Verizon on a roll thanks to MCI merger


Verizon Business, a unit of Verizon Communications Inc. in Basking Ridge, N.J., on Jan. 6 passed the one year anniversary of its acquisition of MCI. Revenues for the unit are expected to exceed US$20 billion for all of 2006, and John Killian, president of Verizon Business, talked up what he called “a very good first year.” In an interview with Computerworld, Killian also weighed in on competition and the future of his business unit. Excerpts from that interview follow:

How has the integration of MCI gone?

Verizon Business has most of the former MCI operations, combined with Verizon business operations. We’ve just finished our first year of being in business and feel we had a very good first year under [our] belt. Integration has gone extremely well. One goal we had a year ago was to hit the enterprise market globally very quickly, achieving the switch to the Verizon business brand — and that has gone quite well. We’re outperforming and gaining share on the other business carriers. We’re very pleased with where we are at the end of the first year.

Speaking of competition, including foreign carriers, what makes Verizon special?

We’ve very well positioned with the best global network, and have a strong U.S. network, coming from MCI and previously UUNET, which has really positioned us all over the globe. We have 7,000 of our 34,000 workers overseas, which gives us unsurpassed capabilities. Most of our key customer base is truly global now. Major financial companies and manufacturers are looking for providers who offer service all over the globe. We didn’t shed any network assets. The people and the culture we had with MCI are being very quick and responsive. The former MCI retained a lot of share during the time they were potentially going bankrupt, and that’s a real testament to the kinds of skill sets that were brought in. And I think we’ve built on those. Also, we were a first mover to IP. Businesses are moving more and more to Internet Protocol for their networking and for VoIP for their networking, so that product set stands us out.

What’s your reaction to the big AT&T merger with BellSouth and especially the well-publicized concessions AT&T made to get FCC approval?

Candidly, we at Verizon Business don’t pay a lot of attention to it. We’ve very focused on our product portfolio. Those conditions are AT&T conditions and not ours, so there’s nothing constraining us at all. If anything, it might create some opportunity for us as far as speed in the marketplace because we’re not going through another integration right now while they are. We don’t spend much time worrying what BellSouth coming on board does. We’re more worried about serving our customers and getting their business.

Do you see a price war brewing, or possibly a different effect, with AT&T growing in size and increased competition from foreign carriers?

We’re focused on providing value to our customers. If anything, there’s more logic put back in the industry with mergers. There used be a whole host of people going after the business, and it’s really a smaller group now. We’re showing customers we can add value and reliability. For example, two weeks ago, we dealt with the implications of the Taiwan earthquake. We have an undersea cable infrastructure that we share and some of those were damaged. We came out of that very well, because we had multiple routes into Asia. We were able to help some major institutions [that] had service problems re-route their traffic, and with some, we won new business as part of that process. We also continue to invest in the new undersea cable into China and are partners with the three major Chinese carriers, which puts us in a different position.

What is top of mind for your big business customer?

Top of mind with all of them is reliability, making sure that the network serving them works. One example is [a major automaker] with plants all around the world. We’re their major data network supplier. I was recently out with them and they basically said to me, “If your network goes down, our plant goes down.” They were paying us a compliment that we’ve done such a good job, with really no problems at all. This is serving them in multiple countries around the globe.

First is reliability and second, we hear a lot about the need for help to run the day-to-day network, both voice and data. They want it to be up, they want it available, they want it modern. So, we’ve moved to where we’re managing the voice and data networks for about 3,500 companies. That’s growth of more than 20 percent per year, which is nice growth. CIOs in many cases really want to spend their time more on how to bring technology and capabilities of IT to help the business achieve its objectives, including a lot of focus around revenue growth and customer retention. So on network management, if they are convinced we’ll do a good job, they’ll let us do that.

Where does Verizon Business need to improve?

There’s a couple of areas. We’re going to invest in the business more this year than last for a couple of areas. One is continued new product development, particularly in capabilities around IP and managed services and IT services. The second one is that we need to get more efficient. We took two companies, the former MCI and the former Verizon. While we’re well ahead of our targets, there’s still a lot of opportunity to be more efficient. We are investing significant money in new systems. The former MCI had three or four operational support systems, the brains that allowed the business to operate. The reason for that is that they never integrated the UUNET, the MCI system and the WorldCom system. So we have a program called Single Stack to bring that down to one operational support system. It’s an ERP system, and it includes the system to process orders, so there’s opportunity to make it less people-intensive and more reliable. We have multiple billing systems. For the end-user customer, we do a pretty good job of doing summary statements and summary bills, but there are multiple underlying feeds. So, a great opportunity for Verizon Business is efficiency in the business.

Will you be laying off or hiring this year?

Our workforce will probably stay fairly constant with where it is right now. In the first year, with the merger, we brought the work force down 10 percent, so it’s more than 34,000 now for Verizon Business. We’ll be adding skill sets around areas of professional services, IT and managed services, so you’ll see a change in the mix of the workforce.


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