The History of Verizon Communications

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					The History
of Verizon
Communications
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                    2

                   The History of Verizon Communications                                    The Bell atlantic - GTe merger
                                                                                                               The mergers that formed Verizon
                   Verizon Communications, Inc., based in New York
                                                                                                               were among the largest in U.S. busi-
                   City and incorporated in Delaware, was formed on                                            ness history, culminating in a defini-
                   June 30, 2000, with the merger of Bell Atlantic Corp.                    tive merger agreement, dated July 27, 1998, between
                   and GTE Corp. Verizon began trading on the New                           Bell Atlantic, based in New York City, and GTE, which
                                                                                            was in the process of moving its headquarters from
                   York Stock Exchange (NYSE) under the VZ symbol on                        Stamford, Connecticut, to Irving, Texas.
                   Monday, July 3, 2000.
                                                                                                              GTE and Bell Atlantic had each
                                                                                                              evolved and grown through years
                   The symbol was selected because it uses the two
                                                                                                              of mergers, acquisitions and divesti-
                   letters of the Verizon logo that graphically portray                     tures. Each had proven history of successfully integrat-
                   speed, while also echoing the genesis of the company                     ing business operations.
                   name: veritas, the Latin word connoting certainty and
                                                                                            Prior to the merger, GTE was one of the world’s largest
                   reliability, and horizon, signifying forward-looking                     telecommunications companies, with 1999 revenues of
                   and visionary.                                                           more than $25 billion. GTE’s National and International
                                                                                            Operations served approximately 35 million access
                                                                                            lines through subsidiaries in the United States, Canada
                   While Verizon is truly a 21st century company, the                       and the Dominican Republic, and through affiliates in
                   mergers that formed Verizon were many years in the                       Canada, Puerto Rico and Venezuela. (Access lines are
                   making, involving companies with roots that can be                       the individual connections from a customer’s premises
                                                                                            to the phone network.) GTE was a leading wireless
                   traced to the beginnings of the telephone business in                    operator in the United States, with more than 7.1 mil-
                   the late 19th century.                                                   lion wireless customers and the opportunity to serve
                                                                                            72.5 million potential wireless customers.

                   Government regulation largely shaped the evolution
                                                                                            Outside the 50 states, GTE operated wireless networks
                   of the industry throughout most of the 20th century.                     serving approximately 6.7 million customers, with 34.8
                   Then, with the signing of the Telecommunications                         million potential wireless customers through subsidiar-
                                                                                            ies in Argentina, Canada and the Dominican Republic,
                   Act on February 8, 1996, federal law directed a shift
                                                                                            and affiliates in Canada, Puerto Rico, Venezuela and
                   to more market-based policies. This promise of a new                     Taiwan. GTE provided internetworking services, rang-
                   competitive marketplace was a driving force behind                       ing from dial-up Internet access for residential and
                                                                                            small-business consumers to Web-based applications
                   Verizon’s formation.
                                                                                            for Fortune 500 companies. GTE was also a leader in
                                                                                            directories and telecommunications-based information
                                                                                            services and systems.
Telecom Timeline




                          In Boston, Alexander Graham Bell transmits          American                  The Interstate Commerce
                   1876




                                                                       1885




                                                                                                 1910




                          the first complete message - “Mr. Watson,           Telephone and             Commission (ICC) assumes
                          come here, I want you!” - with the use of           Telegraph Co. is          jurisdiction over interstate
                          his invention, the telephone.                       established.              telephone companies.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                   3

