Genuity Incorporated (2000)

NOTE: This page is for the Genuity Incorporated that was created in year 2000 by GTE Corporation upon GTE's transition into Verizon Communications Incorporated . In 1995, "Bechtel quietly purchased Phoenix-based Internet Media Network Incorporated , a dormant Internet access provider. The company, which it renamed Genuity, was one of 22 so-called "Tier 1" companies that make up the Internet's backbone." [at that time].

The page for the 1995 to 1997 Genutiy is here : Genuity Incorporated .

Source for above - [HM001C][GDrive]


2000 (April 06) - The Boston Globe

Full newspaper page : [HN01F0][GDrive]

See : Genuity Incorporated (2000) , GTE Corporation , Verizon Communications Incorporated

2000 (April 04) - Boston globe, advertisement for Genuity

2000 (April 10) - Network World article / Vol. 17, No. 15 - "GTE, others play the game"

For more than 20 years, Network World has been the premier provider of information, intelligence and insight for network and IT executives responsible for the digital nervous systems of large organizations. Readers are responsible for designing, implementing and managing the voice, data and video systems their companies use to support everything from business critical applications to employee collaboration and electronic commerce

Full pages : Page 01 (cover) : [HP004Q][GDrive] / Page 15 : [HP004R][GDrive]

2000 (May 25)

Full newspaper page - [HN01F5][GDrive]

See : Genuity Incorporated (2000) , GTE Corporation , Verizon Communications Incorporated

2000 (June 19) - RCRWireless article - Verizon gets green light ; The FTC approves transfer of GTE Corp.’s communications licenses to Bell Atlantic Corp

See [HW005C][GDrive] - By Reily Gregson on JUNE 19, 2000Archived Articles

WASHINGTON-The Federal Communications Commission late Friday approved the transfer of GTE Corp.’s communications licenses to Bell Atlantic Corp. contingent on 25 conditions, including putting some wireless properties into a trust until they can be sold so as to not violate cellular cross-ownership rules.

“There will be those that will claim this merger brings us closer to a re-emergence of Ma Bell, however, my support is predicated on the applicants’ enforceable commitments to open its traditional local markets to competitors, invest in new markets and accelerate deployment of broadband technologies. The end result should produce more competition, not less,” said FCC Chairman William Kennard.

“This is a great day for Bell Atlantic and GTE, for our customers, our investors and our employees … This final approval contains reasonable conditions that clear the way to unite these two great companies into Verizon Communications,” said Charles R. Lee, chairman and chief executive officer of GTE and designated chairman and co-CEO of the new company. The merger is expected to close by June 30.

Bringing GTE’s wireless holdings into Verizon Wireless-the mobile-phone company consisting of Bell Atlantic Mobile, PrimeCo and Vodafone AirTouch plc-would create the nation’s largest wireless company, with more than 24 million customers and a footprint covering 90 percent of the United States.

“Our ability to deliver a full plate of voice, data, Internet and wireless services to all our customers will make Verizon the next great brand in communications,” said Ivan Seidenberg, chairman and CEO of Bell Atlantic and designated president and co-CEO of Verizon.

Bell Atlantic and GTE obtained Department of Justice approval after selling off overlapping wireless properties. Some of the sales were made in a multiproperty deal with Alltel Corp., which was approved by the FCC’s Wireless Telecommunications Bureau last week.

One of the major conditions on the transfer involves GTE’s Internet backbone, operation of which would violate the Telecommunications Act of 199

To get around the telecom act’s prohibition against regional Bell operating companies offering long-distance services, Bell Atlantic and GTE proposed, and the FCC accepted, spinning off the Internet backbone into a new entity called Genuity.

Verizon would have a 9.5 percent interest in Genuity until Verizon is granted long-distance authority in the former Bell Atlantic states. Bell Atlantic has received such authority in New York but still has 12 states and the District of Columbia to go. Once approval has been obtained, Verizon would then be permitted to control up to 80 percent of Genuity. If approval is not granted for at least 50 percent of the old Bell Atlantic territory within five years, the conversion to 80-percent stock would evaporate.

Seidenberg said he expects long-distance approval within two years from the close of the merger.

This arrangement satisfied FCC Commissioner Susan Ness, who said approving the merger was “a close call.”

Both Republican members of the commission partially dissented in the approval because of the conditions placed on it.

