verizon

Verizon Communications (NYSE: VZ) a Dow 30 company, is a broadband and telecommunications provider. It was formed in 2000 when Bell Atlantic, one of the Regional Bell Operating Companies, bought GTE, formerly the largest independent local exchange telephone company in the United States. Prior to its transformation into Verizon, Bell Atlantic had merged with another Regional Bell Operating Company, NYNEX, in 1997. The name is a portmanteau of veritas (Latin for truth) and horizon, suggesting a future of innovation.

History

Pre-Verizon creation

Bell Atlantic

The company began as Bell Atlantic, and was created as one of the original Regional Bell Operating Companies (RBOCs) in 1984, when AT&T was broken up. Bell Atlantic's original roster of operating companies included:

• The Bell Telephone Company of Pennsylvania
• New Jersey Bell Telephone Company
• The Diamond State Telephone Company
• The Chesapeake and Potomac Telephone Company
• The Chesapeake and Potomac Telephone Company of Maryland
• The Chesapeake and Potomac Telephone Company of Virginia
• The Chesapeake and Potomac Telephone Company of West Virginia

Bell Atlantic originally operated in the U.S. states of New Jersey, Pennsylvania, Delaware, Maryland, West Virginia, and Virginia as well as Washington, DC.

In 1994, Bell Atlantic became the first RBOC to entirely drop the original names of its original operating companies. Ameritech simply added d/b/a names to its operating companies; US West and BellSouth had merged their operating companies. Operating company titles were simplified to:

• Bell Atlantic — Delaware, Inc.
• Bell Atlantic — Maryland, Inc.
• Bell Atlantic — New Jersey, Inc.
• Bell Atlantic — Pennsylvania, Inc.
• Bell Atlantic — Virginia, Inc.
• Bell Atlantic — Washington, D.C., Inc.
• Bell Atlantic — West Virginia, Inc.

In 1996, CEO and Chairman Raymond W. Smith orchestrated Bell Atlantic's merger with NYNEX. When it merged, it moved its corporate headquarters from Philadelphia to New York City. NYNEX was consolidated into this name by 1997.

Prior to its merger with GTE, Bell Atlantic traded on the NYSE under the "BEL" symbol.

NYNEX

Main article: NYNEX

NYNEX was created as one of the original Regional Bell Operating Companies (RBOCs) on January 1, 1984 and it owned New York Telephone and New England Telephone.

NYNEX also operated cable TV services in some parts of the UK, although these were later sold to Cable & Wireless, which subsequently sold these to NTL.

In Gibraltar, NYNEX had a 50 per cent stake in a joint venture with the Government of Gibraltar, called Gibraltar NYNEX Communications, also known as GNC or GibNYNEX. The NYNEX name was retained after the U.S. parent company's merger with Verizon, before being dropped in 2002 in favor of Gibtelecom, although it is still used colloquially in Gibraltar.

Prior to its merger with Bell Atlantic, NYNEX traded under the "NYN" symbol.

GTE

General Telephone and Electronics (GTE) was the largest of the "independent" telephone companies during the days of the Bell System. It would later merge with the second largest independent, Continental Telephone (ConTel). They also owned Automatic Electric, a telephone equipment supplier similar in many ways to Western Electric, and Sylvania Lighting, the only non-telephone company under GTE ownership. GTE provided local telephone service to a large number of areas of the U.S. through operating companies, much like how AT&T provided local telephone service through its 22 Bell Operating Companies.

GTE operated in Canada via controlling interest in subsidiary companies such as BC TEL and Quebec-Téléphone.

Its former Canadian subsidiaries have combined with the former Alberta Government Telephones (AGT) to create TELUS, the second largest telecommunications carrier in Canada.

Creation of Verizon

The acquisition of GTE by Bell Atlantic, on June 30, 2000, which formed Verizon, was among the largest mergers in United States business history. It was the result of a definitive merger agreement, dated July 27, 1998, between Bell Atlantic, based in New York City since the merger with NYNEX in 1996, and GTE, which was in the process of moving its headquarters from Stamford, Connecticut, to Irving, Texas.

