Verizon Communications (pronounced /v?'ra?z?n/ v?-RY-z?n), is an American broadband and telecommunications company, the largest U.S. wireless communications service provider as of September 2014, and a corporate component of the Dow Jones Industrial Average. The company is based at 1095 Avenue of the Americas in Midtown Manhattan, New York City, but is incorporated in Delaware.
What eventually became Verizon was founded as Bell Atlantic, which was one of the seven Baby Bells that were formed after AT&T Corporation was forced to relinquish its control of the Bell System by order of the Justice Department of the United States. Bell Atlantic came into existence in 1984 with a footprint from New Jersey to Virginia, with each area having a separate operating company (consisting of New Jersey Bell, Bell of Pennsylvania, Diamond State Telephone, and C&P Telephone).
As part of the rebranding that the Baby Bells took in the mid-1990s, all of the operating companies assumed the Bell Atlantic name. In 1997, Bell Atlantic expanded into New York and the New England states by merging with fellow Baby Bell NYNEX. In addition, Bell Atlantic moved their headquarters from Philadelphia into the old NYNEX headquarters and rebranded the entire company as Bell Atlantic.
In 2000 Bell Atlantic merged with GTE, which operated telecommunications companies across most of the rest of the country that was not already in Bell Atlantic's footprint. Bell Atlantic, the surviving company, changed its name to "Verizon", a portmanteau of veritas (Latin for "truth") and horizon.
As of 2016, Verizon is one of three companies that had their roots in the former Baby Bells. The other two, like Verizon, exist as a result of mergers among fellow former Baby Bell members. One, SBC Communications, bought out its former parent AT&T Corporation and assumed the AT&T name. The other, CenturyLink, was formed initially in 2011 by the acquisition of Qwest (formerly named US West).
History
Bell Atlantic (1983-2000)
Bell Atlantic Corporation was created as one of the original Regional Bell Operating Companies (RBOCs) in 1984, during the breakup of the Bell System. Bell Atlantic's original roster of operating companies included:
- The Bell Telephone Company of Pennsylvania
- New Jersey Bell
- Diamond State Telephone
- C&P Telephone (itself made of four subsidiaries)
Bell Atlantic originally operated in the states of New Jersey, Pennsylvania, Delaware, Maryland, West Virginia, and Virginia, as well as Washington, DC.
In 1994, Bell Atlantic became the first RBOC to entirely drop the original names of its original operating companies.
In 1996, CEO and Chairman Raymond W. Smith orchestrated Bell Atlantic's merger with NYNEX. When it merged, it moved its corporate headquarters from Philadelphia to New York City. NYNEX was consolidated into this name by 1997.
Formation (2000-2002)
Verizon Communications formed in June 2000 when the Federal Communications Commission approved a US$64.7 billion merger of telephone companies Bell Atlantic and GTE, nearly two years after the deal was proposed in July 1998. The approval came with 25 stipulations to preserve competition between local phone carriers, including investing in new markets and broadband technologies. The new venture was headed by co-CEOs Charles Lee, formerly the CEO of GTE, and Bell Atlantic CEO Ivan Seidenberg.
Upon its inception, Verizon became the largest local telephone company in the United States, operating 63 million telephone lines in 40 states. The company also inherited 25 million mobile phone customers. Additionally, Verizon offered internet services and long-distance calling in New York, before expanding long-distance operations to other states.
The name Verizon derives from the combination of the words veritas, Latin for truth, and horizon. The name was chosen from 8,500 candidates and the company spent $300 million on marketing the new brand.
Two months before the FCC gave final approval on the formation of Verizon Communications, Bell Atlantic formed Verizon Wireless in a joint venture with the British telecommunications company Vodafone in April 2000. The companies established Verizon Wireless as its own business operated by Bell Atlantic, which owned 55% of the venture. Vodafone retained 45% of the company. The deal was valued at approximately $70 billion and created a mobile carrier with 23 million customers. Verizon Wireless merged Bell Atlantic's wireless network, Vodafone's AirTouch and PrimeCo holdings, and the wireless division of GTE. Due to its size, Verizon Wireless was able to offer national coverage at competitive rates, giving it an advantage over regional providers typical of the time.
During its first operational year, Verizon Wireless released Mobile Web, an Internet service that allowed customers to access partner sites such as E*Trade, ABC News, ESPN, Amazon.com, Ticketmaster and MSN, as well as the "New Every Two" program, which gave customers a free phone with every two-year service contract. In another partnership with MSN in 2002, Verizon Wireless launched the mobile content service "VZW with MSN" and a phone that utilized the Microsoft Windows operating system.
