VERIZON ANNOUNCES LONG DISTANCE PLANS FOR MASS.

Verizon began publicizing its new plans in TV ads Mon. night, shortly after FCC voted to let it enter long distance market in Mass. (CD April 17 p1). Company said it would start offering calling plans to consumers and businesses April 26, with most of plans devoid of monthly charges and minimums. Services will target all levels of usage, from low-volume to high-volume callers, Verizon said. Company will offer consumers 5 domestic plans and one international calling plan. Business customers will be offered 4 domestic options and 2 international plans. Verizon also will offer toll-free and calling card plans for both businesses and consumers. Midsized to large companies will be offered customized high-speed data services.

Breen said plans were similar to those it offered in N.Y. Consumer plans included: (1) Timeless plan in which consumers pay 10 cents per min. for all long distance calls all day and every day with no monthly fee or minimum. (2) SmartTouch prepaid plan with calls 8 cents per min. all the time for state-to-state calls and 9 cents per min. for in-state calls. Voice prompts tell customers how much money is in their account. There are no surcharges or monthly fees. (3) E-Values is available only through Verizon’s Website. Calls are 5 cents per min. on weekends and 9 cents during week, again with no monthly fees or minimum usage charges. (4) Best Times is designed for consumers who make more than $35 worth of long distance calls per month. Cost is 5 cents per min. in off-peak hours and 7 cents in peak hours, plus $4.75 monthly charge. (5) TalkTime plan offers block of 300 minutes for $24 monthly or 500 minutes for $39 monthly, with 60- minute plan to some soon for $5 monthly. (6) International plan offers rates from 9 cents to 25 cents per minute, depending on country called, for $3 monthly. In addition, Verizon customers with optional calling plans can add long distance at flat 8 cents per minute.

Among business services: (1) SimpleOptions for business customers who spend more than $100 per month on long distance charges. It offers variety of per-min. rates based on volume and term commitments. A 5% discount is available to customers who also subscribe to Centrex and other products. (2) E-Values for Business offers flat rate of 8 cents per min. and is available only from Web site. (3) Talk to the World is flat-rate plan for businesses that make minimum of 3 international calls per month from U.S. There is $3 monthly service fee and businesses can call 250 other countries. (4) BusinessLink Solutions offers 5 cent rate to customers who subscribe to Centrex and other local business services. (5) FirmRate offers 9 cents a min. for calls all day with no monthly fee or minimum charges. Optional term plans reduce per-min. rate. (6) Another international calling plan targets businesses that frequently call single country or region. Verizon also offers toll-free service and calling card plans.

Financial analysts reacted positively to FCC’s approval of Verizon’s entry in Mass. Credit Suisse First Boston predicted company Verizon would see success in Mass. similar to what it experienced in N.Y., where it gained 20% of market in first year. That would equate to $140 million in annualized revenue in Mass., Credit Suisse said in report Tues. UBS Warburg said Verizon’s long distance entry in Mass. was very positive strategically because it strengthened Verizon’s marketing presence in northeastern corridor. UBS Warburg said it expected Verizon to gain only “modest incremental revenues” from long distance market in Mass. this year. However, it will contribute to “significant opportunity” to tap multinational companies in future as company gains more states and bigger footprint.

Legg Mason report said decision “confirms that the Bells have figured out how to open the regulatory gate to long distance entry, though it sometimes takes a second effort.” (Verizon refiled its application after FCC expressed concern about first one.) Legg Mason report, released by analysts Blair Levin and Michael Balhoff, said decision also undercut efforts by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (D-Mich.) to pass Bell long distance data relief legislation. With new commissioners lined up take seats at FCC, this “probably was the last chance that AT&T, WorldCom and Sprint had to throw up an obstacle with a Commission split 2-2 along party lines,” Legg Mason report said.

Although Verizon’s application was approved 3-1, with Comr. Tristani dissenting, sources said FCC came close to deadlocking at 2-2, which would have meant defeat for Verizon. Called “swing vote” by some observers, Comr. Ness had considered voting against item because she shared Tristani’s concern that rate Verizon was charging competitors for use of its switching element was too high, source said. Ness’s concern was eased by Chmn. Powell’s statement suggesting that FCC could revisit those rates if certain conditions occurred, source said.

Switching rate was single most debated issue as Commission weighed Verizon’s application, FCC officials said. Mass. switching rate was based on rate used in N.Y. However, N.Y. regulators are considering lowering rate in that state in response to complaints by competitors that rate isn’t cost-based. If N.Y. rate were lowered in future, it could raise question about appropriateness of using old rate as basis for Mass. price.

Powell said in separate statement that FCC’s approval “does not forever insulate the switching rate Verizon has successfully proferred in this application.” If N.Y. regulators revised rate downward, and Verizon didn’t follow suit in Mass., FCC might decide that Verizon had stopped meeting Telecom Act’s requirement for cost-based pricing, Powell said. He said if that happened, he would support “requiring Verizon to find a new cost-based rate for switching for a few months until the Massachusetts Department resets its rates.”

Ness said in separate statement she had “serious reservations” about Verizon’s prices for unbundled switching and was uncomfortable about relying on N.Y. rates for unbundled switching in Mass. She said if N.Y. commission ordered lower rates and Verizon didn’t follow suit in Mass., FCC should suspend or revoke Verizon’s long distance authorization in Mass. until regulators there completed a review.