The telephone will soon 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.
This is expected to become official Tuesday, but there is still time to fight it, as I’ll explain below.
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.
Verizon will also be able to impose unlimited charges for any one-time service, such as an installation or upgrade. This way it would be able to turn away any customer it deems unprofitable simply by demanding huge fees.
Under the new deal, rates would also increase an outrageous 36 percent by 2019. 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. Significantly, this huge rate hike is not listed as a purpose of the four-year-old proceeding under which the backroom deal was made.
Typically, 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. No such proceeding will have occurred here: The state is effectively just handing the companies more money.
This violates the basic economic and legal principle of utility regulation. Owners are entitled to just and reasonable profits and customers to just and reasonable prices.
Assemblyman Dan Benson, a Democrat, said if the deal goes through, the economic damage will be felt widely, especially in lightly populated areas. 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.
There was no involvement by the New Jersey state office that looks out for the interests of telephone customers. Its director, Stefanie Brand, filed a petition Friday protesting the deal, which she said is being done in violation of state law.
Based on the original case, Brand said, “the public would have no way of knowing” the central changes being proposed.
Brand told me 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.
The Stakes Are Too High To Do Nothing
Lilyan Cralle, a retired actuary, said neighbors knock on her Jersey Shore condo during storms because she has a Verizon landline that works when the power goes out, unlike VoIP (Voice over Internet Protocol) telephone service, which dies in a blackout.
The traditional copper wire system that telephone companies want to abandon is able to work in times of crisis, like Superstorm Sandy, when there is no electricity. It is in fact so reliable that some New Jersey homes and businesses continue to make and receive calls on copper wire lines that were strung in the 1880s.
Without continual maintenance to switches and other equipment, however, this system fails. Brand said utility workers have told her staff that fewer and fewer repairs are being made, effectively guaranteeing that the system will fail.
Defending the old system is not an example of Luddite opposition to new technology. Internet calls that use coaxial cables, fiber optic lines, and wireless networks are the future. But 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.
So far both individual mayors and the New Jersey State League of Municipalities have been ignored. The League says “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.”
Furthermore, Verizon collected many billions of dollars in increased rates for services that millions of New Jersey residents and businesses will never see. Although 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.
The determination of the phone giants 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.
Click on this link to tell the New Jersey Board of Public Utilities that you want this deal stopped until there are public hearings.
You can also sign an Internet petition here.
Or you can do nothing. And if the day comes that your phone doesn’t work, or you move and are told no service is available, you can rue your mistake.
Photo: Dan Tantrum via Flickr
This piece has been updated.