NEW YORK-- In an initiative designed to expand Verizon Communications' presence in the large business market, the company today announced plans to assemble and operate a global telecommunications network that will link the United States with major cities in Europe, Asia and Latin America.
Verizon will acquire fiber-optic cable, switching and transmission equipment and related network management software to deploy the high-speed, broadband network, which will carry data, Internet and voice traffic. The first phase -- which will link New York to London, Paris, Amsterdam, Brussels, Frankfurt and Milan -- is scheduled to begin operating by the second quarter of this year. Links between New York and Toronto and between Hawaii, Hong Kong, Tokyo and Sydney are already operating and will be part of the new network.
"This is a logical next step for Verizon because it will help unlock the full value of our network and our core business," said Eduardo R. Menasce, president of Verizon's Enterprise Solutions Group, which manages the design, operation and maintenance of networks for large business customers. "We believe that our global network perfectly positions Verizon to become a leading presence in the large business market, which is the fastest-growing segment in the U.S. telecommunications industry and generates $140 billion a year in revenues."
Verizon will make a significant capital investment to complete the first phase of the network. This investment is already incorporated in Verizon's capital budget and in the financial guidance for 2001 and 2002 that the company issued last year and reaffirmed today. The company also expects to save at least $300 million in transport costs over five years because it will be significantly less expensive to route international calls over Verizon's global network rather than to continue to pay other carriers to transport the calls.
Over the next two years, the network will be expanded and provide direct links to other leading commercial and financial centers including Geneva, Zurich, Madrid, Singapore, Buenos Aires, Caracas and Mexico City.
In addition to serving the large business market, other major benefits of the network include:
- It is anticipated that Verizon's business units will route calls over the new network. This will enhance Verizon's ability to meet the growing global needs of the consumer market and to provide service at lower cost.
- Capacity on the network also will be offered on a wholesale basis to other carriers that provide traffic and services to and from the United States or between select regions within Europe, Asia and the Americas.
- Under a joint marketing and resale agreement between Verizon and Genuity, a leading data services and network company, Verizon will resell a variety of Genuity's advanced Internet products such as Web hosting and dedicated and dial-up Internet access.
- A variety of personalized customer-care initiatives will provide customers with direct, 24-hour-a-day access to network information that is critical to their individual business needs.
"We will manage and operate our global network by owning the switches and controlling our own transmission facilities, rather than just re-selling capacity and services on another carrier's network," said Thomas A. Bartlett, president of Global Solutions Inc. (GSI), a new Verizon business unit that is responsible for assembling and managing the global network. "And we will support our network with outstanding customer care, including Web-based services such as provisioning and billing.
"As a result, we will be able to offer a facilities-based network that connects commercial centers around the globe and that provides an array of voice, data and Internet services to large business, wholesale and residential customers. Our prices will be competitive and our service will be outstanding," Bartlett said.
Key elements of the network will be provided by two companies with which Verizon has close alliances and in which it has ownership stakes -- FLAG Telecom and Metromedia Fiber Network, Inc. (MFN).
FLAG Telecom is a leading independent network services provider and carriers' carrier. It owns and operates a high-capacity, undersea cable system that links Europe, the Middle East and Asia. The company is completing work on a trans-Atlantic cable between New York, London and Paris that is scheduled to begin operating next month. FLAG is also developing FLAG North Asian Loop, which will connect major cities throughout the Asian region, and is developing a trans-Pacific cable.
MFN owns fiber-optic infrastructures within key metropolitan areas in the United States and internationally that can transmit the latest data, video, Internet and multimedia applications. MFN has deployed more than 1.2 million fiber miles and plans to increase the total to 3.6 million miles worldwide by 2004.
GSI plans to operate gateway switches in New York, Los Angeles, Honolulu and London to aggregate data and voice traffic and route it over the new network. A European network operations center will be constructed in a suburb of London.
GSI will assemble additional portions of the new network through a variety of methods, including forming partnerships with other companies and leasing capacity on the networks of other carriers.
Initially, Verizon's Enterprise Solutions Group will market the global network to large business customers in New York -- where the company received regulatory approval in December 1999 to offer long-distance service -- as well as to business customers in states outside the former Bell Atlantic footprint that were served by GTE prior to the companies' merger forming Verizon.
Verizon will extend its customer base for the new network to the New England and mid-Atlantic states once Verizon receives regulatory approval to offer long-distance service in each of those states. The company has filed for approval in Massachusetts and also plans to seek approval this year for Connecticut, New Jersey, Pennsylvania and Rhode Island.
Once the approvals are obtained, the new network will take full advantage of the fact that 40 percent of all international long-distance traffic in the United States originates in Verizon's service territory. In addition, more than 30 percent of the headquarters of the worldwide Fortune 500 companies are located in this territory.
Verizon also has negotiated an exchange agreement with its Canadian affiliate TELUS, one of Canada's leading telecommunications companies, that provides for utilization by TELUS of the new network.
Bartlett said Verizon, which has operations in 19 countries around the globe, is currently negotiating similar agreements with other affiliates.
"The new network is also a key element of Verizon's strategy to become a major force in the global marketplace over the next several years by continuing to gain scale in our network businesses, solidifying our position in our home markets and building on the skills and capabilities of our affiliates and partners," Bartlett said. "The end result of this disciplined approach to international expansion will be a globalization of our business.
"Verizon has all of the ingredients needed to make this new network a success. We have a critical mass of minutes of use generated by our domestic business and consumer operations and by our affiliates. We will offer an array of advanced products and services. And we believe that our new network will have one of the lowest cost structures in the international telecommunications industry, which will enable us to compete favorably with other global carriers."
Additional information about Verizon's global network -- including a map and fact sheets -- is available at Verizon's News Center on the World Wide Web (www.verizon.com/kit/global).
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 nearly 109 million access line equivalents and more than 27.5 million wireless customers. Verizon is also the world's largest provider of print and online directory information. A Fortune 10 company with approximately 260,000 employees and more than $63 billion in annual revenues, Verizon's global presence extends to 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.