Good morning, and welcome to the Verizon third quarter 2013 earnings conference call. At this time, all participants have been placed in a listen-only mode, and the floor will be opened for questions following the presentation. (Operator Instructions). Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to your host, Mr. Michael Stefanski, Senior Vice President, Investor Relations.

Thanks, Brad. Good morning, and welcome to our third quarter 2013 earnings conference call. This is Mike Stefanski, and I am here with our Chief Financial Officer, Fran Shammo. Thank you for joining us this morning. Before we get started, let me remind you that our earnings release, financial and operating information, the investor quarterly, and the presentation slides are available on our Investor Relations website. Replays and a transcript of this call will be made available on our website later today. I would also like to draw your attention to our Safe Harbor statement and our other legends on slides two and three. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussion of factors that may affect future results is contained in Verizon's filings with the SEC, which are also available on our website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available on our website. Before Fran takes your through the details of our results, I would like to cover a few special items that are included in our reported results. These are displayed on slide four. For the third quarter, we reported earnings of $0.78 per share on a GAAP basis. These results include a net gain on the sale of 700 B block spectrum of $0.02 per share, offset by net incremental interest expense of $0.01 per share related to the debt we have raised to finance the acquisition of the remaining 45% stake in Verizon Wireless. We have accounted for the gain on the spectrum sale at the corporate level. So it is completely excluded from Wireless segment results. Excluding these non-operational effects, adjusted earnings per share was $0.77 in the third quarter compared with $0.64 a year ago. Year-to-date adjusted earnings per share was $2.18 compared with $1.87 last year. Our discussion of operating results and growth rates in this presentation exclude the effects of these two items and they are not part of our segment results. Finally the quarterly growth rates disclosed in this presentation are on a year-over-year basis unless otherwise noted as sequential. With that, I will now turn the call over to Fran.

Thanks Mike. Good morning, everyone. In the third quarter, our key strategic networks and platforms, Wireless 4G LTE, FiOS and enterprise strategic services drove very strong operating performance and financial results. Our consolidated revenue growth rate increased once again and our focus on cost efficiency and improved profitability resulted in double-digit growth in both, operating income and earnings per share, which we have delivered in every quarter this year. Third quarter adjusted earnings per share of $0.77 was up 20.3%. Year-to-date adjusted earnings per share of $2.18, represents 16.6% growth. In Wireless, we had another very strong quarter of growth and profitability. We posted sequential quarterly improvement in terms of new retail connections and smartphones. Total retail net adds were 1.1 million, which included 927,000 high-quality postpaid net adds. Service revenue growth increased to 8.4%. EBITDA increased 10.7% and our EBITDA service margin was 51.1%. All of this was accomplished with 7.6 million smartphone activations this quarter, which was up sequentially and 12.5% higher than last year. Our Wireline results in the third quarter also showed improvement. Consumer revenue increased 4.3% driven by FiOS penetration. Enterprise Strategic Services revenue grew 5.2%. Total Wireline segment EBITDA increased 3.8% and EBITDA margin improved to 22.7%, up 50 basis points, sequentially, and 100 basis points year-over-year. Our strong operating performance and disciplined capital spending is driving growth in free cash flow. On a year-to-date basis, free cash flow increased $3.1 billion to $16.6 billion, an increase of more than 23%. All-in-all, we had a great third quarter capped off by a lot of activity since Labor Day. We announced an agreement with Vodafone to acquire its 45% interest in Verizon Wireless. The transaction will be accretive to earnings per share, provide additional operating cash flows and enable greater flexibility to develop converged solutions…

Thank you, Fran. Brad, we are now ready for questions.

Thank you. We will now begin the question and answer session. (Operator Instructions) Your first question comes from John Hodulik of UBS. You may go ahead with your question.

Thanks. Good morning, guys. Two quick ones. First, on the Wireless margins. Fran, how much of an impact did the Edge plan and the 24-month upgrade cycle have in the strong margin you guys posted in the third quarter? And then how should those issues affect the fourth quarter? And then I thought you talked about the uptick you had in the Wireless CapEx. You talked about the AWS deployment. Can you give us a little bit more detail on how that gets laid over and just sort of how quickly can you get some more capacity into the market on the LTE side?

