Verizon Communications said Thursday it lost $1.5 billion in the fourth quarter of 2003, attributing it to the costs of an employee buyout in which the company shed 21,000 jobs.

The job reduction cost Verizon, the nation’s largest phone service provider, $3.1 billion.

The cuts were an effort to close the door on a lackluster period and focus on moving forward. Verizon, like SBC Communications, faces stiff competition from smaller phone companies that offer local and long-distance service. In addition, the two phone giants have to deal with a steady decline in wire lines and customers who rely more on cellphones and e-mail.

The buyouts were designed «to put a couple of bad years behind them,» said David Yedwab, a telecommunications analyst with Eastern Management Group, a New Jersey research firm. «They want to put themselves in a position to grow in 2004.»

Verizon’s loss amounted to 53 cents per share of common stock for the period that ended Dec. 31. In the same period in 2002, the company posted a profit of $2.29 billion, or 83 cents per share.

Excluding the buyout, Verizon earned $1.6 billion, or 58 cents a share, for the quarter.

Yedwab said some of Verizon’s and SBC’s land-line losses could be attributed to people who are ridding themselves of a second phone line, a throwback to the dial-up days.

SBC is able to counter the shift to wireless with Cingular, its venture with BellSouth. Verizon can do the same with Verizon Wireless.

That division leads its industry with 35 million subscribers, and the company said Thursday that it continues to grow. For the fourth quarter, Verizon Wireless recorded 1.5 million new subscribers. Its revenue grew 14.6 percent to $6 billion.

The company also stretched into new markets to offset its losses. Verizon throughout the year aggressively pursued long-distance markets and beefed up its digital subscriber line base.

The company added 736,000 long-distance lines in the fourth quarter, closing the year with 16.6 million, and 203,000 DSL customers, ending with 2.3 million.

Verizon aims to continue its growth in new markets. Last month, the company said it will upgrade its infrastructure with voice-over-Internet technology. It also will concentrate on attracting more business customers with an upgrade in its wireless data network.

Speaking at its analyst conference Thursday, Ivan Seldenberg, president and chief executive of Verizon, said talk of a buyout of AT&T Wireless by another wireless operator will not slow the company’s push for growth.

«There is no question that the wireless segment has too many players,» Seidenberg said. «Any transaction that makes the industry structure slightly more rational is a good thing.»

Robert Rosenberg, an analyst with Insight Corp., a New Jersey-based telecom research company, said Verizon is pushing hard to be prepared for a surge in competition from cable.

Verizon «has not seen the real competition; the wind will hit them soon,» Rosenberg said. «Very shortly, cable will be going after local phone service and long-distance. Initially it might be a shock.»

To counter some of the «bundling» that cable will offer, with local, long-distance, cable content and possibly broadband all in one, Verizon is slated to roll out satellite television service during the first quarter of 2004 through an agreement with DirecTV. The company will also offer a push-to-talk walkie-talkie service similar to Nextel’s.

For 2003, Verizon reported a $3 billion profit on $67.7 billion in revenue, compared with a $4 billion profit on $67.3 billion in revenue for 2002.

Verizon had about 13,000 employees in North Texas before the buyouts reduced the company’s worldwide work force by 9.8 percent.

Puerto Rico Telephone’s New Top Management Will Invest An Additional $160 Million This Year To Launch A New Era Of Technology-Driven Services, Offer Cheaper Intra-Island Long Distance, And Improve Customer Satisfaction

By MARIALBA MARTINEZ

‘Do it right the first time’: President & CEO Cristina Lambert wants Puerto Rico Telephone to become the most respected telecom company on the island. Here’s how she intends to do it.

Imagine sitting at your computer videoconferencing with your son or daughter at the University of Indiana while paying bills through your bank’s electronic checking system. While catching up on the week’s highlights, you continue monitoring your e-mail to find a notice that the movie you rented from an electronic media service will be available for viewing at home over the next three days.

When you get up to go shopping, you will be able to transfer your phone calls from home (that is, if you still have a wireline phone at home) to your wireless device (a phone, a personal digital assistant, or both). You may even be able to transfer only incoming calls from a specific telephone number, allowing the voicemail service at home to record messages for others, which of course you can access from your wireless device at any time.

