Verizon Communications Inc. VZ has been allegedly overcharging its plain old telephone service (POTS) New York customers over the last few years, according to a consumer advocacy group New Networks Institute. The allegations came to the light only recently during an investigation by the New York Public Service Commission related to the maintenance of Verizon’s copper network.
The Allegations
The group claims that Verizon’s POTS voice customers have been overcharged to the tune of $1000 to $1500 per customer and that the charges have been diverted to fund Verizon’s more profitable wireless and fiber to the home (FTTH) networks. Per the group, the total amount that the telecom operator has overcharged may run into billions of dollars.
The advocacy group contends that since the copper lines are archaic and have been written off in the company’s books, the fees charged to its customers utilizing the copper network should be in the band of $10 to $20 per month. On the contrary, Verizon’s customers are actually charged a basic fee of about $23 per month, which can even run on to $60 per month, depending on the unlimited local and long distance usage fees. A simple call forwarding function incurs a fee of $7.95 per month – significantly high compared to the cost of 2 cents incurred by Verizon for the same.
Verizon’s Response
Verizon has termed the group’s claims baseless. The company however, has assured cooperation with the New York Public Service Commission in the process of the probe.
To Conclude
Apart from New York, Verizon recently received a lot of flak related to its pricing and the state of its copper network in regions like New Jersey and Pennsylvania. With regulatory pressures piling up, such allegations are certain to hurt customers’ perception about its operations further. At present, the company is ranked number one nationally in terms of subscriber count. However, competition in the telecom market is fierce with rivals like AT&T Inc. T, T-Mobile US Inc. TMUS and Sprint Corp. S constantly battling each other for subscribers.
Verizon Communications carries a Zacks Rank #3 (Hold).
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