ISP News

Verizon to Maintain Connections for Northpoint Customers (April 3, 2001)

Talks Under Way for Video on Demand via DSL (April 9, 2001)

Reporter Hails Positive DSL Experience (March 22, 2001)

Stop Blocking the Broadband Revolution (March 1, 2001)

Regulatory Relief Urged for Broadband (February 26, 2001)

Verizon's Network Remains Reliable in Calif. (January 18, 2001)

Verizon Launches Nationwide Separate Data Affiliate (January 3, 2001)

OnePoint Purchase Completed; Unit to Be Renamed 'Verizon Avenue' (December 19, 2000)

NorthPoint Files Suit For Terminating Merger Agreement (December 8, 2000)

Seidenberg Stresses Growth Through New Services, Innovation (November 15, 2000)

Verizon Argues for Open Access on Cable (October 4, 2000)

Verizon to Maintain Connections for Northpoint Customers (April 3, 2001)

In the wake of Northpoint's decision last week to shut down its DSL networks, Verizon will continue to maintain Northpoint DSL customer connections at our central offices -- for the time being -- to give Northpoint customers time to change to a new service provider.

NorthPoint, a major national provider of digital subscriber line (DSL) services, began shutting down its network last Thursday after announcing it didn't have the funds necessary to continue operations. The Wall Street Journal reported the shutdown left about 100,000 businesses across the country without high-speed Internet access.

Tom Maguire, vice president-CLEC Operations, said that assuming Internet backbone companies and other parties follow our lead and leave the former Northpoint network intact, NorthPoint customers should be able to use their high-speed service until they change to a new service provider.

"Verizon recently gained experience in the mass migration of DSL customers, as a number of providers have pulled out of the DSL market," Maguire said. "We are working extensively with data providers to establish an efficient process for moving NorthPoint customers to new providers."

NorthPoint filed for Chapter 11 protection in bankruptcy court earlier this year, and last week the company agreed to sell most of its assets to AT&T Corp. for $135 million. Verizon had reached an agreement last year to purchase an $800 million stake in Northpoint, but we terminated that agreement Nov. 29 after Northpoint reported a significant deterioration in their business, operations and financial condition. [return to top]

Talks Under Way for Video on Demand via DSL (April 9, 2001)

In a move that will demonstrate how broadband can be a platform for new services, Verizon is working on a deal that will enable us to provide video on demand via DSL to multiple-dwelling units (MDUs) across the country.

Representatives from Verizon are in talks with major studios this week for deals that would provide content for the service -- mostly first-run movies -- and deliver a competitive alternative to cable TV's pay-per-view offerings.

Larry Plumb, director-Media Relations, said some of the movie studios find Verizon's proposal attractive. He added that potential deployment could take place later this year, but that it would be modest -- focused primarily on apartments and other MDUs.

"We've always wanted to package video with voice and data, but we have to do it in a way that makes sense for Verizon and is attractive to our customers," Plumb said.

Plumb said that a story published last week in Daily Variety contained a number of errors regarding our conversations with the studios and with the status of the proposal.

The service would be offered through Verizon Avenue -- created through our acquisition of OnePoint Communications last year -- which is part of our Retail Markets Group. Verizon Avenue offers high-speed Internet access via DSL to customers in apartment and office buildings.

Plumb said the task of adding video capabilities to broadband equipment already installed in MDUs is straightforward, and that when deployed, the new service has the potential to deliver on broadband's promise as a rich revenue source.

If this week's talks are successful, Plumb said the next step would be a "soft" deployment "to get our feet wet." No decision has been made yet with regard to the set-top boxes needed to deliver the service.  [return to top]

Reporter Hails Positive DSL Experience (March 22, 2001)

Verizon's DSL service received high praise in a recent Associated Press article when reporter Larry Blasko said that his experience with our DSL service was as good as promised -- from placing the order to the self-installation of the service.

"Cable modems and DSL modems are supposed to be complicated, expensive and cranky, right? Wrong," Blasko wrote, noting that Verizon's DSL service is priced right and easy to install.

The reporter said Verizon's offer, a self-install kit with a free DSL modem, free Ethernet card, free PC camera and service for $39.95 a month, sounded too good to be true. But he ordered the service anyway and was encouraged when the kit arrived within two days.