If you are a Puerto Rico Telephone customer, you will be able to do all that this year—and it will cost you much less than you imagine. The possibilities for innovative telecommunications solutions are infinite and just around the corner. In 2004, Puerto Rico Telephone (PRT) will incorporate these and other new services through infrastructure and operational investments of more than $160 million, bringing the total new investment in the formerly government-owned telecom giant to approximately $1.4 billion since it was privatized in 1999.

To provide these services, the island’s major communications provider will use broadband technology, which transfers multiple signals over a single medium at high speed. The bill for these bundled services will be significantly lower (some say as much as 50% lower) than the cost of the services individually.

Not only that. Next month, PRT will begin converting the island’s 68 local calling zones into 10 regional zones, part of a federal legal settlement concerning long-distance access rates for carriers. That means you will pay less for some intra-island phone calls. A call from Caguas to Dorado, for example, will be a local call before year’s end. The first regional calling zones, Aguadilla and Mayaguez, will be activated on Feb. 2, followed by Arecibo, Fajardo, San Juan Metro, Guayama, Naranjito, Ponce, Cayey, and Manati.

«Our mission is to transform PRT into a more efficient, market-driven corporation, one sensitive to what our customers want,» said Cristina Lambert, the new president & CEO of both PRT and Verizon Wireless.

«Since 1999, we have implemented new technology such as digital subscriber lines [DSL], cable modem, Asynchronous Transfer Mode, and relay stations [see glossary], in addition to new processes, procedures, and operational systems. We have also invested heavily in our employees, asking them to commit to delivering services to our customers.»

Lambert, who replaced the recently retired Jon Slater, is confident about PRT services in the pipeline. «I believe converged broadband and wireless is probably the most exciting [service] in the industry. The quality of data transmission over the wireless network will continue to improve, and with EVDO [Evolution Data Only] as the next-generation broadband technology for wireless, we’ll have higher speeds to equal wireline DSL,» said Lambert. A typical DSL service allows Internet access via wireline at speeds up to 512 kilobits per second (Kbps), compared with up to 56 Kbps from an analog modem.

«I also believe the convergence of voice and data in the wireless industry will probably be the next huge step in the transition of telecommunications,» said Lambert.

Placing herself on the side of customers, Lambert said, «I am most excited about having DSL capability at home along with voice capability. It will be important when I drive to Mayaguez, for example, to be able to continue working on my wireless network at the speed of my DSL connection at home. I’m also looking forward to a package of services that, regardless of where I am on the wireline or wireless network, will have a flat rate for my voice and data traffic and will allow me to use as much time as I want.»

For reasons concerning competition, Lambert declined to reveal when PRT would be launching these services, but she did say that it will be this year and that Puerto Rico customers will be getting them at the same time as Verizon’s customers on the U.S. mainland.

Can PRT make a buck providing new, cheaper services?

Wireless and data technology isn’t for the faint of heart—or for those with an acronyms phobia. «This year you will hear a lot about VoIP [Voice over Internet Protocol] and its multiple uses,» said Lambert. «We are scheduled to give customers the capability to make a voice call over the Internet. Voice traffic will migrate into VoIP and wireless from the switch network. Broadband capabilities—DSL and cable modem, both deployed in Puerto Rico—will continue to grow as more customers prefer broadband services to narrowband.

»Also, the local number portability (LNP) regulation implemented in November 2003 will give customers flexibility," said Lambert. PRT had to jump on the LNP bandwagon after the Federal Communications Commission ordered wireless companies to allow customers to keep their original telephone numbers when switching providers.

As these services become industry standards, and every other telecom provider offers similar services at cheaper rates to lock in customers, revenue will go down. According to Lambert, VoIP is an evolution that will increase customers’ value proposition as they seek better prices, more bandwidth, and converged networks, but it isn’t a revenue generator for the company.