The Bell Atlantic-GTE merger, priced at more than $52 billion at the time of the announcement, closed nearly two years later, following analysis and approvals by Bell Atlantic and GTE shareowners, 27 state regulatory commissions and the Federal Communications Commission (FCC), and clearance from the United States Department of Justice (DoJ) and various international agencies.

The merger of Bell Atlantic and GTE, to form Verizon Communications, became effective on June 30, 2000, with an exchange ratio of 1.22 shares of Verizon Communications Common Stock for each share of GTE Common Stock owned. Fractional shares resulting from the exchange of GTE stock into Verizon Communications shares were sold at a price of $55.00 per share. Verizon began trading on the New York Stock Exchange (NYSE) under its new "VZ" symbol on Monday, July 3, 2000.

Meanwhile, on September 21, 1999, Bell Atlantic and UK-based Vodafone AirTouch Plc (now Vodafone Group Plc) announced that they had agreed to create a new wireless business with a national footprint, a single brand and a common digital technology – composed of Bell Atlantic's and Vodafone's U.S. wireless assets (Bell Atlantic Mobile (which was previously called Bell Atlantic-NYNEX Mobile by 1997), AirTouch Cellular, PrimeCo Personal Communications and AirTouch Paging). This wireless joint venture received regulatory approval in six months, and began operations as Verizon Wireless on April 4, 2000, kicking off the new "Verizon" brand name. GTE's wireless operations became part of Verizon Wireless – creating what was initially the nation's largest wireless company before Cingular Wireless acquired AT&T Wireless in 2004 – when the Bell Atlantic-GTE merger closed nearly three months later. Verizon then became the majority owner (55%) of Verizon Wireless.

Genuity was formerly the Internet division of GTE Corp and spun off in 2000.^[2] Level 3 Communications acquired the bankrupt ISP in 2002 for only $137 million; a bargain-basement price considering the $616 million that a pre-Bell Atlantic-merger GTE paid for Genuity (then BBN Planet) in 1997.^[3]

Merger effects

Note this section refers to land lines only, as Verizon Wireless operates nationwide.

Verizon shares were made a component of the Dow Jones Industrial Average on April 8, 2004.^[4] Verizon currently has 140.3 million land lines in service. With the MCI merger, it has more than 250,000 employees. Verizon serves customers throughout much of the United States. The primary states that it provides service to include:

• Northwestern Connecticut
• Delaware
• District of Columbia
• Maine*
• Maryland
• Massachusetts*
• New Hampshire*
• New Jersey
• New York
• Pennsylvania**
• Rhode Island*
• Vermont*
• Virginia**
• West Virginia

These states are served by the following renamed Bell Operating Companies:

• Verizon Delaware, Inc. – Also serves a portion of southeastern Pennsylvania
• Verizon Maryland, Inc.
• Verizon New England, Inc. – noted with a (*)
• Verizon New Jersey, Inc.
• Verizon New York, Inc. – Also serves northeastern Connecticut
• Verizon Pennsylvania, Inc.
• Verizon Virginia, Inc.
• Verizon Washington, D.C., Inc.
• Verizon West Virginia, Inc.

(**) Also served by GTE operating companies (refer below)

It also provides service to secondary markets (mostly from its acquisition of GTE) in:

• Arizona*****
• California****, *****
• Florida
• Idaho****
• Illinois**
• Indiana***
• Michigan***
• Nevada*****
• North Carolina*
• Ohio**
• Oregon****
• Puerto Rico
• South Carolina*
• Texas
• Washington****
• Wisconsin**

These states are served by these operating companies:

• GTE Southwest, Inc. dba Verizon Southwest,Inc., which serves only Texas.
• GTE Florida, Inc. dba Verizon Florida, Inc.
• Verizon South, Inc. (marked with a *)
• Verizon North, Inc. (marked with a **)
• Contel of the South, Inc. dba Verizon Mid-States, Inc. (marked with a ***) Also served by Verizon North.
• Verizon Northwest, Inc.(marked with a ****) Operations in California do business as "Verizon West Coast, Inc."
• Verizon California, Inc. (marked with a *****)

Due to the rigorous climate and high costs, GTE Alaska was sold to Alaska Power and Telephone Company rather than be merged with Verizon.

