Introduction
Verizon, or what is formally known as Verizon Communications Inc., is an American wired and wireless telecommunications company. One good way to measure this company’s current performance is by checking its stock market performance. Verizon is one of the components of the Dow Jones Industrial Average. It is a stock market index, composed of 30 publicly owned companies, to which the Verizon Communications Inc. belongs. The company, whose former name is Bell Atlantic, was founded in October 1983. It became a large cross-listed public company after a series of mergers with and acquisitions of other smaller, private and publicly owned telecommunication companies.
Now, the company reigns as one of the largest, if not the largest, telecommunications company in the U.S. in terms of the coverage of services and service lines. The objective of this paper is to track and discuss critical management actions that Verizon Communications Inc. undertook in the last ten years.
Recent Developments in the Company within the Past 10 Years
One important thing to know about Verizon Communications Inc. is that it is a product of a series of mergers and acquisitions of smaller telecommunication companies. Its predecessor, being the world famous American Telephone and Telegraph Company (AT&T), merged with and acquired several other companies, leading to the formation of the current day Verizon Communications Inc. Because of this given fact, we will focus more on the merger and acquisition history of the company, and how doing so benefited them and contributed to their steadfast growth.
One of the most critical management decisions that Verizon Communications Inc. made in the past ten years was their acquisition of MCI World Com. MCI was one of the pioneers in long-distance telephone services in the U.S. It was one of the main reasons behind the legal and regulatory changes that led to the end of AT&T’s monopoly in the telecommunications services industry. In the first quarter of 2005, Verizon Communications Inc. acquired MCI Inc. and all of its assets.
It turns out that their acquisition of MCI was detrimental to their current success because of two main reasons. Firstly, a fellow telecommunications company Baby Bell SBC Communications acquired AT&T, Verizon’s former parent company, turning it into a considerably larger company than Verizon in terms of service coverage and diversity. Perhaps, during that time, the management became intimidated with the presence of a larger competitor. In reality, they could have easily been overshadowed by their new competitor if not for their acquisition of MCI Inc.
Secondly; their acquisition of MCI Inc. increased the coverage of their services by adding the current client base of MCI to theirs. The acquisition also led to the acquisition of long-haul lines, which gave it the ability to forfeit usage fees to long haul carriers (e.g. the former AT&T and MCI companies). The usage fees are usually charged whenever customers use Verizon’s services outside its designated footprint. So before the acquisition, Verizon would have to pay companies like MCI and AT&T a certain fee for every customer that calls another customer located outside the company’s footprint. Verizon would not have to pay for any usage fees after the acquisition because everything that was owned by MCI is now Verizon’s.
Traditional telecommunications companies use copper wires as the main medium of data transportation. While we have nothing against the use of copper wires in the telecommunications industry even during this time wherein everyone wants everything to be fast-paced, especially when it comes to internet speed and reliability, we cannot deny the fact that it is an aging technology. Despite the use of copper fiber’s long and good track history, upgrades that, unfortunately, will replace copper wires, are already available. Fiber optic wires are now being used by telecommunications companies. The Verizon management has already decided to replace all existing copper lines with fiber optics, especially in areas covered by their FIOS service. The automatic upgrade to fiber optic-based telecommunication lines was permanent and customers were no longer given the option to go back to the traditional copper line-based service. Most, if not all customers were able to experience the supposedly improved service after the automatic upgrade. This is one of the major management decisions they made in the past 10 years and actually greatly contributed to the company’s strong presence in the telecommunications industry terms of consumer awareness and satisfaction.
Verizon FIOS
Verizon Communications Inc. used to offer mainly wired telecommunications services to their clients. However, due to the recent spike in popularity of wireless telecommunication technologies, they were forced to divert their focus and attention to such. Now, Verizon Communications Inc. offers fixed line voice, data, and television services that operate via a fiber optic telecommunications network which recently replaced the traditional copper wire network. The company offers these three plans via their Verizon FIOS service which is basically a bundled voice, data, and television service. As of now, Verizon Communications Inc. is ranked second among the largest fixed line services providers in the U.S. The company also offers wireless voice, data, and television services and is actually focusing a larger amount of their resources in improving wireless network coverage, signal strength, and overall network quality because of the recent trend shifts towards this area of telecommunications.
Conclusion
Verizon Communications Inc. deserves to be where it is now. They have employed the right mixture of a risk-taker and a practical attitude in majority of the management decisions they made in the past ten years. Although it is an undeniable fact that they indeed committed few errors, it is valid to say that the current overall outcome is still in their favor. With their numerous acquisitions and mergers, and the significant improvements in the quality of their services, they shall continue to be one of the dominating forces in the telecommunication industry in the U.S.
References
Murawski, J. (2010). Frontier Phone Switch Starts. News and Observer.
United States Department of Justice. (2009). Complaint for Judgment and Injunctive Relief: MCI Communications Corporation and BT Forty Eight Company. US DOJ.
