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October 15, 2002
CONTACT: David Fish
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Seidenberg: Bankruptcy No Shield From Competition
PFF Releases Transcript of CEO's Speech & Panel Discussion

WASHINGTON, D.C. - Are certain telecom companies hoping to use bankruptcy to gain an unfair competitive advantage? That is the specter raised by Ivan Seidenberg, CEO of Verizon Communications, at a recent event sponsored by The Progress & Freedom Foundation. The text of his speech, and comments by a panel of experts and the audience, are included in a transcript released by the Foundation.

“We are wary that the bankruptcy process may be used to return companies with discredited business models to the market with their liabilities forgiven, ready to fuel an irrational price spiral that will cause even more capital to drain from the telecom sector,” Seidenberg said. “Successful companies should not be forced to subsidize failed ones. You can count on Verizon to make this point as forcefully as we can in the months to come.”

Released as a paper, “Opportunity Knocking Now for Telecom Deregulation,” the transcript also contains the views of panel members Scott Cleland, Blair Levin and Bret Swanson. Randolph J. May, PFF senior fellow and director of communications policy studies, moderated the September 17 lunch. Some highlights of the discussion follow:

Cleland: “I will go so far as to call UNE-P fraudulent competition. It is pure regulatory arbitrage that creates no economic value whatsoever. It creates regulatory PR value and…destroys investment incentives. It sends incorrect pricing signals throughout the market and it’s essentially a reallocation regime.” Levin: “Here’s the structural problem: We are moving the revenues of the network from the high margin, low competition voice network, the original voice network, to the high competition, low margin wireless and data networks. That’s actually probably a good thing for the country. It’s certainly a good thing for consumers. But it creates an enormous problem in the way we think about things.” Swanson: “We’re not going to come back without technology. That’s where our productivity growth comes from…Wherever deregulation happens, even if the technologies are inferior, you have growth and energy. Wherever you have regulation, in our case over the last six or seven years, you have sclerosis.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation