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How important is Verizon Communications quest to acquire long-distance rights in the mid-Atlantic and New England states?
“Its the heart of this business,” says Verizon Chairman and Co-CEO Charles Lee. “The value of the network is only realized when we get 271s.”
Local phone companies must prove they are abiding by Section 271 of the Telecommunications Act of 1996 before they can sell long-distance in their service region.
Verizons long-distance revenue for 2000 was $3.2 billion, only 5 percent of the companys total revenue of $64.7 billion. But Lee refers to long-distance approval as “our big challenge.”
Verizon already offers long-distance in 31 states. Out of the 13 Bell Atlantic states, Verizon has secured long-distance approval in New York and Massachusetts. Since the New York approval in December 1999, Verizon has picked up 20 percent of that states long-distance market.
Lee, who shares leadership with President and Co-CEO Ivan Seidenberg, said this year his company is applying to sell long-distance in Connecticut, New Jersey, Pennsylvania and Rhode Island, with the remaining seven states and Washington, D.C., slated for 2002.
Verizon had 5.1 million long-distance subscribers at the end of first quarter 2001, and predicts that number may reach as high as 6.6 million by years end.
Without long-distance approval, a call that originates in Verizon territory is hauled over state lines by a competing long-distance company. Lee relishes the thought of that type of agreement ending.
“All of a sudden, people who are getting a free ride out of our traffic, they will be left holding the bag, so to speak.”