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Telecom Finds Its Calling

Verizon chief wants to expand the old-fashioned way--slowly and with caution


What we don't need to do is make a big splash and buy some company that gives us enormous dilution and then try to go after the high end of the market, when the high end of the market has the least market opportunity. So we're not interested in buying KPNQwest or companies like Global Crossing.

Q: What about the North American part of Global Crossing?

A: That's something we could look at. But I still think that they are too expensive. It's worth very little. The way you have to value it is 'What would it cost us to duplicate it or buy it in pieces or lease it from other players?' That's not to suggest there aren't good assets and somebody else might not buy them. But whoever buys it, we can lease facilities from them.

Q: How do you expand your presence in California, where your largest territory is west of Los Angeles and the rest of the state is dominated by SBC Pacific Bell?

A: In the business market, we've used our Verizon access line base, which is in Southern California, and in the next 30 days or so, we will announce that we've completed the construction of a fiber ring into the business district in L.A. [SBC PacBell's home turf]. We've done the same thing in Seattle, and we've done the same thing in Dallas. So we've started down the road of extending our network to cities in which we have a presence [nearby]. Our view is that we can use our presence to begin expanding in the business market out of franchise.

Q: What about broadband? You have strong views about regulation in that market, where you sell high-speed connections in competition with cable modem services.

A: We think government policy is not [incentivizing] the proper capital formation and therefore it's slowing down [broadband] innovation. There is a sort of an imbalance in the rules coming out of Washington, between taking old technology and trying to regulate it, and trying to regulate new technology the way you regulated old technology. What we have is the government doing a straight-line extrapolation, [taking the] rules for analog and moving it to digital [broadband services], and that's not helping anybody.

Q: On to wireless. What do you think about the expected consolidation among the big U.S. players?

A: You have to have a reason to consolidate. All of the pundits who are saying that what wireless needs to do is consolidate--that's only half the problem. Consolidation will fix certain things. It will take away some of the inefficiencies. But it won't help the innovation factor.

I think what the industry needs to do right now is straighten out the multiple technology platforms, focus on the compatibility of handsets and generate a lot of new products and services to get the industry growing again, and then if you have a little consolidation, that's going to be very efficient.

I think consolidation's in the cards ... but if all we did right now is go from six to four [national carriers], nothing is going to change.

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