                   Bell Atlantic was even larger than GTE, with 1999 rev-                   Vodafone Group Plc) announced their agreement to cre-
                   enues of more than $33 billion. Its Domestic Telecom                     ate a new wireless business — with a national footprint,
                   unit served 43 million access lines, including 22 million                a single brand and a common digital technology —
                   households and more than 2 million business custom-                      comprised of Bell Atlantic’s and Vodafone’s U.S. wireless
                   ers. Its Global Wireless unit managed one of the world’s                 assets (Bell Atlantic Mobile, AirTouch Cellular, PrimeCo
                   largest and most successful wireless companies, with                     Personal Communications and AirTouch Paging).
                   7.7 million Bell Atlantic Mobile customers in the United
                   States and international wireless investments in Latin                   This wireless joint venture received regulatory approval
                   America, Europe and the Pacific Rim.                                     in six months. The new “Verizon” brand was launched
                                                                                            on April 3, 2000, and the wireless joint venture began
                   Bell Atlantic’s Directory Services was already the world’s               operations as Verizon Wireless on April 4. GTE’s wireless
                   largest publisher of directory information, including                    operations became part of Verizon Wireless — creating
                   operations in Europe. Bell Atlantic’s International unit                 the nation’s largest wireless company — when the Bell
                   included a mix of mature and start-up wireline telecom-                  Atlantic - GTE merger closed nearly three months later.
                   munications investments in Europe and the Pacific Rim.                   Verizon then became the majority owner (55 percent)
                                                                                            of Verizon Wireless, with management control of the
                   The Bell Atlantic - GTE transaction — valued at more                     joint venture.
                   than $52 billion at the time of the announcement
                   — was designed to join Bell Atlantic’s sophisticated                     When Verizon Communications began operations in
                   network that served its densely-packed, data-intensive                   mid-2000, the leaders of Bell Atlantic and GTE shared
                   customer base in 13 states from Maine to the Virginias                   management responsibility for the company. Former
                   with GTE’s national footprint, advanced data commu-                      GTE Chairman and CEO Charles R. “Chuck” Lee became
                   nications capabilities and long-distance expertise. The                  Verizon’s founding Chairman of the Board and co-CEO,
                   purpose was to create a combined company with the                        while former Bell Atlantic CEO Ivan Seidenberg became
                   scale and scope to compete as one of the telecommu-                      Verizon’s founding President and co-CEO. In accordance
                   nications industry’s top-tier companies. This combined                   with a leadership transition plan announced at the
                   company would be able to provide long-distance and                       time of the merger, Lee retired from Verizon in 2002.
                   data services nationwide as part of a full package of                    Seidenberg is currently Chairman and CEO.
                   other communications services (subject to regulatory
                   restrictions).
                                                                                            reCenT Verizon HisTory
                   The merger closed nearly two years later, following                      A bellwether for the industry, Verizon Communications
                   review and approvals by Bell Atlantic and GTE shar-                      was added to the Dow Jones Industrial Average in 2004.
                   eowners, 27 state regulatory commissions and the                         Verizon continues to have a nationwide presence in
                   Federal Communications Commission (FCC), and clear-                      wireline and wireless markets, with well more than 100
                   ance from the U.S. Department of Justice (DOJ) and                       million Americans connecting to a Verizon network daily.
                   various international agencies.                                          With the addition of MCI, Inc., in 2006, Verizon became
                                                                                            the leading provider of advanced communications
                   In the meantime, on September 21, 1999, Bell Atlantic                    and information technology solutions to large busi-
                   and London-based Vodafone AirTouch Plc (now                              ness and government customers worldwide. Moreover,
Telecom Timeline




                                                            1918




                                                                                                1924




                          In the Kingsbury Commitment,             Ten million Bell System             Bell System engineers publicly
                   1913




                          the United States government             telephones are in service.          demonstrate the first trans-
                          accepts establishing of a tele-                                              mission of pictures over tele-
                          phone monopoly.                                                              phone wires.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                    4

                   by acquiring Alltel Corp. in early 2009, Verizon Wireless                 In wireline, Verizon is in the midst of a major initiative
                   became the largest wireless carrier in the U.S.                           to bring customers the next-generation broadband
                                                                                             services — fiber-optic-based Internet and TV services
                   As of year-end 2008, Verizon’s wireline network                           called FiOS®. Verizon is the only major U.S. communica-
                   included more than 36 million access lines and nearly                     tions company building an advanced, all-digital fiber-
                   8.7 million broadband connections nationwide. Over                        optic network on a mass scale all the way to customers’
                   1 billion phone calls and trillions of bits of data were                  homes. From 2004 through 2010, the company plans to
                   being carried over this nationwide network on an aver-                    invest $22.9 billion — or $18 billion net of copper net-
                   age business day, with a reliability factor of more than                  work investment costs that would otherwise have been
                   99.99 percent. Meanwhile, Verizon Wireless owned and                      made — to deploy Verizon’s fiber network to approxi-
                   operated the nation’s most reliable wireless network.                     mately 18 million premises and attract up to 7 million
                   By January 2009, Verizon Wireless served more than 80                     FiOS® Internet customers and more than 4 million FiOS®
                   million customers nationwide.                                             TV customers.

                   From 2006 through 2008, Verizon invested a total of                       At the same time that Verizon has made these sig-
                   more than $50 billion to maintain, upgrade and expand                     nificant strategic investments, the company has shed
                   its technology infrastructure. Verizon’s strong cash flow                 non-strategic assets and investments. For example,
                   from operating activities ($26.6 billion in 2008) enabled                 Verizon sold wireline access lines in Alabama, Missouri
                   the company to invest in growth areas – particularly                      and Kentucky in 2002, and in Hawaii in 2005. In 2006,
                   broadband and wireless — even as the company main-                        Verizon spun off its U.S. print and Internet yellow pages
                   tained a healthy dividend.                                                directories company to Verizon shareholders. The spin-
                                                                                             off resulted in a new public company called Idearc,
                   In wireless, Verizon has made several recent major                        Inc. Verizon shareholders received one share of Idearc
                   investments. In March 2008, Verizon invested $9.4 bil-                    common stock for every 20 shares of Verizon common
                   lion for a nationwide spectrum footprint (excluding                       stock, and Idearc began trading on the NYSE as a sepa-
                   Alaska) in the FCC’s 700 MHz auction, plus 102 spec-                      rate company in November 2006.
                   trum licenses for individual markets around the U.S.. In
                   August 2008, Verizon Wireless expanded its service to                     Verizon also sold its interests in telecommunications
                   many rural markets by completing its purchase of Rural                    providers in the Dominican Republic, Puerto Rico and
                   Cellular Corp. for $2.66 billion in cash and assumed                      Venezuela in three separate transactions to América
                   debt. In January 2009, Verizon Wireless completed its                     Móvil, a provider of wireless service throughout Latin
                   purchase of Alltel from Atlantis Holdings LLC, expand-                    America, and a company owned jointly by Teléfonos de
                   ing the company’s network coverage to nearly the                          México (Mexico’s leading full-service telecommunica-
                   entire U.S. population. Consistent with the terms of the                  tions company) and América Móvil. The sale of Verizon
                   transaction announced in June 2008, Verizon Wireless                      Dominicana closed in December 2006, and the other
                   paid approximately $5.9 billion for the equity of Alltel.                 transactions closed in early 2007.
                   Immediately prior to the closing, the Alltel debt associ-
                   ated with the transaction, net of cash, was approxi-                      In January 2007, Verizon announced the spin-off
                   mately $22.2 billion.                                                     of wireline businesses in Maine, New Hampshire
Telecom Timeline




