Verizon Lays It on the Line

Babbio said this fell by about 30 percent last year and is likely to drop another 15 to 20 percent this year, so that by the end of 2006, "we will probably have cut the cost in half" from the start of 2005. He also said many investors do not grasp how much cheaper a fiber-optic network is to run than the old copper-based system, in place for decades.

Even as company officials are trying to reassure Wall Street, they are pushing Congress and state legislatures to make it easier for them to offer video by streamlining the laborious process of negotiating franchises one by one in thousands of localities.

If the company does not get some relief, Seidenberg said, it will have to reconsider whether to serve small franchises and might instead focus on big ones.

"This is the only threatening comment I'll make. . . . Remember, there are some franchises that are big. So let's take the city of Philadelphia -- it's big," he said. "Then you've got all these oodles of them in the state of New Jersey, or Virginia.

"So at some point, if we don't clean up this process, we just won't be in a position to do all the things that we think could be done," he said. "If we don't see some change in behavior here, I think we are going to have to question how much we can do and how fast we do it."

Asked if that meant he would focus on big franchises rather than little ones, he replied, "It's something that we have to think about."

His stance on streamlining the video franchising system is fiercely opposed by cable companies, which had to go to every locality in the country for approvals and want phone companies to have to do the same.

Cable executives say they believe phone companies will "cherry-pick" by wiring only wealthy areas if they are not forced to serve entire communities, as local franchise deals routinely require.

"It's important to retain the local franchising process so that there is a level playing field in the video industry," said Thomas M. Rutledge, the chief operating officer of Cablevision Systems Corp., the sixth-largest U.S. cable TV operator. "We encourage competition, but we think that competition requires that the players have similar obligations.

"To allow someone to come through and just serve affluent suburban areas, not the rural communities, not the poor communities, gives the new provider a tremendous economic advantage," Rutledge said in an interview.

The House and Senate commerce committees are considering legislation that would make it easier for the phone companies to enter the video market.

Regulatory analysts see little chance of a bill passing this year, citing the short congressional calendar, the reluctance of lawmakers to enact legislation that would anger either industry in an election year, and the opposition of towns and cities reluctant to lose control over the local franchising process.

"Why kick 30,000 hornet's nests?" said Scott C. Cleland, chief executive of the research firm Precursor Group.

Winning franchising relief is Verizon's top legislative priority this year, partly because it would allow the company to deploy the network and earn a profit from it faster, possibly allaying investor concerns.

"We recognize that we are making some bets," Seidenberg said, speaking from his office in the soaring art deco skyscraper built in the 1920s for the New York Telephone Co., one of Verizon's predecessors. "We don't consider them all that complicated because we have done this for a hundred years."