Verizon

Verizon Communications announced it has completed the $1.8 billion purchase of XO Communications’ fiber-optic network business. Verizon’s purchase and integration of XO’s fiber network will help the company extend its suite of high-quality network services to its enterprise and wholesale customers. In addition, it will help the company in its plans to densify its cellular network, and to deploy new 5G technologies.

Integration of all XO operations and facilities is expected to commence immediately. The company expects to achieve significant synergies by incorporating XO’s fiber assets as part of its current network operations. Verizon anticipates the transaction will deliver in excess of $1.5 billion in operating and expense savings in net present value. In addition to the fiber transaction, Verizon has entered into an agreement to lease certain wireless spectrum from former XO affiliate NextLink Wireless. Verizon has an option, exercisable under certain circumstances, to buy NextLink.

As 2016 comes to a close, this is a time of both reflection and looking ahead. At Verizon, we could not be prouder of the work our dedicated teams have accomplished over the past 12 months to improve our customers’ experience. From introducing new services like LTE Advanced on our next gen network, to providing more mobile content to our customers with go90, to expanding Verizon’s position in exciting new technologies such as 5G, the Internet of Things, telematics and smart communities; it’s been an exciting year.

The next Congress and incoming Administration have an opportunity to modernize the nation’s antiquated communications laws in ways that will better protect consumers, foster innovation and encourage market competition across the Internet ecosystem. Today’s rigid laws and regulations built around legacy services must give way to new, more flexible approaches that are more aligned to the realities of the converged digital marketplace. Rather than relying on outdated technology-specific regulations, we need a modernized legal framework with broad parameters that is tailored to promote competition and protect consumers in today’s ever-changing environment.

Verizon Communications announced it has entered into a definitive agreement to sell 24 data center sites to Equinix, Inc in a transaction valued at approximately $3.6 billion. Equinix will own and manage 24 Verizon customer-facing data sites, consisting of 29 data center buildings, in the United States and Latin America. The transaction is expected to close by mid-2017. This transaction aligns with Verizon’s strategy to focus resources in areas that will help drive digital transformation for enterprise customers, while providing world-class service. The sale does not affect Verizon’s managed hosting and cloud offerings, or its data center services delivered from 27 sites in Europe, Asia-Pacific and Canada.

Earlier this summer, Verizon hosted a mobile technology training session for local senior citizens in Washington DC. There, I saw first-hand the promise that mobile technology holds for seniors. From staying connected with their families, to accessing community resources, senior citizens represent a significant (and growing) portion of the “mobile-first” generation.

At a more recent class held in September at the Knollwood Military Retirement Residence in Northwest DC, I spoke with several participants to understand how, in their own words, their smartphones and tablets are enriching their lives. Dr. Jerry Earll, a retired physician who practiced internal medicine and geriatrics, spoke about the ways mobile technology has changed medicine for both patients and practitioners. “Technology offers real-time updates and helps to expand differential diagnoses for a particular group of symptoms. You can determine the side effects of pharmaceuticals instantaneously. It also empowers patients to take preventive measures to protect their health.”

In the context of network interconnection, communications policymakers have the benefit of a real-world experiment with two very different approaches to interconnection, which have existed in parallel for decades.

One model is the proscriptive regulatory approach that governs traditional voice communications. The other is the IP interconnection model in which commercial negotiations have created a flexible, adaptable network ecosystem that has seen unprecedented innovation and investment. This voluntary, commercial interconnection model has been nothing short of a tremendous success.

In the IP interconnection model, each service provider negotiates an agreement with several other providers, the terms of which vary according to the networks’ needs. Because there are multiple paths (aside from direct interconnection) available for any one provider to reach another, there are no compulsory agreements and each party is assumed to receive equitable value from an agreement to connect. IP interconnection has allowed for innovation and flexibility in response to changes in end users’ demands.

Recently, Level 3 decided to call attention to their congested links into Verizon’s network. Unfortunately, they are now the one “trying to get a free ride on someone else’s network” and failing to “keep the interest of their customers paramount.”