                          Transatlantic telephone service          Hygrade Sylvania          Congress passes Communications
                   1927




                                                            1931




                                                                                      1934




                          from New York (AT&T) to London                                     Act of 1934, with a goal of universal
                          becomes operational, transmit-                                     service at reasonable charges as its
                          ted by radio waves.                                                key tenet. The FCC was formed.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                   5

                   and Vermont to FairPoint Communications, Inc., a                       Verizon Center, at the former headquarters location of
                   telecommunications provider based in Charlotte, NC.                    AT&T in Basking Ridge, NJ.
                   This transaction closed on March 31, 2008, and Verizon
                   shareholders received one share of FairPoint common                    Current facts and figures about Verizon can be
                   stock for every 53.0245 shares of Verizon common stock.                obtained at http://newscenter.verizon.com/kit/vcorp/
                   Following this transaction, Verizon has U.S. wireline oper-            factsheet.vtml and additional details about Verizon
                   ations in 25 states and the District of Columbia.                      Wireless can be obtained at http://news.vzw.com/pdf/
                                                                                          Verizon_Wireless_Press_Kit.pdf
                   The mCi merger
                   On February 14, 2005, Verizon announced its agree-
                   ment to acquire MCI, in order to enhance its ability to                BeLL aTLanTiC CorPoraTe HisTory
                   deliver the benefits of converged communications,                      The term “Baby Bell” — synonymous with RBOC, or
                   information and entertainment across the country and                   Regional Bell Operating Company — indicates that Bell
                   around the world.                                                      Atlantic was one of the companies tracing its heritage
                                                                                          to the Bell System, which was a common name for the
                   Qwest Communications later announced its own bid                       organizational structure of the American Telephone
                   for MCI, but in May 2005, the MCI Board endorsed an                    and Telegraph Co. (AT&T) prior to 1984.
                   amended bid by Verizon. MCI shareholders approved
                   the merger with Verizon in October 2005, and state,                    Until then — as the result of a 1913 agreement known
                   federal and international regulatory approvals were                    as the Kingsbury Commitment and reinforced by the
                   obtained by year-end 2005. The merger closed on                        Communications Act of 1934 (the act that created
                   January 6, 2006, in a transaction valued at approxi-                   the FCC) — the Bell System functioned as a legally
                   mately $8.5 billion.                                                   sanctioned, regulated monopoly. The purpose of this
                                                                                          sanction was the goal of “Universal Service” which,
                   Current statistics                                                     according to the 1934 Act, was “to make available...
                   Verizon Communications, Inc., generated more than                      for all the people of the United States a rapid, efficient
                   $97 billion in 2008 total consolidated operating rev-                  nationwide...wire and radio communication service
                   enues, and at year-end 2008, the company had nearly                    with adequate facilities at reasonable charge.”
                   224,000 employees, serving customers in more than
                   140 countries. Verizon currently operates two network-                 On Jan. 1, 1984, 22 local telephone companies were
                   based business units: Verizon Wireless, operator of                    split from parent company AT&T. At the time, it was the
                   America’s most reliable wireless network, and Wireline,                largest private business enterprise in the world, with
                   comprised of Verizon Telecom, which deploys the most                   more than 1 million U.S. employees; the company was
                   advanced wireline broadband and video network in                       popularly referred to as “Ma Bell.”
                   America today, and Verizon Business, which includes
                   many former MCI operations and serves medium and                       A divestiture occurs when one or more companies are
                   large businesses and government customers. Verizon’s                   split from a parent corporation, often by government
                   corporate headquarters is located at 140 West St. in                   order. The divestiture of AT&T was so large and unprec-
                   Manhattan, NY, and it has a major operations hub, the                  edented that it became known as simply “Divestiture.”
Telecom Timeline




                          Bell introduces            Opening of first all-cable transcontinen-          Philadelphia is the last city
                   1938