«We know the wireless industry is price-sensitive from the churn [turnover rate] in the marketplace,» said Lambert. «As somebody comes up with a new price plan, customers are willing to make a change. Intra-island calls are diminishing as customers make calls over the wireless network and through VoIP. We will continue making investments in wireless and broadband to maintain quality and implement procedures and processes that will allow us to retain our customers. Everyone knows it costs more to acquire customers than to retain customers, so we will be focusing on customer retention.»

The employee mantra: Customer service

PRT is set to conclude negotiations with one of its two labor unions this year. So far, the company has met little resistance (at least none that has been made public) in its attempt to transition its former government employees to a private-sector corporate culture.

«I don’t know that I ever put a number on change, but I will tell you there are people in the company who are clear about the change that has occurred, clear about the competitive environment, the urgency to serve customers—all the things we need to do to acquire or retain our customers,» said Lambert. «[Some employees] aren’t as clear about the fact that customers have choices, that as employees they have to do everything they can to make customers feel important. We have to be attentive and sympathetic of their needs. We have the skills and the tools to serve our customers well.»

According to Lambert, since its privatization five years ago, PRT has been effective in transforming the corporate culture to that of a more market-driven organization. The company has developed new procedures and systems to improve service and efficiency, invested in infrastructure and employees, and deployed the newest technology, all at a price tag of $1.2 billion in five years, $200 million more than originally committed under the acquisition agreement.

«In that time, however, the industry has changed completely; a new era of telecommunications has begun,» said Lambert. «So our job in the next few months is to reach a larger mass of our 5,000-employee base so that it embraces what it means to be customer-driven or customer-centric. I think we have begun to translate those words into active behavior.»

Lambert said her key priority is to engage employees as partners in delivering excellent customer service. The first step will be to complete labor negotiations with Hietel, on which Lambert wouldn’t comment.

Because of her own background in the operational side of the business—for almost five years she was PRT’s vice president for wireline services, under Slater—Lambert is keenly aware that offering a competitive quality of service is critical to fulfilling the company’s vision of becoming the most respected telecom company in Puerto Rico.

«We have to meet our service commitments. We have to understand that if a customer takes a morning off from work to be home when we told him we would install his phone, we have to be there,» said Lambert.

She said the company is committed to shortening waiting times for wireline installations and repairs, training employees in «customer service first» skills, solidifying Verizon’s position as the best wireless network on the island, and implementing operations systems and procedures to improve the quality of service.

The bottom line: Making do with less

As recently as five years ago, wireless phone service cost $0.25 per minute and wireline long-distance rates were $0.15 per minute. Today, rock-bottom rates are available for wireless service, significantly reducing revenue from wireline service.

For the nine months ended on Sept. 30, 2003, PRT’s revenue decreased $12 million, or 1%, to $961 million from $973 million for the same period in 2002. Net income during this period was $70 million in 2003, compared with $136 million in 2002, a 49% decrease.

Revenue from PRT’s wireline services fell 3%, from $835 million in the first nine months of 2002 to $810 million in the same period last year. Wireless revenue increased 10% from $137 million to $151 million, primarily from the addition of 15,000 wireless telephone customers and the resulting equipment sales.

PRT has approximately 5,300 employees, down from 7,200 when the company was first purchased by GTE in 1999. The reduction was achieved through attrition and early retirement windows, closely supervised by PRT’s labor unions. Labor and benefits for the first nine months of 2002 amounted to $303 million, 32% of the company’s total revenue. Another $4.7 million was spent on voluntary separation and retirement agreements.

«[Competition] drives us to be more efficient, and that is the message we have to share with our employees,» said Lambert. «We must become more efficient as the trends in technology change and revenue declines. Everyone knew that new technology trends, good or bad, would bring cheaper prices. So, for the past five years, we have managed the company realizing the impact of technological changes on the bottom line.

»We don’t foresee any layoffs, and we hope our market position and market growth will enable us to manage this size of a company. We may continue rightsizing through attrition and by other means that we have used in the past. But our intention is to continue to make this business grow and to run an efficient operation," said Lambert.

New technologies, consolidations in store

As sure as there are dozens of companies on the island vying for wireline and wireless customers, dozens more will fall by the wayside as new technologies arrive.

