Verizon Communications Inc. won Federal Communications Commission approval yesterday to offer long-distance telephone service to customers in Maryland, West Virginia and the District of Columbia, paving the way for the nation's largest local phone company to have a piece of the long-distance market in every state except Alaska.
Verizon, a Bell spinoff that has 10.4 million long-distance customers in the 47 other states, is expected to aggressively compete with companies such as AT&T; Corp. and Sprint Corp. for what it describes as $2.2 billion worth of business in those three jurisdictions.
"What happened [yesterday] is a product of the fact that ... the regulators are essentially saying, 'OK, you have opened your local markets, now we'll let you get into long-distance in Maryland, Washington and West Virginia,'" said Thomas W. Hazlett, a former chief economist for the FCC and now a senior fellow at the Manhattan Institute for Policy Research, a think tank.
The expansion of Verizon's long-distance market into 49 states has been a long time coming, Hazlett said. The local Bells are entering long-distance markets with many advantages over their competitors, and local phone companies could be forced to match the regional Bells' plans and drive down the price of service, Hazlett said.
"In a sense, this is what we've been waiting for since the '96 Act," he said, referring to the Telecommunications Act of 1996, which opened up the telephone industry to competition.
The FCC had permitted Verizon to sell long-distance service in the 11 other states where the company needed such approval. Verizon provides cell phone and high-speed Internet service in many areas.
But the Telecommunications Act forbade the regional Bells from selling long distance in some states until the companies proved they allowed competitors into the local calling market.
In December, the Maryland Public Service Commission approved Verizon's bid to sell long-distance service in the state but also demanded the company meet 10 conditions that the PSC is monitoring.
Verizon must receive approval from the PSC on applications and tariffs to do business as a long-distance carrier in Maryland, but that is largely an administrative matter, said Don Laub, a telecommunications expert for the PSC.
"What happens after that is going to be very clear to any Maryland consumer who turns on the TV or opens up the paper," Laub said. "I'm sure that the marketing will begin forthwith."
Some of it might have already started. AT&T; said yesterday, before the FCC decision was released, that it would offer many of its Maryland and Washington customers 30 minutes of free long-distance for a month to thank them for their loyalty.
Verizon said yesterday that customers in all its markets would have more choices.
"Verizon will offer a menu of long-distance plans and packages that provide customers with great value," Maura Breen, senior vice president and chief marketing officer for Verizon's retail markets unit, said in the release. "We offer our customers the ease and convenience of having one supplier, one bill and easy-to-understand service packages. ... "
Verizon already shows commercials in Virginia that advertise many of its services bundled together, said Russell Frisby, former chairman of the Maryland Public Service Commission and current president of the Competitive Telecommunications Association in Washington, a trade group that represents competitive local and long-distance phone companies.
With yesterday's FCC approval, consumers are likely to see more ads and more competition, he said.
Frisby predicted that Verizon will grab 20 percent to 25 percent of the market share of long-distance calling in Maryland within a year.
Since breaking into long-distance markets, Verizon has been able to offer customers packages in which long-distance and regional calling are bundled with call management services, high-speed Internet connections and wireless services at discount prices. It also sells unlimited long distance for a set monthly price, the company said.
Now, Verizon will have a chance to significantly extend its customer base, said Laub of the PSC.
"It puts one more really big player in the marketplace," he said.