"The quick response was impressive, which kept me looking for the catch," he wrote. "The catch: there wasn't any."

He said that he was able to install the service in about 90 minutes and that "everything went exactly as the very detailed and diagrammed instructions said it would."

Currently, more than 90 percent of Verizon's DSL customers install the service themselves.

Finally, Blasko said the performance of our DSL service will "blow you away." For example, he said that his 56 kbps modem downloads a video of a favorite Web TV show in about eight minutes vs. 10 seconds with our DSL service.

By the end of this month, Verizon will have signed up 700,000 DSL subscribers, keeping us on track to hit our target of 1.2 million to 1.3 million subscribers  by the end of the year. [return to top]

Stop Blocking the Broadband Revolution (March 1, 2001)
By Ivan Seidenberg The Wall Street Journal via Dow Jones

New Federal Communications Commission Chairman Michael Powell faces a formidable challenge. The Internet is creating a market structure in which a single broadband connection enables people to speak in real-time, enjoy untapped sources of video entertainment and access information at light speed. To date, the FCC has hampered this migration to broadband with outmoded rules. Its regulations, designed for a bygone era, are stifling the economy's most innovative sector.

Competition in broadband will consist of rival pathways to the home. Two such technologies already are available -- cable modems and telephone digital subscriber lines. These will be joined in coming years by broadband fixed wireless and satellite connections. The primary objective of federal policymakers should be to encourage new investment and allow competition between these rival "last-mile" technologies.

Instead, regulators have focused obsessively on creating a host of firms that merely resell services developed by local phone companies. To create this imaginary competition, the FCC has had to subsidize these resellers by requiring local phone companies to share with competitors every piece of their networks at ridiculous, below-cost prices.

These rules have discouraged the building and upgrading of broadband pipelines. Why would new competitors risk building facilities when they can use someone else's for next to nothing? These requirements have also discouraged local phone companies from improving their own networks because competitors capture much of the value of any new investments.

Federal policymakers have also discouraged broadband investment by adopting different regulations for the same competing services. These rules vary depending on whether the network owner started as a phone or cable company. Phone companies have seen their broadband pipes regulated to the hilt, despite having only a fraction of the broadband market. Cable operators, who control 70 percent of the market, are virtually free from regulation.

Further, regulators allow cable companies to make a profit on their broadband investments by letting them capture revenues both from subscribers and from firms that deliver content over their pipelines. In contrast, regulators restrict phone companies to collecting only transport charges from subscribers, preventing those companies from making enough of a financial return to justify the large investments required to deploy broadband. The result is slower deployment and stifled competition.

Any sensible approach to regulation must recognize that broadband is creating an entirely new world, one in which competition is measured by the rivalry between competing high-speed pathways to the home. The proper model for regulators to follow is that of mobile wireless services, where deregulation has prompted a torrent of innovation.

In 1993, Congress instructed the FCC to reduce the regulatory burden on wireless businesses, even though there were then only two cellular providers in each market. The commission eliminated pricing regulation altogether. Further (and in contrast to its current approach) the commission offered independent blocks of spectrum to any entrant seeking to build its own competing network. These hands-off policies led to a proliferation of providers, a steep drop in prices and amazing innovation.

Mr. Powell should follow this model in the broadband world, eliminating price regulation and sharing requirements. Current technology allows cable and phone companies to separate broadband from conventional phone lines. While the old rules can still apply to the old services, broadband facilities and services should be set free from regulation. All competitors, regardless of their heritage, must be allowed to compete on equal footing. Congress has a role to play by giving the FCC clear instructions -- as it did with wireless services -- to free up broadband from regulation.

If the government is to assist, rather than impede, the broadband revolution, it must banish outmoded regulatory requirements that have no place on the Internet.  [return to top]

Regulatory Relief Urged for Broadband (February 26, 2001)

An analyst writing in Fridays Wall Street Journal argues for less regulation in the area of broadband services as a way to rally a sluggish economy and make high-speed services more readily available to thousands of U.S. households.

Technology analyst George Gilder wrote that, "contrary to popular belief, the chief obstacle to progress is not ...the Bell operating companies, but a regulatory regime that presumes to level the playing field, equalize access and promote competition." He stated that the only result of these policies has been the "effective nationalization and paralysis of broadband."

