Seidenberg, Ivan G. 1946–
Ivan G. Seidenberg
Chairman and chief executive officer, Verizon
Education: City University of New York, BA, 1972; Pace University, MBA, 1980.
Family: Son of Howard (owner of an electrical supply shop) and Kitty (Zaretsky) Seidenberg; married Phyllis A. Maisel; children: two.
Career: New York Telephone, 1966, cable splicer's assistant; New York Telephone, 1968–1974, various engineering positions in the field; AT&T, 1974–1976, district manager, transmission design; 1976–1978, district manager, technical planning; 1978–1981, division manager, federal regulatory; 1981–1983, assistant vice president of rates and tariffs; NYNEX, 1983–1994, worked as an engineer, vice president of external affairs, and senior vice president; 1995–1997, president, chief executive, and chairman; Bell Atlantic, 1997–1998, chief operating officer and vice chairman; 1998–2000, chairman of the board and chief executive officer; Verizon, 2000–2002, president and co–chief executive officer; 2002–2003, president and chief executive officer; 2003–, chairman and chief executive officer.
Address: Verizon, 1095 Avenue of the Americas, New York, New York 10036; http://www.verizon.com.
■ Ivan G. Seidenberg, who started at the bottom of the telecommunications industry and worked his way to the top, transformed Verizon into a leader in both the traditional phone market and the wireless industry. The company's history can be traced back to the breakup of AT&T in the mid-1980s, when the Baby Bells were born. Originally there were seven Baby Bells, but they ultimately merged into four giants, including Verizon (formed in 2000 when Bell Atlantic merged with GTE), SBC, BellSouth Corporation, and Qwest Communications International. These companies controlled the local phone service market and were even awarded free radio
wave spectrum licenses to start cellular phone services. But at the end of the 20th century, Verizon and the other Baby Bells watched their monopolies dissipate as they faced competition from the cable industry.
Verizon remained the biggest of all the Baby Bells. In 2004 it led the local market—dominating the Northeast with 35 million local phone customers, more than any other telecom—and was the number two long-distance provider, behind AT&T. Verizon boasted 2003 sales of $68 billion and a market capitalization of nearly $100 billion. Meanwhile, Verizon Wireless, the company's joint venture with Vodafone, was the number one U.S. wireless provider. As for the future, Seiden-berg bet on broadband. Hoping to thwart attacks from cable companies, Seidenberg fought back on broadband, investing heavily on the belief that customers would pay to bring the technology into their households.
STARTING FROM THE GROUND UP
Seidenberg, who grew up in the blue-collar Gun Hill section of the Bronx, New York, worked his way into the upper echelons of the telecom industry. Having failed out of college during his first matriculation, Seidenberg found few doors open to him. He took a job with New York Telephone, climbing into manholes and splicing cable. But the country was at war, and Seidenberg was drafted into the U.S. Army.
WINNERS NEVER QUIT
Wounded at Khe Sahn, Vietnam, Seidenberg returned home a decorated war veteran and resumed work with the telephone company. While working in series of operations roles, Seidenberg was on a quest for self-improvement. Attending night school for 14 consecutive years, he earned an undergraduate degree and an MBA.
HARD WORK PAYS OFF
In 1974 he joined A&T, working in that company's engineering and federal regulatory departments. He rose to assistant vice president of rates and tariffs. In 1982 he was assigned to AT&T's divestiture transition team responsible for developing access charge proposals for its local telephone companies. Following the breakup of AT&T and the subsequent birth of the Baby Bells, Seidenberg joined NYNEX and worked his way up the ladder. At NYNEX he was vice president of external affairs, responsible for integrating all aspects of NYNEX's external activities involving public relations, corporate communications, federal government relations, and corporate advertising. He assumed the president and CEO position in January 1995 and the chairman title in April 1995.