Verizon also owns stakes in some international communications companies, most notably 23% of Vodafone Omnitel in Italy, which serves over 23MM wireless subscribers as of December 31, 2005. On April 3, 2006 Verizon agreed to sell its stakes in Verizon Dominicana (operating in the Dominican Republic), CANTV of Venezuela, and Telecomunicaciones de Puerto Rico, Inc. (TELPRI) in Puerto Rico to Telmex and America Móvil for over $3 billion. Verizon's other international investment is 50% ownership of Gibraltar NYNEX Communications.

In 2002, Verizon sold GTE's former telephone operations in 3 states: Missouri and Alabama operations were sold to CenturyTel, and Kentucky operations were sold to Alltel, which later spun off its landline operations as Windstream. In 2005, Verizon sold off GTE's former telephone operations in Hawaii to The Carlyle Group, This operation is now known as Hawaiian Telcom. As of 2006, Verizon's operations in Maine, New Hampshire, and Vermont are for sale.

MCI Acquisition

On February 14, 2005, Verizon agreed to acquire MCI, formerly WorldCom, after SBC Communications agreed to acquire AT&T just a few weeks earlier.

Media coverage has focused on several ways in which that acquisition, once completed, would benefit Verizon, including economies of scale derived from a potential productivity boost to be achieved via the elimination of thousands of jobs at the combined company, and access to the large base of business customers currently served by MCI. The real benefit to Verizon was the acquisition of long-haul lines. The bulk of Verizon's business is concentrated in the eastern United States. This not only renders the company, effectively, a regional phone company, but also forces it to pay usage fees to long-haul carriers, such as former MCI, to complete calls for its customers whenever those calls go outside the Verizon "footprint". That need is obviated by the MCI acquisition and was key in the long term market position strategy. By January 6, 2006, MCI was incorporated into Verizon with the name Verizon Business. With this merger, Verizon also acquired the naming rights to the Washington, DC home of the Washington Wizards and the Washington Capitals, the Verizon Center (formerly known as the MCI Center).

Just prior to the acquisition, MCI had purchased an internet services company, Totality.

Verizon, with MCI, is currently the largest telecommunications company in the United States based on Sales 75.11 Billion, Profits 7.4 Billion and assests 168.13 Billion. After completion of the BellSouth/AT&T merger, AT&T will become the largest telecom company in the world in terms of assest and profits.

Rank     Company          Sales  Profits   Assets    Market Value
 25      Verizon          75.11   7.40     168.13       93.18
         Communications

 49      AT&T             43.86   4.79     145.63      107.04
 131     BellSouth        20.55   3.29      56.55       57.82
         Merged           64.41   8.08     202.18      164.86

http://www.forbes.com/lists/2006/18/06f2k_The-Forbes-2000_Rank.html

Verizon services

Voice

Verizon provides several different types of land line services - standard POTS (Plain Old Telephone Service) service as well as VoIP (Voice Over Internet Protocol) and optical fiber line services. In addition, Verizon offers long distance services. Verizon also offers a product that is a joint venture with Microsoft called "Verizon Web Calling" A type of voip service used within Windows Live Messenger

Video

Verizon launched its FiOS Video service in Keller, Texas on September 22, 2005. FiOS TV ^[5] uses an optical fiber network to deliver more than 330 total channels, more than 180 digital video and music channels more than 20 high-definition channels, and 1,800 video-on-demand titles.

Data

Verizon provides DSL (Digital Subscriber Line) Internet service in many areas where it offers phone service. See Verizon Online DSL.

