It is quite likely that then. When the RED NIC detects a lost link it is literally that cable that is plugged in and whatever is on the other side. It is not further down the line as in a cable/fibre modem. It’s the Ethernet link on the way.
Regarding DNSSEC: it is very bad style from VZ to block anything. It is simply their surveillance machine that they are trying to feed with data. However I understand that very often there is not a (very good) choice between ISPs.
I would strongly recommend against disabling DNSSEC.
If you must you can try using the DNS Forwarding feature and forward the Root zone to the VZ DNS servers and there is a checkbox to disable DNSSEC. But you would be on you own then…