Bells Don’t Have Major Lobbying Agenda, Focusing on Growth, CFOs Say

“A geopolitical crisis” is really the only way Washington’s decision making process could knock Verizon off its 2007-2008 projections, CFO Doreen Tobin told Communications Daily. Lobbying issues are less critical than before, she said, since no single issue can make or break a carrier’s balance sheet in the current market. “Nothing even on the wireless side” -- where some regulatory issues still remain contentious -- really has the power to move the company’s basic growth rate or business strategy one way or the other, she told us. The high-profile net neutrality issue is unique, she said, in that cable companies and Bells are on the same side, “so that’s not going anywhere.”

Tobin was very positive on Verizon’s FiOS and wireless numbers in her presentation, noting that the “share dilution” from the expensive FiOS buildout peaks this quarter and next and then tails off as a much greater number of subscribers sign on. The company has officially moved away from wireline voice as part of its revenue strategy, focusing now on wireless, broadband, and enterprise markets. Tobin predicted wireline voice would constitute “less than 15%” of overall revenue within 2 years.

“We have no burning regulatory issues right now,” said Qwest CFO Oren Shaffer. Qwest is lucky to have 2 major Bells fighting in Washington for issues on which “we tend to agree much more often than not,” he said. Claiming to be unable to point to even one urgent regulatory or legislative white whale for Qwest, Shaffer said ultimately “we have our regulatory house in order.” The carrier is more excited about Moody’s recent upgrade of its credit rating “2 notches,” he said, with Standard & Poor’s “due to do something soon.” That will better position the company to pay out higher dividends, he said. Shaffer responded to a press question about a rumored acquisition of Sprint’s long- distance spinoff saying “we don’t comment on rumors… but I haven’t even heard that one.”

Meanwhile, AT&T remains “absolutely committed” to the BellSouth acquisition despite delays in the FCC and renewed attention from House Commerce Committee Democrats (CD Dec 6 p1). The deal has already received approval from 19 states and the DoJ, he said: An “industry forum,” not a single merger review, should be the avenue by which Democrats deal with questions about net neutrality and special access rules, he said. Lindner remained confident, however, that the merger would gain approval “soon.” He called “false” a recent claim in Forbes that the 2 sides were stuck on concessions about a timeline for net neutrality. Though “we have not had meaningful dialog” with FCC Comr. McDowell because he’s been recused, Lindner said the Commission would be able to reach consensus with or without McDowell, because “this is a good transaction for the industry” with no anticompetitive ramifications.

The Bells may be speaking “relative to where they've come from,” but they're far from unburdened with regulatory issues, said UBS analyst John Hodulik, who moderated most of the conference’s telecom events. Compared to network unbundling, “which was just such a disaster for so long” for the Bells, it may seem that none of the many policy issues the Bells still face is such a big deal, he said -- but he added those issues are indeed many: Special access “looks like its about to rear its ugly head”; the net neutrality “bulls are gathering,” especially now that Democrats control Congress; USF is a big deal for rural carriers, who want the Bells’ money. “These guys spend tens of millions of dollars a year on lobbying,” Hodulik said, and until they no longer do that, Washington issues will always affect their bottom line.