This article was written by Bruce Kushnick, Executive Director of New Networks Institute, and appeared in the Huffington Post on January 15, 2015
Did Verizon Commit Perjury in the Net Neutrality Proceeding About the Use of Title II?
New Networks Institute has filed a Petition for Investigation with the FCC to examine Verizon's use of Title II and whether the company has committed perjury in the current Net Neutrality, Open Internet Proceeding, (Docket number 14-28).
Click Here to Send a Note to the FCC: Request the FCC Investigate Verizon's use of Title II and mention "Open Internet", use "Proceeding Number 14-28" and add "New Networks Institute's Petition".
Let Me Summarize Our Petition for Investigation.
Simply Put: Verizon has told the FCC, the courts and the public that applying Title II would harm investment if it is reinstated in the current Net Neutrality proceeding. In fact, Verizon has gotten their 'friends', corporate-paid think tanks, 'academics', astroturf groups, and even co-opted non-profits to parrot this statement as if it was true.
The Problem? Verizon's entire fiber optic deployment (including FiOS) and financial plan is based on using Title II and this has not changed since Net Neutrality became an issue about a decade ago.
This is an Open and Shut Case: Verizon Communications, Inc. and its affiliates, including Verizon Wireless, have violated Section 1.17 of the Communications Act of 1934, by "intentionally omit[ting] material information that is necessary to prevent any material factual statement that is made from being incorrect or misleading".
Simple to Prove: Compare these two statements by Verizon Communications, Inc., and the company's affiliates.
The first excerpt is from a 2014 Verizon NY cable franchise agreement, and is similar, if not identical to every other Verizon state-based fiber-to-the-premises (FTTP) deployment.
The second excerpt is from Verizon's Open Internet Comments July 15, 2014
"Imposing a Title II common carriage regime on broadband providers would be a radical change in course that would only chill, not spur innovation. Title II is a regulatory dinosaur, crafted eighty years ago - and based on 19th-Century laws regulating railroads - to address the one-wire world of rotary telephones."
Title II is a Cash Machine: Verizon's entire business plan is the based on using Title II as it allows the company to not only to use the utility rights-of-way, but as we discuss in the Petition, it also allows the company to get local phone customers to fund these investments of the fiber optic networks. In New York State, Verizon received at least three rate increases for "massive deployment of fiber optics" (and "losses", which we will be addressing in future petitions).
NOTE: The phrase "massive deployment of fiber optics" is taken directly from Verizon New York's filings and the NY Public Service Commission's orders. We did not need to 'make it up'.
If you have been reading the past articles, you know that we have been documenting all of this for years. Our research reports, based on Verizon's own financial reporting and other Verizon-authored documents have uncovered that Verizon's entire investment in the fiber optic networks, including the wires to the cell towers for Verizon Wireless or the "special access" wires, are based on the use of Title II.
Verizon Told the FCC Over and Over that Title II Harms Investment
There are pages of quotes by Verizon it their own Open Internet Proceeding filingsabout the harms to investment if Title II were imposed. Here are just a few.
Reclassification would create a major drag on new and improved broadband infrastructure, even though substantial investment in such infrastructure is precisely what is needed to keep pace with exponentially increasing consumer demands for bandwidth.
By chilling such investment and discouraging innovation, Title II and related proposals would only impede, not advance, the public's access to and enjoyment of the Internet.
The prospect of 19th-Century price regulation and Title II's other arcane requirements would stifle investment in and development of the Internet.
This is Misrepresentation on a Massive Level, Not Some Trivial Point.
This massively deceptive practice of getting Title II benefits on the state level while impaling it on the federal level has nothing to do with either the multiple classifications of services over the wire or some miss-matching 'investor tale' with that of the companies' reports to the FCC.
We are well aware of the use of multiple classifications, i.e., that the Title VI cable service, combined with a Title I Internet information service, can use a Title II network, but it is the flows of money that is at the crux of the issue here.
The "Title II" Issue is about the Flows of Money and the Use of Title II as a Cash Machine.
