Verizon Executive Tells Industry Council That Fiber-to-the-Home Network Provides Best Broadband and Video Services, and Greatest Promise for Innovation

LAS VEGAS - Verizon's all-fiber broadband and TV network is lighting the way for advanced services and reliability today, while providing the sturdiest platform for innovation and expansion down the road, a company executive told industry representatives.

In a keynote address today at the annual conference sponsored by the Fiber to the Home (FTTH) Council, Verizon Telecom Executive Vice President and Chief Marketing Officer Bob Ingalls said the competition is coming up short on its “me-too” claims of offering a fiber-rich network for high-speed Internet and TV service.

“As the FTTH Council has already acknowledged, Verizon is the only major provider in the country that is building and offering service over an all-fiber network,” Ingalls said.  “The claims by the competition – most notably the cable industry -- that they offer a similar fiber-dense network fall a mile short -- the last mile.”

In September, the FTTH Council announced that Verizon has earned the council’s first certification for a network that provides fiber all the way to customers’ homes and offices.

In his presentation, Ingalls outlined Verizon’s aggressive plans for building the nation’s largest all-fiber network, including an $18 billion net investment over a seven-year period (2004-2010). Verizon told investors and analysts last week that it plans to pass 18 million premises with its fiber network by the end of 2010 – more than half the approximately 33 million households in the company’s 28-state wireline service area.  The company is on target to pass 6 million households by the end of this year.

By the end of the third quarter of 2006, Verizon expects to have more than 500,000 FiOS Internet customers, compared with 375,000 FiOS Internet customers at the end of the second quarter of 2006.  Monthly churn rates, a measure of customer turnover, have been below 1.5 percent, indicating customer loyalty that exceeds the company’s initial expectations. Currently, Verizon offers FiOS Internet Service at speeds of up to 50 Mbps.*

Verizon is also seeing strong customer demand for FiOS TV, which was launched in its first market just over a year ago.  By the end of the third quarter of 2006, Verizon expects to have more than 100,000 FiOS TV customers, and the company estimates that about two-thirds of FiOS TV customers have discontinued their cable TV service.

Verizon has set a target of 175,000 FiOS TV customers by year-end 2006 and making the service available to 1.8 million households.  This would be a market penetration rate of approximately 10 percent.  More than 1 million households are already currently eligible to purchase FiOS TV services, due to Verizon’s significant progress in obtaining state and local cable franchises.

Verizon’s goal is for FiOS TV to have a market penetration rate that ranges from 20 percent to 25 percent by 2010 -- or from 3 million to 4 million FiOS TV customers -- based on its estimate that approximately 15 million households will be video-ready by then.

Nearly 80 percent of FiOS TV customers have purchased three services -- voice, data and video -- from Verizon.  Monthly churn rates have mirrored those of FiOS Internet Service, or less than 1.5 percent, which also indicates customer loyalty that exceeds the company’s initial expectations.

“Verizon’s FiOS Internet services continue to gain market share with unmatched reliability and speeds that make applications like photo and video sharing, blogging, digital movie downloads, video chat and conferencing, and interactive multi-player games a part of everyday living,” Ingalls said. “Meanwhile FiOS TV is setting the pace for signal clarity, HD channel lineup and video on demand, all at competitive prices.”

But the best is yet to come, Ingalls said, referring to the nearly limitless capacity and potential of an all-fiber network.

“We have only begun to scratch the surface on the potential of this network,” he said.  “We are taking the Internet to new levels of speed and capability, while building a high-capacity framework for innovation and expansion.  With FiOS, we see opportunities to offer services that change the way we work, the way we play and the way businesses of all sizes access global markets.”

Verizon FiOS TV enhancements next year will include a TV portal, home shopping, interactive broadcasting, gaming, and on-demand and multimedia upgrades.  Among terrestrial TV providers, Verizon is already the leader in the number of national high-definition channels and first in the percentage of customers with digital service.

The FTTH Council, a nonprofit organization founded in 2001, educates, promotes and accelerates fiber-to-the-home deployment and the resulting quality-of-life enhancements. The council is made up of about 800 members that range from telecom equipment manufacturers to educational institutions to municipalities.

* NOTE: Mbps speeds reflect initial connection speeds between a computer and Verizon’s central office.  Actual throughput speeds will vary based on numerous factors, including network and Internet congestion and the speed of websites visited on the Internet.

Verizon Communications Inc. (NYSE:VZ), a Dow 30 company, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers.  Verizon Wireless operates America’s most reliable wireless network, serving nearly 55 million customers nationwide.  Verizon Business operates one of the most expansive wholly-owned global IP networks.  Verizon Telecom is deploying the nation’s most advanced fiber-optic network to deliver the benefits of converged communications, information and entertainment services to customers.  Based in New York, Verizon has a diverse workforce of more than 252,000 and generates annual consolidated operating revenues of approximately $90 billion.  For more information, visit www.verizon.com.


NOTE:  This news release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in economic and industry conditions and labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; material changes in available technology; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; the timing, scope and financial impacts of our deployment of fiber-to-the-premises broadband technology; the ability of Verizon Wireless to continue to obtain sufficient spectrum resources; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; the timing of the closings of the sales of our Latin American and Caribbean properties; and the extent and timing of our ability to obtain revenue enhancements and cost savings following our business combination with MCI, Inc.