                                              1942




                                                                                                 1943




                          crossbar central           tal telephone line with completion of              to have telephone service
                          office switches.           buried cable, connecting existing cable            supplied by different local
                                                     systems of East and West                           carriers.
                   HisTory of Verizon CommuniCaTions inC.
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                   Events leading to Divestiture included the FCC’s 1968              NNX, which refers to the three digits that follow an area
                   Carterfone decision, which allowed competition with                code in a 10-digit phone number. These terms relate to
                   the Bell System for telephone equipment, and a 1974                the public switched telephone network, or PSTN; area
                   antitrust suit filed by the DOJ, charging that AT&T had            code designations are not tied to geographic areas
                   unlawfully monopolized the telecommunications mar-                 when voice over Internet Protocol, or VoIP, technology
                   ket. After years of preparation and several months of              is used.)
                   trials related to this antitrust suit, the government and
                   AT&T resolved their differences out of court, agreeing             Bell atlantic/nyneX
                   to a consent decree in January 1982. This is also some-            One of the most significant evolutionary steps for Bell
                   times called the Modified Final Judgment, or MFJ, since            Atlantic was a June 1994 agreement to form a wireless
                   the settlement modified a 1956 consent decree also                 joint partnership with NYNEX, another of the original
                   involving AT&T.                                                    seven Baby Bells that began operations in 1984. The
                                                                                      combined wireless businesses were to cover 55 million
                   According to terms of Divestiture, the 22 operating Bell           potential customers along the East Coast and in the
                   telephone companies were formed into seven regional                Southwest. This combination began operations in July
                   holding companies of roughly equal size. Bell Atlantic             1995 under the name Bell Atlantic NYNEX Mobile.
                   was one of the original seven RBOCs, or Baby Bells, that
                   began operations in 1984.                                          NYNEX (pronounced “NINE-x”), based in New York, was
                                                                                      so named because it was composed of the New York
                   When it was formed, Bell Atlantic was based in                     and New England telephone companies that were for-
                   Philadelphia and consisted of several telephone com-               merly part of the Bell System (“NY” representing New
                   panies (Bell of Pennsylvania; C&P Telephone Companies              York, “NE” representing New England, and “X” the unde-
                   of D.C., Maryland, Virginia and West Virginia; Diamond             fined future). It operated in seven Northeastern states
                   State Telephone, and New Jersey Bell) serving six states           — Connecticut, Maine, Massachusetts, New Hampshire,
                   (Delaware, Maryland, New Jersey, Pennsylvania, Virginia            New York, Rhode Island and Vermont. For a decade,
                   and West Virginia) and the District of Columbia.                   New York Telephone and New England Telephone were
                                                                                      branded independently, but under Ivan Seidenberg’s
                   One key regulatory restriction imposed by Divestiture              direction, operations were internally “merged” under a
                   on all of the RBOCs was a prohibition against providing            single NYNEX brand on Jan. 1, 1994.
                   long-distance telephone services in their own juris-
                   dictions. The MFJ had divided the United States into               The Bell Atlantic - NYNEX wireless partnership marked
                   geographic areas within which an RBOC could offer                  the beginnings of the current-day Verizon Wireless.
                   telecommunications services. These areas are called
                   Local Access and Transport Areas, or LATAs. Local tele-            This partnership also began a relationship between the
                   communications services are called intraLATA, while                two RBOCs that resulted in an announcement on April 22,
                   long-distance services are called interLATA. (Area codes           1996, that Bell Atlantic and NYNEX had agreed to merge
                   and LATAs do not necessarily share boundaries; New                 their entire operations in a transaction then valued at $23
                   York state, for example, has eight LATAs and 14 area               billion. On April 1, 1996 — less than two months after
                   codes. A similar traditional industry abbreviation is              the signing of the Telecommunications Act — two other
Telecom Timeline




                                                                AT&T introduces the
                                                         1949




                          FCC requires the use of
                   1946




                                                                famous black rotary Model
                          “beep tones” required when
                                                                500 telephone.
                          conversations are recorded.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                            7

