Verizon Communications (VZ)

Operations

Verizon Wireless provides wireless voice and data services across one of the most extensive wireless networks in the U.S. and has the largest third generation (3G) network of any U.S. wireless service provider. Verizon Wireless is the industry–leading wireless service provider in the U.S., in terms of operating income. With our acquisition of Alltel, Verizon Wireless became the largest wireless service provider in the United States, as measured by the total number of customers and revenues.

Operations

Mass Markets

Mass Markets operations provide local exchange (basic service and end-user access), long distance (including regional toll), broadband services (including high-speed Internet and FiOS Internet) and FiOS TV services to residential and small business subscribers. In partnership with DIRECTV, Verizon also offers satellite television service to enable double- and triple-play offers in non-FiOS markets. In 2009, Mass Markets revenues were $19,755 million, representing approximately 43% of Wireline’s aggregate revenues.

To differentiate the FiOS platform from its competitors, initiatives are under way to leverage this technology to deliver video applications, “widgets,” and interactivity with television, including access to social networking sites, and access to Internet video sites.

Global Enterprise

Global Enterprise offers voice, data and Internet communications services to medium and large business customers, multi-national corporations, and state and federal government customers. We offer communications and IT solutions, combining professional expertise with extensive IP networks to deliver communications, IT, information security and network solutions. We securely connect today's extended enterprises with their wide-spread customers, partners, suppliers and highly mobile employees—enabling them to increase productivity, efficiency and the speed at which they conduct business. In addition to traditional voice and data services, Global Enterprise offers managed and advanced products and solutions through our strategic services. This encompasses our focus areas of growth, including IP services and value-added solutions that make communications more secure, reliable and efficient. Global Enterprise also provides managed network services for customers that outsource all or portions of their communications and information processing operations and data services such as private IP, private line, frame relay and asynchronous transfer mode (ATM) services, both domestically and internationally. Over 80% of our frame relay customers have converted to private IP. Customers can now choose an on-demand consumption model for their infrastructure as a service rather than installing and configuring dedicated environments. In addition, Global Enterprise offers professional services in more than 30 countries around the world, supporting a range of solutions including network services, managing a move to IP-based unified communications and providing application performance support. In 2009, Global Enterprise revenues were $14,988 million, representing approximately 32% of Wireline’s aggregate revenues.

10

Table of Contents

Global Wholesale

Global Wholesale offers switched access and special access services primarily to long distance and other carriers who use our facilities to provide services to their customers. Switched access revenues are generated from fixed and usage-based charges paid by carriers for access to our local network, interexchange wholesale traffic sold in the United States, as well as internationally destined traffic that originates in the U.S. Special access revenues are generated from carriers that buy dedicated local exchange capacity to support their private networks. Global Wholesale services also include local wholesale revenues from unbundled network elements and interconnection revenues from competitive local exchange carriers and wireless carriers. A portion of Global Wholesale revenues is generated by a few large telecommunication companies, many of whom compete directly with us. In 2009, Global Wholesale revenues were $9,637 million, representing approximately 21% of Wireline’s aggregate revenues. Major initiatives that are under way, such as Fiber-to-the-cell sites, global data growth, an increased focus on high-yield international voice routes and the development of new segments, will further differentiate Global Wholesale from its competitors.

As consumer demand for smartphones and bandwidth intensive applications grow, wireless carriers are looking for network solutions to carry increasing volumes of traffic. Our service allows virtually unlimited capacity and enables wireless carriers to offer next generation applications to their customers. We have constructed more than 2,300 cell sites in 2009 with fiber Ethernet service across most carriers and we are on track to fully support Verizon Wireless’ LTE launch in 2010.

Global Wholesale will also continue to capitalize on voice traffic growth to high-yield destinations where we have volume (minutes) going to key destinations around the globe. New opportunities are being driven by machine-to-machine applications, managed services, and digital content which provide more value to our customers and represent the largest growth opportunities. Global Wholesale’s initiatives are focused on providing value and targeting these growth services.

Other

Other services include such services as local exchange and long distance services from former MCI mass market customers, operator services, pay phone, card services and supply sales, as well as dial around services including 10-10-987, 10-10-220, 1-800-COLLECT and prepaid cards. In 2009, Other revenues were $1,700 million, representing approximately 4% of Wireline’s aggregate revenues.

Operations

Verizon Wireless provides wireless voice and data services across one of the most extensive wireless networks in the U.S. We believe that Verizon Wireless is the industry–leading wireless service provider in the U.S., in terms of profitability, as measured by operating income. As a result of the Alltel acquisition on January 9, 2009, Verizon Wireless now serves more than 80 million customers, excluding markets to be divested, making it the largest wireless service provider in the U.S. in terms of the total number of customers.

