Verizon Hints at Further Spending Cuts

On one side, Verizon and fellow Bells SBC (SBC), BellSouth (BLS) and Qwest (Q) control the largest portion of the nation's equipment spending and thereby hold the greatest influence on the fortunes of the battered networking industry.

On the other side, regulators must carry out the pro-competitive dictates of the Telecommunications Act of 1996, while not caving in to commercial interests to the detriment of consumers.

Last year Verizon cut its capital spending by some 30% from 2001 levels, to $12 billion. The company said last month that it expects to keep its budget at that level. But Seidenberg made it clear in his presentation Monday that the spending plan "may contract" if the company doesn't get more favorable regulations.

Seidenberg has a reason to weigh more cuts. In his presentation, he put the company's best foot forward, saying half of the company's revenue -- in wireless and residential phone service -- grew 6% last year. But from another perspective, since Verizon had no growth last year, it could be just as easy to conclude that the other half of the business isn't so robust.

Investors in equipment suppliers will no doubt be watching the Bells as they prepare their appeals and play their spending-cut card.

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