Verizon CEO defends broadband rollout

Verizon Communications Inc.'s co-CEO Ivan Seidenberg on Tuesday mapped out the role ahead for large telecoms that are among the few players now with pockets deep enough to set the pace of the networking industry.

Here at the ComNet trade show, Seidenberg characterized Verizon as moving out of an era marked by its own corporate build up and an increased reliance on networking.

"Companies like Verizon used to be on the periphery of the action in the IT world. Now we're in the center," he declared. "With the convergence of communications and computing technologies, our networks are becoming the platform for delivering value to the information-age customer and the focus of investment and innovation," he said.

It was in that vein that Seidenberg went on to defend the New York-based Baby Bell's broadband rollout.

Verizon's overall capital investment budget, which includes its broadband expenditures, was US$17 billion in 2001. The company in the coming days will release 2002 figures, which Seidenberg called "still very significant."

At the same time, he fired off warnings that the company can hardly afford to keep up its current DSL investment level under the current market and regulatory conditions.

"We have spent a lot of money on DSL," he said. "If you follow what Wall Street is saying, they claim not that we have spent too little but that we have spent too much."

Quite opposite is the case for equipment manufacturers, he added. "The manufacturers represent the first significant problem in this area," he said, detailing slow-downs in DSL-related research and development.

However, the bigger problem, according to Seidenberg, involves the limited return on investment Verizon gets when it opens up its broadband facilities to competitors.

"Because of our size, we can push the vendors ahead," he said.

Yet to do that, Verizon officials stress their need to get out from under regulations that require the company to share its facilities with competitors at prices Verizon finds unacceptable.

"Unbundling our loops for rates that are below cost creates a burden for us," said Seidenberg, beating the drum for relief.

That relief in the short-term could arise through passage of the controversial Tauzin-Dingell bill, now scheduled for a vote in the House of Representatives in late February, he said.

But Seidenberg claimed the issue now goes farther than this ballyhooed bill crafted to free the Bells from long-standing regulations and thereby spur broadband deployment.

"We think Tauzin-Dingell will pass, but beyond that, we think it will broaden the debate," he said.

Specifically, Seidenberg predicted that the regulatory models governing the wireless and cable industries should and will be applied to the telecom space.

"We are not asking for changes to the voice rules - we'd like to have those changes and we think there should be changes - but we'd like to take the regulatory model [governing the voice industry] and make it more like cable and wireless," he said.

In those industries, Seidenberg continued, there are virtually no restrictions on marketing and pricing.

Indeed, Seidenberg said his company will feel more heat from competing technologies and industries than it will from companies trying to sell services that piggyback on Verizon's infrastructure.

On that point, Seidenberg said he anticipates telephony strides on the part of cable operators and broadband wireless advances that mirror Verizon's current path of development.

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