In August 2000, approximately 85,000 Verizon workers went on an 18-day labor strike after their union contracts expired. The strike affected quarterly revenues, resulting in Verizon Wireless' postponement of the company's IPO (the IPO was ultimately cancelled in 2003, because the company no longer needed to raise revenue for Verizon Wireless due to increased profits ), and created a backlog of repairs. In August 2002, Verizon began offering local, long-distance, and mobile calling, as well as Internet service, in a bundle. It was initially only available to customers in New York and Massachusetts.
2003-2005
In June 2003, Verizon Wireless backed an FCC-issued portability requirement that permitted consumers to take their phone numbers with them across carriers. The company gained 1.5 million new subscribers the following quarter, partially due to the rule change. The following year, in April 2004, the Dow Jones Industrial Average added Verizon Communications to its stock market index. Verizon replaced telecom competitor AT&T, which had been a part of the index since the Great Depression.
On December 22, 2004, mail servers at Verizon.net were configured not to accept connections from Europe, by default, in an attempt to reduce spam email that was originating from the region. Individual domains would only be unblocked upon request.
Verizon launched its FiOS Internet service, which transmits data over fiber optic cables in Keller, Texas. The company launched FiOS TV in September 2005, also in Keller, Texas. Twenty percent of qualified homes signed up by the end of the year. By January 2006, FiOS offered over 350 channels in eight states, including 20 high-definition television channels as well as video on demand.
MCI (WorldCom) acquisition
Verizon began negotiations to purchase long distance carrier MCI in 2005. MCI accepted the company's initial $6.75 billion offer in February 2005, but then received a higher offer from Qwest Communications. Verizon increased its bid to $7.6 billion (or $23.50 a share), which MCI accepted on March 29, 2005. The acquisition gave the company access to MCI's one million corporate clients and international holdings, expanding Verizon's presence into global markets. As a result, Verizon Business was established as a new division to serve the company's business and government customers. The FCC approved deal on November 5, 2005, valuing it at $8.5 billion. Verizon's 2006 revenues rose by as much as 20% following the purchase.
2006-2010
In May 2006, USA Today reported that Verizon, as well as AT&T and BellSouth, had given the National Security Agency landline phone records following the September 11 attacks. That same month, a $50 billion lawsuit was filed by two lawyers on behalf of all Verizon subscribers for privacy violations and to prevent the company from releasing additional records without consent or warrant. Protesters staged the National Day of Out(R)age due in part to the controversy. Verizon stated in 2007 that the company fulfilled only "lawful demands" for information, though also acknowledged surrendering customer information to government agencies without court orders or warrants 720 times between 2005 and 2007.
Verizon won a lawsuit against Vonage in March 2007 for patent infringement. The three patents named were filed by Verizon in 1997 and relate to the conversion of IP addresses into phone numbers, a key technology of Vonage's business. The company was awarded US$58 million in damages and future royalties. Vonage later lost an appeal and was ordered to pay Verizon $120 million.
In May 2007, Verizon acquired Cybertrust, a privately held provider of global information security services. This purchase represented Verizon's intent to offer security solutions to its global enterprise customers.
Verizon Wireless reversed a controversial decision in September 2007 to deny NARAL Pro-Choice America a short code through which the organization could text consumers who had signed up for messaging from the group. They had initially refused the group access to a code by reserving the right to block "controversial or unsavory" messages.
In November 2007, Verizon opened its networks for the first time to third party apps and devices, a decision that allowed it to participate in the FCC's 2008 700 MHz auction of "open access" spectrum. During that auction, the company bid $9.4 billion and won the bulk of national and local licenses for airwaves reaching approximately 469 million people. Verizon utilized the increased spectrum for its 4G service.
Verizon Wireless purchased wireless carrier Alltel for $28.1 billion in June 2008. The acquisition included 13 million customers, which allowed Verizon Wireless to surpass AT&T in number of customers and reach new markets in rural areas.
In October 2010, Verizon Wireless paid $77.8 million in refunds and FCC penalties for overcharging 15 million customers for data services. The company stated the overcharges were accidental and only amounted to a few dollars per customer.
On February 4, 2010, 4chan started receiving reports from Verizon Wireless customers that they were having difficulties accessing the site's image boards. 4chan administrators found that only traffic on port 80 to the boards.4chan.org domain was affected, leading them to believe that the block was intentional. On February 7, 2010, Verizon Wireless confirmed that 4chan.org was "explicitly blocked" after Verizon's security and external experts detected sweep attacks coming from an IP address associated with the 4chan network. Traffic was restored several days later.
In August 2010, the chairmen of Verizon and Google agreed that Network Neutrality should be defined and limited.
