Verizon Responds to Structural Separation Bill Introduced in Michigan

BACKGROUND - An AT&T-supported bill to require structural separation of Ameritech's and Verizon's wholesale and retail operations in Michigan was introduced yesterday in the Michigan Legislature. The following response should be attributed to John Dudley, president of Verizon's Great Lakes Region.

MUSKEGON, Mich. - "Structural separation is a solution waiting for a problem. There is no evidence that it promotes competition in the telecommunications network and no evidence it will resolve any telecommunications issues. In contrast, evidence exists that it will produce confusion for customers in Michigan while threatening jobs and increasing costs.

"This is a discredited idea that the Federal Communications Commission has rejected at least four times. Most recently, Pennsylvania regulators realized it was a bad idea. And in Maryland, a structural separation bill was withdrawn when it was headed for certain defeat. In fact, no state has required it.

"Just yesterday, Dataquest Inc., a unit of Gartner, Inc., one of the nation's leading research firms, said that structural separation would not be the cure to creating a more competitive telecommunications marketplace.

"Structural separation isn't necessary to increase competition in Michigan. Right now well over 100 companies have been authorized by the Michigan Public Service Commission to compete for local telephone service in Verizon markets. Our doors already are open. Splitting Verizon in two would do nothing to accelerate competition -- it simply would add another layer of needless regulation.

"So, who really wants structural separation? It's clear that AT&T has one driving motive here -- to gain market advantage at the expense of its chief rivals. Even considering such an absurd idea only further delays the benefits of full competition for Michigan residents.

"Many experts, including the Progress & Freedom Foundation, Cato Institute, Competitive Enterprise Institute, Commonwealth Foundation, Independent Institute, Dataquest Inc., CSE Foundation, Eastern Management Group and Mercatus Center at George Mason University, all oppose structural separation. The fact that some firms are performing poorly in the marketplace - despite numerous regulatory advantages - is hardly cause for returning to the failed model of a regulated monopoly.

"Michigan residents must not become the guinea pigs for an ill-conceived idea that the Federal Communications Commission, other states and many think tanks have already rejected."