                   Baby Bells (SBC Communications and Pacific Telesis) had         System for many years to come — “One Policy, One
                   also proposed a merger, and more than a year of regula-         System, Universal Service.”
                   tory review and approvals followed for each.
                                                                                   The Bell System has a long and storied history, dating
                   The Bell Atlantic - NYNEX merger united a natural mar-          back to the very invention of the telephone and the
                   ket in the adjoining Northeast and Mid-Atlantic regions.        first patent filed by Bell, applied for on Feb. 14, 1876,
                   The “new” Bell Atlantic opened for business on Aug.             and granted on March 7, 1876. Three days later, the
                   15, 1997. As announced when the merger agreement                inventor dropped a battery, spilling acid. He called out
                   was struck, the company retained the Bell Atlantic              to his assistant, “Mr. Watson, come here!,” and Watson
                   name and was headquartered in New York. Raymond                 heard Bell’s words over the new device.
                   W. Smith retained the title of Chairman and CEO of Bell
                   Atlantic after the merger, and Seidenberg, who was              Many books and other educational resources are avail-
                   formerly Chairman and CEO of NYNEX, became the                  able that chronicle the history of the Bell System —
                   Vice Chairman, President and Chief Operating Officer.           from 1917 when exchange names (“Pennsylvania 6”)
                   Seidenberg was later named CEO, then Chairman upon              were first added to four-digit phone numbers in New
                   Smith’s retirement at the end of 1998.                          York (a practice that began to be phased out in 1960
                                                                                   with the introduction of “all number calling”), to the
                   Even before their merger, both Bell Atlantic and NYNEX          first public demonstration of the newly invented tran-
                   had been making headlines since the 1984 Divestiture.           sistor by Bell Telephone Laboratories in 1948, to the
                   Under Seidenberg, NYNEX was widely recognized as                introduction of Picturephone service coincident with
                   among the first of the Baby Bells to embrace the new            the 1964 World’s Fair.
                   competitive era codified by the Telecommunications
                   Act of 1996, and throughout the ‘90s Bell Atlantic’s            An underlying theme of Bell System culture has been an
                   Smith articulated a vision for the Information                  attention to customer service — whether exhibited by a
                   Superhighway made possible by the fledgling Internet.           bedrock commitment to protect customer privacy or by
                                                                                   the heroic efforts of phone company managers and tech-
                   In 1993, Bell Atlantic proposed a merger with cable TV          nicians to restore essential services following disasters.
                   giant Tele-Communications Inc. — a high-profile deal
                   later terminated by Bell Atlantic, but one that dramati-        This service ethic is often depicted by a Bell System-
                   cally accelerated the pace of change in the industry,           commissioned painting, “The Spirit of Service,” based
                   making it clear that convergence of digital technologies        on a photograph of New England Bell lineman Angus
                   and industry consolidation were the way of the future.          Macdonald in snowshoes, maintaining the only long-
                                                                                   distance telephone lines between New York and
                   The Bell system                                                 Boston during the Great Blizzard of 1888. Bell System
                   Before 1984, as part of the Bell System, the histories of       communications lines had stayed open during the
                   Bell Atlantic and NYNEX followed similar paths. They            severe March storm that otherwise had paralyzed the
                   were, in fact, part of one management system, promul-           Northeast.
                   gated in 1908. Theodore N. Vail, the then-new president
                   of AT&T, set forth a vision that would define the Bell          Examples of the Spirit of Service abound throughout
                                                                                   the history of the Bell Atlantic and NYNEX telephone
Telecom Timeline




                          AT&T’s Consent           Merger forming GT&E          The first transatlantic
                   1956




                                            1959




                                                                         1959




                          Decree                                                transmission of a TV signal
                                                                                via the TELSTAR satellite
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                  8

                   companies. On Feb. 27, 1975, a fire of unknown origin                   of independent telephone companies could only call
                   swept through a New York Telephone central office in                    other customers served by the same company.
                   lower Manhattan, causing the worst service disaster
                   ever suffered by a single Bell operating company. The                   GTE, before its merger with Bell Atlantic, was the larg-
                   company restored lines serving more than 170,000                        est independent phone company in the United States,
                   phones within 22 days — a technological feat that, at                   owning numerous independent local telephone
                   the time, would normally have taken a year or more.                     properties in rural and urban areas from Hawaii and
                   The restoration effort was dubbed “The Miracle of                       California to Virginia.
                   Second Avenue.”
                                                                                           This distinction between “former Bell System” and “inde-
                   More recently, this spirit was exemplified by Verizon’s                 pendent” meant that Bell Atlantic and GTE had histori-
                   restoration efforts following the terrorist attacks on                  cally been regulated very differently. For example,
                   Sept. 11, 2001.                                                         GTE was already providing long-distance (interLATA)
                                                                                           services to customers at the time the merger with Bell
                   These restoration efforts were enhanced by the scale                    Atlantic was announced. GTE had owned and oper-
                   and scope Verizon had obtained through the merger                       ated the Sprint long-distance network during parts of
                   of Bell Atlantic and GTE, together with the coopera-                    the 1980s and 1990s. However, as a result of a consent
                   tion of other companies in a now fully competitive                      decree entered into by GTE in connection with its
                   industry. In New York, Verizon employees responded                      acquisition of the Sprint network, GTE was required
                   to the emergency by helping the NYSE resume trad-                       to keep its Sprint business separate from the business
                   ing and handle record volumes less than a week after                    conducted by its telephone operating companies. GTE
                   the attacks on the World Trade Center. At crash sites in                re-entered the long-distance business in conjunction
                   Pennsylvania and at the Pentagon, employees provided                    with its local telephone operations shortly after the
                   emergency services and rebuilt systems. In less than 90                 Telecommunications Act of 1996 eliminated these
                   days, Verizon had restored a phone and data network at                  separation restrictions.
                   Ground Zero of roughly the size and complexity of one
                   serving a city the size of Cincinnati.                                  On the other hand, as a former Baby Bell, Bell Atlantic’s
                                                                                           entry into the long-distance business had been sub-
                                                                                           ject to greater restrictions. Under Section 271 of the
                   GTe CorPoraTe HisTory                                                   Telecommunications Act, federal regulators were
                   There were more than 1,400 local phone companies in                     required to certify, with input from state regulators
                   1984 that were never part of the Bell System. Many still                and the DOJ, that local telecommunications markets
                   exist today, primarily in rural areas. Typical independents             are fully open to competition before a former Baby Bell
                   are family-owned businesses or subscriber-owned coop-                   could be approved to offer long-distance service in a
                   eratives that serve one or more small communities.                      jurisdiction.

