Significant Network Management Problems

Verizon DSL Traffic Blocking Issues

In the early days of Web services, the ability to communicate machine to

machine over port 80 to avoid firewall configuration issues was a much
touted advantage. The reality, of course, is that sending XML traffic over
port 80 introduces a potentially significant security risk. With the blocking of
port 80 issues by Verizon, someone at a small business with a Verizon DSL
Internet connection can’t connect to a home computer with NetMeeting.
Despite there being no firewall on the receiving computer NetMeeting still
couldn't make a connection. Even a simple ping of the target computer
failed.

Verizon's press relations office made it clear in an update on August 07, 2008
that they do not block traffic. And, it seems they don't - at least not on
purpose. The issue in most of the cases is was with the firewall in the router.
In a standard consumer grade router, the firewall has a simple task: block all
unsolicited incoming traffic. It doesn't try to govern outgoing traffic at all.
Thus, any connection to the Internet that starts from a computer on the LAN
is allowed. This is similar to the way the Windows XP firewall works, except
that the XP firewall is likely to have some pre-defined holes in it.

Security Management

One of the major problems that Verizon FiOS network faces is security
management. A recent study was conducted for this purpose and the results
indicated that around 70 percent of data breaches in the company resulted
from external sources. These include breaches caused by business partners,
inevitably a source of vulnerability. Only 18 percent of breaches were caused
by insiders.
According to “Data Breach Report” issued by Verizon Business in 2008, most
breaches resulted from a combination of events rather than a single action.
Some form of error often directly or indirectly contributed to a compromise.
In terms of deliberate action against information systems, hacking proved to
be the attack method of choice among cybercriminals. Although these
breaches were perpetrated from outside but were facilitated by errors inside
the company’s management. This clearly indicates that most security
breaches were crimes of opportunity, in which a door was left open and
attackers simply walked in and did the damage.

"It’s not about clever or complex security protection measures," says Peter
Tippett, Vice President of research and intelligence for Verizon Business
Security Solutions. "It really boils down to doing the basics, from planning to
implementation to monitoring of the data."

The most common errors identified in the study were errors of omission,
which account for 79 percent of the mistakes identified. This often involved
standard security procedures or configurations which were believed to have
been implemented, but in actuality were not, posing a threat to the
company’s stability. The breaches can be attributed to a number of causes.
Verizon had a system running that was operating without the organization's
knowledge; a system that had unknown access or network connections; or a
system that had unknown accounts or user privileges.

To alleviate these internal problems which often lead to external attacks,

Verizon should work on some common-sense strategies, including frequent
checks to ensure that policies are carried out, securing business partner
connections, and creating a data maintenance plan. They should ensure that
basic and essential security controls are met across the entire organization
consistently, and that these controls are actually implemented as well. If
basic security controls had been in place at the time of attack, nearly all
breaches would likely have been prevented.
Billing Issues

FiOS is seeing good reviews from their users because of the speed and
reliability of the connections. Verizon is deservedly seeing praise for being
the only telecommunication company with the foresight to see that fiber is
the future. However, if FiOS has a weak spot, their users say it's Verizon's
FiOS billing department.

Its price is a major barrier to make it more popular. As of March 2009, it

charges from $50 per month for a connection reaching up to 10 megabits per
second to $145 per month for a connection reaching up to 50 megabits per
second. Its price is more expensive than AT&T’s fastest DSL ($30 per month
for 3 megabits per second, as of March 2009) and Time Warner’s cable
internet service ($45 per month for 10 megabits per second, as of March
2009). As of March 2009, Time Warner offers high definition TV (HDTV), cable
internet, and digital telephone bundle services for $130 per month (with a 2-
year contract), while Verizon FiOS service (HDTV, telephone, and internet)
costs $140 per month regularly, but at certain times can be $95 (with a 2-
year contract).