In December 2010 Verizon continued censoring its network by blocking access to some IRC servers related to Wikileaks "Operation Payback".
Verizon introduced its 4G LTE network in 38 markets in December 2010, as well as in airports in seven additional cities. The company planned on a three-year continuous expansion of the 4G service.
Selling wirelines (2005-2010 & 2015)
Between 2005-2010, Verizon divested wireline operations in several states in order to focus on its wireless, FiOS internet and FiOS TV businesses. It sold 700,000 lines in Hawaii in 2005, and spun off lines in Maine, New Hampshire and Vermont in January 2007 that were then purchased by FairPoint Communications for $2.72 billion. In 2009, the company spun off wirelines in 14 states into a company that then merged with Frontier Communications in a deal valued at $8.6 billion. Verizon also shed its telephone directory business in 2006.
In May 2009, Verizon announced that it was selling off its wireline operations in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia, and Wisconsin. And in 2015, they announced they were selling its wireline operations in Texas, Florida, and California to Frontier.
2011-present
On January 27, 2011, Verizon acquired Terremark, an information technology services company for $1.4 billion.
In February 2011, Verizon Wireless began selling the iPhone 4, which eventually became the most successful launch on the network, outselling all previous phones in the company's history.
Ivan Seidenberg stepped down as Verizon's CEO on August 1, 2011. Lowell McAdam succeeded him.
In December 2011, the non-partisan organization Public Campaign criticized Verizon for its tax avoidance procedures after it spent $52.34 million on lobbying while collecting $951 million in tax rebates between 2008 and 2010 and making a profit of $32.5 billion. The same report also criticized Verizon for increasing executive pay by 167% in 2010 for its top five executives while laying off 21,308 workers between 2008 and 2010. However, in its Form 10-K filed with the SEC on February 24, 2012, Verizon reported having paid more than $11.1 billion in taxes (including income, employment and property taxes) from 2009 to 2011. In addition, the company reported in the 10-K that most of the drop in employment since 2008 was due to a voluntary retirement offer.
In June 2012, as part of its strategy to expand into new growth areas in its wireless business, Verizon purchased Hughes Telematics--a company that produces wireless features for automobiles--for $612 million.
Also in June 2012, Verizon's E-911 service failed in the aftermath of the June 2012 derecho storm in several northern Virginia suburbs of Washington, D.C., with some problems lasting several days. The FCC conducted an investigation and in January 2013 released a report detailing the problems that led to the failure. Verizon reported that it had already addressed or was addressing a number of the issues related to the FCC report, including the causes of generator failures, conducting audits of backup systems and making its monitoring systems less centralized, although the FCC indicated that Verizon still needed to make additional improvements.
In July 2012, the FCC required Verizon to stop charging users an added fee for using 4G smartphones and tablets as Wi-fi hotspots (known as "tethering"). Verizon had been charging its customers, even those with "unlimited" plans, $20 per month for tethering. As part of the settlement, Verizon made a voluntary payment of $1.25 million to the U.S. Treasury.
In August 2012, the Department of Justice approved Verizon's purchase of Advanced Wireless Services (AWS) spectrum from a consortium of cable companies, including Comcast, Time Warner Cable and Bright House Networks, for $3.9 billion. Verizon began expanding its LTE network utilizing these extra airwaves in October 2013.
On June 5, 2013, The Guardian reported it had obtained an order by the Federal Bureau of Investigation (FBI) and approved by the United States Foreign Intelligence Surveillance Court that required Verizon to provide the NSA with telephone metadata for all calls originating in the U.S. Verizon Wireless was not part of the NSA data collection for wireless accounts due to foreign ownership issues. (see also MAINWAY article)
In September 2013, Verizon purchased the 45% stake in Verizon Wireless owned by Vodafone for $130 billion. The deal closed on February 21, 2014, becoming the third largest corporate deal ever signed, giving Verizon Communications sole ownership of Verizon Wireless.
On January 14, 2014, the DC Circuit Court of Appeals struck down the FCC's net neutrality rules after Verizon filed suit against them in January 2010.
On January 22, 2014 the Wall Street Journal reported that Verizon Communications Inc. received more than 1,000 requests for information about its subscribers on national security grounds via National Security Letters. In total, Verizon received 321,545 requests from federal, state and local law enforcement for U.S. customer information.
On January 5, 2015, Verizon was said to have approached AOL about a possible takeover or venture.
On May 12, 2015, Verizon announced they would purchase AOL at $50 per share, for a deal valued around $4.4 billion.