«I believe there will be consolidations in the industry, not only in Puerto Rico but on the U.S. mainland as well,» said Lambert. «Costs are higher, the margins lower, and you can’t make it as a profitable business. However, PRT has made improvements to its structure and has more to make.

»This is a journey we intend to continue. We have the technology and are technology leaders. It is how that technology benefits our customers and how we translate that technology into value for our customers that will make the difference. I expect to engage more of our employees in becoming a part of our team and delivering excellent service," said Lambert.

CARIBBEAN BUSINESS staff reporter Jacques-Christian Wadestrandt contributed to this story.

Christina Lambert: A life in telecom

Cristina Lambert was named president & CEO of Puerto Rico Telephone in October 2003. She is responsible for the performance of the overall wireline, wireless, paging, Internet, intra-island, and offisland long-distance businesses.

Lambert has taken the helm of Puerto Rico’s largest telecommunications provider at a time when the industry is undergoing a transformation driven by local number portability, expansion in wireless services, steady growth of Voice over Internet Protocol (VoIP), and ever-increasing demand for broadband services.

Before to her appointment as president, Lambert was vice president & general manager of wireline services for PRT, a position she had held since June 1999. She was responsible for managing the sales / marketing and network operations functions, leading a team of 2,600 employees and serving 1.3 million individual, business, and wholesale customers.

Among Lambert’s most significant accomplishments at PRT have been the launch and aggressive positioning of Puerto Rico Telefonica Long Distance as the No. 1 long-distance provider on the island and the acquisition of Coqui.net and its integration with PRT.net to create the largest Internet Service Provider in the Caribbean. In addition, she has been responsible for deploying an impressive list of new products, such as VoIP, IP-Virtual Private Networks, Frame Relay, Asynchronous Transfer Mode capabilities, and for launching the first multiservice bundles for consumers and businesses on the island.

Before coming to Puerto Rico Telephone, Lambert served as GTE’s assistant vice president for customer care. In this capacity, she developed, directed, and implemented business strategies for GTE’s National Customer Care organization. Before that, she was assistant vice president for process planning.

In 1974, Lambert began her telecommunications career at Contel, which merged with GTE in 1991. She advanced through many line and staff positions of increasing responsibility, such as district customer operations manager, director for process re-engineering, and general manager for customer operations at GTE’s Illinois offices.

Lambert earned a bachelor’s degree in business management from Indiana University and a master’s degree in business administration from Indiana Wesleyan University. Born in Panama, she speaks and writes English and Spanish fluently.

Lambert and her husband, Jim, live in Dorado. Their grown children, Bill and twins, Christine and Monica, live on the U.S. mainland with their families. Lambert communicates often with them through PRT’s wireline and wireless networks.

Puerto Rico Telephone over the years

In 1974, the local government paid International Telephone & Telegraph $165 million for Puerto Rico Telephone Co. (PRTC). After a failed attempt by Gov. Rafael Hernandez Colon in 1990 to privatize the agency and use the revenue for infrastructure and educational projects, pressure from the labor unions forced the administration to call off the sale.

In 1997, the Rossello administration announced new plans to sell PRTC. Once again, there was heated opposition from the labor unions, which engaged in a two-month strike. The Federal Communications Commission and the local Telecommunications Regulatory Board approved the sale in February 1999, and it was made official in March 1999. The government-owned Telecomunicaciones de Puerto Rico Inc. (Telpri), parent company of PRTC and Celulares Telefonica, was sold for $444 million in cash to a consortium made up of Texas-based GTE Corp. and Puerto Rico’s Popular Inc.

GTE has kept a 52% majority interest in the local exchange carrier, now known as Puerto Rico Telephone (PRT). The local government owns 28% of the shares, Popular 13%, and PRT employees 7%.

In 2000, GTE merged with Bell Atlantic to create the corporate entity named Verizon, and Celulares Telefonica’s name was changed to Verizon Wireless. At the time, PRT President & CEO Jon Slater said, «The merger means more than improving our economic power. Bell Atlantic serves areas with high concentrations of Puerto Ricans and we plan to take advantage of this opportunity.»

