Verizon CEO Calls for Sweeping Revision of U.S. Telecom Policy

WASHINGTON, DC - Telling the Senate Commerce Committee, "that U.S. telecommunications policy is broken and must be fixed," Verizon Chairman and CEO Ivan Seidenberg today called on Congress to enact a major reform to create a new policy for the broadband era. Seidenberg said that it must be national in scope, leave pricing to the marketplace rather than regulators, and ensure common rules for all competitors.

The new policy must be: "One that encourages investment in both wireline and wireless infrastructure; that puts power in the hands of consumers, not government; and that permits and even encourages innovation, rather than trying to force new services into old regulatory models," Seidenberg said.

He said the policy should be based on three principles that govern other technology companies, including cable and wireless companies:

• Provide stability and uniformity across the industry and across the nation
• Be free of economic regulation and permit markets to determine prices
• Common rules for enforcement, technical standards and public safety where they are needed

Seidenberg pointed out that only a few major telecom companies, led by Verizon, have both the will and financial resources to invest billions of dollars to build the infrastructure needed to bring high-speed broadband networks to the nation. Such investment would restore "America's leadership in an industry that drives productivity, stimulates innovation and creates jobs," he said.

However, Seidenberg told the commerce committee, the current regulatory system imposes costs, injects ambiguity and introduces bureaucratic red tape into every investment decision involving the wireline network.

Seidenberg noted that the 1996 Telecom Act was intended to impose rules to transition the industry to more competition; however, the additional regulations appear to be becoming the norm. In this environment, the industry is not growing.

As a result, Verizon and others are cutting investments and diversifying assets. Seidenberg noted that the business problem is evident from Verizon's own financial report just released for the first quarter of 2004. The wireless business, subjected to limited regulation and fair competition, grew at an annual rate of 21 percent. The heavily regulated traditional wireline business declined nearly 4 percent from the level of the previous year.

"Even in the face of a shrinking wireline business, Verizon has been willing to invest because we expected a move to a more stable regulatory environment," said Seidenberg. "But eight years is long enough. Unfortunately, we see that the regulatory practices of these past eight years are becoming permanent."

The question is whether, without change, Verizon's commitment to invest and take on the risks of investing in new technologies is sustainable over the long term. "Under the present regulatory framework, it must be said that the ability to continue our level of investment is highly speculative," Seidenberg told the committee. But, he added, Congress can reverse this trend by enacting new policy.

"We still see value and the potential for growth in the wireline business" said Seidenberg. He noted that Verizon continues to invest in broadband, wireless, data and voice technologies at a rate of $12 billion a year, a level unmatched by its competitors in either the wireless or wireline businesses. Verizon is the first company in the U.S. to commit to deploying fiber-optic technology to homes and small businesses, a project that is now under way.

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Read the full text of Ivan Seidenberg's oral testimony before the committee.

A Dow 30 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services, with approximately $68 billion in annual revenues. Verizon companies are the largest providers of wireline and wireless communications in the United States. Verizon 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.

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