In May 2015, Verizon agreed to pay $90 million "to settle federal and state investigations into allegations mobile customers were improperly billed for premium text messages."
In August 2015, Verizon launched its car doctor product named Hum.
Fios Internet Business Video
Lines of business
Verizon Communications' operations are divided into four business units: wireless services, residential and small business services, enterprise services, and partner programs.
Wireless
Verizon Wireless provides mobile phone, text message, and data services for phones, tablets, and computers, as well as wireless hotspot devices.
As of September 2013, Verizon's 4G LTE network covered over 303 million people, and as of September 2014, Verizon had 125.3 million wireless subscribers. In a September 2013 survey conducted by J.D. Power and Associates, Verizon Wireless was rated as having the highest network quality amongst national providers across all six geographic regions of the U.S., marking the first time any provider has come in first in all regions since the study switched to a regional format in 2004.
Also in September 2013, it was announced that Verizon would buy the remaining stake that Vodafone owned in Verizon Wireless, which had been a joint venture between the two companies, for $130 billion. Upon the closing of the deal in the first quarter of 2014, it was the third largest corporate deal ever signed.
As of January 2015, Verizon's 4G LTE network covers 90% of all Americans.
Residential and small business
Verizon provides wireline phone service, Internet access, and television to residences and small businesses, via either copper wire or fiber optic cable.
Verizon's FiOS service, launched in 2005, provides Internet, television, and phone service using fiber optic cable instead of copper wire. FiOS cable passes near 18 million homes, of which 14.6 million are completely ready for service; the other 3.4 million homes would require some additional wiring to support FiOS. As of September 2013, Verizon had a total of 5.9 million FiOS Internet subscribers and 5.2 million FiOS TV customers, with FiOS accounting for 75% of Verizon's revenues from fixed-line consumer retail. In September 2013, Verizon announced that FiOS TV subscribers would be able to watch some television channels live on their mobile devices.
In areas where Verizon has installed FiOS service, the copper wires, which are more expensive to maintain, are removed. This prevents a customer who has switched to FiOS from switching back to services provided by copper wires, such as DSL service.
Operating companies
Verizon inherited multiple incumbent local exchange carriers that remain part of the company's operations, these are:
- Verizon Delaware
- Verizon Maryland
- Verizon New England
- Verizon New Jersey
- Verizon New York
- Verizon Pennsylvania
- Verizon Virginia
- Verizon Washington, DC
- GTE Southwest+
- Verizon California+
- Verizon Florida+
- Verizon North
- Verizon South
+Sale of these operating companies to Frontier Communications is pending, expected to be complete 1Q 2016
Enterprise
Verizon Enterprise Solutions, known as Verizon Business from 2006 to 2011, provides services for wholesale, corporate, and government clients. Enterprise Solutions provides a cloud-based platform to deliver IT, security, mobility, and collaboration solutions to customers. It supports service in 75 countries, and has a global IP network that reaches more than 150 countries, with 99 percent of Fortune 500 companies using Verizon Enterprise Solutions.
In October 2013, Verizon announced Verizon Cloud, a platform as a service offering that allows for the fast deployment of virtual machines for customers, as well as control of the configuration of those virtual machines.
Verizon Partner Program
On February 28, 2013, Verizon launched the Verizon Partner Program (VPP), which offers medium-sized preferred access to its businesses' cloud, mobility, communications, and networking solutions. There are four levels to VPP membership: Platinum, Gold, Silver, and Member. Each offers a different level of benefits and requirements. VPP also offers three business models: Agent, Resale, and Sell With. Each represents a different relationship with Verizon. Some Partner Program companies include General Datatech, SOVA (a Platinum member in the program), and OEM Data Delivery.
Marketing campaigns
Since its inception, Verizon Communications has run several marketing campaigns, including:
Can you hear me now?
The "Can you hear me now?" campaign, which was created for the newly formed Verizon Wireless, started running in 2001 and featured actor Paul Marcarelli in the role of "Test Man," a character based on a Verizon network tester who travels the country asking "Can you hear me now?" The campaign, originally conceived by the agency Bozell in New York, ran from early 2001 to September 2010. Data from the technology tracking firm The Yankee Group shows that, in the early years of the campaign, net customers grew 10% to 32.5 million in 2002 and 15% more to 37.5 million in 2003. In addition, customer turnover dropped to 1.8% in 2001, down from 2.5% in 2000.
There's a map for that
The "There's a map for that" campaign was launched in late 2009. It was designed as a parody of AT&T's "There's an app for that" adverts. The ads depicted a side-by-side comparison of Verizon and AT&T network coverage maps. AT&T filed a lawsuit in Atlanta federal court early in November 2009, claiming that the coverage maps being used in the ads were misleading. The suit was dropped later that month in conjunction with Verizon dropping a similar suit against AT&T.