Verizon uses Title II to fund the infrastructure as "Title II", which means it is part of the state-based utilities as a telecommunications network and therefore fuels the financial perks including charging utility customers for the 'massive deployment of fiber optics'. Verizon also gets the rights-of-way from the state-based utility as Title II.
There are those who will argue that the networks can have multiple classifications of service over the same wire. While true, the issue of investment is about the flows of money. In at least New York State, Verizon's Title VI cable networks were built as part of the existing telecommunications network and therefore the cable division paid little or no construction costs for the FTTP networks it uses to deliver its cable programming. Similarly, it appears that the fiber optic wires to the cell towers and the wires used for Internet service, were all installed as Title II facilities -- i.e., the affiliate companies are getting a free ride on the backs of local phone customers who were charged multiple rate increases in New York for "massive deployment of fiber optics".
I note that these 'pundits' for Verizon or the ill-informed have not bothered to actually go through the financials of Verizon's state-based utilities or read the actual primary Verizon and NY State commission documents we quote, much less what we uncovered.
The "Janus" of Telecom
Janus was the two-faced Roman mythology figure. While the name in the 21st Century can have multiple implications, the simplest is when a person is "two-faced" or duplicitous.
The facts reveal, then, a massive duplicity on the part of Verizon Communications that continues to violate Section § 1.17 of the Communications Act, which requires "Truthful and accurate statements to the Commission".
(1) In any written or oral statement of fact, intentionally provide material factual information that is incorrect or intentionally omit material information that is necessary to prevent any material factual statement that is made from being incorrect or misleading...
The omission in every document of any statement that Title II is used for investments and that the fiber-to-the-premises networks are already Title II, which is then used to charge local phone customers as 'defacto investors', requires immediate investigation. It is at the very heart of the current Net Neutrality/Open Internet proceeding, and other proceedings related to network infrastructure policy and practices.
- Verizon has deceived the FCC, the courts and the public over and over, and it is time for the FCC not only to acknowledge this fact but to start investigations into the failure of Verizon to disclose critical, material facts.
- The FCC needs to examine the extent of the use of Title II today by Verizon for deployment of infrastructure used for broadband, Internet, phone and cable service.
- The FCC needs to examine the role of customers as 'de-facto' investors; how Verizon has used Title II to get rate increases on basic POTS (plain old telephone service) customers and tax perks.
- The FCC must examine the role of Title II and the other classifications ('titles') in allowing the manipulation of the flows of money between and among Verizon New York, the state-based utility, and Verizon Communications and Verizon's other affiliate companies, including Verizon Online, Verizon Business, Verizon Services and most of all Verizon Wireless
And this must be done with a focus on Verizon's own statements, information, comments, reply comments, etc, made to the FCC, as well as to the courts and the public. The FCC must examine whether Verizon intentionally provided factual information that is incorrect, or intentionally omitted material information, in an effort to mislead the Commission concerning Verizon's claim that Title II harms investments.
Did Verizon Commit Perjury?
Section 47 CFR 1.16 states:
Unsworn declarations under penalty of perjury in lieu of affidavits.
Any document to be filed with the Federal Communications Commission and which is required by any law, rule or other regulation of the United States to be supported, evidenced, established or proved by a written sworn declaration, verification, certificate, statement, oath or affidavit by the person making the same, may be supported, evidenced, established or proved by the unsworn declaration, certification, verification, or statement in writing of such person...
We ask the FCC to start an immediate investigation into the fact that Verizon has not once disclosed, as far as we can ascertain, any of the documents and information about their use of Title II, which we have uncovered and detail in the Petition.
Where are the Investigations and Oversight?
Finally, I find it incredible that the leading government agency that is in charge of all of America's communications in the United States had no clue that Verizon gamed the system. But this points to a more serious question -- Where are the other government agencies, advocate offices, politicians, state commissions, or Internet advocate groups who claim that they care about 'reclassification' to Title II? Where are the investigating reporters in the US? Why wasn't this deception exposed years ago?
NOTE: This Petition was created by New Networks Institute's independent team of lawyers, auditors, and communications experts and we received no funding from any group, organization, company or political party.
We did it because it is the right thing to do.