“None of the shortcomings I address here or in my previous statement on these issues will ever be addressed unless the commission begins to reform the majority’s `balancing approach’ to merger review that we apply again here, or seriously question the aforementioned specious theories of potential harm,” said FCC Commissioner Michael Powell.

FCC Commissioner Harold Furchtgott-Roth also dissented because he does not believe the commission should be involved in regulating undersea cable licenses. This is one of the approvals the FCC granted.

Amid concerns that someone might challenge the license transfers, the companies said they believe the approval with conditions can withstand any court challenge.

“We think this arrangement is bullet proof. We believe we have the best lawyers and best consultants that one could have … We don’t think there is a minuscule chance that this would be overturned,” said Lee.

Fate of WorldCom/Sprint

Internet issues also may derail WorldCom Inc.’s hopes of marrying Sprint Corp. and gaining control of Sprint PCS.

Sprint Chairman William Esrey told shareholders last week at the company’s annual meeting in Westwood, Kan., that some Justice Department staff do not support the merger.

“We have had a number of high-level meetings with [DOJ] officials in recent weeks, but it remains unclear if we will or will not get the necessary government clearances to implement the merger,” Esrey said.

WorldCom needs the merger to fill in the large wireless gap in its offerings. Sprint needs to expand its international reach. Both companies would benefit from combining their fixed-wireless assets.

While DOJ seems concerned with the antitrust implications of a merger between the nation’s No. 2 and No. 3 long-distance companies, the European Commission is concerned about WorldCom’s dominance of the Internet. Experts believe WorldCom is willing to sell off Sprint’s Internet backbone but not its stake in UUNet.

Similar concerns when WorldCom bought MCI Communications Corp. led to the sale of some of WorldCom’s assets to Cable and Wireless plc. This sale was not successful and experts believe the EC does not want to create a repeat situation.

The EC is scheduled to make a decision by July 12

Should WorldCom/Sprint convince DOJ and EC officials that the merger would create an all-distance company in an all-distance telecommunications market, the company still must receive FCC approval to transfer its licenses.

2000 (July 07)

Full newspaper page : [HN01F3][GDrive]

2002 (July 26) - NYTimes - "Genuity Faces Bankruptcy As Verizon Ignores an Option"

By Seth Schiesel With Simon Romero ; See [HN01C4][GDrive] ;

This article is also located at [Verizon Communications Incorporated]

Genuity [(Genuity Incorporated (2000))], the last of the original Big Three Internet carriers, may be about to go the way of its competitors -- into bankruptcy.

[Verizon Communications Incorporated], the No. 1 local phone company, said yesterday that it would not rescue Genuity from the telecommunications and technology vortex by taking control of the company.

Verizon, which spun off Genuity [(Genuity Incorporated (2000))] two years ago, had been expected to reassume control of the company by June 2005, under terms of the spinoff

Yesterday's announcement sent Genuity's stock plummeting by 89 percent to close at 29 cents, pushed Genuity into default on $3 billion in loans and raised the possibility that the company might have to file for bankruptcy protection within months. If that happens, Genuity would take its place alongside WorldCom's UUNet division and PSINet as former highflying Internet ''backbone'' companies operating under bankruptcy protection.

A sharp sell-off of Genuity's shares on Wednesday -- otherwise the best day for stocks in 15 years -- suggested that some traders might have had advance warning of yesterday's announcement. Certainly, the Wall Street grapevine may have known something was afoot: Genuity [(Genuity Incorporated (2000))] revealed yesterday that on Monday, it had drawn down $723 million from a prior credit line with eight banks.

But Genuity said yesterday that it had no idea that Verizon was planning to drop its option when Genuity called on the banks Monday. ''This is absolutely coincidental from our standpoint,'' Susan Kraus, a Genuity spokeswoman, said yesterday. ''We had absolutely no knowledge of what Verizon was going to do.''

As the Internet came to popular attention in the early 1990's, three companies emerged as the leading carriers of Internet data: Uunet, PSINet and Genuity's predecessor, BBN. As telephone companies expanded into data networking in the 1990's, they were eager to acquire those early pioneers. Although PSINet remained independent, [UUNET Technologies, Incorporated] was acquired by [MFS Communications Company, Incorporated] shortly before MFS was acquired by WorldCom [, which later became MCI WorldCom Corporation,] in 1996. GTE acquired BBN in 1997 and later renamed it Genuity.