That's not cool
In 2009, Verizon joined with the Ad Council, in partnership with the Family Violence Prevention Fund and the Office on Violence Against Women, to create the "That's not cool" campaign. This public service advertising campaign was designed to help teens recognize and prevent digital dating abuse. Verizon ran the ads on its Wireless' Mobile Web service, Verizon FiOS Internet, and Verizon FiOS TV.
Powerful Answers
In January 2013, Verizon launched the "Powerful Answers" campaign designed by agency McGarryBowen. The campaign centered around a contest in which $10 million in prizes was offered to individuals for finding solutions to "the world's biggest challenges" by making use of Verizon's cloud, broadband, and wireless networks. Winners of the inaugural competition were announced by Verizon Chairman and CEO Lowell McAdam at the 2014 Consumer Electronics Show. Israel-based TinyTap won the education category, Smart Vision Labs of Newport, Rhode Island won in the healthcare category, and Mosaic Inc. of Oakland, California won in the sustainability category.
Inspire Her Mind
Verizon launched its "Inspire Her Mind" ad in June 2014, in partnership with MAKERS. The ad, created by the agency AKQA, sought to encourage girls' interest in science, technology, engineering and math. It aimed to address findings from the National Science Foundation, whose research showed that 66 percent of fourth-grade girls said they like science and math, yet only 18 percent of college students in engineering and math are women. The spot was directed by Pam Thomas of Community Films and voiced by Girls Who Code founder Reshma Saujani.
Flipside Stories (#NeverSettle)
Verizon launched its Flipside Stories ad campaign in February 2015 featuring the #NeverSettle hashtag. The ads show dramatized "testimonials" of people with and without Verizon Wireless or Verizon FiOS services.
Get Out of the Past, Get FiOS
Similar to the Flipside Stories ad campaign, Verizon's mid-2015 ad campaign features dramatized "testimonials" of people without FiOS. The ads end with a voiceover of someone saying "Get Out of the Past, Get FiOS".
Corporate responsibility
The Verizon Foundation is the philanthropic arm of Verizon Communications, donating about $70 million per year to nonprofit organizations, with a focus on education, domestic violence prevention, and energy management. Verizon's educational initiatives have focused on STEM fields, including: a national competition for students to develop mobile application concepts; the Verizon Innovative Learning Schools program, providing professional development for teachers in underserved areas; and providing students with wireless hardware and services as part of President Obama's ConnectED program. The company also runs HopeLine, which has provided mobile phones to approximately 180,000 victims of domestic violence, and a program that offers grants for victims of domestic violence to start or grow home-based businesses. As part of an initiative to reduce the company's carbon intensity metrics by 50 percent by 2020, Verizon announced planned investment in solar panels and natural gas fuel cells at its facilities. The increased capacity would make Verizon the leading solar power producer among U.S. communications companies.
Sponsorships and venues
Verizon is the title sponsor of several large performance and sports venues as well as a sponsor of several major sporting organizations.
National Hockey League
In January 2007 Verizon secured exclusive marketing and promotional rights with the National Hockey League. The deal was extended for another three years in 2012 and included new provisions for the league to provide exclusive content through Verizon's GameCenter app.
IndyCar Series
In 2010 Verizon chose to opt out of a two-year-old NASCAR team sponsorship with Penske Racing in order to pursue an expanded presence with the IndyCar Series. In March 2014 Verizon signed a multiyear deal making them the title sponsor of the IndyCar Series, now called the Verizon IndyCar Series.
National Football League
In late 2010 Verizon Communications joined with Vodafone Group in a joint partnership to replace Sprint as the official wireless telecommunications partner of the National Football League. The four-year deal was estimated at $720 million. In June 2013, Verizon announced a four-year extension with the NFL in a deal reportedly valued at $1 billion. The new agreement gives Verizon the right to stream every NFL regular-season and playoff game.
Venues
Verizon is the title sponsor for a number of sporting and entertainment arenas including the Verizon Center in Washington, DC; the Verizon Wireless Arena in Manchester, New Hampshire; the Verizon Arena in North Little Rock, Arkansas; and the Verizon Wireless Center in Mankato, Minnesota. Verizon is also currently the title sponsor of five entertainment amphitheaters in locations throughout the United States, four being individually referred to as the "Verizon Wireless Amphitheatre": in Irvine, California; Maryland Heights, Missouri; Selma, Texas; and Alpharetta, Georgia. The fifth is the Verizon Theatre at Grand Prairie, Texas.
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