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FCC Fines Verizon For Failing To Investigate Rural Phone Problems 94

WheezyJoe writes Verizon agreed to a $5 million settlement after admitting that it failed to investigate whether its rural customers were able to receive long distance and wireless phone calls. The settlement is related to the FCC's efforts to address what is known as the rural call completion problem. Over an eight-month period during 2013, low call answer rates in 39 rural areas should have triggered an investigation, the FCC said. The FCC asked Verizon what steps it took, and Verizon said in April 2014 that it investigated or fixed problems in 13 of the 39 areas, but did nothing in the other 26.

"Rural call completion problems have significant and immediate public interest ramifications," the FCC said in its order on the Verizon settlement today. "They cause rural businesses to lose customers, impede medical professionals from reaching patients in rural areas, cut families off from their relatives, and create the potential for dangerous delays in public safety communications." Verizon has been accused of letting its copper landline network decay while it shifts its focus to fiber and cellular service. The FCC is working a plan to protect customers as old copper networks are retired.
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FCC Fines Verizon For Failing To Investigate Rural Phone Problems

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  • by turkeydance ( 1266624 ) on Tuesday January 27, 2015 @01:24PM (#48915543)
    "Grandpa, what are those things called, again?"
    • by Anonymous Coward

      I'm a rural customer. I don't have a copper connected telephone but my internet still has to come over copper. I do actually still hang on to a telephone to make sure I still have a dialtone to troubleshoot my connection failing.

    • by chesterw ( 1296887 ) on Tuesday January 27, 2015 @01:36PM (#48915693)
      Eventually, perhaps. But read the headline again: "Rural Phone Areas." I live 9 miles from the nearest place I get cell reception. Copper is still the only viable option where I live. It ain't dead yet.
      • Yeah, it ain't dead, but verizon doesn't want to support it. Our copper line kept deteriorating in quality and after repeated complaints Verizon hired some guy (seriously, a guy with a ditch-witch and a roll of cable) to lay a new line down the road to my house. He did a shitty job and didn't mark the line, so it got dug up or broken several times by neighbors in under a year.

        So we invested about $1200 into a cell booster, antenna and tower. Now we get good cell reception and told Verizon to stuff it.

        St

        • See, I'm golden there because I'm grandfathered into an unlimited plan on Verizon (from way back), but even a booster doesn't cut it for me. Our land line is good at least, but probably because AT&T manages our copper, I think.
        • Still can't get broadband other than via the cell phone. And that's expensive. Even the "unlimited" plans only come with a few Gb of 4G, then it drops to Edge.

          It's still a raping, but satellite Internet is miles cheaper overall than cell, and there's some actual competition for it other than Hughes.

    • Recycable materials.
      • I imagine that could certainly be a line quality problem: a random scavenger trying to recycle your phone line while you're trying to use it.

    • it's been 3 or 4 years since several telcos petitioned the FCC to set out the guidelines for making VoIP replace copper, and take care of all the legal aspects in the separate states. until that happens, NostrilDrippus Predicts! (tm) there will be precious little formal abandonment of wireline cables and service. it's still possible to make a buck on the copper, but increasingly the way that works is to cut the ranks of the techs who repair it.

      • VoIP still requires some form of service to the house, and that's almost always copper in rural areas.

    • by fahrbot-bot ( 874524 ) on Tuesday January 27, 2015 @02:02PM (#48915973)

      "Grandpa, what are those things called, again?"

      Suck it youngsters!

      I live in Virginia Beach and still have a copper POTS line with Verizon -- my TV and internet are via coax from Cox. Having copper has it's advantages, like (1) still working in an extended power outage, (2) not having to pay for the replacement battery in the eMTA modem and (3) being able to get phone service from third-party provider. Once you switch to FiOS or simply phone over fiber, you're stuck having to use Verizon over that media and they will *not* ever switch you back to copper.

      During one of the last bad hurricanes that caused an extended power outage of a few days, copper landlines were of the few working phones (land or wireless) in my neighborhood / area. I've only been w/o phone service *once* here since 1985, when the power when out across the city for over a week after a hurricane, when the Verizon generators finally ran out of fuel.

  • So what next? (Score:5, Insightful)

    by misterthirsty ( 1102101 ) on Tuesday January 27, 2015 @01:25PM (#48915551)
    Does Verizon feel that these fines obviate their responsibility to act? Is it cheaper to pay the fines than fix the problem?
    • Re:So what next? (Score:5, Interesting)

      by tnk1 ( 899206 ) on Tuesday January 27, 2015 @01:37PM (#48915713)

      They are still required to act on it. There is usually an order to remedy the solution along with any fine. If they don't act they would face the same fines.

