Despite Marathon Memorial Day Weekend Negotiations, No Wholesale Agreement Between Two Largest CLECs and Verizon

NEW YORK - Marathon negotiations over the Memorial Day weekend led to progress, but no breakthrough, as Verizon worked to reach commercial agreements with MCI and AT&T.

On March 2, the U.S. Court of Appeals threw out rules that forced Verizon to provide services at below-cost rates to its wholesale customers, known as competitive local exchange carriers (CLECs). Before the ruling takes effect on June 15, Verizon is attempting to negotiate agreements to replace the overturned government rules, and the weekend sessions were the most intensive so far to reach such agreements with AT&T and MCI.

"The positions of all sides are clearer now, there was some movement, and we'll continue to do everything we can to reach fair agreements with wholesale customers," said Tom Tauke, executive vice president of public affairs at Verizon.

"At Verizon we are focused on three goals," Tauke said. "We want to assure wholesale customer access to the Verizon network, to negotiate rates that move toward a fair return on investment for Verizon, and to ensure that all carriers have an incentive to invest in infrastructure." Tauke added that it is also important that Verizon, like all network operators, carry as much traffic as possible on its network.

"But the negotiations are frustrated by the position of the government," Tauke said.

The majority of the Federal Communications Commission is seeking a stay of the appeals court order.

"As long as the government holds out the hope of preserving the status quo, it is disappointing but hardly surprising that AT&T and MCI would delay concluding commercial agreements," Tauke said.

Tauke further noted, "The pick-and-choose procedure, sanctioned under earlier regulation, lets a company sit on the sidelines now hoping that later it will be able to take advantage of the best terms of earlier agreements with other companies, again removing the incentive for any early commercial agreement."

Verizon is negotiating with dozens of carriers and has reached commercial agreements with two, InfoHighway and DSCI. "The time to reach agreements and move away from red tape and unfair pricing is now," Tauke said.

Verizon entered into the weekend negotiations seeking only phased increases in the prices wholesale customers pay for service. Verizon rates currently are among the lowest in the country. The increases Verizon proposed would have brought Verizon rates up to a level currently charged by other carriers.

In April, Verizon proposed a program, Wholesale Advantage, to provide services to wholesale customers, assuring them not only that service would be uninterrupted service but also offering wholesale customers new services such as DSL broadband service and voice mail. Furthermore, on April 9 Verizon agreed to a 45-day extension of a stay of the recent appeals court order to facilitate negotiations with the CLECs.

Verizon Communications

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