Verizon Proposes Plan to Protect Customer Service and Healthy Carriers during Telecom Shakeout

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WASHINGTON - Verizon today filed a plan with the Federal Communications Commission that would safeguard continuous customer service while limiting the financial fallout flowing from WorldCom's bankruptcy and the financial difficulties facing other firms in the telecommunications industry.

The plan outlines specific steps to protect the customers of all carriers by enabling Verizon and other healthy carriers to protect themselves against the risk of amassing large uncollectible charges for services provided to financially troubled phone companies.

"While there has always been financial interdependence among carriers in the telecommunications industry, the FCC's implementation of the 1996 Telecommunications Act has heightened the risk that failure of some will affect others," said William P. Barr, Verizon executive vice president and general counsel. "The rules have encouraged the creation of more firms than could reasonably survive, including many with unsound business plans, while at the same time mandating that local carriers like Verizon continue to provide service to those risky companies.

"It is critical that the government not exacerbate the situation by preventing us from taking the kind of reasonable protective steps that would be available to companies in any other industry under these circumstances," Barr said.

Verizon's plan calls on the FCC to allow service providers to take the same kinds of steps to obtain adequate assurances of payment as would be available to companies in any other industry. Specifically, it asks the FCC to allow carriers to quickly modify their tariffs to require security deposits or payments in advance from companies that demonstrate a financial concern. The plan also urges the FCC to defend the right of carriers to obtain adequate assurances of payment in bankruptcy proceedings and to make clear that carriers have the same right as other service providers to recoup outstanding indebtedness on continuing service arrangements.

"The bankruptcy announcements by WorldCom and others are unfortunate developments that call for strong leadership by policy makers to confine any financial fallout by ensuring that suppliers are promptly compensated for services provided to these carriers," said Barr. "We believe our proposal will help bolster confidence in the industry and provide the FCC with a solid framework upon which to protect customers, investors and carriers in wireline and wireless markets nationwide."

Verizon Communications

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 133.8 million access line equivalents and approximately 29.6 million wireless customers. Verizon is also the largest directory publisher in the world. With more than $67 billion in annual revenues and nearly 248,000 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


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