In a complaint filed with the New York Public Service Commission late last month, a consumer watchdog group alleges that Verizon Communications Inc. (NYSE: VZ) has overcharged the company’s landline subscribers by manipulating utility construction budgets.

New Networks Institute (NNI) claims that New York local phone customers have experienced at least three major rate increases since 2006 for “massive deployment of fiber optics” and “losses” associated with maintaining its landline assets. In its report NNI says:

Verizon claims to have spent $200 million for copper [landline] maintenance, but Verizon New York’s Local Service was charged $8.5 billion in network expenses, from 2009-2014.

Verizon later told the commission that its $200 million estimate provided “an incomplete picture of all expenses for the copper wire maintenance, etc.” The company then offered a chart of “Plant Expenses” for the six-year period indicating expense costs of $8.43 billion, to which NNI responded:

If Verizon New York is adding over $1.4-$2.1 billion in network costs annually to the Local Service category, where is all this money going? Verizon stopped upgrading the networks around 2010-2012, and it slowed down maintaining the state copper-based utility networks over the last decade.

And even if Verizon spent $200 million in just New York, and in just one year, it would still be a fraction of the network costs that have been allocated against the copper-based local phone service revenues.

The New York Post reported that the state’s public service commission is beginning an investigation into whether Verizon maintains its copper network properly, and that Verizon has said it will cooperate with the state probe. The company denied NNI’s allegations.

New York state had 13 million wireline phone subscribers in 2000. There are about 2 million today, according to the Post.

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