THE DEAL MAKER
Seidenberg was instrumental in reshaping the communications industry. In the period after the AT&T breakup, pieces of the old company were recombined in a flurry of mergers and acquisitions. But no one in the industry shifted the landscape as much as Seidenberg. Beginning in 1997 he led a series of deals, including two of the largest mergers in business history at the time, that would ultimately link five major players under the Verizon brand. In 1997 NYNEX merged with Bell Atlantic in a deal worth $23 billion. Then, in 2002, Bell Atlantic merged with GTE in a $50 billion deal. Ultimately the successor entity was renamed Verizon. Seidenberg spoke about the business climate that drove both mergers: "There are tons of competitors, and we have to keep moving. We're like a car stranded on the Cross Bronx Expressway. Every time we stop for a minute, somebody takes off another hubcap" (New York Times, April 3, 1995).
SHORT-TERM SACRIFICE WINS THE GAME
In both mergers he orchestrated, Seidenberg sacrificed the top job in the merged companies. His choice helped the deals obtain regulatory approval and close more quickly than they would have had there been a power struggle. Said the former FCC chairman William E. Kennard, "He's a master board-room player" (BusinessWeek, August 4, 2003). After the first merger, Ray Smith, the CEO of Bell Atlantic, took over the newly created company. As for the Bell Atlantic merger with GTE, Seidenberg became co-CEO with Charles R. Lee of GTE. In both cases, an agreement was struck that would guarantee Seidenberg the top position within a specified period of time after the deals were finished. Commenting upon his decision, Seidenberg said, "Sharing responsibility for a three-, four-, or five-year period in the history of the world was not a big deal" (Fortune, May 31, 2004).
CONSOLIDATION IS THE MARKETING PLAN
The goal of the newly created Verizon was to provide customers with one-stop telecom shopping, where they could get local, long-distance, international, and wireless calls as well as high-speed Internet access. Said Seidenberg, "We're bundle freaks" (Forbes, April 16, 2001). The bundled approach offered considerable cost savings—instead of enlisting cold callers to sell long distance, the company could pitch long distance to existing customers who called in with questions about their local service. What is more, a customer with bundled service was less likely to switch providers. Still, the strategy had its detractors. Said Scott Kriens, chief executive of Juniper Networks, which made Internet protocol routers, "There are two worldviews competing here. One is that you can be all things to all people. The only problem is that I am unaware of any case in history where that has worked. The execution of that strategy is harder than the declaration" (Forbes, April 16, 2001).
PATIENCE PAYS OFF
In the spring of 2002 Seidenberg's wait was over, and he became the sole CEO of Verizon. But he was never in a position to rest on his laurels. The rapidly consolidating telecom business faced a new threat: cable. Between 1995 and August 2003 the cable industry spent more than $75 billion to prepare its networks for high-definition television, high-speed Internet access, and telephone service. David N. Watson, executive vice president for marketing at Comcast, the nation's cable leader at the time, said, "Phone companies would have to make hefty investments to catch up. And we won't be standing still" (BusinessWeek, August 4, 2003).
THE FUTURE IS WIRELESS
Verizon began readying itself for an onslaught of competition, exploiting growth in newer businesses, such as wireless. Seidenberg had a formidable head start, having led a strategy in September 1999 to form Verizon Wireless, a joint venture with Vodafone of Germany. In 2004 Verizon Wireless was the nation's number one wireless provider with more than 26 million mobile phone customers nationwide. Verizon's investments in the technology continued in 2003 as the company outfitted the Manhattan section of New York City with more than one thousand wireless fidelity hotspots. These allowed broadband subscribers near a Verizon telephone booth to access the Internet wirelessly with their laptops. Another project on the horizon was 3G, which would allow customers to make speedy online connections using their mobile phones. By 2004 wireless accounted for 33 percent of Verizon's total revenues, and Seidenberg planned to invest an additional $5 billion into the technology.
A COMPANY MAN TURNS ON THE UNIONS
As Verizon faced increasing competition from cellular phones and cable modem services, the company was also forced to take a closer look at its balance sheet. In spite of the fact that Seidenberg prided himself on having come up through the rank and file of the company, in December 2002 Verizon laid off 2,700 workers in New York and New Jersey, about 10 percent of the company's frontline repair and installation workforce. These cuts were the first major layoffs in New York by Verizon, which at the time had 46,000 employees in the state, including those in its wireless division. Seiden-berg called the cuts unavoidable in a telecommunications industry that had been crippled by an economic slump, saying, "The union leadership is standing at a crossroads. They can hold on to the old industry, and accelerate the flow of jobs and investment away from traditional telecom companies to the newer companies. Or they can join the fight for our mutual survival and help us find a new model that will help us preserve jobs and compete in the marketplace" (New York Times, July 31, 2003).