Within 15 months of PRT’s acquisition, Slater was announcing that pending installation orders at PRT had dropped 20% and repairs were being completed in 24 hours or less, a 50% improvement. Cristina Lambert, who succeeded Slater in November 2003, said that the time customers wait for installations had decreased from 10 days in 2000 to eight days in 2003.

«One of our priorities is to encourage personal development [of our employees],» said Lambert. «In 2003, we provided 78,249 hours of technical training and 30,313 hours of management training, figures similar to previous years. And we recognize and reward their performance and maintain communication with them to ensure understanding.»

This year, Verizon Wireless announced that it would spend $25 million to switch on new transmission sites and cover 95% to 97% of the island’s population.

PORTLAND, Oregon, -- Nettel Holdings Inc. (OTCBB:NTTL) is pleased to announce a six month status update on the Company’s progress and various lines of business.

Since its inception over two years ago as a provider of residential and commercial long distance using VoIP, Nettel has diversified and expanded its operations substantially. Today Nettel, through subsidiaries and offices in the U.S, Russia, India, and Vietnam, provides a full range of services in telecommunications, software development, digital animation, and import-export of computers electronics, metals, commodities, and foods.

Over the past six months the Company has developed a strategy to reshape itself, taking stock of the dramatic changes occurring in the hi-tech industry. This strategy should enable us to grow and prosper in this environment.

The reshaping of Nettel Holdings involves six core businesses, these are:

Nettel Global Communication -- Nettel Global Communication is a high growth, cutting edge telephony company in the exploding VoIP industry. Current products and services include residential and commercial long distance, prepaid calling card, PC to phone, unified messaging, and teleconferencing.

For more information on Nettel Global Communication, please visit the website at [ >>> ]

VoipXchange.net -- With additional customer service and technical support offices recently added in Vietnam to handle the demand, VoipXchange.net has partnered with over 1,600 major VoIP network termination partners worldwide to access their network infrastructure. This allows VoipXchange.net to provide high-quality, low-cost «any-distance» call termination to over 250 countries and territories. We operate our own, or in cooperation with other providers, a network of VoIP gateways throughout the world. These gateways are located mostly in difficult-to-reach countries or regions and provide local termination of international calls. VoipXchange.net offers this service to any international carrier, which is interested in reliable and inexpensive completion of its traffic to the VoipXchange.net’s On-Net destinations.

For more detailed information on VoipXchange.net, please visit the website at [ >>> ]

Entec Software -- Based in Portland, Oregon, with programming offices in Vietnam, creates and develops software for small, medium, and large businesses. Entec has, or is currently, developing Accounting, Finance, Project Management, Inventory System, Database Management, Presentation Tools, E-mail, Voice Recognition, and Word Processing software.

For more information on Entec Software, please visit the website at [ >>> ]

Talking Technologies -- Based in Beaverton, Oregon, with programming offices in Latvia, India, and Vietnam, is a next generation telecom application service provider. The Company provides our customers with ground-breaking, value-added voice services that are unique in their user utility, ease of application and use, presentation to users and cost advantage. Talking Technologies is making IVR technology more affordable and accessible to customers through standards-based technology. Talking Technologies next-generation IVR -- using VoiceXML enables companies to easily and quickly deploy automated phone services that can improve employee productivity, reduce costs, increase customer satisfaction, and create new revenue opportunities. This IVR allows companies to extend existing or new Web applications to be accessible by any phone at the lowest total cost of ownership

For more detailed information on Talking Technologies, please visit the website at [ >>> ]

Tougi -- Based in Seattle, Washington, with programming teams based Europe and Asia. Tougi is a developer of interactive entertainment software and technology for a variety of consoles and computer platforms. Currently employing over 25 full-time programmers, artists, animators and game designers, Tougi is dedicated to the business of developing computer games. Current and future projects are being developed for the following platforms: PC Games, Nintendo GameCube, Game Boy, Game Boy Advance, Playstation, PS2, Dreamcast, and Xbox.

