Verizon Business Growth Continues as New IP Capabilities, Network Enhancements Are Deployed

BASKING RIDGE, N.J. - Verizon Business again demonstrated success in the highly competitive global enterprise market during third-quarter 2008, continuing its growth while bolstering its IP capabilities and adding significant new business.

The company, which delivers integrated global communications and IT solutions to large-business and government customers, had total revenues of $5.4 billion, or growth of 1.2 percent compared with last year's third quarter.  This was Verizon Business' eighth consecutive quarter of year-over-year pro-forma revenue growth (non-GAAP, calculated as if Verizon and MCI had merged on Jan. 1, 2005).  Global enterprise revenue, representing retail sales, increased 0.7 percent to $4.0 billion, compared with the year-ago quarter.

Sales of strategic services - such as security solutions, IT solutions and a full spectrum of professional and managed IP services that help customers make the most of IP communications, infrastructure, network and technology - continued to drive growth at Verizon Business.  These services generated $1.6 billion in revenue, up 15.4 percent from third quarter 2007.

"Our customers are looking for a partner that can provide integrated communications and IT solutions - securely and globally," said John Killian, president of Verizon Business.  "This growth validates that we're meeting that demand.

"This is a highly competitive global marketplace, and we are clearly bringing to bear the right combination of capabilities, reach and customer-first approach," Killian said.

Capabilities, Reach Expanded During Quarter

Verizon Business introduced new capabilities during the quarter to further expand its ability to meet customer demands for integrated global solutions. 

The company unveiled a new set of professional services to help businesses make the most of  virtualization - a technology that enables businesses to consolidate multiple IT resources, such as operating systems and software applications, on a single server - helping to control costs while improving flexibility.  These new consulting services augment Verizon Business' growing set of more than 50 professional-service capabilities in 30 countries.

Verizon Business also teamed with Cisco to announce an expanded suite of unified communications and collaboration tools.  The joint go-to-market strategy focuses on the innovative delivery of collaborative solutions for businesses of all sizes, improving productivity and reducing the need for travel.

Verizon Business, owner and operator of the world's most connected Internet network and a pioneer shaping the commercial Internet, continued to help companies harness the power of IP to help customers connect to their customers, partners, suppliers and employees more quickly and securely by introducing a range of other new innovations during the quarter.  These included:

• A new, managed wireless local area network (LAN) service that enables businesses and government entities to take full advantage of wireless technology. Verizon Managed Wireless LAN (MWLAN) Service, including Cisco Unified Wireless Network technology, enables customers to securely extend the reach of LANs within offices, schools and factories, and across corporate and college campuses.

• New professional and managed services support for Network Access Control (NAC), a security technology that helps boost security by allowing only authorized users and compliant devices to access a company's network.  NAC provides a means for controlling access to a company's extended network as more employees, contractors, customers, suppliers, vendors and partners connect to critical resources and business applications.
• An enhanced user interface for connecting with more than 70,000 Wi-Fi hot spots worldwide and extension of the company's enterprise mobility access services to Latin America.
• A new service designed to enable police, fire and other public safety personnel to communicate directly with one another by radio, phone or e-mail during an emergency - even if they are using incompatible communications systems.

Other enhancements rolled out during the quarter include:

• A new set of Open Hosted Speech Services (OHSS) that enable customers to better customize and control the speech services used to interact with their customers while still enjoying the reliability and cost benefits of a fully hosted speech platform.

• A consolidated Global Billing Report that gives multinational customers using the Verizon Enterprise Center a more convenient way to view, monitor and analyze their expenses.

Network Leadership and Global Expansion

Verizon Business continued during the quarter to enhance its global IP network, which serves as the critical platform for the company's secure communications and IT solutions, and expand its reach into high-growth, global markets. 

The company announced during the quarter that the first phase of the Trans-Pacific Express submarine cable system - which directly connects mainland China, the U.S., South Korea and Taiwan - is ready for service.  The 18,000 kilometer (more than 11,000 mile) fiber-optic undersea cable will play a significant role in driving new development for international telecommunications in the Asia-Pacific region.

Verizon Business also began a significant expansion of its operations in India to support the direct delivery of advanced telecommunications services to multinational companies with operations there, as well as to India-based multinationals.  The company is activating Private IP nodes in the major Indian business centers of Bangalore, Chennai, Hyderabad, Mumbai and New Delhi, offering customers a direct, secure, high-performance link to the Verizon Business global multiprotocol label switching (MPLS) network.

Other developments during the quarter included:

• Giving customers more direct access and speedier connections by installing 27 additional Private IP edge switches globally for a total of 621 edge switches in 158 markets across the globe.

