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Verizon Cuts Plans to Upgrade Bergen County, N.J., Telephone Firm's Network

Posted on: Wednesday, 19 May 2004, 06:00 CDT

May 20--Verizon Communications, the nation's largest telephone company, yesterday followed through on a warning and cut plans to upgrade the local telephone company's network in New Jersey with fiber optic technology.

The move follows a refusal by the state Board of Public Utilities in April to give a 58 percent hike in the wholesale rate that Verizon charges its competitors, such as AT&T Corp., to lease its network to offer local telephone service.

"We have been saying clearly and consistently over the past several months that the company will make incremental investments in states where we get the right rate of return," said Rich Young, a spokesman for Verizon New Jersey. "This is not a personal decision. This is not a political gesture. This is strictly a business decision."

A spokesman for Gov. McGreevey said the state believes Verizon will continue to invest in New Jersey. "We are confident Verizon recognizes the importance of New Jersey," spokesman Micah Rasmussen said.

The news came yesterday when Verizon Communications announced that it had begun installing new technology to upgrade its network in a Dallas, Texas, suburb.

The fiber-optic equipment will replace traditional copper telephone wires that are connected to homes and businesses and will enable Verizon to offer new services, such as television and faster high-speed Internet access.

Projects in other parts of Texas and in eight other states, including New Jersey, will occur this year. But Young said Verizon is "drastically scaling back" its 2004 plans for the Garden State.

Initially, Verizon said it had plans to spend $250 million in New Jersey over the next two years to upgrade the network with fiber optic cables.

The project would have amounted to $100 million this year, installing the technology in 34 Bergen County towns, passing 108,000 homes. Now the project will only be in parts of seven towns in the North Jersey county, covering about 20,000 homes, Young said.

Earlier this year, Verizon argued to the BPU that competitors were getting access to its network at below cost. Its proposed 58 percent increase would have pushed the wholesale price from $12.61 per line, per month, to $19.89. The BPU agreed to raise the rate instead by $1.82, or 14.4 percent, to $14.43.

Afterward, Verizon said it was going to review its options regarding its New Jersey investments.

"While the board's rate decision was a modest step in the right direction, it clearly did not go far enough in fixing a broken situation," Young said.

Plans for 2005 are still under review, Young said, "but we are hopeful that the situation will improve."

In a statement, BPU President Jeanne M. Fox said consumers benefit from competition rather than regulation if it leads to more choices, better services and lower prices. "The BPU will continue to make decisions that give consumers choice, something they have not had in the past," she said.

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(c) 2004, Asbury Park Press, N.J. Distributed by Knight Ridder/Tribune Business News.

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