Verizon Complies with Order in Massachusetts That Continues Below-Cost Wholesale Rates

BOSTON - Verizon today complied with an order from state regulators that continues below-cost wholesale rates to carriers leasing switching facilities and lines from the company to serve their customers.

The new rates, for services known as unbundled network elements (UNEs), will become effective retroactive to Aug. 5, 2002 once the Massachusetts Department of Telecommunications and Energy (DTE) approves them. The DTE last summer ordered the company to recalculate rates using a federal pricing formula that bases prices on a hypothetical network that uses the latest, most cost-effective technologies, not the network the company has actually built in Massachusetts.

"While we have fully complied with the department's order, some of the new rates are even further below our actual costs," said Donna Cupelo, region president for Verizon Massachusetts. "Steep wholesale discounts may seem appealing, but when discounts become subsidies, they discourage investment by Verizon or other companies that build their own networks. Subsidized 'competition' is not beneficial to consumers in the long run."

The company calculates that based on the order the UNE rate for switching drops from fifteen-hundredths of a cent ($0.0015) to eight-hundredths of a cent ($0.0008) per minute, while the statewide average for leasing a typical line increases from $14.98 to $15.26. The statewide average for combining all elements, known as UNE-P, remains about 50 percent below Verizon's actual costs.

Cupelo said Verizon is considering an appeal of the department's order.

Massachusetts is among the states with the most facilities-based competition. Facilities-based competition, as opposed to leasing or reselling Verizon's network services, was the goal of the 1996 federal Telecommunications Act.

"It would be a shame for consumers and for our state's economy if we promote uneconomic, subsidized competition at the expense of real competition," Cupelo said. "Different networks and technologies offer consumers and businesses real choices and innovation."

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 135.8 million access line equivalents and 32.5 million Verizon Wireless customers. Verizon is also the largest directory publisher in the world. With more than $67 billion in annual revenues and 229,500 employees, Verizon's global presence extends to 33 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.