Creating True Choice in Video Services

The North Texas Commission Annual Luncheon
September 30, 2005

[Introduction by Linda Cohn, well-known sports-caster and anchor woman for ESPN SportsCenter]

Thank you, Linda. I'm thrilled to have you join us - both here at the luncheon, and on the channel line-up for Verizon's new FiOS TV service.

Good afternoon, everyone, and thank you for inviting me to speak to you today.

I'd also like to thank the North Texas Commission for the terrific work you do on behalf of the local business community. Verizon has been involved with the Commission for nearly 30 years, and we've come to rely on your support and advocacy in making Texas a better place to live and work.

I appreciate that all of you took time out of your busy schedule to attend this important meeting, especially in light of the enormous relief efforts that many of you have been involved with as a result of the devastating hurricanes that hit the Gulf Coast.

Katrina and Rita caused widespread damage to the region and displaced millions of people. But in the days that followed, you and your fellow Texans opened your doors, your wallets and your hearts to those in need.

Verizon employees across the country also played a role in the hurricane relief efforts. When survivors streamed into temporary shelters such as the Dallas Reunion Arena and the Houston Astrodome, we provided more than 10,000 wireless phones, 20,000 prepaid calling cards, a fleet of portable phone banks, and free wireless service to hurricane victims.

But even with our extensive networks and sophisticated technology, at the end of the day our greatest resource was our people.

Immediately after both storms hit, Verizon Wireless technicians moved quickly to restore vital wireless communications in areas that suffered outages. Today we still have 100 Verizon telephone workers in Louisiana assisting Bell South with the monumental task of restoring their network.

Verizon employees gave more than just their time to this cause. Their financial contributions, along with the Verizon Foundation's matching grants, have so far totaled an unprecedented $10 million for local relief efforts.

We are proud to be part of the Lone Star State, because this is where we work, where we live, and where we're building a future for our kids. We're dedicated to making sure that Texas remains one of the most progressive, technologically advanced states in the country. And just like the state itself, our stake in Texas is big - and getting bigger.

Today Verizon has a significant investment in the future of Texas. In just the past two years, we have invested over $615 million to upgrade our telephone networks, and more than $660 million in our wireless infrastructure, for a two-year total of nearly $1.3 billion.

Verizon has well over 12,000 employees in the Metroplex, along with more than 50 facilities including:

• Our largest corporate campus in Las Colinas;
• The regional headquarters of Verizon Wireless;
• The world headquarters of Verizon Information Services - our directory business;
• Our wireless Network Operations Control Center in Westlake
• And less than a half mile from this hotel is Verizon's National Network Control Center, where we monitor the operations of FiOS - our new fiber optic service -for 15 states.

Since we started our fiber project in the town of Keller a year ago, Verizon has added over 700 new jobs in Texas, hired more than 800 contractors, and placed over 15 million feet of fiber to provide our superior voice, data and video services. When you think about all the knowledge-based work that will be crucial to the future growth of Texas, Verizon is a vital piece of that puzzle.

As you can see, we serve some of the most plugged-in, high-tech customers in the country. Whether it's in the car, at the office, in school, or at home - millions of Texans rely on Verizon's networks to connect them to the things that matter most in their lives.

So this afternoon I'd like to give you a few examples of how a positive business climate like yours benefits the citizens of Texas by encouraging companies like Verizon to invest in new technologies.

At Verizon, our customers continue to demand more speed, mobility and control, and we've been transforming ourselves to meet those needs. Since the year 2000, we've invested nearly $75 billion in capital nationwide - more than any other telecom or cable company in America. We've used many billions of that to build the best wireless network in the country, and to deploy DSL broadband service over our wireline network.

As you may know, Texans are the first in the nation to benefit from this next wave of investment in broadband.

We are the first major communications company to make a significant commitment to taking fiber all the way to homes and businesses, which means we can deliver super-fast Internet access, true broadband capacity for video, and all kinds of interactive capabilities. Nationwide, we plan to pass 3 million homes by the end of this year - more than all other carriers combined.

But this new network is more than just another method to deliver voice, data and video. By taking fiber directly to homes and businesses, we are building a platform for the future two-way multimedia applications that require more bandwidth than today's networks can provide. Best of all, the fiber network is able to expand and evolve based on customers' needs and the innovative capacity of Texas businesses.

Verizon Wireless has also improved the way Texas communicates. We were the first company to deliver a true wireless broadband experience through our Broadband Access service. In fact, Austin was one of the first cities to receive this innovative service last year. This next-generation, high-speed wireless technology lets you download large files, view e-mail attachments, even get video on your wireless devices… while you're on the go. In addition to Austin, this exciting new service is also available in and around the Metroplex, as well as Houston, San Antonio and Beaumont. By the end of the year, we expect that Verizon's Broadband Access will be available to nearly half the U.S. population.

For Verizon, these advanced broadband networks make us more competitive in terms of delivering the speed, control and mobility our broadband customer want. For Texas, they put powerful new tools for economic empowerment in people's hands.

We believe our fiber network is the start of the next wave of innovation and growth for Verizon, and it will provide competition and choice for our customers.

It all began right here - in Keller, Texas - the first town in America to receive our ultra high-speed FiOS Internet Service service. And just last week Verizon announced the launch of yet another exclusive new innovation - FiOS TV - which means that, once again, Keller has the distinction of leading the nation in the broadband revolution.