                   The independent telephone industry originated in                        Bell Atlantic was the first of the former Baby Bells to
                   1893, when Alexander Graham Bell’s original patents                     file a Section 271 application that was approved by the
                   expired. In the early years of this industry, customers                 FCC, and the company had entered the long-distance
Telecom Timeline




                          Bell System adopts the use of          GT&E changes its              Divestiture occurs.
                   1968




                                                          1982




                                                                                        1984




                          "911" as a nationwide emer-            name to GTE.                  Bell Atlantic and NYNEX
                          gency telephone number.                Court orders                  are formed.
                                                                 divestiture of AT&T.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                       9

                   market in New York state in January 2000. However, at                       resources forced the corporation into receivership in
                   the time of the Bell Atlantic - GTE merger in June 2000,                    1933, but it emerged two years later, reorganized as
                   regulators did not want to allow Verizon to have opera-                     General Telephone Corp.
                   tional control of GTE’s Internet infrastructure business,
                   which operated across LATA boundaries in all states,                        The Missouri roots of Theodore Gary and Co. stretched
                   before Verizon had Section 271 approvals in almost                          back even further than those of Associated Telephone
                   all of the former Bell Atlantic states (which occurred in                   Utilities. Gary purchased the Macon, Mo., telephone
                   2003). Therefore, one condition to the FCC’s approval                       exchange in 1897. Bitter competition developed when
                   of the Bell Atlantic - GTE merger was the spin-off of this                  American Bell Telephone Co., AT&T’s predecessor, tried
                   interLATA data business — an independent company                            to prevent the operations of the independent tele-
                   called Genuity.                                                             phone companies, sometimes leading to physical vio-
                                                                                               lence. The resolution of this conflict was the previously
                   early GTe History                                                           mentioned 1913 Kingsbury Commitment.
                   The early GTE structure was forged primarily through
                   an aggressive history of acquisitions and mergers —                         In the meantime, Gary was acquiring domestic and
                   beginning with the acquisition of hundreds of small                         international telephone companies at a rapid rate.
                   telephone companies independent of the Bell System.                         Theodore Gary and Co. and General Telephone were
                   These companies had been formed following the 1894                          the two largest independent telephone companies in
                   expiration of the last of the telephone patents granted                     the United States when they merged in 1955.
                   to Bell. This expansion movement reached its zenith in
                   the late 1950s with the combination of three large cor-                     Sylvania Electric Products began modestly in the 1910s
                   porations that formed the nucleus of the GTE as it was                      in Massachusetts and Pennsylvania as a renewer of
                   structured in 1990: General Telephone, Theodore Gary                        burnt-out light bulbs. Operations moved on to produc-
                   and Co., and Sylvania Electric Products Inc.                                tion of new lamps and then to vacuum tubes in the
                                                                                               1920s, when radio broadcasting became increasingly
                   GTE was conceived as a corporate entity in 1918                             popular. In 1931, the Massachusetts and Pennsylvania
                   when John F. O’Connell, Sigurd L. Odegard and John                          companies merged to become Hygrade Sylvania Corp.,
                   A. Pratt purchased the small Richland Telephone Co.                         later Sylvania Electric Products. By the time it merged
                   in Wisconsin. The partnership became a corporation                          with General Telephone in 1959, Sylvania had become a
                   two years later, with the acquisition of other Wisconsin                    leader in electronics, lighting, television and radio, and
                   telephone properties. Later, the corporation purchased                      chemistry and metallurgy.
                   a Long Beach, Calif., telephone company, and a hold-
                   ing company called Associated Telephone Utilities Co.                       After this 1959 merger, the company became known
                   was organized in 1926 to serve as an umbrella for the                       as General Telephone & Electronics Corp. Operations
                   Wisconsin and California properties.                                        of the General Telephone, Theodore Gary and Sylvania
                                                                                               companies were not integrated, and the conglomerate-
                   Associated Telephone Utilities served 500,000 tele-                         styled business produced a wide range of products
                   phones before the stock market crash of 1929 and the                        over the following decades, including halogen auto-
                   Great Depression that followed. Depleted financial                          mobile headlights, cutting tools, telecommunications
Telecom Timeline




                          GTE and Contel merge.          Sprint sold          Sylvania sold          Congress passes the 1996
                   1991




                                                  1992




                                                                       1993




                                                                                              1996




                                                                                                     Telecommunications Act.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                10