For more detailed information on Tougi, please visit the website at [ >>> ]

Nettel Trading -- Based out of Portland, Oregon, Nettel Trading’s business scope covers import and export of computer electronics, machinery, equipment, instruments, light industry products, textiles and chemicals, seafood products and investment in different enterprises. Over the past year, Nettel Trading has established excellent connections and cooperative relations with over 1,000 companies in more than 40 countries and regions in the world. Through these important connections the Company has been able to branch into importing items necessary for advanced plant and production lines, key equipment and technologies, know-how in the fields of textiles, machinery, electronics, chemicals, light industry, building materials, transportation and agriculture.

For more detailed information on Nettel Trading, please visit the website at [ >>> ]

Performance in the last six months since the merger

Nettel Trading Corporation

-- 3rd quarter 2003, Nettel Trading exported over 45 forty foot
containers of computers and electronics overseas.
-- Received order for products and services worth $127 million.
The majority of these orders should be filled by third quarter
of 2004.
-- Profit generated from Nettel Trading operations has continued
to provide the needed funding to finance Nettel Global
Communication, Entec Software, Talking Technologies, Tougi,
and VoipXchange.net into 1st quarter of 2004.

Nettel Global Communication

-- Received purchase order for over $38 million worth of prepaid
calling cards from several nationwide distributors. The first
batch of prepaid calling cards will be delivered to distributors
by the middle of January 2004.

VoipXchange.net

-- Completed the relocation, installation and upgrading of bandwidth
capacity to a redundant OC-48 connection
-- Commissioning an additional three Cisco AS5800 models for
placement on the network.
-- Since June 2003, has received orders for over $164 million worth
of wholesale minutes from domestic and international carriers.
-- Over the past three months, VoipXchange.net learned that lack of
quality customer service and technical support has been a problem
in fulfilling many of these orders.
-- In response to increasing requests from clients concerned about
personal technical support and customer service, VoipXchange.net
has recently completed the hiring and training of 17 additional
customer service and technical support personnel.
-- Once the new customer service and technical support department is
in full operation, the Company will be able to start fulfilling
orders. To date the Company has successfully completed and
received payments on a few of these orders.

Outlook and Forecast

Looking ahead, we are on track for solid full-year performance. The long-term strategy is to remain focused on the core skills of providing telecommunication and software development services, and to seek opportunities for strategic partnerships in these areas.

Nettel Global Communication -- Based on current orders and market condition, estimates revenue generated from Nettel Global Communication could be over $40 million for the year 2004 with profit margins of 9–12%.

VoipXchange.net -- Based on current, pending orders, and market conditions estimates revenue could be well over $150 million with profit margins of 2–4% in 2004.

Entec Software -- A plan to spin off Entec Software into a publicly traded company by the second quarter of 2004 is being discussed with management. Based on current orders, industry averages, and current market conditions, estimated revenues for Entec Software could be over $7 million, with profit margins of 65 -- 85% for 2004.

Talking Technologies -- Based on current orders, industry averages, and current market conditions, estimated revenues for Talking Technologies in 2004 could be over $5 million with profit margins of 65 -- 85%.

Tougi -- Based on current orders, industry averages, and current market conditions, estimated revenues for Tougi could be well over $10 million with profit margins of 75 -- 90%.

Nettel Trading -- Nettel Trading revenues fall into two categories: Import and export of metals and commodities, we have booked over $127 million in revenue with profit margins of 2–4%. Revenues from exporting of computers and electronics, we expect to book well over $6.5 million in 2004 with profit margins of 59–68%.

The reshaping of Nettel Holdings, which has taken place over the last six months and continuing through the 4th quarter 2003, is essential to delivering future value to our shareholders. Although much has already been achieved, there are still many challenges ahead. We intend to pursue growth in each of our strategic core businesses both from within and where appropriate, through acquisitions. We have no shortage of opportunities and are actively pursuing the ones we feel will add value to the Company.

Safe Harbor

Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company’s actual results in the future to differ materially from forecasted results. These risks and uncertainties include, among other things, the company’s ability to attract qualified management, raise sufficient capital, and effectively compete against similar companies.

CONTACT: Nettel Holdings, Inc.
Sam Brewer
(503) 222–6018
www.nettelholdings.com

By LOYD COOK/Daily Sun Staff
Navarro County commissioners will likely approve a contract with a company that will audit the county jail’s revenue stream from its public phones.