When Bell Atlantic acquired GTE in 2000, creating Verizon, the combined company spun off 90 percent of Genuity as a condition for winning regulatory approval for that deal. Bell Atlantic was not allowed to control Genuity because Bell Atlantic was not then allowed to sell long-distance communications services, including data networking.

But Verizon accurately anticipated that it would win the necessary long-distance approval within a few years. So, when it spun off most of Genuity to public shareholders in 2000, it retained the ability to reassume control of Genuity by mid-2005.

Until recently, many investors expected that Verizon would assert its option, given that Genuity had grown from $183 million in revenue in 1997 to $1.2 billion last year.

Genuity's losses, however, have also grown. Were Verizon to reacquire control of Genuity, it would also have to consolidate Genuity's $3 billion in debt and its annual losses -- $4 billion last year -- into its own financial statements.

Already jittery about the state of the regional Bell companies, investors were loath for Verizon to make that move. As a result, Verizon said yesterday that it would not. Now, Verizon appears to believe that it can get into the long-distance data communications business without assuming Genuity's baggage

Given the stock movement on Wednesday, the most important outstanding questions are about just when Verizon made that decision and when Verizon told Genuity.

On Wednesday, as the Dow Jones industrial average soared by nearly 489 points, Genuity's shares plunged by 26 percent, to $2.59, from Tuesday's close of $3.50. Peter Thonis, a Verizon spokesman, said yesterday that Verizon did not tell Genuity about its decision until after the stock market closed on Wednesday.

As for Genuity [(Genuity Incorporated (2000))], the question is why it rushed to borrow $723 million on Monday.

Genuity said yesterday that the group of eight banks really should have been nine and that the $723 million really should have been $850 million. Genuity said Deutsche Bank refused to honor a commitment to lend it an additional $127 million, and that it had sued Deutsche Bank in Federal Court in Massachusetts.

Deutsche Bank said that it had not received any legal papers and that it was in talks with Genuity.

People close to Genuity's lenders said yesterday that Genuity called its banks on Monday morning and demanded the money remaining under its prior credit line by noon that day. Some banking executives said yesterday that companies generally were prepared to wait 48 hours before actually receiving cash under a credit line. They speculated that Deutsche Bank could have been unnerved by the unusually urgent nature of Genuity's request.

Ms. Kraus, the Genuity spokeswoman, said Genuity's agreement with its lenders allowed the company to draw on its loans quickly.

Some bankers speculated yesterday that the eight other banks that did comply might have inferred that Genuity was worried about Verizon's intentions. Moreover, according to people close to both Genuity and Verizon, Michael T. Masin, a Verizon vice chairman and Genuity board member, was asked not to attend a Genuity board meeting on Sunday. His exclusion could have fueled a perception that Genuity suspected that Verizon would cut it loose soon.

2002 (Jul 26) - Forbes - "Genuity Is Left On The Launching Pad"

See [HP004D][GDrive]

This article is also located at [Verizon Communications Incorporated]

Genuity [(Genuity Incorporated (2000))] introduced itself to a puzzled public two years ago with an ad campaign that featured a mysterious-looking black rocket and a very 1990s tagline: "Do you want to change the world?" But the '90s, alas, had just ended, and the world had already changed--and not for the better, if you were a tech investor.

Now Genuity and its rocket appear headed for the auction block. Irony abounds in the situation, for Genuity descends from BBN, the firm that pretty much built the original Internet. The firm's current travails offer yet another sad illustration of the Moses syndrome, in which the visionary genius who points the way to the promised land fails to make it there himself.

Genuity [(Genuity Incorporated (2000))] operates a major Internet backbone network. The firm started touting its Black Rocket network services platform with that ad campaign in late 2000, just as the Internet stock market boom was collapsing. Genuity remained unprofitable, and investors abandoned this stock en masse on July 25, after Verizon Communications cut the lifeline that theoretically had tethered Genuity to its former corporate parent.

Verizon on July 24 effectively relinquished its right to reacquire a controlling interest in Genuity [(Genuity Incorporated (2000))]. That decision pushed Genuity into default on some of its credit agreements. The next day its shares fell almost 90%, to 29 cents from $2.59, and although it was back up over 50 cents today in afternoon trading, the stock has been cut to a rare "sell" rating by at least one Wall Street analyst. Genuity Chairman PaulGudonisPaul Gudonis was reduced to talking up his "valuable set of assets," which is the verbal equivalent of hanging a "for sale cheap" sign on the front door.

