Verizon Calls For Green Light From FCC on Broadband Deployment by Issuing Clear, Precise National Policy

WASHINGTON - A business plan cannot be built on the good intentions, speeches and reassurances of FCC Commissioners, Verizon's senior vice president for public policy and external affairs, Tom Tauke, said today.

When Verizon builds a new fiber-to-the-premises network starting next year, "we have to comply with the law - with the law as it is, not the law we wish for or what someone says it will be," said Tauke, while speaking at the 2003 Optoelectronics Industry Development Association Annual Forum. He called on the Federal Communications Commission to promptly issue "clear rules, clear direction and a clearly thought-out policy" with respect to broadband.

"The FCC led us to believe that we would receive clarity last February, when the Triennial Review order was announced," he said. "For the next six months, while they did their wordsmithing of the final order, they told us we'd get the policy we need. But when the final text was published in the Federal Register, while that was a major step, we discovered that we did not have the answers we needed. In fact, we had more questions."

Regarding broadband networks, Verizon has three key policy concerns, Tauke said:

The first concern is with the juxtaposition of Sections 251 and 271 of the 1996 Telecommunications Act. "It's clear in the Triennial Review Order that the unbundling rules of Section 251 of the act have been eliminated for deployment of fiber to the premises" in the mass market for consumers and small businesses, said Tauke. "But the order implies there still may be an unbundling requirement under Section 271, the part of the act that deals with long- distance entry."

For Verizon that would mean that the company would be encouraged to deploy facilities in the former GTE states that are not subject to the Section 271 requirements, but would be required to unbundle fiber and therefore would be discouraged from deploying it in the former Bell Atlantic states.

"We don't believe this makes sense," Tauke said. "We can't find anyone who suggests this was the intent of the commission. No one believes the FCC meant to give with one hand and take away with the other. Nevertheless it is a problem, and the FCC should clarify it and do so promptly."

"Our second concern is that the FCC decided that multiple-unit premises apparently are not included in mass markets" but are in the Enterprise market, said Tauke. "This means if Verizon deploys fiber to a multiple-unit premises [like an apartment building], then it has to unbundle the fiber, because multiple units are defined as being in the Enterprise category. This, again, is something that we have difficulty believing that the FCC intended.

"We can't believe that they were telling companies to deploy to single-family residences in the suburbs but not to deploy to multiple-unit premises in the major cities," he said. "Certainly the commission does not intend to encourage that type of geographic redlining. But again, the issue needs to be addressed."

"The third concern is the definition of Enterprise vs. the mass market," said Tauke. "The FCC recently clarified that the intent was to provide unbundling relief for fiber that was extended to the premises rather than just to residences, seemingly making the opportunity to deploy to small businesses more real."

"But the FCC has yet to define where the mass-market ends and the Enterprise market begins," he said. "So if you deploy to a small businesses today, you don't know whether you have to unbundle or whether you don't have to unbundle that fiber."

In addition to concerns about the rules for broadband networks, Verizon has concerns about the rules for broadband services.

"The FCC has been studying the issue of broadband services for almost two years now, trying to decide whether these service should be classified as Title I services or Title II under the Communications Act," said Tauke. "Without going into a lot of details, in a nutshell, Title II services are highly regulated, like today's traditional phone services, where we have rate regulation, and myriad accounting rules, inventory rules and much more. Title I services, on the other hand, are lightly regulated, though still in the FCC's purview.

"We believe applications that ride on the Internet should be free of traditional telephone rate regulation and all the other rules attached to that type of economic regulation," he said. "This will help encourage the development of this nascent set of technologies and provide consumers with even more choices and more competition."

Verizon Communications

A Fortune 10 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services, with approximately $67 billion in revenues. Verizon companies are the largest providers of wireline and wireless communications in the United States, with more than 139 million access line equivalents and 36 million Verizon Wireless customers. Verizon is the third largest long-distance carrier for U.S. consumers, with nearly 16 million long-distance lines. The company is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon's international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.