It has been reported by many customers of Verizon FiOS network that from
day one, their bill has never been correct. The triple bundle package which
includes the phone, Internet and TV service is supposed to cost around
$156/month including taxes but most of the statements get around more
than $220/month. There were so many charges that were never clarified to
the customers when they signed up the contract. Customers tell they're
being incorrectly billed for service they didn't order, aspects of installation
not performed, and channels they never asked for. While these users like the
service itself, they say resolving errors is difficult and navigating phone
support is a nightmare.

The billing anomalies vary greatly from customer to customer. One user
complains that TV Poland mysteriously showed up on his bill to the tune of
$18 per month. After calling and getting confirmation that it had been
removed, it re-appeared the following month.
Another user complains about a phantom $75 extra PC installation charge.
One FiOS customer tells he's been charged for a high-definition set-top box
he doesn't actually have going on eight months now.

When Verizon service was referred for the cause of the problem, they told
that the service was being fixed and re-bundled. According to Verizon's Jim
Smith, the company's current billing system involves some "complex billing
system interactions" that require activations to sync up before bundled
discounts are applied.

"What matters, though, is that the discount always runs for the full period
promised, either 12 or 24 months, even if it does not start in month one of
the service" he says. Moreover, "Software upgrades are being installed mid-
August to remedy this and to assure that for new FiOS bundle customers,
discounts are immediate and actually cover the promised period from
service activation forward with no delays," he explains. As for the other
erroneous charges, Smith attributes these to "simple data entry errors made
during the ordering process [which] should be remedied with a call for help."

The customer service representatives are clueless; they apparently are

placed in a service center somewhere where they have no idea what anyone
else at Verizon is actually doing. The average call time, and it’s near-
impossible to get to an actual person. One feels stuck in the perpetual phone
loop of despair. Hopefully early FiOS billing issues are a small, soon to be
resolved cost of broadband on the bleeding edge, and not a persistent
headache.

Verizon Video Performance Issues

Verizon FiOS Video Services are great and the HD quality is very nice except
for a few drawbacks. Accessing DVR recordings remotely from a regular set
top is painfully slow. The quality is the same as watching a show on the DVR
itself, but there is a 1-2 second delay when the playback buttons are
pressed. It makes the feature useless.

Conclusion

Technologically, Verizon’s FiOS service is awesome. Download and upload

speeds are fantastic. Speeds are consistent, too. As an alternative to cable
high-speed Internet, FiOS gets a very, very good score of 8/10 or even 9/10.

Verizon’s main weakness is a confounding combination of contradictory

management policies and untrained/unintelligent support staff. Not all
Verizon support techs are detrimental to the cause, in fact some of them are
very smart and helpful, but too many low-rent reps spoil Verizon’s potentially
wonderful image.

It seems that Verizon is simply just too big and clumsy for its own good. If it
wasn’t for the solid technical delivery of its services, Verizon would probably
implode or get eaten up by competitors.

Organization’s strategy to handle Digital

Convergence:

Verizon is currently expanding its technical department and is striving to

provide better services for its users. Currently, it has separate departments
for its Tele-products including video, audio and data facilities. The reason
behind having separate departments for its products is to reduce the load on
a particular department and secondly, it would keep departmental work
focused on their assigned tasks.
Since the successful launch of FiOS network, Verizon has never looked back
and are continuously developing and implementing more technological
products in the field of integrated broadband services.

According to CEO Ivan Seidenberg, “By the end of the year, Verizon’s current
fiber-to-the-premises, or FTTP, and ultra-long-haul fiber network deployments
will be more than halfway complete”.

Three years after its launch, FiOS is now available in 16 states. By the end of
the year, it will be available to 9 million households, halfway toward its
ultimate goal of 18 million homes by the end of the decade. Though Verizon
is now transitioning from broadband passive optical networks (BPON) to
Gigabit PON (GPON), it is already considering future migrations beyond
GPON. “By the end of the decade, we’ll be preparing for the next generation
of [FTTP] electronics,” Seidenberg said.

Meanwhile, Verizon expects to add 6000 miles of fiber this year to its all-
optical ultra-long-haul U.S. network, passing the halfway point in the planned
50,000-mile network. While Verizon is upgrading its wireless broadband
network, by the end of the decade, it will be ready for fourth-generation
wireless broadband, which will open the door to a new world of applications.