Gilder noted that while the Internet is about seven years old, fewer than 7 million of 100 million American homes have broadband service.

Ed Young, senior vice president-Federal Government Relations, said Verizon is making progress in our deployment of DSL service but noted the need for more regulatory relief. He said that Verizon has long advocated that less regulation is critical to promote competition and investment in this and other high-speed technologies.

Gilder said that while the 1996 Telecom Act opened the door for competitive local exchange companies to enter the broadband market, many of these companies are now struggling to survive and some have gone out of business -- even in the face of massive consumer demand. He said the reason for this is because DSL is "risky and hard" and more a matter of technical and entrepreneurial risks than a matter of "will and politics."   [return to top]

Verizon's Network Remains Reliable in Calif. (January 18, 2001)

As California struggles to cope with rolling energy blackouts, Verizon is reassuring its customers that its telephone network will continue to work without major disruption.

In the event of a commercial power outage, Verizon's backup power generators provide electricity to the company's network for up to 72 hours. Since the rolling blackouts generally don't last longer than an hour, the power outages are not expected to interrupt local phone service.

Last week, a series of blackouts ran for about three hours in central and northern California. About 500,000 utility customers at a time in checkerboard patterns were denied power by Pacific Gas and Electric for about an hour, then had service restored as another block was blacked out.

Jeremy Metz, senior specialist-Corporate Sourcing, said there are multiple causes for this situation, but the lesson for us is to be prepared for similar problems in our other regions.

"New York -- especially New York City -- is particularly vulnerable to power shortages this summer due to increased electric demand and potentially inadequate electric capacity," Metz said.

Verizon spends about $27 million for energy in California. However, the company expects that we will have to spend an additional $3 million this year because of the rising energy costs brought on by the state's energy crisis.

Jon Chestnut, Team Energy specialist-New Technologies, said the energy crisis in California should be taken as sign of what can happen elsewhere, and he cited it as a reason to seek alternative technologies for energy.

Nationwide, Verizon's energy bill totals about $400 million annually.  [return to top]

Verizon Launches Nationwide Separate Data Affiliate (January 3, 2001)

In a major step forward in our data strategy, Verizon has launched its national separate data affiliate in 29 states. The affiliate -- Verizon Advanced Data -- will provide DSL and fast-packet services in areas where Verizon is an incumbent local exchange carrier.

"The creation of a nationwide data affiliate is a key component of Verizon's overall business strategy and will allow us to compete successfully in the evolving and growing market for broadband data services," said George Via, senior vice president-Operations, Advanced Services Group. "By moving these services into a separate company, we will be able to focus more effectively on our data products and services by providing the assets and dedication necessary to position Verizon as the national and global broadband leader."

Establishing a separate data affiliate was no small task. Network components, billing systems, and service fulfillment were revamped, and hundreds of new processes were put in place within a very short time frame.

"I commend the dedication and commitment of the SDA team who met the challenge of balancing the complexity of this effort while at the same time managing astronomical growth in our DSL business," Via said.

Verizon created the data affiliate last July in New York and Connecticut as part of a voluntary commitment made to the FCC in connection with our application for long-distance approval in New York. The 29-state launch supports our commitment to the FCC to implement an SDA as a condition of the Bell Atlantic-GTE merger approval. The SDA will also launch services in California, Hawaii, and New Jersey following state commission approvals, which are anticipated in 2001.  [return to top]

OnePoint Purchase Completed; Unit to Be Renamed 'Verizon Avenue' (December 19, 2000)

Verizon announced today that we have completed our purchase of OnePoint Communications Corp., a leading provider of packaged data and voice telecommunications to apartment buildings and condominiums. [Update Dec. 21: a Q&A has been added below]

The company, which will be renamed Verizon Avenue, will add a focus on office buildings and other multi-unit structures and will offer high-speed Internet, voice and video services to customers in 31 states.

Verizon Avenue will be headquartered in Lake Forest, Ill., with operations based in Herndon, Va. The company has approximately 600 employees nationwide.