SEARCHING FOR SAVINGS
By the end of 2002 the company had lost nearly two million lines to the defection of consumers and businesses to such alternatives as wireless and telephone via cable TV wires. In May 2003 Seidenberg gathered his top managers for an emergency meeting, instructing them to cut costs so that the company could invest in newer businesses and match price cuts by competitors. He gave awards to employees who could find the biggest savings.
MAKING MONEY BY DEALING WITH COMPETITORS
One immediate focus was the company's wholesale business, in which it leased its lines at reduced rates to other companies that wanted to offer local phone service. Baby Bells were once accused of stalling this process—after all, they would rather sell the service themselves—but in a new regulatory arena, they faced fines if they did not meet requirements for fair and speedy access.
EFFICIENCY IS KEY
At Verizon each of the wholesale orders traditionally took about an hour. The orders arrived by fax, and then employees manually entered the details into the company's systems. Next they would send the orders back so that customers could check them for accuracy. That route, which was repeated thousands of times a year, was eliminated. In its place was a more direct process in which Verizon allowed its customers to access its computer directly and place the orders themselves. Said Tom Maguire, who oversaw Verizon's wholesale operations, "It's cheaper to get a machine. Machines don't call in sick and are consistent in quality" (Wall Street Journal, May 28, 2004). As a result of the change, Verizon was processing more than 92 percent of its orders automatically through proprietary software it had developed. The system was so easy to use that Verizon was able to train several temporary workers, whom they hired because of a threatened strike, to use it in a week and a half. Training the old way took more than a year.
As Verizon continued to lose traditional customers, Seiden-berg remained focused on transforming the industry. In 2003 Verizon became the first Baby Bell to offer the now ubiquitous flat-rate plans that offered unlimited long-distance and local calls. Not long after, every other Baby Bell introduced its own plan. Said Seidenberg, "When you're the market leader, part of your responsibility is to reinvent the market" (BusinessWeek, August 4, 2003).
BETTING ON THE FUTURE OF BROADBAND
Seidenberg's biggest move by far was his aggressive push into the broadband market. According to him, the age-old telecom model was completely obsolete. The future relied on what he called a "broadband industry" that offered consumers video and voice features with the potential of transforming the way various demographics accomplished everyday tasks. For example, high school students could use the technology to download a missed algebra class while doctors could use state-of-the-art videoconferencing to communicate with patients in rural areas. Said Seidenberg, "The cable industry focuses on entertainment and games. The broadband industry will focus on education, health care, financial services, and essential government services. I think over the next five to 10 years, you will see five, six, seven [segments of the economy] reordering the way they think about providing services" (BusinessWeek, August 4, 2003).
TAKING ON CABLE
In 2004 Seidenberg backed up his vision of the future by announcing a multibillion-dollar initiative to bring high-speed fiber lines into millions of customers' homes. Those lines could one day carry television programs, allowing Verizon to compete with cable companies. At the January 2004 Consumer Electronics Show, Seidenberg declared that his investment would be the start of the "all-broadband, all-the-time lifestyle" (Fortune, May 31, 2004).
Unlike other telecoms that were bringing "fiber to the curb," Seidenberg planned to go one step further by bringing it to the house. It was a much costlier strategy but one that promised networks with higher speed. Seidenberg relied on a crucial Verizon asset to fund his grand scheme: its tremendous cash flow. By 2003 the company's operations were generating about $22 billion annually in cash—50 percent more than SBC, twice as much as Bell South, and triple AT&T's number. In fact, Seidenberg planned to pay for his fiber plan without increasing his capital budget. Seidenberg said that "funding is not an issue" (BusinessWeek, August 4, 2003). Another benefit of "fiber to the curb" was of a regulatory nature. In 2003 the Federal Communications Commission ruled that it would not force Baby Bells to give access to competitors on fiber networks that ran into the home—the same might not hold true for networks that stopped at the curb.
PIONEER OR POKER PLAYER?