      The real question is the second one you asked. If they can pay 5 mil a year and it costs 10 mil to fix the issues, then I'll take the fine every time.

      If there was personal executive responsibility, then if I fail to execute the task, and then I get arrested for persisting... then 10 mil of Verizon's money is less important than staying out of jail. There is the other option that Verizon could be disqualified from things that give them the potential for much higher profits later. Otherwise, its all about the fines.

      When someone doesn't pay their dues for our HOA, we don't just fine them or send them to collections. We revoke their visitor parking passes and their pool rights. We also slap liens on their property. Even that is usually not enough to get people to pay, but it may be enough to get them to increase the priority of who they pay first. Point being that there are things the FCC may or may not be able to do, but if they go to court they might be able to get other remedies.

      Now, if the FCC does *not* have the ability to apply other remedies... then Verizon will just pay the bill and keep on keeping on.

      • by preaction ( 1526109 ) on Tuesday January 27, 2015 @01:59PM (#48915925)

        Rich people don't go to jail. Anyone we could hold responsible cannot be held responsible for anything.

        • And don't give Bernie Madoff to try to refute me. He was a sacrifice to ensure that we think the regular Joe Rich Person could go to jail. They can't.

          • by sjames ( 1099 )

            Also, he ripped off people richer than himself. Had he stuck to raiding retirement funds, he would still be a free man.

          • by ndavis ( 1499237 )

            And don't give Bernie Madoff to try to refute me. He was a sacrifice to ensure that we think the regular Joe Rich Person could go to jail. They can't.

            Bernie didn't go to jail because of us he went to jail because he broke the rule of being wealthy which is to not take advantage of wealthy people/companies. In doing so they were upset with him and able to use that to put him in jail. If it wasn't for that he would have been fined and probably be living a wealthy live in Europe!

            • by DarkOx ( 621550 )

              he broke the rule of being wealthy which is to not take advantage of wealthier people/companies.

              There fixed that for you

          • by nobuddy ( 952985 )

            He preyed on the one forbidden target- the rich. He lost all protections when he did that.

      • Anyone who would defend even the concept of an HOA is a greedy fascist. "Let's control every facet of the neighbor's lives, lest they devalue our precious property values by a few percentage points!!"
        • by tnk1 ( 899206 )

          Don't really care what you think of HOAs. Not incredibly fond of them myself and I am on the board of one.

          Point is, there are enforcement options that are more than just fines. They can work, if they apply the correct sort of pressure. Example being: I can't always force you to pay your dues, but I sure as heck don't have to let you use common area resources that those dues directly support. That might include a privilege you care about.

          Same goes for government and utilities.

      • by DarkOx ( 621550 )

        If they can pay 5 mil a year and it costs 10 mil to fix the issues, then I'll take the fine every time.

        I don't even the likes of Verizon would act that way. I know short term profits are everything but so are anticipated future earnings, if the cost of fixing the problem was only equal to a few years of fines, they'd fix that rather than putting the anticipated futures fines in their SEC filings.

        Now if it was going to be like 10 years or more before the fines exceeded the cost to fix it, than they might just decided to pay the fines as if they are a just another tax.

    • by alen ( 225700 )

      they should just raise the price of service to cover the true cost of operating the network. as it is now they use money from FIOS, business and wireless to pay for copper

      • by sjames ( 1099 )

        They have already been well paid to maintain those lines in the form of tax breaks, and grants of big wads of cash and monopoly.

      • Or maybe refund the money they've been given to maintain it, or the subsidies to expand it.

        Sorry, but the telecom companies have been handed huge piles of cash to maintain this stuff ... that they've sat on it and failed to invest in all of their infrastructure is their damned problem.

        They weren't given that money to only invest in the most profitable stuff ... they were given it to invest in the entire system so that it was there for everybody.

        Greedy, shortsighted corporations don't need to charge more to

    • by nobuddy ( 952985 )

      Thy just pay it out of the $200B they took to expand fiber to rural regions and then refused to do.

    • Long and short answer: yes.
  • Success! (Score:5, Interesting)

    by serviscope_minor ( 664417 ) on Tuesday January 27, 2015 @01:25PM (#48915555) Journal

    So Verizon accepted a fine of $5,000,000. For Verizon, I call that a success. Given their size nothing at all is going to cost them less than 5 million. There is no way in hell that investigations into rural phone problems would have cost less.

    This is just the cost of doing business, and it's certainly more profitable to break the law and pay the fine than it is to do what they are supposed to do.