• Giving businesses greater network availability and reduced provisioning time by completing the first phase of its Verizon Business' U.S. optical mesh network and expanding its mesh network in the Asia-Pacific region to Taiwan, Hong Kong and South Korea, reducing latency from the U.S. to those countries by 15 percent.
• Deploying an additional 1,348 ultra long haul route-miles in the U.S., bringing total deployed ULH in the U.S. to 34,445 miles.
• Testing of 100 gigabits-per-second (Gbps) commercial transmission in a trial with Nokia Siemens Networks.  The companies set a new distance record while proving that 100 Gbps signals can be simultaneously transported with 10 Gbps and 40 Gbps signals on the same system with superior results by using advanced optical techniques.
• Demonstrating near real-time circuit provisioning across the Verizon Business commercial network by completing the industry's first multisupplier trial of optical network management technology.  The company's successful trial of control-plane technology carried test traffic through optical circuits on Verizon Business' core network from Chicago to Atlanta, traversing the optical network using the Ciena CoreDirector®, the Fujitsu FLASHWAVE® 4500 MSPP and Tellabs® 7100 Optical Transport System.

Verizon Business Industry Recognition

Industry experts and partners alike recognized the depth and breadth of Verizon Business' global capabilities during the quarter.  The recognition included:

• TeleGeography recognized the Verizon Business global IP network as the world's most connected Internet backbone for the tenth consecutive year (based on autonomous system connections).

• Gartner Inc. rated Verizon Business a "Strong Positive" in its inaugural "MarketScope for Managed Security Services in the Asia Pacific Region" report.¹
• Frost & Sullivan awarded Verizon Business its 2008 North American Award for Product Line Strategy for its leadership in developing and delivering hosted IP telephony and voice-over-IP access services.
• BSI Management Systems - the world's leading international standards, testing, registration and certification organization - recognized Verizon Business as a leading provider of information security management and business continuity solutions. 
• Frost & Sullivan awarded Verizon Business its North American Leadership Award for Hosted Contact Center Services.
• INTERNET TELEPHONY recognized Verizon Business' new on-demand voice over IP service as a 2008 TMC Labs Innovation Award winner.
• Frost & Sullivan awarded Verizon its 2008 Green Excellence of the Year Award in the Corporate Leadership category for the telecom services industry.
• Telephony Magazine named the Verizon Enterprise Center (VEC), the company's online site for enterprise customers around the world, as the most innovative enterprise service of 2008. 

New Business Momentum Continues

Verizon Business continued to both solidify and extend its relationships with existing large businesses and government agencies around the world while adding new business.  The company completed agreements during the quarter with multinational corporations including American Express, CA, The Coca-Cola Company, First Data and H&R Block, Husqvarna and Kuwait Petroleum International Ltd for a wide range of advanced communications and information technology solutions.

Specific customer applications include:

• CA is employing Verizon Private IP as a foundation for unified communications and collaboration across its global extended enterprise in 35 countries, including its customer call-center operations.

• Dallas Fort Worth International Airport, one of the nation's busiest airports, selected Verizon Business to consolidate and maintain a 10,000-square-foot data center to securely house critical data, reduce power consumption and enhance its operational efficiency.
• First Data, a leading provider of electronic commerce and payment solutions for businesses worldwide, has expanded its longstanding relationship with Verizon Business for global Private IP services as well as new customer premises equipment (CPE) and maintenance services.
• H&R Block, the world's largest tax services provider and a fully integrated financial services company, relies on Verizon Business for advanced voice, IP data and conferencing services.
• Husqvarna, the global leader in outdoor power products, has chosen Verizon Business as its global communications provider.  Fully managed Private IP will be used to connect the company's operations, which span 16,000 people in more than 100 countries around the world.
• IBA Health, Australia's largest listed health information technology company, chose Verizon Business to provide a fully managed MPLS-based private IP and managed WAN solution.  The infrastructure will enable the deployment of major applications including CRM, HR and Finance throughout IBA Health's geographically dispersed teams of functional designers and business analysts.
• Kuwait Petroleum International Ltd has chosen Verizon Business to unite its global operations.  Fully managed Verizon Private IP with Verizon Secure Gateway will support all critical data traffic between Kuwait Petroleum International's global entities situated in Europe, the Middle East and Africa, and the Asia-Pacific region.
• Mirae Asset Global Investments, one of Asia's leading asset-management companies, is implementing Verizon Business' Private IP and Telepresence services to provide stable and reliable network connections, and real-time and high-definition video conferencing availability between Mirae Asset's offices in Seoul, Hong Kong, India, London, New York and Sao Paulo.

About Verizon Business
Verizon Business, a unit of Verizon Communications (NYSE: VZ), operates the world's most connected public IP network and uses its industry-leading global-network capabilities to offer large-business and government customers an unmatched combination of security, reliability and speed.  The company integrates advanced IP communications and information technology (IT) products and services to deliver leading enterprise solutions including managed services, security, mobility, collaboration and professional services.  These solutions power innovation and enable the company's customers to do business better. For more information, visit www.verizonbusiness.com.

About the MarketScope
The MarketScope is copyrighted June 2008 by Gartner, Inc. and is reused with permission.  The MarketScope is an evaluation of a marketplace at and for a specific time period.  It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner.  Gartner does not endorse any vendor, product or service depicted in the MarketScope, and does not advise technology users to select only those vendors with the highest rating.  Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

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¹ Gartner, Inc. "MarketScope for Managed Security Services in the Asia/Pacific Region" by Andrew Walls and Kelly M. Kavanagh, June 20, 2008.