                   equipment, cameras, television sets, atomic-reactor                     GTe in the ‘90s
                   fuel elements, anti-missile defense systems, and space                  Under the leadership of James L. “Rocky” Johnson,
                   frame systems for buildings.                                            who became GTE’s Chairman and CEO in 1987, and
                                                                                           Chuck Lee, who became Chairman and CEO-elect in
                   During this time, the holding company became known                      late 1991, GTE focused its operations on local telecom-
                   as GT&E Corp. In March 1970, blasts ripped through the                  munications and on the burgeoning market for data
                   headquarters buildings of GT&E and two other com-                       services. GTE anticipated the growing importance of
                   panies in New York in protest of the companies’ par-                    telecommunications technology and the technologi-
                   ticipation in defense work at the height of the Vietnam                 cal shift from analog to digital. By mid-decade, as data
                   War. GT&E subsequently moved its headquarters to                        traffic was becoming more common than voice traffic
                   Stamford, Conn., and in 1971 the company adopted                        on telephone networks, GTE was well positioned in key
                   a new corporate symbol that became a widely recog-                      growth markets.
                   nized logo in the years to come, featuring the initials
                   GTE placed inside a blue, rounded rectangle. The com-                   As early as 1990 in Cerritos, Calif., GTE began market
                   pany formally changed its name to GTE Corp. in 1982.                    testing of how to provide voice, data and video services
                                                                                           over a range of transmission networks, including fiber
                   In 1981, the company sold its electronics holdings to                   optics, coaxial cable and the copper wiring traditionally
                   North American Philips, a subsidiary of N.V. Philips,                   used in the phone industry.
                   Europe’s largest electronics company. Meanwhile, in
                   moves in the telecommunications businesses, GTE                         In March 1991, GTE acquired Contel Corp., which was
                   Mobilnet was formed to construct and operate cellular                   the 10th largest telephone company in the United
                   systems in 1981 (the first customers were served in                     States and the 6th largest cellular provider. At the time,
                   1984 in the Indianapolis area, and in 1989 GTE was the                  it was the largest merger in the history of the telecom-
                   first cellular provider to offer service nationwide). In                munications industry. The transaction was valued at
                   1983, the company bought infant long-distance carrier                   $6.6 billion, and in its new form GTE became the largest
                   U.S. Sprint from Southern Pacific Co. Five years later,                 U.S.-based local telephone company and the coun-
                   GTE sold its controlling interest in what was then called               try’s second largest mobile cellular company. (McCaw
                   GTE Sprint to United Telecommunications Inc.; the                       Cellular, which was subsequently purchased by AT&T,
                   remainder was sold in 1992.                                             was the largest cellular company at the time.)

                   By the end of the ‘80s, GTE was a corporation with                      In January 1993, GTE sold its Sylvania lighting and relat-
                   annual revenues exceeding $17 billion, employing                        ed precision materials operations to OSRAM GmbH. Later
                   more than 159,000 people in various telephone and                       in 1993, GTE began offering Internet access services for
                   manufacturing operations throughout the United                          residential and business customers. In 1997, GTE secured
                   States and some 40 other countries. GTE and its busi-                   its position as a major provider of Internet services with
                   ness operations had spanned the turbulent years from                    the purchase of Internet pioneer BBN Corp.
                   the industrial revolution to the beginnings of the infor-
                   mation revolution.                                                      In October 1997, GTE made headlines worldwide with a
                                                                                           cash offer to acquire MCI Communications Corp., a
Telecom Timeline




                          BBN purchase          Bell Atlantic/          PRTC                    Verizon is formed
                   1997




                                         1998




                                                                 1999




                                                                                        2000




                                                GTE merger is           Consolidation
                                                announced.
                                                                        Bell Atlantic/
                                                                        Vodaphone merger
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                           11

                   long-distance company that had already been targeted               form MCI WorldCom was the largest merger in U.S.
                   for acquisition by British Telecommunications PLC                  corporate history when it was announced on Nov. 10,
                   (BT) and WorldCom Inc. In November, MCI accepted                   1997, and it closed on Sept. 15, 1998.
                   WorldCom’s counter-offer.
                                                                                      In March 2002, WorldCom received a request for informa-
                   In 1999, a GTE-led consortium completed the purchase               tion from the U.S. Securities and Exchange Commission
                   of a controlling stake in the Puerto Rico Telephone                (SEC) relating to accounting procedures and loans to
                   Co. — the culmination of a series of complementary                 officers. This led to the April 30, 2002, resignation of
                   wireline and wireless acquisitions, partnerships and               CEO Bernard J. Ebbers. In late June 2002, following the
                   investments that Bell Atlantic and GTE had engaged in              dismissal of the company’s chief financial officer, shares
                   internationally, particularly in the Americas, prior to the        of WorldCom fell to as low as 9 cents and U.S. President
                   close of the merger that formed Verizon.                           George W. Bush called for full investigation of the
                                                                                      matter. On July 21, WorldCom filed for reorganization
                                                                                      under Chapter 11 of the Bankruptcy Code in the U.S.
                   mCi CorPoraTe HisTory                                              Bankruptcy Court for the Southern District of New York.
                   As a standalone company prior to its 2006 merger with              Many books and media accounts are available with fur-
                   Verizon, MCI was a global communications provider                  ther detail on the WorldCom accounting scandal.
                   that delivered advanced communications connectivity
                   to business, government and consumers. MCI’s Internet              By year-end 2002, under new leadership — including
                   backbone network was the largest in the world based                Board Chairman Nicholas deBelleville Katzenbach and
                   on company-owned points of presence.                               newly appointed CEO Michael Capellas — the company
                                                                                      had already begun an unprecedented turnaround,
                   MCI had 2004 revenues of $20.7 billion, and its expan-             sparked in part by the implementation of rigorous
                   sive global IP (Internet Protocol) network spanned more            ethics and governance standards and policies. MCI
                   than 100,000 miles. It was organized into three distinct           emerged from Chapter 11 protection in April 2004.
                   units: Enterprise Markets, which included the compa-
                   ny’s most complex and high-end accounts in business                early mCi History
                   and government; U.S. Sales and Service, which included             William G. McGowan organized MCI Communications
                   small, medium and large business customers in the                  Corp. (first known as Microwave Communications Inc.)
                   United States, very small business customers, consumer             in 1968, when the FCC’s Carterfone decision allowed
                   calling cards and SkyTel; and International & Wholesale            competition with the Bell System for telephone equip-
                   Markets, with service in Europe, Middle East and Africa            ment. By 1972, MCI began offering point-to-point pri-
                   (EMEA), Latin America and Asia Pacific regions as well as          vate line service between Chicago and St. Louis, and by
                   wholesale customers.                                               1973 the company had annual revenues of $15 million
                                                                                      in a relatively small segment of the telecommunications
                   Before changing its name to MCI, Inc. in April 2003, the           market in competition with AT&T.
                   company was known WorldCom. It had been largely
                   shaped by WorldCom’s acquisition of MCI — the cul-                 The 1982 MFJ, which opened the long-distance market
                   mination of the same series of events described earlier            to competition, was a turning point for MCI. It built out
                   involving BT and GTE. The $37 billion transaction to               nationwide and international networks, established a
Telecom Timeline