FiOS TV is a revolutionary new television service that's delivered over a 100% fiber-optic network. We've put together a package of video services that's as good as or better than anything in the market today.

To see just how amazing this service is, take a look for yourself.

[Play FiOS video...]

FiOS TV gives Texans a genuine choice in an industry sector that has aggressively resisted competition. The record shows that, when cable is forced to compete, the consumer is the winner. Keller is a perfect example.

The incumbent cable company in Keller cut the price of its video and data package in half - from $100 down to $50 - because of Verizon's entry into the market. This savings shows how market forces - not the government or the regulators - are now guiding cable competition and pricing in Keller. The consumer is finally in the driver's seat.

All this is happening first in Texas because this is a progressive, "technology friendly" state, with a business climate that brings new investment, new revenues and new opportunities for your citizens.

A great example of your progressive vision is the passage of "Senate Bill 5," which authorized a state-issued video franchise.

Before SB-5, Verizon was required to get a franchise from each and every Texas community where we plan to offer the service - a process that could take years to complete. This rule dates back to the earliest days of cable TV, and is out of touch with today's marketplace. It restricts innovation and investment, limits customer choice, and only serves to protect the monopoly of the local cable company.

Thankfully, Texas was able to muster the political will to seize control of its own destiny by creating a modern, streamlined franchising process that encourages a level playing field for genuine video competition.

Most important, when Governor Perry signed SB-5, Texas demonstrated true leadership and showed the rest of the country that the Lone Star State is on the fast track to the broadband future. And I believe that SB-5 will become a model that other states will follow.

Last week an op-ed in the Dallas Business Journal discussed the launch of Verizon's new video service and acknowledged the leadership of the Texas legislature by saying: "The effects of the Texas reform will be felt nationwide. The timing and extent will depend on when Congress and other states follow Texas' lead."

SB-5 allows companies like us to compete head-to-head with existing cable providers in the state - sooner rather than later. And it will bring the citizens of Texas innovative video services and better prices. Best of all, this new law will encourage - rather than discourage - investment in the state of Texas.

Now it's time for us to do our part.

I'm pleased to announce that today Verizon will file for a state-issued franchise from the Public Utility Commission of Texas to offer FiOS TV service to 21 additional North Texas communities. This is in addition to the four Texas communities - Keller, Sachse, Westlake, and Wylie - where we already have locally-negotiated franchise agreements.

Soon nearly 400 thousand households in a total of 25 communities - that's over a million potential viewers - will be able to order Verizon FiOS TV service. This will give more Texans a true choice for television service much faster than would have otherwise been possible without the historic passage of SB-5.

The progressive leadership of Governor Perry and the state legislature demonstrates that Texans are committed to "clearing the underbrush" to create a business environment that is free from unnecessary regulations. And the passage of SB-5 shows that Texas understands that telecommunications is an important contributor to economic competitiveness:

• It will encourage telemedicine and electronic records, reducing healthcare costs
• It will improve education and help our citizens compete in the global economy,
• And it will make Texas corporations more productive through the integration of higher-capacity, more reliable, and more flexible fiber and wireless broadband networks.

But in order to compete in the new global economy, we need more than sophisticated technology. We also need sophisticated workers who can keep up with the rest of the world.

Hard as it is to accept, the U.S. is in danger of slipping behind countries like China and India in the race for knowledge-based work. That's because they have invested more aggressively than we have in building their human capital, especially in science and engineering. Universities in Asia now produce eight times as many engineering graduates as the United States. The Intel International Science and Engineering Fair last year attracted 65,000 kids from the U.S. - and about 6 million from China.

Clearly this country needs to do more to encourage the expertise necessary to compete in the global economy. And it all starts with improving the basic literacy and reading skills of our fellow citizens.

Without basic skills, they aren't going to advance to be able to use computers or take advantage of the Internet. They aren't going to get an advanced education or a decent job. And they aren't going to be able to help our country compete in the new global economy.

At Verizon, we believe that increasing literacy is in the interest of business … and in the interest of our society. So as a responsible corporation, we're focused on providing resources to help individuals across America - and here in Texas - improve their reading skills and get resources in the hands of the people who need them.

To do that, we've chosen to work with strategic partners like the North Texas Future Fund. In the past, they've received grants from Verizon to fund research that identifies the literacy needs in the region and recommends potential solutions.

Today, we're taking another step down this path. The Verizon Foundation is pleased to announce a $50,000 grant to the North Texas Future Fund to help launch their upcoming literacy summit. And I strongly encourage other corporations in this area to join Verizon and support in this worthwhile cause.

For all the anxiety about our competitiveness in a global economy, this is actually a tremendously exciting moment in our history. We are on the verge of a whole new era of innovation in fields such as renewable energy, biotechnology, software design and high-speed communications … all areas in which the Texas economy can succeed. And it's worth remembering that - regardless of the new challenges of the global economy - the U.S. still leads the world in turning innovations into marketable products that improve the lives of our citizens.

The great thing about the advances in global communications is that the tools for prosperity are out there for anybody to use. But making it happen will require bold leadership, fertile imagination and dedicated teamwork.

On behalf of all of the Verizon employees in the Lone Star State, we're excited about putting the tools for creativity and economic success in the hands of our fellow Texans. And we look forward to working with all of you to create a business environment that will bring an amazing era of innovation and prosperity to the most progressive state in the nation.

Thank you.