When New York Telephone first moved into its headquarters near Times Square, the company was a monolith that controlled virtually all telecommunications in New York City through a network of wires that snaked into nearly every building. The equipment that connected all those phone lines filled half of the headquarters tower and dozens of other buildings scattered throughout the city.
Now, what is left of the local arm of the Bell monopoly — Verizon Communications — is preparing to move its corporate offices from downtown back into far smaller quarters inside the former New York Telephone building at 1095 Avenue of the Americas, at 42nd Street. Its diminished presence parallels the steady erosion of demand for its original business: providing plain old telephone service over landlines.
Verizon still takes in more money than any other corporation based in the city, but almost all of its profits come from its cellular operations.
As for wired phone service, it is going the way of the telegraph: The number of landlines Verizon has left in New York State is down to about 3 million from 12 million. And only about half of those belong to residential customers.
“We’re more in the last gasps of that evolution away from a wired environment,” said Rich Karpinski, a principal analyst who follows the telecommunications industry for the Yankee Group. Simple voice communications over wires “is not a moneymaker at this point,” he said.
So when Verizon returns to its former home this fall, it expects to have fewer than 100 employees working on just two floors. And the name on the building’s rooftop will not be Verizon, but will remain MetLife, the insurance company.
There was a time when Verizon filled the entire 41-story building, and more than two dozen other buildings spread around Manhattan. The bulk of that prime Midtown space, including the lower 21 floors of the headquarters, was taken up by equipment that connected calls across the company’s vast network of wires.
The ceilings were higher than usual to accommodate “very tall steel frames with wires connecting all of the possibilities,” recalled Frank McLoughlin, who worked as a lobbyist for the company. Inside, he said, it was “very hot and very loud.”
Lately, the company has been making a lot more money selling off pieces of its vast portfolio of New York City real estate; it has collected more than $1 billion from property sales in the last several years and recently sold one of the floors it occupied on the Avenue of the Americas for $24 million.
Of course, there is another part of Verizon’s business, the wireless side, which includes phone, Internet and cable. It is tremendously profitable and accounted for 99 percent of the company’s operating profits last year. Verizon, with $120 billion in annual revenue, ranked highest of all companies based in the city on the latest Fortune 500 list.
As unfashionable and barely profitable as it may be, however, plain old phone service still serves as a critical link for many Verizon customers, like Naomi Acheson, 75, of Manhattan.
“I’ll never give it up,” Ms. Acheson, who calls herself Dolly, said of her landline. Not after her experience in Hurricane Sandy.
The storm surge knocked out power to her apartment building on 33rd Street, leaving her stranded on the 25th floor for several days, Ms. Acheson said. The cellphone that she carries when she goes out stopped working soon after the storm. Without her trusty old handset plugged into the wall, she would have been alone with only her dog, Peggy, to talk to.
“It came in handy that I was able to talk to the outside world,” she said.
Ms. Acheson said she thought the $64 she pays Verizon each month for home phone service and access to the Internet was fair. “To me, it’s worth it,” she said.
Not all landline holdouts are beyond retirement age. Stacy Horn, 58, a writer who lives in Greenwich Village, said she was hooked on her landline for its sound quality as well as its reliability. Conversations over a cellular network were “always so disjointed,” she said.
Ms. Horn said that everyone who knows her “knows to call me on my landline,” but she admits to being an outlier. “Almost everyone I know has gotten rid of their landlines,” she said.
Asked how much she pays for the landline, Ms. Horn found her latest bill and let out a loud “Ahhh!” She said she was sorry to be reminded that it costs her more than $80 a month. Still, Ms. Horn said she had no intention of switching because the landline service, she said, “will stay up as long as the planet doesn’t blow up.”
How to maintain a dependable wired network is a burning question for government regulators across the country. The onus is on legacy providers like Verizon and AT&T, but in some places they have pressed for permission to abandon the copper wires that were the connective tissue of their networks. Every step they take in that direction meets resistance from advocates for older adults and others who depend on landlines in emergencies.
Even though many consumers remain attached to their old-fashioned phone service, the technology that makes it work has shrunk, reducing Verizon’s need for much of the space it occupied in the city. Verizon still needs some space for its switches and cable vaults, but much less than before, said John Vasquez, the company’s vice president for global real estate. Already, nine of its 27 hubs in Manhattan have been partially converted into apartments, offices and even a medical center, he said.
In each case, the company has had to seek permission from state regulators in Albany to sell the property and keep the profits, rather than share them with customers. Having owned a lot of real estate in New York City for decades has proved to be very lucrative. Verizon sold most of the old New York Telephone building in Midtown for $505 million in 2005 and moved its headquarters from there to its building at 140 West Street, near the World Trade Center site.
Last year, Verizon sold the top 22 floors of the downtown building for $274 million to a developer that wanted to convert them to condominiums. That sale spurred the decision to move the headquarters back to 1095 Avenue of the Americas, which was built for New York Telephone in the early 1970s.
New York Telephone became known as Nynex after the breakup of AT&T in 1984. Nynex later was acquired by another AT&T spinoff, Bell Atlantic, which merged with GTE in 2000 to create Verizon.
More than a decade ago, Mr. McLoughlin, the former lobbyist, had to plead with city officials for permission to install a large, lighted Verizon logo atop the Avenue of the Americas building. Today, someone passing by the building across the avenue from Bryant Park would have to spot the proposed ground-level markers to know that Verizon is still there. Mr. Vasquez said there would be a “cornerstone” near the main entrance indicating the company’s presence.
MetLife, which has offices in the building, will retain top billing, even though its name adorns the site of its official headquarters, the tower above Grand Central Terminal that had been the Pan Am Building.
“Would it be great to have our name back on top of the building? Sure,” Mr. Vasquez said.