Verizon Chief Executive Calls for Updated TV Franchise Laws and Progressive Tax Policies to Spur Investment
Current Practices and Potential New Tax Burdens Threaten Future Investment, Ivan Seidenberg Says
Sept. 21, 2005, HUNTINGTON STATION, N.Y. – Verizon Chairman and CEO Ivan Seidenberg today called for a national growth agenda that encourages investment and innovation in modern communications.
In a speech to the Suffolk Nassau Chamber of Commerce, Seidenberg stressed that change is needed now. “Business and civic leaders in Long Island need to come together around an economic agenda that will transform our business environment and position us for leadership in the global economy,” he said.
Seidenberg called for an end to unnecessary barriers to capital investment, starting with video franchise reform. He also called for a tax policy that promotes rather than discourages investment.
To speed consumer choice for video services, Seidenberg called for updated franchising laws. Verizon is building an all-fiber network in parts of 15 states, or more than half the states it serves, including New York. He noted that the company has deployed the new fiber-optic network to some 80 communities on Long Island, and is building it in about 50 more.
In addition to faster Internet connections, this new FiOS network is capable of providing video. However, under state laws that date back to the earliest days of cable TV, a competitor must obtain a franchise in each local community before offering television service.
“We already have the network to provide voice and data,” said Seidenberg. “Now we have to go through an additional process in each individual town just to provide video over the same pipe. It makes no sense.”
Verizon is negotiating franchises in hundreds of communities across the country, including more than 40 local franchise authorities in New York.
“In fact, the village of Massapequa Park is close to approving our very first video franchise in New York state, giving our customers what they tell us they desperately want: competition and choice in video,” Seidenberg said.
Verizon hopes to offer FiOS TV in New York early next year.
Verizon has already obtained franchises in Texas, California, Florida and Virginia to offer FiOS TV to nearly a half-million households served by the company’s FiOS network, and plans to unveil its first commercial offering soon.
“We’re making progress in getting the franchises we need. But we think this could go faster – and the benefits of video competition could come quicker – if we could reform the whole franchise process,” Seidenberg said.
“We’re not talking about doing away with local franchise fees or local content. But we do need a broader, more streamlined solution to this issue if we’re going to clear the path for technology investment and innovation in video.”
Seidenberg also called for reducing the costs to U.S. businesses so they can compete globally and keep more resources here at home. The amount of property taxes Verizon pays in New York state, $336 million in 2004, outpaces every state in which the company does business, he noted.
“Obviously, reducing the tax burden is a big issue for businesses in New York,” he said. “It is no surprise to this audience that New York has one of the highest business tax rates in the U.S.”
Seidenberg said Verizon’s presence and importance to Long Island’s economy will only grow. On Long Island alone, the company already invests more than $700 million annually (nearly $2 million a day), employs nearly 5,600, and works with more than 4,000 vendors and suppliers.
“We serve some of the most plugged-in, high-tech, ‘all-communications-all-the-time,’ consumers in the country, and I think it’s safe to say that – whether it’s in their cars, at their offices, in school or at home – most Long Islanders are connected to a Verizon network at some point, pretty much every single day,” Seidenberg said.
He also noted that he planned to participate in the company’s announcement today about using environmentally-friendly fuel cell technology to power Verizon’s large switching center in Garden City. [Please see separate release.] “We think this energy-efficient technology has great potential to save cost, lower greenhouse gas emissions and make the network even more reliable in the event of an emergency,” he said.
Seidenberg set the stage by outlining the “world is flat” syndrome. In his book with the same title, New York Times columnist Thomas Friedman describes the technologies and political events that converged in the late 1990s to level the playing field for people and economies all over the world. One of the key “flatteners” Friedman writes about is communications technology.
Seidenberg said, “We need to make sure that, as the world gets flatter, Long Island businesses get stronger. And, if communications technology had a big role in creating the ‘world is flat’ challenge, it will play an even bigger part in equipping our citizens and our businesses to meet that challenge.”
Verizon Communications Inc.
With more than $71 billion in annual revenues, Verizon Communications Inc. (NYSE:VZ) is one of the world’s leading providers of communications services. Verizon has a diverse work force of more than 214,000 in four business units: Domestic Telecom provides customers based in 28 states with wireline and other telecommunications services, including broadband. Verizon Wireless owns and operates the nation’s most reliable wireless network, serving 47.4 million voice and data customers across the United States. Information Services operates directory publishing businesses and provides electronic commerce services. International includes wireline and wireless operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.
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