also retiring copper networks, they're not touching the "last mile" that runs from each customer's dwelling to the central office.

Laying fiber, a robust pipeline, through the last mile is much more expensive because each line goes to a particular home or business.

Verizon is taking the pricey route because it believes fiber offers a superior service that will lure customers from cable operators, who now offer telephone service, television and high-speed Internet.

Besides limiting options down the road, the switch to FiOS has other implications.

Unlike copper-connected phone service, FiOS doesn't work during power outages once a backup battery goes out — not even for emergency calls. Home alarms and certain other devices work best with copper.

Rabe said Verizon will restore copper to homes if the customer insists, but would rather not reconnect the copper and will try to persuade the customer to agree.

An example of what Rabe describes as adequate notice is the fine print on Verizon's FiOS policy, which is printed on its Web site. It says "current Verizon Online DSL customers who move to FiOS Internet service will have their Verizon Online DSL permanently disabled after their FiOS conversion."

Bill Kelm, a FiOS customer in suburban Dallas, filed a complaint with the Federal Trade Commission last year because of Verizon's "inconspicuous" policy rules.

"It's buried within these long terms of service that people never take the time to read," he said.

While Kelm has no quarrel with FiOS itself — he pays $145 a month for TV, Internet and phone — he would like to have been told before he signed that Verizon would cut the copper.

He was counting on Verizon's clearly advertised 30-day money back guarantee in case he didn't like the service and wanted to switch back.

"I blew a gasket," Kelm said. "The 30-day money back guarantee was worthless in my opinion."

Kelm's also concerned Verizon initially priced its current FiOS service lower only to jack rates up once the subscriber is reeled in. "Then, you're stuck."

In a story published on July 10, 2007 about Verizon's fiber-optic service, The Associated Press reported that some consumers say they were not notified that the copper lines to their homes would be removed during installation. One customer who was quoted, Henry Powderly II of Long Island, N.Y., said he was not told by Verizon. The story should have noted that Powderly knew he was going to be disconnected and didn't mind, and that he likes the new service. This version was corrected on July 11, 2007.