Verizon Proposes New Regulatory Plan That Reflects Competitive Telecommunications Market in Massachusetts

BOSTON -- Verizon today proposed a new regulatory plan for the company's rates in Massachusetts that reflects the growth of competition for

telecommunications services in the Bay State.

"We've seen explosive growth in competition since the current plan went into effect," said Robert Mudge, president of Verizon Massachusetts.

"In just the past two years, the number of lines served by competitors has more than doubled. Our proposal provides another significant step toward

market-based pricing while providing real safeguards for consumers."

Mudge said Massachusetts already has one of the most competitive local phone markets in the nation. More than 850,000 local lines in the Commonwealth --

about 20 percent of Verizon's retail lines and over 16 percent the state's total lines -- are served by competitors.

The new regulatory framework would replace the existing regulation plan for Verizon services that went into effect in 1995 and capped basic residential rates for

the past six years.

Mudge said the new plan:

• Simplifies billing by combining the separate charges for touch-tone service and basic residential service into a single rate and then capping that rate for

  three years. For example, a customer now paying $16.85 for unlimited local service would now be billed a single rate of $17.32 -- a difference of 47 cents.

  Most customers would see no increase in their monthly bill because 91 percent of consumers already pay a separate charge of 49 cents for touch-tone. The

  company would no longer bill customers the separate 49-cent charge. (The combined touch-tone/basic rate would only be 47 cents higher because the 9

  percent of customers who currently aren't paying for touch-tone would have a charge included in their basic rate.)

• Increases the monthly Lifeline credit for eligible low-income customers by 47 cents to ensure that Lifeline customers will not be affected by these changes.

• Caps local usage charges for three years.

• Caps any price changes for non-basic residential services by requiring that any increases in individual services be offset by reductions in other services.

• Subjects all other services to market-based pricing with the exception of wholesale services and other unique services provided to competitors which would

  remain subject to existing regulatory rules.

• Continues incentives, in addition to those of the marketplace, for Verizon to provide high quality service. If indices drop below prescribed levels, affected

  consumers and businesses would receive a one-time rebate on their monthly charges.

Verizon filed details of the plan today with the Massachusetts Department of Telecommunications and Energy, which also asked the company to include options

for a possible reduction in the charges carriers pay Verizon to complete toll calls in Massachusetts using Verizon's network. While the company feels the current

charges are fair, it complied with the department's request by including two options for a $51 million reduction in charges to other carriers. Verizon said the two

options are modeled after similar changes made by federal regulators. Last year, with the support of regulators, carriers and consumers groups, the Federal

Communications Commission adopted a plan that reduced similar carrier charges by increasing monthly fees.

The first alternative would immediately reduce the in-state, switched-access charge, making it the same as the interstate rate. To offset such a reduction, the

monthly rate for residential phone service would increase by $1.63. The second option phases in the same reduction over a two or three-year period.

Verizon would receive no additional net revenue if the department elects either option. Under both alternatives, the subsidy for Lifeline customers would increase

by an equal amount to ensure Lifeline customers remain unaffected.

If access rates are reduced, Verizon also would have the option to increase the monthly residential rate by an additional $1 over the next four years, but only if

the company offsets the revenue increases by decreasing its rates for residential toll or optional calling plans. Once again, Lifeline customers would be

unaffected.

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 largest directory publisher in the world. A Fortune 10 company with approximately $65 billion in 2000 revenues and more than 260,000 employees,

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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