    Until the fines are set to a level to remove all profit and THEN put a punishment on top, large business will continue to flout the law because it's more profitable.

    • Re:Success! (Score:4, Insightful)

      by Sebby ( 238625 ) on Tuesday January 27, 2015 @01:30PM (#48915621)
      That's why I think fines should be based on a percentage of revenue for the timeframe of the infraction, instead of a fixed (usually capped) amount. That would make it difficult for them to say with certainty that it would cost less to break the law than to actually deal with it (not to mention the investors' backlash if it affects dividends, etc).
      • by nobuddy ( 952985 )

        The right wing think tanks will tell you all day long how such a law will destroy the economy, give your children aids and rabies, and rape your pets.

    • Seriously, that's probably less than the cost of installing/replacing a single rural circuit.

    • Until the fines are set to a level to remove all profit and THEN put a punishment on top, large business will continue to flout the law because it's more profitable.

      You're absolutely right on the theory, but then take the next step to recognize that it's the purpose of government to ensure their profits and help them take money from us (in addition to the FCC taking money from us directly and giving it to the telco corporations).

      This is evidenced by these fines never having been at a level such as you descr

    • Yep, we should hit them where they hurt. Such behavior should result in being disqualified for spectrum auctions, or similar censuring.

  • Pocket Change (Score:4, Insightful)

    by Frosty Piss ( 770223 ) * on Tuesday January 27, 2015 @01:25PM (#48915569)

    And to pay this fine, the execs have their coffee ladies sweep the corners of the executive lounge for dropped money...

  • At my home, I'm about 9 miles from anywhere I can get cell reception. The simple truth is that Verizon doesn't care about investing in low population density areas, whether it's cellular or wired connectivity. Why would they? It costs the same to put up a tower in rural areas (neglecting real estate cost), and they recover far fewer customers to offset the cost. The bottom line: Deer don't use 4G. It leaves some of us out in the cold, but the business model makes sense.
    • by deck ( 201035 ) on Tuesday January 27, 2015 @01:42PM (#48915761)

      The Universal Service Fee (i.e. Tax) that is on everyone's phone bill is supposed to cover the cost of doing this. Unfortunately, it has become just added profit as the phone companies (Verizon, AT&T, etc.) do not use it to subsidize rural phone service. If this was a Libertarian Paradise, you probably would pay $500 dollars a month for landline service while someone in a densely populated urban area would pay $5 a month. Cell phone service would have a greater disparity in price.

      • Re: (Score:2, Flamebait)

        by mc6809e ( 214243 )

        If this was a Libertarian Paradise, you probably would pay $500 dollars a month for landline service while someone in a densely populated urban area would pay $5 a month.

        Why would that be so bad?

        People that want rural living should pay for rural living and should not force urbanites to subsidize their quiet, peaceful life on the farm away from the noise of the city.

        The US government has spent the past 50+ years using subsidies and regulations encourage people to get out of the cities.

        What has it accomplish

        • by Anonymous Coward

          This couldn't be more wrong. In a Libertarian Paradise, the phone company would charge more for moderately populated areas because that's where they will make the most money, and the rural people won't have any service because no one would bother with such a small population even with a large profit margin, because it will bring in a fraction of the revenue a moderately populated area will. Oh, and the densely packed urban area... well only if the infrastructure doesn't cost too much to install. It takes

    • When developers wanted to build $1M+ houses and a golf course in the eastern foothills above Silicon Valley in the 1990's, the short answer should have been no. Alas, the City of San Jose didn't see it that way. Taxpayers paid $200 million to run water and sewer lines out to the new development. The HOA for that development nearly went bankrupt during the Great Recession when people moved out, no one wanted to move in, and everyone else didn't want to pay for keeping the golf course green.

      The bottom line: I

      • We had our chance, actually. At the height of the real estate boom, Foster Enterprises wanted to turn a local 1500 acre cattle ranch - Quail Valley - into an Equestrian community. It's 2 miles from my house and the utilities would have run right by us. All the locals got together and told the county supervisors and Foster not only no but hell no. Turns out we probably did them a favor. We passed on those amenities through that avenue, but that doesn't mean we wouldn't like them. It's the having vs. eating c
  • Ouch! Can anybody spot me?

