Innovation and Competition Heat Up As Verizon Marks First Anniversary

NEW YORK - E-mail, cable TV, satellite, instant messaging and new wireless capabilities are revolutionizing the communications marketplace and creating new options to compete with traditional telephone service.

As the company marks its one-year anniversary, Verizon is competing in new markets -- such as long distance and data -- and is a player in the growing wireless industry while competition heats up in the local telephone market. Verizon was formed by the merger of Bell Atlantic and GTE on June 30, 2000.

"New products and services, offered in new combinations and packages from dozens of insurgents, explode on the scene constantly," said Bruce Gordon, Verizon president of retail markets. "Customers have lots of choices, so engaging in that kind of marketplace is exciting.

"Customers are raising the bar, driving us even harder to deliver innovative calling plans and product packages, and superior service in the local, long-distance and wireless markets we serve."

According to published reports, about 800 million instant messages are shared daily nationwide, approximately 40 percent of all phone connections in the U.S. are wireless and nine million Americans have high-speed Internet hook-ups - 70 percent of which are provided by cable companies. And, industry analysts say, hundreds of thousands of customers place phone calls over their cable TV networks.

Local Competition Flourishes in Verizon's Region

On the first anniversary of the merger, competing local phone companies serve more than 5.5 million local lines in New York, Massachusetts, Connecticut and Pennsylvania alone -- states where Verizon already provides long-distance service or expects to shortly.

In New York, the first former Bell Atlantic state to receive long-distance approval, competitors serve more than 20 percent of the state's local residential lines and about 40 percent of the local business lines. Rivals control 1.4 million access lines in Massachusetts, where Verizon introduced long-distance service in April. The level of competition in Pennsylvania is steadily increasing as the company awaits regulatory approval to begin offering long-distance service this fall. In Pennsylvania, competitors:

• Serve more than one million lines using all three entry paths available under the Telecommunications Act of 1996 including:
  • more than 600,000 lines through facilities they have deployed themselves,

  • more than 385,000 lines through unbundled network elements, and

  • more than 160,000 lines through resale.

• Are exchanging roughly two billion minutes of traffic each month with Verizon over a local interconnection network that - with more than 370,000 trunks in service - is more than three-fourths the size of Verizon's own local interconnection network in the state.

• Have access to more than 90 percent of Verizon's phone lines through approximately 2,000 collocation arrangements.

Competition Spreading across the Country

In its annual report on competition in the local telephone market released in May, the Federal Communications Commission (FCC) described "robust increases" in the number of phone lines captured by new entrants. The FCC reported that at the end of 2000, more than 16 million of the approximately 194 million local phone lines in the country were served by competitors, a 93 percent jump from the previous year. The commission also said rivals' market share in New York had soared 130 percent since the FCC granted Verizon long-distance approval.

"Competitors have successfully penetrated the customer base of the incumbent telephone companies," noted John Malone, president and chief executive officer of The Eastern Management Group, in a recent study on the growth in telecommunications competition since the passage of the 1996 Telecommunications Act. The Eastern Management Group is a consulting firm that serves competitive local exchange carriers, local phone providers and long-distance companies.

The study concluded that local competition is a nationwide phenomenon and rivals continue to gain access line and revenue share across the country, especially in states where the local companies have been allowed to provide long-distance service.

A separate study by the Telecommunications Research and Action Center released in May estimated that New Yorkers are saving up to $700 million in local and long-distance charges annually since Verizon entered the New York long-distance market in January 2000. Verizon serves 1.8 million long-distance customers throughout New York.

Massachusetts' customers also are reaping benefits from increased competition. Two months after Verizon filed to provide long-distance service in that state, the Boston Globe reported that one large long-distance company was rolling out local and long-distance service over its cable system.

About a month after Verizon launched its long-distance service in the Bay State, that very same long-distance company announced it was offering 30 minutes of free domestic long distance to loyal residential customers.

"Clearly, the benefits of stimulating head-on competition among local and long-distance providers are huge," said Gordon. "As soon as we gain long-distance approval, it becomes clear to everyone in the market that customers want us to be an alternative and are voting with their dollars. This dynamic sparks product and package innovation, better service and competitive prices."
Verizon plans to file long-distance applications for New Jersey and most of the rest of the New England states by the end of the year. The company expects to be in the long-distance business throughout its service area by the end of 2002.

Verizon Communications

Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 112 million access line equivalents and 27 million wireless customers. Verizon is also the largest directory publisher in the world. A Fortune 10 company with approximately 260,000 employees and more than $65 billion in annual revenues, Verizon's global presence extends to 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.