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Verizon CEO touts trickle-down benefits

Ivan Seidenberg tells a packed house at Supercomm that Verizon's success in deploying new services will benefit the entire industry.

CHICAGO--Verizon Communication's rising tide will raise plenty of other boats, according to Ivan Seidenberg, chairman and CEO of Verizon Communications.

During the opening keynote address at the Supercomm tradeshow here on Tuesday, Seidenberg said his company's ambitious plans to roll out fiber connections to home networks, its plan to provide a new television service, and an effort to deliver everything from e-mail to movie trailers on mobile phones will help drive growth for the rest of the industry. But he cautioned that regulators and government officials need to make sure the atmosphere is right for innovation to continue.

"Innovation is expanding the pie for us," he said. "But it's also expanding it for everyone else in the industry. And it's important to keep our foot on the accelerator."

Verizon has been pursuing an aggressive long-term strategy that includes a multibillion-dollar project to extend fiber into homes and businesses and upgrades to its wireless network. Verizon hopes to reach 3 million homes with new fiber by the end of this year.

Seidenberg cautioned that, without support from state and federal regulators, innovation could be stifled.

In addition to offering high-speed data and telephone services, Verizon will use the new fiber network to deliver television service to customers.

It already has secured content deals with several providers, including NBC and A&E Television, and it plans to launch the television service later this year.

The company has also been upgrading its wireless network to handle so-called 3G technology that will allow users to access data content such as video over a wireless connection on a variety of mobile devices, including cell phones and PDAs.

While the next big wave of broadband investment isn't expected to rival the growth in the telecommunications industry of the late 1990s, it is expected to create $50 billion in consumer benefits and add another million jobs to the U.S. economy over the next several years, Seidenberg said.

As an example of how Verizon has directly impacted the growth of companies further down the food chain, he highlighted the Marlborough, Mass.-based startup Fiber Optic Network Solutions (FONS), which makes equipment to connect homes to Verizon's fiber network. Since working with Verizon, FONs has seen a 300 percent growth in sales, he said. And the company has increased its work force by 40 percent.

But Seidenberg cautioned that, without support from state and federal regulators, innovation could be stifled. He reiterated the company's stance on obtaining local television franchises. For the past several months, Verizon has been lobbying state and federal lawmakers to streamline the process for obtaining local television franchise agreements.

Currently, Verizon is required to negotiate agreements with every local government where it plans to offer television service. While obtaining agreements is not impossible, Verizon has complained that it is far too time-consuming and will delay the company's efforts to bring competition to many markets throughout the country.

Last month, the company suffered a major blow in Texas when the state legislature there failed to act on a bill that would have created a statewide franchise, rather than a franchise in each community. Undeterred by this setback, Verizon is moving forward with lobbying efforts and at the same time is working to secure the franchise agreements it needs. The local phone giant so far has applied for more than 200 franchises around the country and received six. But the task ahead is daunting. New Jersey alone has more than 500 local franchises, and Verizon would have to apply for every one of them in order to cover the entire state.

In fact, the Texas lawmakers' failure to change the franchise rules threatens to severely hamper all the Bells' efforts to offer TV. It can take months, sometimes up to a year, to negotiate a single franchise, Bellsouth regulatory Vice President Hershell Abbott said in an interview. "It could take 40 years to get all the franchises, if my math is right."

Seidenberg said Verizon is not trying to dodge the rules and fees that are charged to support local services in many of these communities. The issue is more about timing.

"We would be willing to pay the franchise fees. That's not the issue," he told reporters in a question-and-answer session after the keynote. "We are willing to pay our fair share...When you are the second, third or even the fourth entrant in a market, I find it strange that we are required to file for a franchise as if we were the first in the market."

Siedenberg also emphatically denied recent cable-industry charges that Verizon is looking to offer its television service only to rich communities, forgoing deployments in poorer neighborhoods.

"Those are bogus claims," he said. "When cable goes into telephony, they don't serve all customers in the market. We would be happy to commit that we won't redline. What we're looking for is parity of entry of two industries who are becoming insurgents in the other industry."

CNET News.com's Ben Charny contributed to this report.