"Verizon Avenue will offer residents and tenants in apartments and other multi-unit and community settings a clear and superior alternative to cable modems for high-speed Internet access and other advanced telecommunications services," said Bruce Gordon, president-Retail Markets. "High speed Internet access is the 'work-out' room of the new millennium -- all residents will expect it as an amenity in their apartment communities. And office tenants will find it essential to conduct business."

Verizon Avenue will offer high-speed Internet access over regular copper phone lines by using DSL (digital subscriber line) service supported by equipment located in apartment and office buildings, rather than in distant network hubs.

"By placing DSL equipment on site and close to the customers in these buildings, connection speeds and performance will be optimized," said Jim Otterbeck, chief executive officer-Verizon Avenue. "All circuits will be well within the distance limitations of DSL, making Verizon Avenue's high-speed Internet access available to every resident or tenant in a Verizon Avenue building."

Nationwide, more than 20 million households live in multiple dwelling units giving Verizon Avenue an enormous market niche to address. The company already has marketing contracts for 690,000 multiple dwelling units in 31 states -- including markets outside of our local service territories such as Atlanta; Charlotte, N. C.; Chicago; Denver; and Phoenix.

Otterbeck said he expects the company to have more than 2 million units under contract within the next five years.

Verizon announced plans to acquire OnePoint on Aug. 7. The Department of Justice gave its approval Sept. 15 and the Federal Communications Commission approved the purchase Dec. 8.

Questions and Answers

Q. Why did we purchase OnePoint?

A. Verizon recognized the importance of bringing a very competitive offering to apartments and condominiums -- multi-dwelling units (MDUs). Verizon chose OnePoint since it was the leader in its field and has the capability to offer a compelling packaged product that includes high-speed Internet access, a key amenity for residents in the 21st century.

Q. What does OnePoint have to offer in this deal?

A. OnePoint brings to the table expertise and skills to offer the products and packages consumers want -- especially high-speed Internet access developer relationships sales force focused on MDUs. DSL deployment forces focused on MDUs.

Q. What will Verizon Avenue offer?

A. Verizon Avenue's offer will include local and long-distance service (or just local with a choice of long-distance carriers in markets where restrictions apply) and, where available, high-speed Internet access (based on DSL) with two options (256 kbps and 1.5 mbps).

Q. Why did we name the company Verizon Avenue?

A. Verizon Avenue communicates that we are a path for developers and the road for residents to the Information Superhighway.

Q.Where will Verizon Avenue offer its bundles? Will Verizon Avenue be expanding its offerings?

A. We're already in 31 states, and our out-of-franchise markets include Atlanta, Charlotte, Chicago, Denver and Phoenix. We'll make announcements regarding new markets at the appropriate time.

Q. How many customers do we have?

A.Verizon Avenue has marketing contracts with property owners and managers for 690,000 units. OnePoint came with 350,000 units under contract, and Verizon brings contracts for 340,000 units to the venture.

Q. What are the competitive advantages of this deal?

A. OnePoint has a well-thought-out and well-engineered approach to offering high-speed Internet access that is complementary to our current network-based approach -- and it gives us a jumpstart in many markets where Verizon doesn't currently offer local telephone service. Also, OnePoint has strong relationships with real-estate developers and a DSL deployment focused solely on MDUs.

Q. What is the advantage of this for customers, will they see a savings over buying those services individually?

A. The primary benefit of a package is being able to order multiple services from one company through a single source -- leasing agents, the Web, or by making one phone call.

Q. What is the advantage for the owners of the MDUs?

A. Property owners who partner with Verizon Avenue will benefit by increasing occupancy by offering a package of communications services that are in high demand. In addition, owners can earn additional income when they assist in signing up their residents for Verizon Avenue service.

Q. Is there a plan to make such an offer to businesses in multi-tenant units?

A. OnePoint was focused on the consumer market, but Verizon Avenue will offer an attractive suite of services to small businesses located in high-density office parks or high-rise buildings. The plans and product sets for businesses are under development.

Q. How will our sales teams refer customers and potential customers (MDU builders, customers moving into an MDU) to Verizon Avenue?

