Verizon Communications Inc. (Verizon), incorporated in 1983, is a holding company. The Company is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. It operates in two primary segments: Verizon Wireless and Wireline. Verizon Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to consumer, business and government customers across the United States. Wireline’s communications products and services include voice, Internet access, broadband video and data, Internet protocol network services, network access, long distance and other services. The Company provides these products and services to consumers in the United States, as well as to carriers, businesses and government customers both in the United States and in over 150 other countries worldwide. In April 2011, Verizon acquired Terremark Worldwide, Inc. (Terremark). In August 2011, the Company acquired CloudSwitch. In March 2012, Verizon Wireless purchased the operating assets of Cellular One of Northeast Pennsylvania from United States Cellular Corporation. In July 2012, it acquired HUGHES Telematics, Inc.
Verizon’s Verizon Wireless segment, primarily consists of Cellco Partnership doing business as Verizon Wireless (Verizon Wireless), is a joint venture formed by the combination of the United States wireless operations and interests of Verizon and Vodafone Group Plc (Vodafone). Verizon owns a controlling 55% interest in Verizon Wireless, and Vodafone owns the remaining 45%. Verizon Wireless provides wireless voice and data services across one of the most extensive wireless networks in the United States and has third-generation (3G) and fourth-generation (4G) Long-Term Evolution technology (LTE) networks of any United States wireless service provider. As of December 31, 2011, Verizon Wireless had 92.2 million retail customers. As of January 19, 2012, Verizon had deployed 4G LTE in 195 markets covering more than 200 million people throughout the country.
The Company offers voice and data services on a postpaid and prepaid basis. During the year ended December 31, 2011, it began offering a range of 4G-enabled devices, including smartphones, tablets, netbooks, notebook computers and devices that provide a mobile wireless fidelity (Wi-Fi) connection that includes Jetpack devices. Verizon’s customers can access the Internet on all of its smartphones, as well as its basic phones that include hypertext markup language (HTML) Web-browsing capability. It offers usage-based data packages and data plans that allow customers, regardless of the device, to select the plan that matches their data usage patterns. This data pricing model offers customers more options for smartphones, basic phones, tablets and netbooks.
The Company’s mobile broadband service enables its customers to access the Internet at broadband speeds. The Company’s customers can access its Mobile Broadband service on netbooks, notebook computers and tablets that either have embedded 4G LTE or Evolution - Data Optimized (EV-DO) Mobile Broadband modules, or that are used in conjunction with separate Mobile Broadband devices that enable access to this service, such as smartphones, as well as universal serial bus (USB) modems and other dedicated devices that provide a mobile Wi-Fi connection. The Company’s messaging services enables its customers to send and receive text, picture and video messages. Verizon’s consumer-focused multimedia offerings provide its customers with access to applications providing music, video, gaming, news and other content.
Business-focused offerings include solutions for accessing the Internet and their corporate intranets and products that enable wireless e-mail across its diverse portfolio of wireless devices. Location-based services, which, among other things, can provide the Company’s customers with directions to their destinations and enable its business customers to locate, monitor and communicate with their mobile field workers. Global Data services allows its customers to access their e-mail on its Global Ready Phones while at hundreds of international destinations and to access the Internet at such destinations with laptops that are either Global Ready, tethered to a Global Ready Phone, or are used in conjunction with other Global Ready devices, such as certain USB data modems or Jetpacks.
Verizon offers a range of plans for voice services. In addition, many of its plans allow customers to place calls to, and receive calls from, certain phone numbers they designate that are not part of the Verizon Wireless network (including domestic landline numbers) without the call time counting against their minute allowance. Verizon also offers a range of international wireless voice services to its customers through roaming arrangements with wireless service providers outside of the United States. The Company provides data access and services to support telemetry-type applications, which are characterized by machine-to-machine (M2M) wireless connections. Verizon’s M2M services support devices used by a variety of vertical market segments, such as healthcare, manufacturing, utilities, distribution and consumer products. The Company provides data access and services to support telematics. Verizon supports telematics services for the automotive manufacturers, and it is a national provider of wireless service for OnStar, a subsidiary of General Motors Company.
Verizon offers several categories of wireless devices, including smartphones and basic phones, as well as tablets and other Internet access devices. The Company’s device line-up includes an array of smartphones that are enabled to utilize its 3G EV-DO (Revision A) or 4G LTE high-speed data services and have operating platforms, such as Google Android, Apple iOS, BlackBerry OS, and Windows Mobile. Some of Verizon’s basic phones are 3G EV-DO-enabled and have HTML-browsing capability. In addition, the Company offers a selection of basic phones that operate via its CDMA-1XRTT service. Verizon offers a range of 4G LTE and/or 3G EV-DO-enabled tablets from multiple manufacturers that run primarily on either the Apple iOS or Google Android operating systems. These tablets also permit its customers to access the Internet via a Wi-Fi connection. In addition, the Company offers devices that provide a mobile Wi-Fi 4G LTE and/or 3G EV-DO connection capable of connecting up to five Wi-Fi-enabled devices to the Internet at one time. Its customers can also access the Internet wirelessly at broadband speeds on their computers via data cards or through the use of certain laptop computers and netbooks with embedded 4G LTE and 3G EV-DO Mobile Broadband modules offered by original equipment manufacturers (OEMs).
