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Verizon Faces Plenty of Competition for $1 Billion New York City Contract

Posted on: Monday, 17 May 2004, 06:00 CDT

May 18--AT&T, Sprint and more than 100 other telecom providers are competing to wrestle a five-year contract worth up to $1 billion away from Verizon to manage all city agencies' phone and Internet operations.

The first-of-its kind telecom contest covers phone and Internet connections for all New York city offices including the police and fire departments and schools, the Daily News has learned. A separate bidding process will be launched later for 911 services.

After being prompted by the city controller's office, the Department of Information Technology & Telecommunications asked for bids in March.

The original deadline was May 5 but has been extended until June 14 to allow further time for the multitude of bidders to satisfy the city's requirements.

Verizon currently holds the contract, which expires on June 30. City telecom commissioner Gino Menchini said he expects more than 100 bids from different companies, who could fight for a piece of the overall contract.

Because of the drawn-out bidding process, Menchini said he expects the Verizon contract to remain in effect until Jan. 1, 2005, but that the rates for the next seven months will be negotiated lower. The rates have already fallen since last January.

"We are looking for the best value at the best price," Menchini said.

It's the first time the city has solicited a competitive telecom bid because until now, these services were considered a utility like Con Edison.

"The system that's been in place was not built to integrate all the different agencies and departments. If you look at some of the problems, after the '93 bombing of the World Trade Center, Sept. 11, the blackout of last summer and the 911 emergency failure this year, it was certainly time for a fair bidding process," AT&T spokesman Jeff Roberts said.

On Mar. 26, 911 service for most of Brooklyn, Queens and Staten Island went down at 7:30 p.m. for two hours after a Verizon worker accidentally shut down some of the 911 lines.

The bids for the rest of the telecom system had already been solicited before the 911 breakdown.

"We submitted a proposal," a Verizon spokesman said. "It's a very competitive industry and we provide the best products and services."

And a Sprint spokeswoman said, "We're preparing a bid for this contract.

Experts said Verizon should have a home-field advantage.

"Verizon's the only one who has a local network throughout New York state, so MCI or AT&T would have to purchase access to the network in order to provide that service. It seems unlikely to me that Verizon would lose a contract like that," said Drake Johnstone, telecom analyst at Davenport & Co.

City commissioner Menchini said that ownership of the local networks wouldn't help Verizon's chances of scoring the contract.

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(c) 2004, Daily News, New York. Distributed by Knight Ridder/Tribune Business News.

T, FON,

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