The company, Praeses Corporation, will make sure the call volume on the county’s pay phones are being properly counted for revenue and that the county is receiving the actual commissions it should be.

Richard Wright, Praeses’ representative at Monday’s meeting of the Navarro County Commissioners Court, said his 17-year-old company began making its money reselling long distance services before transitioning in recent years to offering public phone management services to different entities.

He said the idea of providing the same service to smaller entities, like counties, came to him as the Shreveport-based company was having a meeting about a large private prison company they were working for.

«In 18 months, on behalf of the private prison (company), we returned about $1.5 million in additional revenue,» Wright said. «I thought, why couldn’t we do this for our parishes (in Louisiana) and counties in the surrounding states?»

Since June, Praeses has reached agreements with five Texas counties and are slated to make their pitch to several others in coming months, Wright said.

Praeses gets 15 percent of all revenues received from the inmate telephones which are, in the Navarro County jail, collect call-only telephones. Wright said his company typically is able to generate 25 to 40 percent more revenues for an entity -- in about 90 percent of the audits Praeses performs -- just in billing error situations.

That leaves about 10 to 25 percent additional revenue for the county, he said.

Wright said the company the county presently uses for their public telephones, Everman, is the best that Praeses deals with. He said Praeses deals with about 25 to 30 such companies providing public telephones.

«I have to stress that these are intentional errors,» Wright said. «Everman is very good with their policy, that if a mistake is found they want to correct it and get the money back to a county because their feeling is that it belonged to (the county) in the first place.»

The billing errors found often unearth revenue the public phone company isn’t receiving either, he said. Those companies are reselling long distance as well -- in the case of Everman and the county, it’s likely AT&T long distance, Wright said -- and the billing errors can effect them as well.

Part of the audit includes researching past billings to see if the county has lost revenue there as well. If any is recovered in that situation, Praeses gets a 33 percent commission.

Presently, Praeses Corporation provides the same auditing services for Exxon, Circle K, Piggly Wiggly and Waffle House, among others.

Should the company not find enough savings to cover its commission, it will refund up to 100 percent of that commission amount back to the county. Wright said his company would move quickly to do so in that scenario, well before the end of the one-year contract.

«In about 10 percent of our contracts, that’s what happens,,» Wright said. «Worst case scenario … is that you would have the same revenue» as before.

Commissioners voted to accept the presentation. County Judge Alan Bristol said the item would be put on the commissioners’ Dec. 22 meeting agenda for formal approval, dependent on an examination of the contract.

WASHINGTON (AP) -- The Federal Communications Commission voted Wednesday to allow Qwest Communications International Inc. to sell long-distance phone service in its entire region, approving the final such application for a regional Bell.

Qwest’s petition for Arizona was the last by a former Bell company to enter a long-distance market after the FCC broke up AT&T in 1984 and barred the local regional Bells from providing long distance in their local markets.

The application process to offer long-distance services began in 1997, when Ameritech submitted the first application from a former Bell company. The application was later withdrawn. The FCC approved its first application in December 1999, when Bell Atlantic’s New York application was approved.

FCC Chairman Michael Powell said the Arizona application approval marks the «end of a long and difficult road.» Regional Bells can now sell long-distance service in 48 states and the District of Columbia.

«The barrier between local and long-distance service has finally been removed,» Powell said. «Consumers throughout the country will continue to enjoy innovative new choices that make the concept of separate local and long distance markets a thing of the past.»

FCC Commissioner Kathleen Abernathy said the commission’s work is not done. The commission needs to ensure that the markets remain competitive, she said.

In a joint statement, commissioners Michael Copps and Jonathan Adelstein, the two Democrats on the commission, said the FCC has failed to adequately ensure markets remain competitive beyond the first year that a carrier’s application is approved.

Qwest already provides local service to nearly 2.7 million customers in Arizona. The Denver-based company expects to begin taking orders for long-distance calling plans from Arizona customers later this month.

The Telecommunications Act of 1996 allows companies to offer long-distance services once it has shown that local service in its area has been opened to competition. Qwest said it spent more than $3 billion complying with the competition requirement.