Verizon purchases wireless devices and accessories from a number of manufacturers, with the majority of its purchases made from Apple, Motorola, Samsung, LG Electronics, RIM, Palm and PCD (through which it purchases Pantech and HTC devices and accessories). Most of its wireless device suppliers rely on Qualcomm Incorporated (Qualcomm) for manufacturing and supplying CDMA-1XRTT and EV-DO chipsets. Verizon also sells phones that include CDMA-1XRTT and EV-DO chipsets manufactured by VIA Telecom under license from Qualcomm. The LTE chipsets used in its 4G LTE-enabled devices are manufactured by various companies, each using its own 4G LTE chipset technology. In addition, there are a number of other components common to wireless phones provided by various electronic component manufacturers that it does not deal with directly.
The Company’s primary cell site equipment infrastructure vendors are Alcatel-Lucent, which provides more than half of our cell site equipment, and Motorola and Ericsson, which together provide nearly all of its remaining cell site equipment. It also relies upon Alcatel-Lucent, Motorola and Ericsson for its switching equipment. Alcatel-Lucent and Ericsson are Verizon’s primary network vendors for its LTE network deployments.
The Wireline segment provides customers with voice service, including long distance, broadband video and data, IP network services, network access and other services. It provides these products and services to consumers and small businesses in the United States, as well as to businesses and government customers and carriers both in the United States and in over 150 other countries worldwide. Verizon organizes its service and product offerings by the primary market focused by these offerings - mass markets, global enterprise, global wholesale and other. Mass Markets operations provide local exchange (basic service and end-user access) and long distance (including regional toll) voice services, broadband services (including high-speed Internet and FiOS Internet) and FiOS Video services to residential and small business subscribers.
Verizon offers video service over its fiber-optic network. As of December 31, 2011, FiOS Video is available to approximately 13 million homes across 12 states, as well as the District of Columbia. With Flex View, FiOS customers can watch content anytime, anywhere, on any device. Customers who subscribe to FiOS Video and Internet also have the ability to upload their photos, music and videos to their personal Flex View Library, which gives them access to this content via any data-capable device. Its HBO GO offering provides customers with unlimited access to HBO programming on any data-capable device. Verizon’s FiOS Video subscribers can also access Turner Broadcasting’s online programming directly on the TBS and TNT sites and through Verizon FiOS Video Online.
During 2011, Verizon introduced the Home Monitoring and Control Solution, which allows FiOS customers to use any data-capable device to remotely operate key functions of their home, such as setting and controlling lights, thermostats and appliances. In addition, customers have the ability to monitor their home via networked cameras. In October 2011, Verizon announced a partnership with Microsoft Corporation to offer FiOS Video and broadband customers who also subscribe to the Xbox LIVE Gold online gaming service. In February 2012, a new joint venture between Verizon and Coinstar, Inc. was announced. The Company offers high-speed Internet and FiOS broadband data products with varying downstream and upstream processing speeds.
Verizon offers voice services that include local exchange, regional, long distance, wire maintenance and voice messaging services, as well as voice over Internet protocol (VoIP) services, which use the Internet or private broadband networks to transmit voice communications. The Company also offers plans that include landline and wireless services with calling features and unlimited calling between a Verizon customer’s home phone and wireless handset, all on a single bill. Global Enterprise offers strategic services, including networking products and solutions, advanced communications services, and other core communications services to medium and large business customers, multinational corporations and state and federal government customers.
Strategic services consist of networking products and solutions, which are primarily private Internet Protocol (IP) services, and advanced communication services, which are primarily security, infrastructure and cloud services. Private IP services include its multiprotocol label switching (MPLS)-based solution. Verizon’s Private IP network allows customers to communicate over a private secure network in more than 120 countries. Other services primarily include Ethernet access and ring services. Ethernet Access services allow customers to connect network environments worldwide.
Infrastructure and Cloud Services include offerings for managed hosting services that provide enterprise and government customers with data center and network facilities, connectivity, security, architecture and support; data center collocation services that house and protect customers’ critical applications and systems, such as several facilities that offer extensive carrier neutral options; application management services that provide customers with monitoring and management of applications, and advanced enterprise-class cloud services that provide customers. Security services include security professional services; governance, risk and compliance; identity management, managed security, and other services.
Identity Management provides identity-based access management for customer data, applications, and systems across multiple IT environments. Other services primarily include Internet access. Other Services include core voice and data services, which consist of a portfolio of global solutions utilizing traditional telecommunications’ technology, such as conferencing and contact center solutions, as well as private line and data access networks, frame relay and Asynchronous Transfer Mode (ATM) services. Core services also include providing customer premise equipment, installation, maintenance and site services. Global Wholesale provides communications services, including data, voice and local dial tone and broadband services primarily to local, long distance and other carriers that use its facilities to provide services to their customers.
The Company’s data services include high-speed digital data offerings, such as Ethernet and Synchronous Optical Network, as well as core data circuits, such as DS1/DS3. In addition, data services include special access revenues that are generated from carriers that buy local exchange capacity to support their private networks. Global Wholesale offers a suite of services to support the expansion of 3G networks and the roll-out of 4G networks. Managed Services offers wholesale customers to outsource the management of their networks, security, remote access, and Web applications to Verizon. Security provides wholesale customers integrated solutions to help their enterprise end-users secure their networks and data.
Voice services provide switched access services that allow carriers to complete their end-user calls that originate or terminate within its territory. The Company offers a range of local dial tone and broadband services to local exchange carriers. In addition, it offers services, such as collocation, resale and unbundled network elements. Other services include such services as local exchange and long distance services derived from former MCI mass market customers, operator services, card services and supply sales, as well as dial around services, including 10-10-987, 10-10-220 and prepaid cards.
The Company competes with AT&T, Sprint Nextel Corporation and T-Mobile USA, US Cellular, Metro PCS, Leap Wireless, Microsoft Corporation, Google, Inc. (Google) and Apple, Inc. (Apple).