Verizon recently announced that it is integrating home-energy management

into its FiOS broadband service some time in 2010. Verizon can remotely
update home routers, which means that customers can too. So once we give
thermostats and window shades IP addresses, we can turn down the heat
and schedule the shades to open or close on a daily schedule--all from our
cell phones. That's the gist of what Verizon wants to do, but the company
remains unclear on details of a release date, partnering companies, and
price.
Up until recently, consumers have looked primarily to utilities' rapidly
proliferating smart meters for home-energy management. But the landscape
is changing, with non-energy related companies like Black & Decker, Google,
and now Verizon entering the fray. None of these companies can succeed
without the detailed usage information available from smart meters, but all
of them can help make energy efficiency easier for those of us with limited
time, and, well, energy to devote to the cause.

Oregon's rollout of Verizon FiOS TV has made plenty of residents in greater

Portland area excited. More video competition means lower prices for the
consumers. Over 152,000 Oregon households will be able to enjoy this great
new television service offered to only a few selected areas across the nation.

Right now, Verizon has already begun taking orders for this great video
service. Customers who have been changed by Verizon's FiOS Internet
Service will undoubtedly enjoy Verizon FiOS TV just as much. What's really
interesting is that while Verizon is laying down fiber to many major cities and
competing with Cable and DSL companies for internet service (Verizon offers
5, 15, and even 30Mbps connections), fiber has plenty of bandwidth left over
for sending data like HDTV. It will be interesting to see what Cable, DSL, and
Satellite companies do once Verizon has fiber going to everyone's homes.
Verizon just may be poised to take over a huge chunk of the market.

Verizon FiOS is currently joining hands with other cable companies to expand
its services. Currently, it has collaborated with the “Major League Baseball”
network to launch one of the largest and most successful debuts in cable
television history, exceeding any other cable television launch by
approximately 20 million. Major League Baseball and Verizon recently
announced that MLB Network and the MLB Extra Innings Package will be
offered on Verizon's FiOS TV service as a result of new multiyear agreements.
MLB Network will be available to all Verizon FiOS TV customers as part of the
Essentials and Extreme HD packages on Channel 86. Verizon also will offer a
high-definition (HD) simulcast of the MLB Network on Channel 586. MLB
Network -- which will air live games, original programming, highlights, classic
games and coverage of baseball events -- is expected to be available to
approximately 50 million homes on TV systems across the country, the
largest launch in cable history.

In addition, Verizon and Major League Baseball have entered into a new
multiyear agreement to provide the MLB Extra Innings package on FiOS TV,
offering baseball fans up to 80 out-of-market Major League Baseball games
per week. The two agreements mark the first television arrangements
between Major League Baseball and Verizon.

"We are looking forward to launching MLB Network on Verizon FiOS TV, which
is the fastest-growing television provider in the country," said Tony Petitti,
MLB Network President and CEO. "MLB Network will offer baseball fans an
insider's perspective that has never been seen before. This partnership
further expands on our ability to bring the ultimate coverage of the national
pastime to fans on a 24 x 7 basis."

Terry Denson, Vice President - FiOS TV content and programming, added,

"Verizon FiOS TV is the best place to watch sports. Baseball fans will be able
to keep up with their favorite teams and rivalries, with access to 80 games
from around the country each week. And FiOS TV's stunning rock-solid
picture will make fans feel like they're sitting right behind home plate."

Chris Tully, Major League Baseball senior Vice President, broadcasting, said,
"The MLB Extra Innings package plays a key role in our continuing effort to
provide fans around the country with access to as many MLB game telecasts
as possible. Adding Verizon FiOS TV to our roster of MLB Extra Innings
distributors provides our fans with more choice in accessing the package."
MLB Network and the MLB Extra Innings Package join Verizon FiOS TV's
extensive channel lineup, which offers customers more than 400 total
channels, including a growing number of HD channels, with 100 HD channels
already available in most markets. FiOS TV also offers more than 11,000
video-on-demand titles each month - 8,500 of which are free of charge.

