Verizon restructuring cost claim questioned

(Telephony) Pennsylvanians for Local Competition announced yesterday its finding that Verizon could complete an ordered structural separation plan for only $41 million--not the $1 billion price tag the RBOC had claimed.

The consumer-based organization cited a study by an AT&T-hired economist, Lee Selwyn, as the basis of its claim that Verizon’s $1 billion restructuring assertion was little more than a deceptive scare tactic to avoid separating into wholesale and retail units.

“Verizon has gone beyond stretching the truth recently to get out of regulatory requirements for opening its monopoly to competition,” said the pro-competition group in a statement. “Pennsylvanians may not know much about structural separation, but they do know that Verizon still maintains a monopoly in this state.”

Verizon responded yesterday with a harshly worded statement expressing its position on the cost study, which the company said was conducted by AT&T’s “perennial hired gun.”

“It’s ludicrous that AT&T is playing such desperate games with the PUC expected to decide this issue in two weeks,” said a spokesman at Verizon. “AT&T, after one management pratfall after another, wants the PUC to bail it out by hampering its competitors and protecting it from competition. The commission should deep-six this desperate ploy.”

AT&T was one of the most outspoken proponents of a separation order that it said would open local telephone markets to competition. A state administrative law judge upheld the order recently, and the case goes before the Pennsylvania Public Utility Commission later this month.

Given the competitive ramifications that could spring from structural separation, AT&T and Verizon clearly have incentive to put forth biased restructuring estimates, but both figures likely exaggerate the truth, said Courtney Quinn, an analyst with The Yankee Group.

“AT&T is certainly not a neutral source,” Quinn said “But, intuitively, I would say the number is somewhere in between.”