Earlier today, Verizon announced its Q4 earnings results, and Chief Financial Officer Fran Shammo was asked by an analyst about the impact that Title II regulation would have if applied to broadband service. Fran reiterated the inverse relationship between regulation and investment:
Kevin Smithen - Macquarie Research Equities – Analyst: Just a quick follow-up. Does your guidance change at all under certain Title II outcomes? And what is your current thinking on this, given recent government comments?
Fran Shammo - Verizon Communications Inc. - EVP & CFO: That's a great question, because I personally have been misquoted both in the press and in Congress on what I've said. So this is a good question for me to clear this up.
First of all, this is not an issue about Internet rules. It's about an issue of FCC reclassifying broadband as a Title II service, and this will absolutely affect us and the industry on long-term investment in our networks.
That can be seen factually as to what happened in the rest of the world, where you have high regulation, the networks are not invested in, they are not good quality of service networks. And that's where this will put us.
I guess I would emphasize also that the approach, in whole or in part, on Title II is an extreme and risky path that will jeopardize our investment and the development of innovation in broadband Internet and related services. It will also tie up the industry in a very uncertain time and cause all types of litigation.
So when I said before and misquoted on the fact that it would not hurt our investment, I was talking about 2015. But if this piece of Title II was to pass, I can absolutely assure you it would certainly change the way we then view our investment in our networks.
The other thing, too, is I think it is important to show that this industry, on a high-level basis, has invested about $50 billion a year in networks and improving the quality of service and open network to everyone. That is what the industry believes is that this is an open Internet basis.
If we curtail the investment of this industry, it will definitely trickle down to what we would consider middle-class jobs. And it's because of most of – at least for Verizon Wireless – a lot of our build are done by thousands of contractors across the United States. That will impact those small businesses and impact their employees.
So from that perspective, I guess what we would say, Kevin, is we would encourage Congress to adopt a legislative solution. Congress has the authority to adopt clear rules of the road that will allow policymakers in the industry to move on to more important things. So I think that summarizes the position about Title II.