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Verizon Communications is no longer satisfied to be the largest telecommunications carrier in the U.S. It unveiled plans Wednesday to burst out of the U.S. market and create a global broadband network carrying data, Internet and voice.

"This is a logical next step for Verizon because it will help unlock the full value of our network and our core business," said Eduardo R. Menasce, president of Verizon's Enterprise Solutions Group, which manages the design, operation and maintenance of networks for large business customers. "We believe that our global network perfectly positions Verizon to become a leading presence in the large business market, which is the fastest-growing segment in the U.S. telecommunications industry and generates $140 billion a year in revenues."

Verizon is acquiring fiber-optic cable, switching and transmission equipment and related network software to deploy the broadband network, with the first phase -- linking New York to London, Paris, Amsterdam, Brussels, Frankfurt and Milan -- scheduled to begin operating by second quarter 2001. Verizon already operates links between New York and Toronto and between Hawaii, Hong Kong, Tokyo and Sydney, and those cities too will become part of the network. Additionally, over the next two years, Verizon plans to expand the network with direct links to leading commercial and financial centers like Geneva, Zurich, Madrid, Singapore, Buenos Aires, Caracas and Mexico City.

Completion of the first phase of the network will require the outlay of significant capital, but Verizon said the investment has already been incorporated in its capital budget and in the financial guidance for 2001 and 2002 that it issued last year. Also, Verizon said it anticipates a cost savings of at least $300 million in transport costs over the next five years because routing international calls over its global network rather than paying other carriers to transport the calls will be significantly less expensive.

Verizon has created a new business unit, Global Solutions Inc. (GSI) to oversee the project and manage the network.

"We will manage and operate our global network by owning the switches and controlling our own transmission facilities, rather than just re-selling capacity and services on another carrier's network," said Thomas A. Bartlett, president of GSI. "And we will support our network with outstanding customer care, including Web-based services such as provisioning and billing. As a result, we will be able to offer a facilities-based network that connects commercial centers around the globe and that provides an array of voice, data and Internet services to large business, wholesale and residential customers. Our prices will be competitive and our service will be outstanding."

Verizon is turning to its allies to help it complete the network on schedule. FLAG Telecom and Metromedia Fiber Network Inc. (MFN) -- Verizon holds ownership stakes in both -- will lend their muscle to get the ball rolling.

FLAG Telecom owns and operates a high-capacity, undersea cable system that links Europe, the Middle East and Asia. It is currently laying a trans-Atlantic cable between New York, London and Paris and is scheduled to begin operating it next month. The company is also developing FLAG North Asian Loop, to connect major cities throughout Asia, and a trans-Pacific cable.

MFN, meanwhile, owns fiber-optic infrastructures within key metropolitan areas in the U.S. and internationally. It has already deployed more than 1.2 million miles of fiber and plans to hit 3.6 million worldwide by 2004.

While FLAG Telecom and MFN lay the fiber-optic infrastructure, GSI plans to operate gateway switches in New York, Los Angeles, Honolulu and London to aggregate data and voice traffic and route it over the network. It plans to build a European network operations center in a suburb of London.

Analysts Wednesday cautiously lauded Verizon's plans.

"This is a good and necessary move by the company, and one which is consistent with our view of where the ILECs have to go in order to sustain growth," Goldman Sachs said. "In addition, utilizing the transmission capacity of existing suppliers (i.e. FLAG, MFNX) is exactly the right approach in executing this strategy."

But, Goldman Sachs said it is essential that Verizon not get mired in the pitfalls that so many other companies have struggled with in this space.

"...it should be noted that having transmission facilities equates to actually being able to provide the service and winning the business in a profitable way," Goldman Sachs said. "Examples of unprofitable efforts in this regard are plentiful. Thus, while we applaud the company's efforts, and agree with the strategy, we don't expect an important or profitable contribution to results any time soon. The impact of VZ's entry into this segment of this business on existing carriers should be immaterial initially, but long term has the potential for the kind of increased competition that we anticipate domestically."

Initially, the Enterprise Solutions Group plans to target large business customers in New York -- where it received regulatory approval to offer long-distance service in December 1999 -- and to business customers that were served by GTE prior to its merger with Bell Atlantic to form Verizon. Once the company gets regulatory approval, it will also target customers in New England and mid-Atlantic states. Approval is already pending in Massachusetts and the company said it will file for approval in Connecticut, New Jersey, Pennsylvania and Rhode Island this year.

Internationally, the company has already negotiated an exchange agreement with Canadian affiliate TELUS, which will allow that company to utilize the network. Verizon also has operations in 18 other countries and Bartlett said it is negotiating similar agreements with other affiliates.