Verizon, the nation's fastest-growing television service provider, delivers FiOS

TV over the country's most advanced fiber-optic network straight to
customers' homes and businesses. Verizon's FiOS TV service was selected as
the top-ranked residential television service provider in the Northeast region
by J.D. Power for 2008. FiOS TV is currently available to more than 8.2
million homes in 14 states: California, Delaware, Florida, Indiana, Maryland,
Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island,
Texas, Virginia and Washington.

In a bid to boost energy efficiency in new telecommunications equipment,

Verizon has unveiled a set of metrics that will be applied to new products
launched by Verizon FiOS. The company is pushing equipment manufacturers
to make new products such as broadband, data center, network and
customer premises products 20 percent more energy efficient.

According to the company, the standards are similar to the Energy Star
rating system, which often doesn’t exist for the types of equipment
purchased by the company. Verizon’s equipment ratings are based on
formulas that measure the energy consumption of equipment in various
stages of operation.

Tested products will include optical and video transport systems, switches
and routers, DSLAM high-speed internet equipment, optical line termination
gear, data center servers and power adapters.
"Aside from the potential cost reductions involved, as a responsible
corporate citizen, we want to be part of the drive toward greater energy
efficiency," Mark Wegleitner, Verizon’s senior Vice President of corporate
network and technology, said in a statement. "Part of our plan to accomplish
this is to request our suppliers' help in meeting our conservation goals."

The company’s result of operations, financial position and sources in the

current and future periods reflect Verizon management’s focus on the
following strategic imperatives:

• Revenue Growth — The company’s emphasis is on revenue growth,

devoting more resources to higher growth markets such as wireless,
including wireless data, wire line broadband connections, including
Verizon’s high-capacity fiber optics to the premises network operated
under the FiOS service mark, digital subscriber lines (DSL) and other
data services, as well as expanded strategic services to business
markets, rather than to the traditional wire line voice market. At wire
line, revenue growth in the residential market, driven by broadband
and video services, coupled with growth in the business market
derived from strategic services, partially offset declines in the
traditional voice mass market.
• Market Share Gains — The Company is focused on gaining market
share. In their wire line business, their goal is to become the leading
broadband provider in every market in which they operate. At
Domestic Wireless, the company continues to add retail customers,
grow revenue and gain market share while maintaining a low customer
turnover rate.
• Profitability Improvement — Their goal is to increase operating
income and margins. Domestic Wireless also expects, from time-to-
time, to acquire operating markets and spectrum in geographic areas
where it does not currently operate.
• Operational Efficiency — While focusing resources on revenue
growth and market share gains, they are continually challenging their
management team to lower expenses, particularly through technology-
assisted productivity improvements, including self-service initiatives.
The effect of these and other efforts, such as real estate
consolidations, call center routing improvements, the formation of a
centralized shared services organization, and centralizing information
technology and marketing efforts, has led to changes to the
Company’s cost structure as well as maintaining and improving
operating income margins. With the deployment of the FiOS network,
they expect to realize savings in annual, ongoing operating expenses
as a result of efficiencies gained from fiber network facilities. As the
deployment of the FiOS network gains scale and installation and
automation improvements occur, costs per home connected are
expected to decline.
• Customer Experience — Their goal is to provide the best customer
experience possible and to be the leading company in customer
service in every market they serve. The company views superior
product offerings and customer service experiences as a competitive
differentiator and a catalyst to growing revenues and gaining market
share. Verizon continues to expand their wireless data, messaging and
multimedia offerings for both consumer and business customers and
take advantage of the growing demand for wireless data services.
• Performance-Based Culture — Verizon embraces a culture of
corporate-wide accountability, based on individual and team objectives
that are performance-based and tied to these imperatives. Key
objectives of their compensation programs are pay-for-performance
and the alignment of executives’ and shareowners’ long-term interests.
Verizon also employs a highly diverse workforce, since respect for
diversity is an integral part of Verizon’s culture and a critical element of
their competitive success.
The above mentioned strategic imperatives clearly explain the rationale of
their decision to continue implementing more broadband technologies.