DSL

DSL Prime Examines Verizon

Quote: "I told them where they could stick their modem and cable equipment and proceeded to cancel my cable TV and modem accounts," an Adelphia customer shut down for running a server.

Verizon's Sarah Deutsch knows better, "asking for subscriber termination is a very drastic remedy that infringes on people's rights and speech."

Verizon right (sharing) and wrong (Verizon ad in every email)
Pro-customer on one issue, cutting service on another
Verizon, in the quote on top, has it right. While Napster was shown in court to be promoting copying of copyrighted material for profit, there is no precedent that extends the ban to services run by individuals. In addition, gnutella servers can and do transmit many files in the public domain, and are part of the Intel and Microsoft endorsed peer-to-peer computing model. Stanford Law Professor Larry Lessig confirms to us "ISPs do not have a clear obligation to shut down the account of a user running a gnutella server. ISPs should not be bullied by the MPAA here."

Verizon got it dramatically wrong, however, in blocking email without a Verizon name on it. Allowing us to send out email as Dave@dslprime.com is simply not a significant security/spam risk, but the Verizon mail server is set to block us out starting next week.

We can't imagine Verizon is so chintzy they need to advertise their name on every email we send, and Peter Howe in the Boston Globe reports some think it a "ploy to crush rivals", especially alternate webhosts. We know a half-dozen ways Verizon can more effectively reduce spam, and have asked the company to point us to independent experts who thinks this is a major step.

Inside Verizon, they're fingerpointing, saying this ridiculous move comes from another part of the company, so they can't stop it.

Ed Foster's influential "Gripe Line" in InfoWorld this week worries "DSL users have begun to encounter the same kind of sneakwarp service limitations that cable modem providers, with their built-in local monopolies, are prone to use." It's not too late for Verizon to back down, and get some consumer and media cheers they have listened to their customers.

Strange stories
Examining Verizon's numbers routine
Listening to conference calls and reading the coverage is disillusioning, as few reporters and analysts catch what's not said. Verizon, for example, pointed to savings from merger efficiencies as key to achieving their 5 percent profit gains. They dropped 8,000 people, and the expense cost reduction was their big news.

But when they reported $160M in costs as merger-related, that was a "special item".

It would roughly reverse their profit gain, the kind of sleight of hand good analysts should catch.

Verizon was clear, however, about one basic issue—access lines, the underlying business, are down. Fortunately for Verizon's bottom-line, costs are dropping about 5 percent per year on basic service, and they are successfully resisting states who want to reclaim part of the cost-reduction for consumers.

Companies are doing a remarkable job spinning, creating numbers to replace earnings. The Times and Journal are getting stricter about what they'll report, and my standards, coming from accounting, are much closer to GAAP. It's a profound issue, one of the pillars of irrational optimism. Verizon is comparatively minor, and well within accepted norms.

Copyright 2001 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.

1. DSL Prime News	4. DSL Prime People
2. DSL Prime Examines Verizon	5. DSL Prime News Briefs
>3. DSL and the U.S. Government