A. A toll-free number is being established and will be published in the first quarter of 2001.

Q. What will happen to Verizon & OnePoint employees? Will jobs be lost?

A. Virtually the entire team from all parties is intact. This is about growth, not reduction.  [return to top]

NorthPoint Files Suit For Terminating Merger Agreement (December 8, 2000)

NorthPoint Communications said in a press release today that it had filed a lawsuit against Verizon to obtain damages and injunctive relief for terminating the agreement on Nov. 29 to merge the companies' DSL businesses.

Under the terms of the agreement, Verizon's obligation to complete the merger was conditioned upon NorthPoint's business, operations and financial condition each remaining materially the same as they were at the time the agreement was signed.

NorthPoint has been on notice since the 29th that we filed suit against them in Delaware State Court. Our suit seeks a judgment that we were within our rights to terminate the merger agreement and refuse to provide NorthPoint with interim financing.

In response to NorthPoint's press release, Verizon officials stated that we were well within our rights to terminate the merger agreement due to the deterioration of NorthPoint's business. [return to top]

Seidenberg Stresses Growth Through New Services, Innovation (November 15, 2000)

President and Co-CEO Ivan Seidenberg told investors that Verizon continues to develop and strengthen our core business even as other companies appear to be abandoning theirs.

During a Monday telecom conference in New York hosted by UBS Warburg, Seidenberg said local service provides us with a strong cash flow and that we plan to grow our business even further by investing in our network and by introducing innovative new services.

Seidenberg told investors that Verizon "really encourages a culture of product innovation," citing recent new services such as Easy "0" and Talking Call Intercept, as well as wireless services such as New Every Two. "Verizon incents employees to get up every day and think of ways to make our base more interesting," he said.

He also noted an advantage we have in providing local service: We're one of the few companies that can have a seamless network and a seamless relationship with customers thanks to our first-mile assets.

With respect to DSL, Seidenberg said it's a "great product that changes the nature of the connection with the customer." He said we're on track to sign up 500,000 DSL customers by the end of this year. As of Sept. 30, we had more than 350,000 DSL customers and we continue to sign up about 3,500 new customers each day.

He also pointed to our success in the in-region, long-distance market in New York and our "formidable" international portfolio that we're continuing to build.

Seidenberg said Verizon is aiming for per-share earnings to increase by the mid-teens by 2003 as demand for data services, long-distance and wireless increases.

"The companies that stay on course are the ones that will create the returns," he said.  [return to top]

Verizon Argues for Open Access on Cable (October 4, 2000)

Momentum is building for the Internet access offered by cable companies to be declared a telecom service.

A federal appeals court in San Francisco has ruled that it is a telecom service, and as such, the cable company had to provide open access over its wires.

And in Richmond, Va., last week, an appeals court heard arguments concerning a local county's requirement that cable companies must share their pipes with Internet service providers (ISPs) and other competitors who want to provide high-speed access to customers.

The Richmond Times-Dispatch reported Henrico County argued that state law allows counties to regulate cable television systems to protect the public from "excessive prices and unfair competition." The county is appealing an earlier court decision that the county did not have the authority to enforce its open-access requirement.

Meanwhile, the FCC launched an inquiry last week that could determine whether cable modem service is a cable, telecommunications or information service and possibly result in the establishment of a national policy. Like many others, Verizon supports the FCC's move, but says it is two years late.

Right now, cable companies are under no obligation to provide ISPs with access to their networks. Local telephone companies, like Verizon, however, are required to provide competitors with open access to our networks.

Verizon Communications filed a brief in support of Henrico County's open-access requirement, noting that it would give consumers a choice of ISPs.

In its brief before the court, Verizon argued that Internet access offered by cable companies is a telecommunications service and should be open to independent ISPs. If, on the other hand, the court believes cable modem service is a "cable service," then Henrico County, , has the right to require open access because it is the local cable licensing authority.

"This case sets the stage for the future of the Internet," said John Raposa, vice president and associate general counsel. "Open access to telephone networks has fueled the explosive growth and innovation of the Internet. Cable companies are poised to choke off that growth and innovation. America can't afford to let cable companies dictate the future of the Internet."

Tom Tauke, senior vice president-Public Policy & External Affairs, said the debate over open access viacable is further proof of the growing importance of the Internet in every day life.

"Because of this, it is important that networks providing this access remain open and that choice of service provider remains open," Tauke said.
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