  • by amicusNYCL ( 1538833 ) on Tuesday January 27, 2015 @01:55PM (#48915891)

    Apparently going through the FCC is the only way to get anyone to fix anything.

    https://support.t-mobile.com/t... [t-mobile.com]

  • Verizon isn't alone (Score:4, Informative)

    by deck ( 201035 ) on Tuesday January 27, 2015 @02:02PM (#48915969)

    I live in an area that is serviced by AT&T (Southwestern Bell doing business as). This is a rural area in North Texas near Fort Worth that has smaller holdings counted in acres or tens of acres and not generally hundreds of acres. This location is maybe 12 miles from the central office that services my land lines. Almost every time there are heavy rains or even ice or snow (remember, Texas) the phone lines go down. It takes nearly a week to get them repaired. But come the next weather event down they go. And cell phone service is not good. I can walk ten feet within my house and lose the connection with the cell tower.

    AT&T expressed their disdain of Plain Old Telephone Service (POTS) (analog telephone over copper pairs) about 4 years ago when they filed a request for rule making with the FCC to outlaw POTS. They compared POTS to analog television and used the reasoning that if the FCC could force the switch to digital television and relegate analog television to the garbage bin of history, the FCC could do the same for POTS. I believe it was discussed here on Slashdot. This must have been their marketing department because AT&T didn't realize the technical impact this could have in densely populated areas that have extremely high telephone usage such as skyscrapers with a few thousand people that were constantly on the phone for business. It may be that VOIP would negate the problem but they actually focused on cell phone usage.

    The big telephone companies keep dreaming of having everything go over to cell or other services that have MUCH higher profit margins than POTS. If the biggies make the service bad enough they hope they can drive people off of it.

  • Traffic pumping (Score:4, Interesting)

    by jtara ( 133429 ) on Tuesday January 27, 2015 @02:03PM (#48915985)

    How much of this, though, is due to abusive practices like traffic pumping [wikipedia.org]?

    There were hearings and talk of reform. Did anything every happen?

    Is it possible that the reasons that long-distance calls (in or out) don't complete because they've been too greedy abusively-routing 900-calls and the like through these areas?

  • by Princeofcups ( 150855 ) <john@princeofcups.com> on Tuesday January 27, 2015 @02:07PM (#48916043) Homepage

    Save/make $10 million.
    Pay $5 million fine.
    $5 million profit.

    • So actually, they have to do more than just cut a check. FCC Press release [fcc.gov]
      In its consent decree with the Enforcement Bureau, Verizon has agreed to:
      • Pay a fine of $2 million to the U.S. Treasury;
      • Commit an additional $3 million over the next three years to address the problem of rural call completion on a company and industry-wide basis;
      • Appoint a Rural Call Completion Ombudsman within Verizon to centralize analysis of rural call completion problems;
      • Develop a system to automatically identify customer
  • That works out to about $.10/customer.

    I am sure Verizon is laughing at the FCC for this one.
    • Step 1. Don't complete repairs you are required to do. Pocket $X that you would have spent making the repairs.
      Step 2. Get Fined $Y (where $Y $X).
      Step 3. Pay fine.
      Step 4. Add a below-the-fold "Rural Phone Investigation Tax" onto everyone's bill such that the incoming money from this is more than $X + $Y.
      Step 5. Profit many times over!

      (Actually making the repairs is optional.)

      • I expect to see on my next Verizon bill a "Rural Upgrade Tax".

        You know this is going straight to the bottom line.
  • They need a new way doing fines!! $5 million is the fine and then for every $1 you take in the fine you take another $20 on deposit until the issue is fixed!! Once fixed, they get the money back!! So, for this situation - there would be a $5 million fine and a $100 million deposit!! Once the issue is fixed, the $100 million gets returned - if it is not fixed in a timely manor, that $100 million would be the rest of the fine!! That way, there is an incentive to actually fix issues and not let them happen
  • by Anonymous Coward

    I say let the free market decide. Those rural customers don't want Obama's cronies in the FCC's interfering in their business, they don't want FCC regulations, so I think the Fed should just ignore them and leave them to deal with Verizon on their own.

    • Well, perhaps they will finally learn that Adam Smith was talking about trade between equals. When one side has a massive amount of power then trade stops becoming so free.

  • by MickyTheIdiot ( 1032226 ) on Tuesday January 27, 2015 @03:18PM (#48917025) Homepage Journal

    "They cause rural businesses to lose customers"

    This is the argument I don't hear enough about network neutrality. If everyone's one traffic isn't treated with some equality then we essentially let telco companies choose the winners and losers in a whole lot of businesses, not just Internet related businesses. If companies want monopoly protects they should be hit and hit hard when they refuse to treat rural or any other customers the same. Verizon shouldn't only be fined, the should lose their entire business in these areas.

  • is calls that don't go through because the rural company expects 5, 10 or more cents to connect and the other side only pays 1 or 2.

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