"Now that Verizon has elected not to reintegrate Genuity, we will evaluate all our options, which could include seeking another strategic partner or restructuring our operating plan while we address this situation," Gudonis said in a statement expressing disappointment with Verizon's decision.

BBN--originally Bolt, Beranek and Newman--was founded in Cambridge, Mass., in 1948 by professors from the Massachusetts Institute of Technology. Then in 1960, BBN employee J.C.R.LickliderJ.C.R. Licklider famously forecast the Internet with his seminal "Man-Computer Symbiosis" paper. It was BBN that built the ARPANET, the Internet's forerunner; it was BBN's RayTomlinsonRay Tomlinson who invented e-mail, which soon composed the bulk of the Internet's traffic. So it made sense that BBN would end up a major Internet backbone firm. In 1997 it was acquired by GTE in a deal valued at $616 millio

A few months later, GTE bought a Bechtel Enterprises unit called Genuity [(Genuity Incorporated (2000))] and combined it with BBN. Then in 2000, GTE merged with Bell Atlantic to form Verizon. The Internet network had to be spun off, because a Baby Bell was not allowed to be in the long-distance data business. But Verizon retained an option, if certain conditions were met, to reabsorb Genuity. The general expectation was that Verizon one day would exercise that option, which is why this week's announcement to the contrary left the spinoff gasping for life.

With WorldCom already in Chapter 11 proceedings, its UUNet Internet backbone unit presumably is being shopped around. Now Genuity too is up for grabs--and with it, the storied BBN legacy. It's one thing to invent the Internet, it seems, and quite another to figure out how to make it pay.

2002 (Nov 27) - NetworkWorld - Level 3 to buy bankrupt Genuity's assets

Stephen LawsonBy Stephen Lawson ; See [HP004I][GDrive]

This article is also located at [Verizon Communications Incorporated]

Internet backbone provider [Level 3 Communications, Incorporated] has agreed to acquire the bulk of the assets of network provider Genuity [(Genuity Incorporated (2000))], which has filed for bankruptcy, the companies announced Wednesday.

Level 3 will pay as much as $242 million in cash and assume a significant portion of Genuity's long-term operating agreements, according to a statement from the companies. The deal must be approved by regulatory agencies and a bankruptcy court and is expected to close in the first quarter of 2003.

Also Wednesday, Genuity [(Genuity Incorporated (2000))] filed voluntary petitions for reorganization under Chapter 11 of the U.S. bankruptcy code, the statement said. The cash on Genuity's balance sheet, together with Level 3's cash payment, will be distributed to creditors of Genuity.

Based in Woburn, Mass., Genuity [(Genuity Incorporated (2000))] was spun out of U.S. telecommunications carrier [Verizon Communications Incorporated] according to the terms of the merger of Bell Atlantic and [GTE Corporation] that created Verizon in 2000. More recently, the company has been suffering financially amid a glut of capacity on backbone networks. In May, Genuity announced that it would cut as much as 30 percent of its workforce, or 1,200 jobs.

[Level 3 Communications, Incorporated], in Broomfield, Colorado, will acquire Genuity's network transport business as well as its dedicated and dial-up Internet access operations. It also will take over Genuity's managed services business, which it will combine with its iStructure subsidiary but continue to operate under the Genuity brand.

Genuity's biggest customers are Verizon and AOL, according to the statement. Verizon has executed a new multi-year contract to buy wholesale dial-up, transport and other services from Level 3, which should take effect when the acquisition closes.

2002 (Nov 27) - "Level 3 to acquire Genuity assets and operations for $242 million"

Source - LightWaveOnline - [HW005H][GDrive]

This article is also located at [Verizon Communications Incorporated]

[Level 3 Communications, Incorporated] and Genuity Inc. [(Genuity Incorporated (2000))] announced today that they have signed a definitive agreement under which Level 3 will acquire substantially all of the assets of the Massachusetts-based communications company.

[Level 3 Communications, Incorporated] will pay up to $242 million in cash and assume a significant portion of existing long-term operating agreements to acquire Genuity's assets and operations. To facilitate the transaction, Genuity [(Genuity Incorporated (2000))] today is filing voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. Level 3's cash consideration at closing could be reduced subject to certain material adjustments.

Closing is expected to occur during the first quarter of 2003. The transaction is subject to approval by the bankruptcy court and certain government regulatory agencies.

"This transaction represents the best outcome for the key constituencies of both Genuity and Level 3," contends Paul R. Gudonis, chairman and chief executive officer of Genuity. "Both companies, as well as Genuity's largest customers and creditors, have signed agreements supporting the transaction."