                          Verizon has more than              Verizon is added             Verizon introduces
                   2002




                                                      2004




                                                                                   2005




                          $22 billion in cash flow.          to the Dow Jones             fiber-based FiOS TV
                                                             Industrial Average.          services.
                   HisTory of Verizon CommuniCaTions inC.
                                                                                                                                                                    12

                   vibrant brand and grew so rapidly that, by 1990, it had                          entrepreneurial and competitive forces. With its well-
                   become one of the nation’s largest telecommunications                            recognized brand, MCI expanded WorldCom’s presence
                   companies. It established a fiber-optic network span-                            in the high-end global business market and added
                   ning more than 46,000 miles, and it offered more than                            approximately 21 million residential customers. MCI
                   50 services in more than 150 countries.                                          WorldCom was the second-largest long-distance phone
                                                                                                    company in the United States (the largest was AT&T).
                   The MFJ settlement also marked the beginning of Long
                   Distance Discount Service (LDDS), founded by Ebbers,                             In May 1999, MCI WorldCom and SkyTel
                   William Fields, David Singleton and Murray Waldron.                              Communications, a nationwide wireless messaging
                   From 1983 to 1991, LDDS and its former companies,                                company, announced a definitive merger agreement.
                   WilTel and IDB Communications, began constructing a                              Five months later, on Oct. 5, MCI WorldCom and Sprint
                   nationwide voice and data communications network.                                (the long-distance provider that GTE had owned during
                   During this period, the companies also purchased                                 parts of the 1980s and 1990s) announced a $129 billion
                   several state and regional voice and data carriers.                              merger agreement. This merger would have created the
                   In December 1992, LDDS merged with Advanced                                      largest communications company in the United States,
                   Telecommunications Corp., virtually doubling its size,                           but the transaction never closed. Faced with U.S. and
                   and the consolidated company became the fourth-                                  European regulatory concerns, the boards of both com-
                   largest long-distance provider in the country.                                   panies agreed to terminate the planned merger in July
                                                                                                    2000. Later that year MCI WorldCom changed its name
                   In 1993, LDDS merged with Metromedia and                                         to simply WorldCom.
                   Resurgens Communications. In 1994, it acquired
                   IDB Communications Group, establishing an inter-
                   national presence. In 1995, the company acquired                                 sources:
                   WilTel Network Services, a nationwide common
                   carrier network, and later that year the company                                 Brooks, John, Telephone: The First Hundred Years, Harper &
                   changed its name from LDDS Communications to                                     Row, New York, NY, 1976.
                   WorldCom. In 1996, WorldCom completed a merger
                   with MFS Communications, which owned the lead-                                   Eds., Events in Telecommunications History, AT&T, New York,
                   ing Internet capabilities of UUNET Technologies. Early                           NY, 1979 edition.
                   in 1998, WorldCom completed a merger with Brooks
                   Fiber Properties and also completed an acquisition                               McCarthy, Thomas E., The History of GTE: The Evolution of
                   of CompuServe from H&R Block. WorldCom kept                                      One of America’s Great Corporations, GTE Corporation,
                   CompuServe’s data network and swapped its consumer                               Stamford, CT, 1990.
                   online service division for an America Online network
                   services subsidiary.                                                             Verizon Media Relations, archived press releases.

                   On Sept. 15, 1998, the combined MCI WorldCom                                     For further information, contact: robert.a.varettoni@verizon.com.
                   opened for business. With more than $30 billion in                                                                                Updated February 2009
                   revenue, it joined together two of the industry’s most
Telecom Timeline




                          Verizon                Verizon spins off its yellow          Verizon invests $9.4             Verizon Wireless pur-
                   2006




                                          2006




                                                                                2008




                                                                                                                 2009




                          acquires               pages directories com-                billion in a nationwide          chases Alltel, expanding
                          MCI for                pany to form a new public             spectrum footprint               its coverage to nearly the
                          $8.5 billion.          company, Idearc, Inc.                 (excluding Alaska).              entire U.S. population.