By KEN BELSON
Published: March 20, 2006
Ivan Seidenberg is known in the telecommunications industry as a chief executive who makes all-or-nothing bets.
Earl Wilson/The New York Times
Ivan Seidenberg, Verizon's chief executive, is making big investments in technology in hopes of competing successfully with cable and satellite television providers.
Ivan Seidenberg Interview
High-Speed Race Since the late 1990's he has often been the man to beat, having created Verizon Communications — for a time America's largest phone company — by merging Nynex with Bell Atlantic and then buying GTE.
But in less than two years, Mr. Seidenberg has been eclipsed in ambition by Edward E. Whitacre Jr., the longtime Bell executive who engineered SBC Communications' takeover of AT&T last year. He now plans to buy BellSouth to create a $120 billion giant that looks increasingly like AT&T did before it was broken up in 1984.
Not that Mr. Seidenberg wants Verizon, with about $90 billion in sales, to be known as the biggest Bell. In fact, nothing annoys him more than when Verizon is called a Bell company — with all the connotations of a heavily regulated, slow-moving behemoth.
He is trying to shed all vestiges of Verizon's history as part of Ma Bell by making long bets on advanced wireless services and a top-of-the-line fiber network that will provide consumers with the fastest broadband connections available and television service to compete with the cable and satellite companies.
The AT&T-BellSouth deal "doesn't change anything for us," Mr. Seidenberg said, sitting in his lower Manhattan office that, in an odd coincidence, used to house the old New York Telephone Company, which hired him as a cable splicer's helper in 1966. Today, he said, Verizon "is all about trying to invest in technology so we can create new growth."
Turning Verizon into a fast-growing technology company represents a huge gamble for Mr. Seidenberg, 59, who will go down in corporate history either as the man who took a stodgy carrier into the next century or as someone who reached too far too fast. His success or failure at revamping Verizon will also provide some clues about how viable traditional phone companies will be in the years ahead.
Last year, Wall Street punished Verizon's stock because Mr. Seidenberg's plan to run fiber optic lines to as many as 16 million homes, or nearly half of Verizon's phone customers, by 2010 was considered reckless. The cost of installing fiber — now about $2,000 a home — was so high that investors sent Verizon's shares tumbling 26 percent last year. (The shares, however, have risen 13 percent this year, closing at $34.41 on Friday.)
The fiber network will undoubtedly offer premium service, but industry analysts remain deeply skeptical that millions of consumers will drop their cable or satellite services to sign up with Verizon. Still, in some towns in Texas where Verizon started selling television service last year, the reception has been positive; about one-third of the homes offered it signed up.
Either way, Mr. Seidenberg has proven his critics wrong before. About five years ago, when investors urged him to grab more wireless customers by cutting prices, as rival companies were doing, he chose instead to spend heavily to build a national cellular network that could be upgraded easily.
That strategy has paid off. Verizon Wireless is now signing up record numbers of new subscribers and they are the most loyal in the industry, largely because Verizon's network is considered better than others. While Cingular, which is owned by AT&T and BellSouth, has more subscribers, Verizon Wireless has more advanced multimedia services.
At the same time, Mr. Seidenberg plans over time to shed millions of local phone lines, withdrawing from a business that is being eroded by wireless phones and Internet-based phone services. He sold off 700,000 lines in Hawaii in 2005 and has said he is willing to sell Verizon local lines in other parts of the country where it does not do much business.
He also dismissed speculation that Verizon would acquire Qwest Communications, the smallest Bell company, which serves 14 Western states.
His top priority now is to buy the 45 percent of Verizon Wireless held by Vodafone; the stake is worth between $38 billion and $43 billion, according to analysts' estimates. Mr. Seidenberg said he was "a willing buyer" because Verizon would be able to book 100 percent of the profits from Verizon Wireless.
To make the deal, he said in an interview last week that Verizon was willing to buy Vodafone's shares in several chunks rather than in one piece, and even to revise the dividend it pays Vodafone during that process.
But he rejected talk that Verizon might pursue Alltel, the fifth-largest cellphone company, which uses the same technology as Verizon Wireless and covers many parts of the country that Verizon does not. Alltel, he said, would only make Verizon bigger, not necessarily faster-growing.