An Expensive Idea Comes to New Jersey
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BACKGROUND -- AT&T today filed a petition with the New Jersey Board of Public Utilities that would result in increased telecommunications
costs in New Jersey and split Verizon New Jersey into separate wholesale and retail units. The following response should be attributed to Dennis Bone,
president - Verizon New Jersey.
NEWARK -- Structural separation is an expensive solution in search of a problem.
Regulators and business people across the country understand that structural separation would cost billions to implement, produce no benefit for consumers and
could result in more expensive phone service and lost jobs.
All this while competition is vigorous across the Verizon region right now. Thousands of customers are switching local phone service from Verizon to other
companies every day.
Other states, the Federal Communications Commission and the Congress all considered splitting local phone companies in two and rejected the idea. One
telecommunications company (SNET in Connecticut) tried to implement a similar plan voluntarily, but after a two-year struggle rejected it as unworkable.
Who thinks this is a good idea? Only Verizon competitor AT&T, a company desperate to keep Verizon out of the long-distance business.
But when Verizon was permitted to offer long distance in New York consumers saved over $220 million just in the first year. AT&T's action signals that
the long-distance giant knows Verizon is getting closer and closer to gaining approval in New Jersey.
AT&T's proposal to split Verizon in two, which no other state has adopted, could cost New Jersey residents and businesses about $1 billion in the first year
and about $300 million in each succeeding year. The costs would result from inefficiency because of the need to create duplicate operating systems, divide up
employees between the two companies and create new business procedures.