Operations

Verizon Wireless provides wireless voice and data services across one of the most extensive wireless networks in the U.S. We believe that Verizon
Wireless is the industry–leading wireless service provider in the U.S., in terms of profitability, as measured by operating income. As a result of the Alltel acquisition on January 9, 2009, Verizon Wireless now serves more than
80 million customers, excluding markets to be divested, making it the largest wireless service provider in the U.S. in terms of the total number of customers.

SIZE="2">Competition

In the U.S., we compete primarily against three other national wireless service providers: AT&T, Sprint
Nextel and T-Mobile. In addition, in many markets we also compete with regional wireless service providers, such as US Cellular, Metro PCS and Leap Wireless and, prior to the Alltel acquisition, Alltel. We also compete with resellers that buy bulk
wholesale service from facilities–based wireless service providers for resale. We expect competition to intensify as a result of continuing increases in wireless market penetration levels, the development and deployment of new technologies, the
introduction of new products and services, new market entrants, the availability of additional spectrum, both licensed and unlicensed, and regulatory changes. Competition may also increase if smaller, stand-alone wireless service providers merge or
transfer licenses to larger, better capitalized and more experienced wireless service providers.

The wireless industry also faces
competition from other communications and technology companies seeking to capture customer revenue and brand dominance with respect to the provision of wireless products and services. For example, Apple Inc. is packaging software applications and
content with its handsets, and Google Inc. has developed and deployed an operating system and related applications for mobile devices.

3

Table of Contents

We believe that the following are the most important competitive factors in our industry:

Operations

Verizon Telecom

Verizon Telecom offers a broad array of telecommunications services, including voice, broadband and video, network access and other communications products and services to our residential, small business and wholesale customers. Verizon Telecom’s three sales channels operate across our telephone subsidiaries and focus on specific customer market areas.

Mass Markets offers broadband, video and voice services to residential and small business customers. Broadband services include high speed Internet and FiOS Internet services. Video services include FiOS TV and other television services. Voice services include local exchange services, including calling cards, 800/888 and operator services, as well as value-added services, such as voicemail, call waiting and caller identification. In 2008, Mass Markets revenues were $20,974 million, representing approximately 43.5% of Wireline’s aggregate revenues.

Wholesale markets our long distance and local exchange network facilities for resale to interexchange carriers, competitive local exchange carriers (CLECs), wireless carriers and Internet service providers (ISPs). Wholesale services include switched access products, high-capacity data products, unbundled network elements (UNEs) and interconnection services. In 2008, Wholesale revenues were approximately $7,571 million, representing approximately 15.7% of Wireline’s aggregate revenues.

Other service offerings include operator services, public (coin) telephone, as well as dial around services including 10-10-987, 10-10-220, 1-800-COLLECT and prepaid phone cards. In 2008, revenues from these other services were $1,367 million, representing approximately 2.8% of Wireline’s aggregate revenues.

Verizon Business

Verizon Business offers advanced voice, data, security, and wireless solutions to medium and large business and government customers worldwide. Verizon Business derives the majority of its revenue from U.S. operations. Verizon Business provides services to tens of thousands of enterprise businesses and government agencies, including 98% of the Fortune 500 companies. We have organized Verizon Business into three sales channels that focus on specific customers.

Enterprise Business offers voice, data and Internet communications services to medium and large business customers, including multi-national corporations and state and federal governments. Enterprise Business also provides value-added services intended to make communications more secure, reliable and efficient. Enterprise Business provides managed network services for customers that outsource all or portions of their communications and information processing operations and data services such as Private IP, Ethernet, Private Line, Frame Relay and ATM services, both domestically and internationally. Enterprise Business revenues in 2008 were $14,411 million, representing approximately 29.9% of Wireline’s aggregate revenues.

Wholesale offers domestic and international voice, data and IP services over its global network to carriers and service providers, some of whom may compete directly with Verizon at the retail level. These customers purchase services on a wholesale basis so that they can transport voice, data and IP traffic without having to build their own infrastructure. In 2008, total Wholesale revenue was $3,341 million, representing approximately 6.9% of Wireline’s aggregate revenues.

Our International and Other operations serve retail and wholesale customers, including enterprise businesses, government entities and telecommunications carriers outside of the U.S., primarily in Europe, the Middle East, Africa, the Asia Pacific region, Latin America and Canada. These operations provide telecommunications services, which include voice, data, Internet and managed network services. Our revenue from International and Other was $3,374 million, representing 7% of Wireline’s aggregate revenues in 2008.

9

Table of Contents

Operations

Operations

Operations

Verizon Wireless provides wireless voice and data services across one of the most extensive wireless networks in the United States. Verizon Wireless is the largest domestic wireless carrier in terms of total revenue and the most profitable, as measured by operating income. We believe, based on publicly available information, that Verizon Wireless has the largest base of retail customers, that is, customers who are directly served and managed by Verizon Wireless and who buy its branded services.