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 2year contract), while Verizon FiOS service (HDTV, telephone, and internet) costs $140 per month regularly, but at certain times can be $95 (with a 2year 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 midAugust 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 nearimpossible 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 Convergence:

strategy

to

handle

Digital

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 alloptical 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-totime, 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 technologyassisted 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.

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