In the first stage of his initiative, Seidenberg planned to bring fiber to one million homes by the end of 2004, an ambitious project that would cost $1 billion—more than 8 percent of the company's total capital expenditure budget for that year. He hoped to have another two million homes wired by 2005. Some analysts calculated that outfitting the homes of Verizon's other 32 million customers with fiber would cost $40 billion. Some called Seidenberg's plan nothing more than a bluff. Said Susan Kalla, a telecom analyst at Friedman Billings Ramsey, "He's not going to do it. The numbers, they just don't make sense" (Fortune, May 31, 2004).
Seidenberg contended that he was planning to move slowly at first, to test his strategy. As for investors' concerns, he was not really worried: "Most investors only understand that which has already been done. They never really like things that haven't been done before. That's why Christopher Columbus had so much trouble getting financing" (Fortune, May 31, 2004). Verizon also made a push into the corporate market, building a national network that could accommodate the vast numbers of bits and bytes on which corporations rely to communicate with their disparate offices. The company expected the new services to generate $250 million per year; it hoped to increase that figure to $1 billion by 2007.
AN UNPREDICTABLE LEADER
Seidenberg's leadership style was a study in paradoxes. He was known for his soothing, persuasive voice that came in handy during those times when he had to sell employees and investors on his seemingly quixotic strategies. Yet he could also be incredibly abrupt. A mutual fund investor, who remained anonymous, recalled Seidenberg's answer to the question from another investor about whether the company would acquire the long-distance company Sprint: "Real condescendingly, he responded that he didn't know why he even bothered to answer these types of questions. This was an investor who owned something like six million shares in the company. I always wondered what he did with them the following Monday" (Fortune, May 31, 2004).
One distinguishable hallmark of Seidenberg's style was his commitment to diversity. Under his leadership the company increased minority employment and created a partnership with the U.S. Small Business Administration to increase the company's purchasing from minority suppliers. Fortune magazine cited the company in its list of the "50 Best Companies for Minorities." Seidenberg was equally passionate about education and implemented measures to help connect students and teachers to technology, including pushing for a special rate for schools and libraries to get online.
A PERSONAL INVESTMENT
Some industry insiders gave Seidenberg favorable long-term projections. The analyst Simon Flannery of Morgan Stanley expected the company's revenues to reach $70 billion in 2005. And Brian Adamik, chief executive of the market researcher Yankee Group, called Verizon "the industry's future" (BusinessWeek, August 4, 2003).
Seidenberg rose to the top of an industry in which most of the companies did not exist in their present form a decade before. But even in the face of rapid change that had personally enriched him, Seidenberg remained a company man. Looking back on his career with Verizon, he remarked, "It's hard to believe, but I've been here for 37 years, more than one-third of this company's history. I feel an obligation to make sure this company is well positioned for the next 100 years" (BusinessWeek, August 4, 2003).
See also entries on AT&T Corp., Bell Atlantic Corporation, NYNEX Corporation, and Verizon Communications in International Directory of Company Histories.
sources for further information
Creswell, Julie, "Ivan Seidenberg, CEO of Verizon, Vows to Overpower the Cable Guys by Plowing Billions into a '90s-Style Broadband Buildout," Fortune, May 31, 2004, p. 120.
Greenhouse, Steven, "Talk of Partners, Rumblings of Battle at Verizon," New York Times, July 31, 2003.
Landler, Mark, "The Man Who Would Save NY for NYNEX," New York Times, April 3, 1995.
Latour, Almar, "After 20 Years, Baby Bells Face Some Grown-Up Competition Cable," Wall Street Journal, May 28, 2004.
Rosenbush, Steve, "Verizon's Gutsy Bet," BusinessWeek, August 4, 2003, p. 52.
Woolley, Scott, "The New Ma Bell," Forbes, April 16, 2001, p. 68.
"Seidenberg, Ivan G. 1946–." International Directory of Business Biographies. . Encyclopedia.com. (August 21, 2018). http://www.encyclopedia.com/economics/news-wires-white-papers-and-books/seidenberg-ivan-g-1946
"Seidenberg, Ivan G. 1946–." International Directory of Business Biographies. . Retrieved August 21, 2018 from Encyclopedia.com: http://www.encyclopedia.com/economics/news-wires-white-papers-and-books/seidenberg-ivan-g-1946
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