Verizon recently began offering FTTP (Fiber to the Premises, or Fiber to the Home) to some subscribers. Verizon calls this "FiOS Internet".^[6]

Directory operations

The Yellow Pages business for Verizon known as SuperPages, and is a Texas-based sales, publishing and related services with 1,200 directory titles and a circulation of about 121 million copies in 41 states. The web site receives approximately 17 million visitors a month. It had an operating revenue of $3.6 billion in 2004 and employs 7,300 nationwide.^[7] In a move to leverage against higher traffic sites, Superpages linked up with Google to provide search advertising services to its millions of listed businesses. SuperPages will offer its advertisers the ability to bid for Google search terms.^[8]

With an estimated $17 billion in assets, Verizon is exploring a sale or spin-off of the business unit to finance its expansion in wireless and high-speed Internet services.^[9] Verizon would not be the first Baby Bell to rid itself of its directory publishing operations; Qwest sold off its QwestDex directory services to become Dex Media, and SBC Communications, now AT&T, sold its Illinois operations to RH Donnelley ("SBC Yellow Pages published by RH Donnelley").

Advertising

In 2005, Verizon was the largest spender on advertising in the United States. The company spent $1.75 billion. This was an increase of over 6.1% versus 2004. Other telecom companies Cingular and Sprint were two and three on the Advertising Age list.

Hurricane response

In 2005, as Hurricane Katrina and Hurricane Rita devastated the Gulf Coast, Verizon donated over 10,000 wireless phones with free airtime, distributed over 20,000 prepaid calling cards and staffed call centers with over 10,000 volunteers to support a national telethon. Also, Verizon contributed more than $10.8 million in employee donations and corporate matching gifts.

Alleged NSA cooperation

In 2006, USA Today published an article which claimed that the United States National Security Agency had been gathering calling records from three of the largest carriers in the US, including Verizon.[1]

On May 12, 2006, Verizon denied allegations it provided any customer calling information to the NSA.[2]

USA Today editors, on an inside page of the June 20, 2006 edition, retracted their claim that Verizon had contracted with NSA to provide any calling records or information.

See also

• Airfone — Air-ground radiotelephone service offered by Verizon
• Verizon SmartPark — Advanced Telecommunications Services

Corporate governance

Current members of the board of directors of Verizon Communications are, Don Porier, James Barker, Richard Carrión, Robert Lane, Sandra Moose, Joseph Neubauer, Thomas O'Brien, Hugh Price, Ivan Seidenberg, Walter Shipley, John R. Stafford,Zak Bowler, and Robert Storey.

Verizon's competitors

Landline

• AT&T
• BellSouth
• Qwest
• LTT
• Embarq (Formerly Sprint Local Telephone)
• Windstream Communications (Formerly Alltel Landline and Valor Telecom)
• CenturyTel

References

1. ^ Verizon (26 January 2006). Verizon Communications Reports Strong 4Q 2005 Results, Driven by Continued Growth in Wireless and Broadband. Press release.
2. ^ Haley, Colin C.. "Genuity Jilted by Verizon, Mulls Options", Internet.com, 25 July 2002.
3. ^ Pappalardo, Denise. "Changes afoot for Genuity customers", Network World, 10 February 2003.
4. ^ Isadore, Chris. "AT&T, Kodak, IP out of Dow", CNN/Money, 1 April 2004.
5. ^ Verizon FiOS TV: FiOS TV. Retrieved on February 12, 2006.
6. ^ Verizon FiOS: FiOS for Home. Retrieved on September 6, 2005.
7. ^ "Verizon may sell $17 billion directory services", Billings Gazette, December 7, 2005.
8. ^ "Verizon online directory in ad deal with Google", Reuters, 28 March 2006.
9. ^ Ranii, David. "Donnelley likely to pass on Verizon directories", The News & Observer, 6 December 2005.

External links

• Official site
• Verizon Wireless
• Verizon Business
• A History of Verizon Communications
• SuperPages
• Verizon News RSS Feed