TELECOM Digest OnLine - Sorted: Verizon Loses $9.7 Million in Revenue in Rhode Island

Verizon Loses $9.7 Million in Revenue in Rhode Island

T (
Tue, 1 May 2007 07:33:30 -0400

And last year it was $16.7 million. One interesting little tidbit in
this article is that 43% of the telecom market in RI doesn't belong to

Verizon reports loss in R.I. local phone operations

01:00 AM EDT on Tuesday, May 1, 2007

By Timothy C. Barmann

Journal Staff Writer

Verizon Communications says its local telephone operations in Rhode
Island last year had a net loss of $9.7 million, the fourth
consecutive year the company recorded a loss in the state, according
to documents Verizon submitted to Rhode Island utility regulators.

The loss was an improvement over the $16.7-million net loss in
2005. The company trimmed last year=3Fs expenses by 12.8 percent,
including a $37- million decrease in depreciation and amortization
costs, according to the documents.

Net operating revenues fell to $256.7 million, down 11.5 percent from
$290 million in 2005.

The figures do not include money Verizon receives from its
long-distance and wireless telephone operations.

The company's declining profits and revenues came at a time when
Verizon continued to lose customers to competitors and wireless phone
companies. Verizon provided a total of 355,000 telephone lines at the
end of last year, down 12 percent from 2005.

The biggest decline was among residential access lines, which fell by
14.5 percent to 224,400 at the end of last year. The number of
business lines fell by 7.3 percent to 130,600.

The declines in the telephone business help explain Verizon=3Fs recent
aggressive moves into the cable TV business. The company is on the
verge of getting state approval to begin offering its fiber-optic
service (FiOS) for TV in Service Area 6: Coventry, East Greenwich,
Exeter, North Kingstown, Warwick, West Warwick and West Greenwich.

State regulators have scheduled a public hearing on May 17 before
granting final approval. Service could begin as soon as June 5,
'assuming no surprises' at the hearing, said Eric Palazzo,
administrator for the cable section of the Division of Public
Utilities and Carriers.

Verizon is also seeking permission to offer its FiOS TV in Service
Areas 2, 3 and 8, which include 158,000 households in Charlestown,
Cranston, Foster, Hopkinton, Johnston, Narragansett, North Providence,
Providence, Richmond, Scituate, South Kingstown and Westerly.

Yesterday, Verizon said its first-quarter revenue grew 6.4 percent to
$22.58 billion from $21.23 billion a year earlier. A big factor in
that growth was Verizon Wireless, where revenues increased 17 percent
to $10.31 billion. That company, which Verizon owns along with
Vodafone, added 1.7 million customers, finishing the quarter with 60.7

Earnings for the quarter fell 8.4 percent to $1.5 billion, or 51 cents
a share, compared with $1.63 billion, or 56 cents a share, in the same
period last year.

Profits were hurt by a larger-than-expected loss of traditional
telephone customers to cable TV companies and other rival providers,
but the bottom line edged most Wall Street forecasts, the Associated
Press reported.

"Our objective is to lose less lines this year, and we have not backed
away from that," Verizon president Denny Strigl said in a conference
call after the report, stressing that the number of activations of
Internet and FiOS services exceeded the 408,000 regular phone lines
turned off during the quarter, the AP said.

Rhode Island has been an especially difficult market for Verizon's
traditional phone service, mainly because of the strong competition it
faces from Cox Communications. That Atlanta-based company added
telephone service to its cable TV offerings in 2000.

Rhode Island's local telephone market is, by far, the most competitive
in the country, according to a report released in January by the Federal
Communications Commission. That report found that as of June 2006,
competitors controlled 43 percent of the market for local phone lines.
(The report does not indicate who among the competitors controls those

The next closest state was South Dakota, where competitors controlled 33
percent of all phone lines.

Competitors have been taking away customers from Verizon since 2000.
Between 2001 and 2006, Verizon lost a total of 45.3 percent of its
telephone lines in Rhode Island, more than any other New England
state, according to data Verizon submitted to the FCC. The next
biggest percentage loss of customers in New England was in
Massachusetts, where the company lost 28.1 percent of its customers
during that six-year period.

Verizon has been trying to shore up its falling revenue by increasing
charges for more than a dozen optional calling features and other
services over the past two months. For example, Verizon raised its
rate for call waiting on a business line to $11 from $8.75 as of March
1. The rate for an unpublished number for both residential and
business customers went to $4.95 a month, from $4, on April 1.

And within the past few weeks, Verizon Long Distance instituted a new
'shortfall' charge for customers who make fewer than $2 worth of long
distance calls. The charge is $2, less any long distance charges.

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