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New York slams Verizon, calls city-wide FiOS rollout 'an egregious failure'

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Officials say Verizon misled the public and did not fulfill contract with city

Ask New Yorkers about Verizon FiOS, and you'll get one of two answers. If they are one of the lucky people who have access, they'll swoon about its fantastic speeds. If not, you'll hear tales of frustration about fruitlessly waiting years for FiOS to make it to their doorsteps.

It wasn't supposed to be this way. When the City of New York signed a franchise agreement with Verizon to build out its fiber-optic network across the five boroughs, everyone — or nearly everyone — was supposed to be able to sign up for FiOS by 2014. The deadline has come and gone, but millions of New Yorkers still say they can't order FiOS in their homes.

Now, New York is calling out Verizon for failing to hold up its end of the deal. An audit published this week by Mayor Bill deBlasio's administration and the Department of Information Technology and Telecommunications (DoITT) highlights "an egregious failure on the part of Verizon to deliver on the FiOS agreement." Verizon, meanwhile, claims it has fulfilled its contract with the city.

"An egregious failure on the part of Verizon to deliver on the FiOS agreement."

The disagreement, primarily, comes down to some vague wording in the original agreement. Verizon was obligated to "pass all households" with its fiber-optic network, a phrase that means that network must go by all dwellings in the city, but not necessarily connect to them. Verizon says it completed its rollout across the city, after some delays, in November 2014.

But the audit paints a different picture. As determined from on-site inspections, DoITT says that blocks that Verizon claims are "passed" with FiOS actually lack the requisite equipment to deliver service.

In addition, the audit finds that Verizon "systemically failed to meet its six-month and 12-month deadlines to fill non-standard installation orders for service to residential buildings." The 2008 franchise agreement mandated that Verizon complete requests to connect buildings to the fiber-optic cables in the street (called a non-standard installation) within a year at the very most. There are more than 40,000 such requests that are still outstanding, according to the audit, and over three-quarters of those have been on the books for over a year.

Verizon continues to tell customers that FiOS is unavailable in their area

There would be likely far more unfulfilled requests were it not for another shady Verizon practice unearthed by the audit. According to DoITT, Verizon continues to tell customers looking for service that FiOS is unavailable in their area, while simultaneously claiming that those areas have been successfully "passed" with fiber optics. In certain areas, the company appears to have taken the position that it is not connecting any more buildings with non-standard installations, even though it is required to do so under the agreement with the city.

Verizon claims, as it has for years, that delays in bringing FiOS to buildings and residences are due to issues with landlords. In a statement provided to The Verge, a representative says, "The challenge we have is gaining access to properties which of course would expand availability. We look forward to working with the City to seek solutions to this issue." The company says some landlords won't let Verizon workers enter the property and perform the construction necessary to bring in service. But the agreement gave Verizon the right to petition a state commission and order uncooperative landlords to grant access to multiple-dwelling properties. Verizon has hardly exercised that right, and has only filed 3,177 such requests, according to the audit.

In addition, Verizon rejects most of the audit's findings. "We disagree with many parts of the report. The review was based on erroneous factual conclusions and incorrect interpretations of the agreement," the company says in a statement. The company has published a lengthy response to the report, attached at the end of the DoITT audit. It largely disputes the terms of the agreement with the city, and claims that Verizon has held up its end of the deal.

Verizon, for its part, also says that the audit is merely a political play. A representative says in a statement that "it is important to note that it’s not a mere coincidence that the report is made public today, and labor negotiations with our largest union begin on Monday." The statement continues, "It’s well known the union has ties to the city administration, and things like this are a familiar union tactic we have seen before." The company's negotiations with the Communications Workers of America and the International Brotherhood of Electrical Workers, and the over 39,000 workers represented by them, are set to begin next week. The city and the deBlasio administration deny that the audit is related to the union negotiations, reports The Wall Street Journal.

As a result of the audit, the city has threatened to sue Verizon for breach of contract, but it isn't going down that road just yet. Instead, the city plans to work with Verizon to help facilitate the task of completing the FiOS rollout. City officials believe that bringing high-speed broadband access to all five boroughs — and introducing competition to legacy providers Time Warner Cable and Cablevision — is a top priority.

Update, June 21st 9:27AM ET: Added additional information on Verizon's official response to the audit, and its statement provided to The Verge.