Qwest currently provides long-distance service to more than 1.7 million customer lines in 13 states in its local service territory.

Riddle: When is a phone call not a phone call?
Answer: When it travels over the Internet.

That, at least, is what a new crop of voice-over-Internet protocol (VOIP) providers will argue Monday before the Federal Communications Commission at what could be a watershed forum.

The hearing kicks off a months-long proceeding in which the FCC is expected to decide what, if any, rules and fees should apply to phone calls over the Internet or Internet protocol networks. The debate has huge implications for the rapidly shifting telecommunications industry. VOIP calls -- which now can be made with regular phones -- are expected to gradually supplant traditional voice calling over the next 20 years.

But state regulators and some local phone companies say these upstarts are getting a free ride by dodging regulatory burdens, such as taxes, universal service fees to subsidize rural phone service, access fees to local phone companies to deliver calls and 911 emergency calling requirements.

«If it’s functionally equivalent to existing services, there’s no policy reason to treat it differently,» says James Ramsay, general counsel for the National Association of Regulatory Utility Commissioners.

VOIP companies say they aren’t providing phone calls in the traditional sense but voice applications via the Internet. The U. S. government has not regulated the Internet for fear of squashing new technology.

«Whether it’s Web surfing, sending e-mail or talking, why should it matter?» says Jeff Pulver, founder of VOIP startup Vonage. «If the incentives aren’t there for people to be innovative, we’ll see a retreating of companies like Vonage.»

FCC Chairman Michael Powell, a free-market advocate, is strongly signaling that he’s inclined to agree, though certain rules may apply to VOIP providers.

"I think the burden should be placed on why you need a regulation as opposed to just, ’Let’s treat these small entrepreneurs like big, hairy telephone companies,’ " Powell said in an interview, adding that he and other commissioners have made no decision. Analysts say the FCC will likely rule that VOIP is an «information service,» rather than a «telecommunications service,» and thus subject to fewer rules.

Vonage, Packet8 and other VOIP providers have snared 135,000 home phone customers. As cable operators enter the business, that is expected to swell to 4 million by 2007, says researcher In-Stat/MDR. An additional million make IP calls via PCs or phone cards.

Standard phone networks link the parties for the entire conversation. Net-based calls are broken into digital data packets to cross the Web. A «gateway» reassembles the packets into voice and hands it off to a standard phone company to complete the call. That lets Vonage charge $40 for unlimited calls and, like other data services, avoid regulation.

So far, most regulatory battles have been in states. About 15, including New York and California, want to impose rules that could force VOIP providers to mail paper bills, give ample notice before cutting off service, pay state taxes and intrastate access charges, and provide Enhanced 911 service that locates emergency callers. In October, though, a federal judge denied Minnesota’s attempt to regulate Vonage.

Ramsay says 911 and proper notice before cutting off service «is what the public expects from a phone service.»

While Vonage provides makeshift Enhanced 911, it says it can’t fully comply because local phone companies will not let it connect to their systems. And it says its customers know it is not traditional phone service.

«We’re concerned about 50 states forming a patchwork of regulations,» says Vonage CFO John Rego. Because calls travel over the Net, he says, they should be considered interstate calls and overseen by the FCC only. The FCC is expected to agree, officials say, and pre-empt the states from regulation.

Whether the agency imposes federal rules is thornier. The Bells are not calling for regulation, partly because they plan also to offer VOIP. But they say VOIP providers should pay them interstate access fees -- about a half-cent a minute -- to complete calls on their networks, just as long-distance companies do.

Vonage typically pays the Bells or Bell rivals sharply reduced fees to carry data traffic at the other end of a call. Some of its calls are handed to long-distance companies, which pay traditional access fees.

Similarly, AT&T has started carrying some long-distance calls over Internetlike VOIP networks and paying cut-rate fees to connect at the other end. In this case, the customer has no idea VOIP is involved.

«They’re basically using our network the same way» as standard services do, David Young, Verizon’s technology policy director says of both AT&T and Vonage. Letting them dodge access fees, he says, will encourage providers to game the system by shifting calling traffic to VOIP networks.

By Paul Davidson / USA TODAY