"There is a unique and compelling fit between Genuity and Level 3," adds [James Quell Crowe (born 1949)], Level 3's chief executive officer. "The transaction combines the assets and operations of Genuity, the company that helped invent the Internet, with Level 3, the company that built the first network fully optimized for Internet Protocol-based communications. Both companies are experienced providers of optical and IP-based services, and both are Tier 1 Internet backbone providers with industry-leading quality of service. Genuity's transport and dedicated and dial-up Internet access business--more than 80 percent of revenue--is complementary to Level 3's transport, managed modem and IP services business."

Based in Woburn, MA, Genuity [(Genuity Incorporated (2000))] operates an international IP network. The company provides dial-up and dedicated Internet access, transport, managed security and VPN, hosting and other services to communications companies, enterprises and government agencies. Its largest customers are Verizon Communications and America Online, which accounted for greater than 60 percent of its $223 million in revenue for the third quarter of 2002.

All but one of Genuity's banks have signed an agreement in support of the transaction. Verizon has executed a new multi-year contract to purchase wholesale dial-up, IP, transport and other services from Level 3, to take effect when the transaction closes. America Online has signed an agreement consenting to the transaction that contemplates [Level 3 Communications, Incorporated] acquiring America Online's network services agreement with Genuity. In addition, Allegiance Telecom Inc., Genuity's largest network supplier, supports the transaction.

As part of this transaction, Level 3 is also acquiring Genuity's managed services business and its associated enterprise customers and product set. "We recognize the importance of these customers and are committed to ensuring they receive the highest quality service without disruption," asserts Kevin O'Hara, president and chief operating officer of Level 3. "As a result, we plan to combine these operations with those of our (i)Structure subsidiary in order to focus on the needs of those customers. That new managed services operating company will do business under the name 'Genuity,' a recognized leader in that market." [...]

2003 (Aug 19) - CenturyLink corporate news - Level 3 to Sell Midwest Fiber Optic Network Acquired in Genuity Transaction

See [HC004L][GDrive]

This article is also located at [Verizon Communications Incorporated]

BROOMFIELD, Colo., Aug. 19 /PRNewswire-FirstCall/ -- [Level 3 Communications, Incorporated] announced today that it has signed a definitive agreement to sell the Midwest Fiber Optic Network (MFON), a regional communications system it acquired through its recent transaction with Genuity [(Genuity Incorporated (2000))] .

CenturyTel (NYSE: CTL) will purchase the stand-alone system, which serves as a regional backbone for a number of carriers, including CenturyTel itself, in Arkansas, Missouri and Illinois. The purchase price is approximately $17 million in cash, subject to adjustments including date of closure and system revenue at time of close. Closing is subject to regulatory approvals and customary conditions.

"This is a non-core asset for Level 3," said Sunit Patel, Level 3's chief financial officer. "While MFON currently generates approximately $1.5 million a month in revenue, the geography and architecture of the system do not offer us a practical or cost-effective way to integrate its operations into the Level 3 network. As such, we believe it makes sense to sell this business and continue to focus on the integration of the core assets, customers and traffic from the Genuity transaction."

Closing is expected to occur by the end of the fourth quarter of 2003.

Daniels & Associates, the Denver-based media and telecommunications mergers and acquisitions specialist, served as financial advisor to Level 3 on this transaction.

  • About Level 3 Communications : Level 3 (Nasdaq: LVLT) is an international communications and information services company. The company operates one of the largest Internet backbones in the world, is one of the largest providers of wholesale dial-up service to ISPs in North America and is the primary provider of Internet connectivity for millions of broadband subscribers, through its cable and DSL partners. The company offers a wide range of communications services over its 22,500-mile broadband fiber optic network including Internet Protocol (IP) services, broadband transport, colocation services, and patented Softswitch-based managed modem and voice services. Its Web address is The company offers information services through its subsidiaries, (i)Structure and Software Spectrum. For additional information, visit their respective web sites at, and

  • About CenturyTel : CenturyTel, Inc. provides communications services including local, long distance, Internet access and data services to more than 3 million customers in 22 states. The company, headquartered in Monroe, Louisiana, is publicly traded on the New York Stock Exchange under the symbol CTL, and is included in the S&P 500 Index. CenturyTel is the 8th largest local exchange telephone company, based on access lines, in the United States. Visit CenturyTel at

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