Verizon's NYC government contracts face scrutiny over claims of not meeting FiOS goals

Verizon's (NYSE: VZ) troubles in New York City continue to mount as Mayor Bill de Blasio is requiring City Hall to approve any business local agencies do with the service provider, a measure focused on getting it to fulfill its goal to wire the city with FiOS fiber-to-the-premises (FTTP) service.

Mayor de Blasio told NYC commissioners and government agency leaders in June that they have to tell the Dept. of Information Technology and Telecommunications about any major contract negotiations they conduct with Verizon and other service providers that do business in the city.

Maya Wiley, de Blasio's general counsel, who is in charge of the city's broadband strategy, will make the final approval of any discretionary deal.

Such a requirement is a big hit to Verizon, which, according to city estimates obtained by Crain's New York Business, has generated nearly $650 million in voice and data revenues with NYC's government agencies since 2010.

Wiley said that they would like to work with Verizon, but they want assurance that the company will be a good corporate actor.

"We'll treat Verizon fairly," Wiley told Crains Business. "But where we have the power to make decisions, we will make decisions that benefit good corporate actors. They have to demonstrate to us that they are good corporate actors if they want us to use our discretion in ways that benefit them."

This new requirement comes in the wake of an audit issued by New York City's Department of Information Technology and Telecommunications that found that Verizon Communications failed to deliver on its promise to provide fiber-optic service throughout the city by 2014.  

Verizon disagreed with the city's findings, saying that the audit is based upon erroneous information and incorrect interpretations of the company's franchise deal that was signed with the city in 2008, which allowed it to deploy FiOS throughout the city.

At the time, Verizon spokesman John Bonomo told FierceTelecom in an interview that the company has met its requirement to install fiber optics through all five boroughs in New York City, adding that the company had invested $3.5 billion in deploying FiOS in New York City and that it wants to get more residents on its service. 

In addition to claims about not meeting its buildout goals, a number of competitors like Optical Communications Group say Verizon has been putting up roadblocks to prevent them from using conduits that are designed to allow any provider to lay their own fiber cables. The telco gained control of the city's underground conduit when it purchased Empire City.

Verizon also dismissed the conduit issue, telling WSJ that its inspection prices are fair and are under city and New York State regulation.

For more:
- Crain's New York Business has this article

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