Verizon Western Region President Tim McCallion has been spending a lot of time in Sacramento lately, keeping close tabs on a pending Digital Infrastructure and Video Competition Act of 2006 that would allow the telecommunications company to more easily branch out into providing cable television services within the state. McCallion describes the legislation as important for both the company and consumers because of the expansion of cable television choice it allows. And more choice would result in a lowering of cable prices. The bill would also replace the process of cable companies getting a franchise from individual cities with a state-issued license yet retains cities receiving fees up to 5 percent of gross revenues earned in the locality. A native of Pennsylvania, McCallion started his career 30 years ago with GTE, which merged with Bell Atlantic in 2000 to form Verizon. McCallion is based in Thousand Oaks. Question: Tell us about what your duties are. Answer: I have responsibilities for Verizon’s operations in 17 western states. I reside in California and that is by far our largest operation in the western states. On a day to day basis in addition to my duties as a senior manager, I oversee our regulatory activities, our governmental affairs activities, our community relations, the Verizon Foundation and any matters of corporate interest in those 17 western states. Q: Sounds like they keep you busy. A: They do. I have been in this position with some minor adjustments since June 2000 when Verizon was formed. Q: Where were you before that? A: This is my sixth location with GTE or Verizon but I’ve had the pleasure of living in California since 1987. I’ve had a number of jobs of increasing responsibility in California. Prior to that I was with GTE in Hawaii and spent time at corporate headquarters in Connecticut. I also worked for various GTE entities in Indiana and Ohio. I started in Pennsylvania, which is where I’m from originally. Q: Assembly Bill 2987 seems to be the big issue the company is interested in right now. A: AB 2987 is very important for Verizon’s future and important for consumers. Q: And why is that? A: What the legislation which was authored by Assembly Speaker Fabio Nunez and Assemblyman Lloyd Levine will do is promote video competition by allowing consumers to have a real choice for their cable TV service. Cable rates have risen 86 percent in the past 10 years according to a study by Bank of America. Clearly market discipline would help consumers. I can trust that to the cell phone business where prices have dropped significantly in recent times. Another example in the industry is the price of long distance has fallen to the point where for $20 extra a month consumers can get unlimited nationwide long distance from a number of carriers. Consumers have a lot to gain if this legislation passes successfully. Q: What have you been doing from your side to ensure that? A: Number one we’ve been entering the video marketplace through our fiOS TV product. We are bringing choice to consumers even while we are promoting the passage of this legislation. We have put fiber in the ground, passing in excess of 200,000 homes in California. We have been negotiating with cities to get video franchises. We’ve had limited success but where we have had success we’ve brought an excellent video product to market. Q: Bringing more choice is what will help lower cable rates? A: Yes. There’s only a small percentage of the country that has wired video competition. According to a Federal Communications Commission report, less than 4 percent consumers have a wired video competitor. But that same report shows in those markets where there is a wired competitor, the consumer rates are lower. Q: So what is the status of that bill right now? A: The bill has gotten through the (Utilities and Commerce) committee in the assembly chaired by Mr. Levine. The vote was 10 people voting in favor and one member not voting at all. So it was an overwhelming endorsement of the bill. The speaker has been working on amendments to the bill in certain areas to address issues that were brought up by members. Then the process will move over to the state Senate. There will in June be a hearing before the policy committee followed by the process of going to the appropriations committee, and then going to the Senate floor. All that would need to take place by the time the Legislature recesses for the year at the end of August. Q: Other than the legislation what other issues are of importance that you are keeping your eye on? A: We always keep an eye on legislation that impacts business and our ability to do business in California. We look out for general business issues also. We certainly want an environment in California where not only we can keep our jobs and be successful but also where other businesses, our customes, can have good jobs. We like to work through the California Chamber of Commerce and organizations such as the Valley Industry and Commerce Association and the L.A. Chamber of Commerce to work with the business community on that type of legislation. But there is no more piece of legislation more important to Verizon’s customers and employees and the company itself than AB 2987. Q: Can you talk more about the Verizon Foundation and what exactly it does. A: The Verizon Foundation is the philanthropic giving arm of Verizon. I’m very proud to say since the formation of Verizon we’ve given back over $4 million a year to the communities Verizon serves. We plan to significantly increase that amount in 2006. Very significant amounts of that giving have been targeted toward minority communities where we see the greatest need existing. We specifically targeted the areas of literacy because we think the ability to read and write, the ability to be technologically literate so one can operate e-mail, cell phones and other devices are critical in today’s society for success. Literacy, good reading skills are important to be able to read the directions on a prescription they get from their doctor. In addition to that we are big supporters of aiding victims of domestic violence. We think that’s a key problem in society and we try to make a difference in that area. Q: Having been in the business for 30 years what have been some of the big changes you’ve seen in that time. A: The changes I’ve seen in 30 years have been dramatic. When I started there was no such thing for the general population as e-mail or the World Wide Web. Cell phones were virtually non-existent. I remember early in my career scratchy car phones. There have been dramatic changes. In addition, long distance was something that was very expensive. The world has really changed. The option consumers had for telephones were you could have a colored princess phone or you could buy the shell of a Mickey Mouse telephone. Now telephones come in every shape and color with a variety of features including answering machines and caller ID and can be purchased at warehouse stores, drug stores, department stores. One of the biggest changes we’ve had is that we had very little competition in the market place and very little communication alternatives 30 years ago or even 20 years ago. MCI came into the business and started competition for long distance. Today you have in most major markets five to seven wireless players. Some people use wireless phones sometimes as their only phone. Q: When Verizon was formed was it strictly just in the phone business? A: Verizon has a couple major business units. There is the local telephone business, and there also is the Verizon Wireless business which is a partnership with Vodaphone. We also have a business called Verizon Information Services, which publishes telephone directories and has superpages.com, the top place to go for directory listings on your computer. Recently we formed Verizon Business, a premier service provider to enterprise customers which would include businesses and government, such as state, federal and local agencies. Q: You would agree that a phone has become more than just a device to talk to people with? A: Who would have thought as recently as five or 10 years ago, you would be using a telephone to take pictures and send those pictures to the Internet or to someone else’s telephone. Or that you can sit with these small devices and text message on a real-time basis with other people. We are just seeing the beginning of the changes that are going on. Where voice was the service that drove the industry for many years, voice is just becoming an application on what in essence is a broadband network that can do voice, but it can do Internet services, data file transfers and video services. Q: This is an exciting time to be in the business with all the changes and new uses. A: It is and points out why AB 2987 is needed. The cable laws in place today come from the era I was talking about before technology changed and there was one cable provider and one telephone provider. I think we’ve seen how consumers have benefited from all of the technological choices and competitive choices hey have in telecomm and communications marketplace. AB2987 will allow us to bring that type of choice in the cable TV marketplace.
Dialing Into New Territory