Verizon Co-CEO Seidenberg Says Pro-Investment Policies, National Broadband Bill Must Top Congressional Agenda
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WASHINGTON - Saying 2002 is the year lawmakers must connect communications policy to larger issues in the U.S. economy, Verizon President and co-CEO Ivan Seidenberg today urged Congress to adopt policies that spur investment, create jobs and stimulate a new wave of high-tech innovation and productivity.
"At a time when the American economy is in desperate need of a jolt of innovation and investment, some of this country's most technologically strong, capital-rich companies are being kept on the sidelines," Seidenberg said during a luncheon speech at the U.S. Chamber of Commerce.
"We need to reframe these issues in terms of the larger goals of getting more technology in the hands of customers and more capital pumped into the economy where it can create jobs, growth and entrepreneurial activity."
Seidenberg said businesses need a reason to invest sooner rather than later and called on Congress to adopt a recovery package that contains changes in tax law that encourage new investment. Lawmakers return to Washington later this month.
"More than $2 trillion in cash or cash equivalents is sitting on the sidelines while the economy languishes in an investment recession. Verizon supports proposals that would give a sizable 'bonus depreciation' for companies making new investments in the next two or three years."
The U.S. House of Representatives included a 30 percent bonus depreciation provision in the stimulus package it passed last month. Senator Majority Leader Tom Daschle recently expressed support for a similar provision as part of a larger, pro-growth agenda.
With a capital budget of about $17 billion in 2001, pro-investment tax policies would have a significant impact on Verizon's investment decisions. But Seidenberg said tax relief alone would not enable that investment to flow to the biggest opportunities.
"For us to put that capital to its most productive use, we also need a national broadband policy that provides a rational economic basis for us to upgrade our networks, deploy new technologies and reinvest in growth."
Seidenberg applauded TechNet, a coalition of more than 300 high-tech companies, for calling on the administration to make broadband deployment a national priority and to free telephone company broadband investments from obsolete rules that are stalling investment and growth.
"Consensus is growing behind this issue. But agreeing in principle is not enough. It's time for the Federal Communications Commission, along with Congress, to take action to open the gates to broadband investment and let us put our resources to work where they can do the most good for America," Seidenberg said.
Telecom spending on broadband will have huge multiplier effects on the economy, he said. It will transform entertainment, create demand for new PCs run by more powerful chips, reinvent consumer electronics and usher in new productivity-boosting business applications.
Seidenberg said the key dynamic in the marketplace is the drive to appeal to the information-age customer by becoming the single most important source of content, commerce and communications. Verizon has assembled the assets, the scale and scope and the technology base required to go head to head with cable, media and software companies to deliver the broadband revolution.
However, Verizon's regulated assets are subject to a long list of price regulations and sharing obligations that prevent the company from having an equal footing in the marketplace and remove the incentives for investing in new technologies. Outdated policies have shifted value, growth and innovation away from incumbent telephone companies to less constrained segments of the industry.
"All that's required is an economic framework that is technology-neutral and rewards investment on the part of the industry's strongest and most capable players," he said.
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 128.5 million access line equivalents and 28.7 million wireless customers. Verizon is also the largest directory publisher in the world. A Fortune 10 company with 256,000 employees and approximately $65 billion in annual revenues, Verizon's global presence extends to more than 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.
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text of Ivan's speech.