BOISE, ID — In a speech today at the National Governors Association, Verizon Wireless President and CEO Denny Strigl outlined three government-imposed pressures on the wireless industry that threaten its great potential as the fastest-growing, most competitive segment of telecommunications. Strigl said that in less than two decades, wireless companies have built a highly-innovative, robustly competitive industry from the ground up into one of the drivers of the U.S. economy.
As evidence, he noted that half the US population now use wireless; there are six national and hundreds of other providers; prices have dropped dramatically; service is available and similarly priced in both urban and rural America; the industry invests significantly in jobs, training and infrastructure; that infrastructure is transforming to its next generation; and wireless has redefined emergency communications.
The government pressures cited by Strigl include:
- The growing problem of excessive, discriminatory taxation.
- Burdensome regulation at the federal and state levels.
- The $16 billion spectrum liability hanging over the industry.
Wireless prices are down 32 percent in the last four years alone. Yet, transaction taxes imposed on wireless consumers add nearly 18 percent to the average consumer's monthly bill nationwide, compared with only 6 percent for customers of most other businesses, including the computer industry. At the same time, higher taxes are imposed on the purchase of network equipment and network property, as compared with most other businesses.
"These excessive taxes hurt customers, either directly in the pocketbook or indirectly, by diverting companies from investing in more network coverage and new products," Strigl said.
Strigl urged officials to treat wireless like any other competitive business and not tax wireless carriers like a monopoly.
More than a decade ago, Congress decreed de-regulation was the best national public policy for wireless service. However, Strigl noted, there is a growing trend of regulatory interference that threatens to undermine the benefits of that policy to the American public, including mandates on how to provide service, what services are to be offered, and to whom.
Carriers have the strongest incentive of all to treat customers well - customer loyalty in a competitive, free marketplace, Strigl said. He urged regulators to eliminate mandates that are not truly in the public's interest and start from the vantage point that no regulation is warranted. Then, exceptions can be made only for those rules with a demonstrated, clear need that outweighs costs on consumers and carriers.
The wireless industry's ability to expand service to consumers requires ongoing investment, which takes significant capital. However, Strigl noted that the current falling stock prices, the collapse of dot-coms and accounting scandals have unfairly spilled into the wireless sector - seriously impairing its access to capital. He noted that America's companies need to restore investor confidence by making sure their own houses are in order.
He said, "one specific action the government could take immediately to ease the capital crisis would be to free wireless companies from a $16 billion commitment for spectrum that the government auctioned off, but now cannot deliver to us." Strigl called for speedy resolution to the NextWave auction debacle, which has frozen up assets for more than 18 months, and which threatens a capital crunch for the industry.
In closing, Strigl said he believes if industry and regulators tackle these issues, this still growing industry will duplicate in the next two decades the extraordinary innovation of its first two decades.
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Verizon Wireless is the nation's leading provider of wireless communications. The company has the largest nationwide wireless voice and data network and 30 million customers. Headquartered in Bedminster, NJ, Verizon Wireless is a joint venture of Verizon Communications (NYSE:VZ) and Vodafone (NYSE and LSE: VOD). Find more information on the Web at http://www.verizonwireless.com.
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