Tuesday March 12, 5:48 pm Eastern Time
By: Mark Wigfield,
from: DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Verizon Communications (NYSE: VZ - news) Inc. (VZ) wants its $150 million investment in defunct high-speed Internet provider NorthPoint Communications (NASDAQ: NPNTQ - news) to count toward the Baby Bell's obligation to compete outside of its local region.

Verizon agreed to invest $500 million in out-of-region competition as a condition of the June 2000 merger between Bell Atlantic Corp. and GTE Corp. that created Verizon. Regulators at the Federal Communications Commission said the condition was needed to offset the loss of competition caused by the merger.

Verizon took steps to fulfill that obligation in August 2000 , when it invested $150 million in NorthPoint as a prelude to merging with the provider of digital subscriber line, or DSL, service. But Verizon backed out of the deal after NorthPoint's poor financial condition became apparent.

Last week, Verizon attempted to retain some of the regulatory benefits of the deal.

"Although Verizon ultimately retained no value for its investment in NorthPoint, based on the plain language of the (Bell Atlantic) merger agreement, Verizon should receive credit" for its investment, Gordon R. Evans, Verizon's vice president for federal regulatory affairs, wrote in a letter to the FCC last week.

"Verizon made this investment in good faith with the expectation that the investment would result in the acquisition of customers outside the Verizon operating area," he continued.

There is always a risk that an investment "may not yield the desired outcome," Evans said. But the condition only requires that Verizon spend the money, whether or not the investment pays off, he added.

The FCC on Tuesday asked for public comment on Verizon's request. Mark Cooper of the Consumer Federation of America had one ready.

"That's cute," he said sarcastically in an interview. "All of these commitments and obligations made as a way to get FCC and Justice Department approval are meaningless.

"They haven't accomplished what they were supposed to accomplish. It's all meaningless."

Verizon spokesman Bob Bishop said the FCC has credited Verizon with $297.4 million in investments in out-of-region competition, not including NorthPoint. That figure represents Verizon's purchase in December 2000 of OnePoint, now called Verizon Avenue, which provides bundled voice, data and video services to offices and apartment complexes.

He said Verizon will have no problem meeting an interim deadline in June of having made $300 million in investments.

Verizon must have invested the full $500 million by June 2003 , half of which must be in actual telecommunications facilities rather than buying services from another provider wholesale.

While NorthPoint had assets in Verizon's region, a large portion of the $150 million would count as facilities-based competition outside of Verizon's region, Bishop said. The company isn't disclosing exact figures, but if the NorthPoint investment were included, Verizon would be close to meeting the full $500 million obligation.

AT&T Corp. (NYSE: T - news) (T) last May bought most of NorthPoint's assets for $135 million.

-By Mark Wigfield, Dow Jones Newswires; 202-828-3397; mark.wigfield@ dowjones.com

(This story was originally published by Dow Jones Newswires)