Verizon Wholesale Seeks Own Identity

By Khali Henderson

This fall, Verizon Wholesale Markets began its first trade press tour to deliver the simple message that it is a distinct entity from its retail parent, Verizon Communications Inc., and that it is committed to supporting its wholesale customers, which include mobile operators, PTTs, ISPs and even cablecos, CLECs and, soon, next-gen service providers.

David Small, senior vice president of marketing and sales, is candid about Verizon Wholesales motives. People tend to think of Verizon as Verizon, and we are very much trying to position the wholesale entity as a component of Verizon and a contributor to Verizon, but dedicated to the success of other service providers in our market area, he says.

Small says Verizon Wholesale, which employs 4,400 employees in the United States, accounts for a little more than $9 billion of Verizons $71.3 billion revenue reported at the end of 2004. About two-thirds of the revenue is from access products while the remainder is from local services like the former UNE-P product now called Advantage.

He also admits to the challenge of overcoming a long-earned reputation of being a reactive underlying provider. I think that one could fairly argue that in the early days of wholesale at Verizon, people could point and say you are out there with the primary goal of getting the 271 approval, he says, referring to a provision in the Telecommunications Act of 1996 that required Verizon and the other Bells to open their local networks as part of the requirements to attain long-distance authority.

Later, he says, the question internally became whether to have a wholesale entity facilitating competition in the retail market. We wholeheartedly agree that we should. Thats what we are all about, he says. We are trying to make our customers successful, getting out of the regulatory regime and truly into a market-based environment. We have, in many respects done that. We still have some work to do, but we have made great strides and want to continue to do that. All across Verizon, we are very committed to the wholesale segment.

Small is quick to point to recent awards earned by Verizon Wholesale. One, issued by ATLANTIC-ACM in April, lauded the carriers carrier for network quality based on surveys from wholesale customers. Another is the Empire State Gold Award for providing excellent service to wholesale customers from the state of New York.

While Verizons $7 billion capital budget has a lot to do with the high scores the carrier has achieved on network performance; what Verizon Wholesale is doing now is moving away from the take it or leave it product sale, Small says.

The wholesale entity is out there to make CLECs successful. It may not sound like a sincere message, but frankly its an extremely sincere message. That is what our role is in the Wholesale Group, says Small.

Verizon Wholesale has commercial agreements with more than 120 providers for its commercial dial tone platform, Advantage, which now represents more than 90 percent of its former UNE-P lines.

The company also is planning some enhancements to the Advantage platform. DSL is expected to be an add-on option as early as this month. We also are looking extensively at some other features and functionalities that would apply to a dial tone type line. Things like voice mail, inside wire from a maintenance perspective and a few others that I am not at liberty to share just yet, Small says.

The DSL only will be available as part of the bundle. Small says that company has not decided yet how it will approach selling DSL as a standalone product to ISPs now that the regulatory requirement was lifted by the FCC in its Aug. 5 ruling.

As reported previously, Verizon Wholesale confirmed that it is in discussions to wholesale its FiOS network, but no agreements have been hatched. Content, however, is another matter, says Mark Marchand, director of media relations for Verizon. He notes those products likely will not be available for resale even if a company were reselling Verizons video network. Other new products available include the summer additions of higher speed services, such as OC192 pointto- point SONET and 10-gigabit Ethernet over SONET. In early 2006, Verizon Wholesale is planning trials of some new services, such as managed IP transport and a real-time OSS for provisioning of bandwidth-on-demand services for wholesale customers.

Peter Karoczkai, vice president of marketing for CLEC Eureka/InfoHighway, which operates in Verizon territory and buys UNEs, EELs and special access as well as dark-fiber and high-cap services from the Bell as a last resort, is skeptical. The headline is terrific, he says, but I want to read the fine print.

Karoczkai is no stranger to the challenges facing Verizon Wholesale. He is formerly vice president of marketing and product management for Bell Atlantics wholesale division, the predecessor to Verizon Wholesale. He launched local resale services in 1995, and led the development of numerous wholesale product initiatives, including ADSL, unbundled extended loop, interconnection, interoffice facilities and LNP. It takes years to become an aggressive wholesaler. I am sure their efforts are genuine. On the other hand, many of their offerings are halfhearted.

In particular, he says the voice mail offering is only available on lines that dont hunt, so its not useful for serving business customers, which comprise Eureka/InfoHighways base. People on the wholesale side are well-intended, he says, but the retail side chimes in and renders it not effective or worthwhile for me to sell it.

He says Verizons and other large carriers mistakes are to assume CLECs like Eureka/InfoHighway wont buy it somewhere else or build it themselves. From Verizons perspective, I am small potatoes, but when there are dozens of us, it adds up, he says.