Fortunately, Verizon and Netflix have found a way to avoid the congestion problems that Level 3 is creating by its refusal to find “alternative commercial terms.” We are working diligently on directly connecting Netflix content servers into Verizon’s network so that we both can keep the interests of our mutual customers paramount.

Rather than open Internet, the Federal Communications Commission’s Open Internet Rulemaking proceeding is about whether the FCC should continue applying the light-touch policy regime that has been in place for broadband Internet access service since the Clinton Administration.

Further regulation of broadband is not needed at this time and would threaten the healthy dynamics fueling the growth and continued improvement of the Internet and the many services it enables.

“Reclassifying” broadband Internet access service as a Title II common carriage telecommunications service, as some have suggested, would be a radical departure that would not achieve its proponents’ stated goals and would only endanger the entire Internet ecosystem. The price and service regulation inherent in Title II have no place in today’s fast-paced and competitive Internet marketplace, and the threats posed by this approach would not likely be confined to broadband providers, but would spread inevitably to other Internet sectors.

Companies like Verizon have pushed hard for policymakers to identify new spectrum to meet consumer needs. Bringing new spectrum to market will help the wireless industry increase broadband speeds, which will fuel innovation.

Verizon continues to support auctioning spectrum for flexible, exclusive use. Verizon is encouraging new research into and testing of different ways to allow commercial and government users to have shared access to spectrum when it cannot be cleared. The Federal Communications Commission is exploring these approaches too.

A good example is its proceeding on the 3.5 GHz band. The government currently operates military radar in the 3.5 GHz band.

These operations cannot easily be moved to different frequencies. Building on recommendations by President Obama’s Council of Advisors on Science and Technology (PCAST), the FCC is proposing making this 3.5 GHz band available for commercial use on a shared basis. This spectrum could then be used by the wireless industry to increase network capacity in high-demand areas like stadiums, college campuses, or airports.

After receiving the letter from a customer in Los Angeles asking why he was not getting a good experience watching Netflix on his 75 Mbps FiOS connection, claiming Verizon was “throttling” Netflix traffic, our network operations team studied the network connection for this customer for the week preceding the date that he emailed us.

They measured the utilization -- or the percentage of total capacity used -- at every link in the Verizon network -- from the customer to the edge of our network, where we receive Netflix traffic -- to determine where, if at all, congestion was occurring.

This review confirmed again what I’ve explained before: there was no congestion anywhere within the Verizon network. There was, however, congestion at the interconnection link to the edge of our network (the border router) used by the transit providers chosen by Netflix to deliver video traffic to Verizon’s network.

While the links chosen by Netflix were congested (congestion occurs when use approaches or reaches 100% capacity during peak usage periods), the links from other transit providers (carrying non-Netflix traffic) to Verizon’s network did not experience congestion and were performing fine. The maximum amount of capacity used (or peak utilization) over the links between these other networks and Verizon’s network ranged from 10% to 80% (with an average peak utilization of 44%).

One might wonder why Netflix and its transit providers were the only ones that ran into congestion issues. What it boils down to is this: these other transit and content providers took steps to ensure that there was adequate capacity for their traffic to enter our network.

Verizon Wireless has continued its long-standing commitment to offer its customers a superior network experience, and a series of metro and airport studies, issued by RootMetrics in the first half of 2014, lends further support to that claim.

In independent testing conducted by RootMetrics as part of its bi-annual RootScore Reports for metro markets in the United States, Verizon Wireless ranked first or tied for first in 115 of 125 RootMetrics metro reports in overall network performance, more than any other among the four national carriers.

Verizon Wireless also ranked first or tied for first in 30 of 50 RootMetrics Airport RootScore Reports, which measured data network performance in the first half of 2014: more wins than any other national wireless carrier tested. Verizon Wireless won or tied for data network performance in four of the top five largest airports in the United States -- Hartsfield-Jackson Atlanta International; Chicago O’Hare International; Los Angeles International; and Denver International.