Good. Thanks, John. On the VZW margins, so Edge, keep in mind we launched Edge at the very end of August. It really didn't really pick up speed until September. Our indirect channels did not get it until the very, very end of the quarter, so there really was no impact from the Edge program to these results. I mean, we will see more in the fourth quarter and we will wait to get to that to report it out, but very, very immaterial impact. On the 24-month cycle it's very hard for us to determine, because again people are proactive on when they upgrade to a cycle basis. Of course, you know it did delay some of the upgrades from going from that the 20-month to the 24-month and that went into effect on September 1, so again only really 30 days of impact there. We will probably see more of that in the fourth quarter. As far as the VZW margin impact from the two of them, I would say very, very limited in this quarter and you can see why the margin was the way it was just from an overall revenue increase and some of the cost containment measures that we have been putting in place for quite some time and we could talk more about that. As far as CapEx goes, so here is where we are at. Obviously, we know that we have completed the coverage build of our 4G LTE and an obviously if you look at our map, it's pretty significant coverage compared to our competitors. Now post June, all of our efforts have gone into the capacity and densification. And given where we are, if you look at some of the metrics, I mean, if you think about 38% of our customers are on the 4G network and they are generating 64% of the data usage, this is a pretty significant volume of usage going through that network and we know that given the growth of this we have had some densification issues in major cities like New York, Chicago, San Francisco and we are totally focused on those types of issues, and what you see us doing is being very proactive in more in-building coverage, more densification cell sites, launching the AWS spectrum, so you are going to see that through in the fourth quarter and that's why we increased the CapEx spending, but I think the walk-away here is, is that we are extremely focused on our network. It is our brand, we will continue to perform in this area and also the return here if you think about every dollar I put into that network when you have 64% of the data on a tiered, shared everything plan, you can see that coming through from our revenue, so the return on the invested capital is pretty immediate and it's pretty significant, so we will continue to concentrate on that effort.

Right. Thanks.

Okay. Brad, we are ready for the next call.

Your next question comes from Jason Armstrong of Goldman Sachs. You may go ahead with your question.

Hi, thanks. Good morning. A couple of questions, I guess focused on Wireline. First, the FiOS volumes very, very strong quarter in broadband. I think it adds up almost 30% year-over-year. Saying that, the extent to which video is bundled to this, looks to have taken a bit of a hit in the quarter. I think there is a 40,000 disconnect between broadband adds and video adds in the FiOS side. That's much larger than normal. Can you help us think through that? Then second, just on Wireline margins. Good progress in the quarter on margins. The comment on margin expansion for 2014, maybe you can help us think through, are there anything that that necessarily relies on? For instance, if enterprise is still under pressure next year, does that put pressure on margins? Or can you grow margins despite that? Thanks.

Thanks, Jason. So on the FiOS broadband. We did have a very, very good quarter from a net add perspective, especially on a year-over-year basis and especially since when you look back in history third quarter is normally a very high churn quarter for us. Keep in mind a couple of things here. So on the broadband side of the house you have to remember that as we do 80,000 migrations from our Copper, who are voice and DSL only over to FiOS, you are getting voice and FiOS Quantum adds. And as I have talked before, we really don't approach these customers on a TV product for about five to six months and then it takes us about another three to four months of marketing to actually see some success in conversion and we see about a 30% conversion once we do that. They are really interested in the broadband speed and of course what you see in the Wireline segment today is, as we migrate these customers from the Copper product to the FiOS product, we are bringing them over at the same price. But what we see is almost immediately with the speeds that they are getting in the FiOS Quantum, they themselves are choosing to upgrade right into that 50 megabits and at times now even into the 75 megabit products. So their ARPU is going up which is generating some of this Wireline increase that you see. So TV net adds were up 13% year-over-year. Now granted, it means some of these adds we have got came from some of the disputes that happened in the competitive nature here during the quarter, but still even without that we would have seen an increase year-over-year in our productivity and our penetration of FiOS. So we are…

Great, that's very helpful. Thanks, Fran.

Brad, let's take the next question, please.

Your next question comes from Phil Cusick of JPMorgan. Your line is open.

Hi, guys, thanks. I think we all continue to be surprised with the Wireless service revenue growth. Can you talk about where customers are in terms of taking more data than the minimum? How many customers or how many families or per devices are taking more than sort of a standard 2-gig package per device, and where does 4G usage looks now? If not an actual number then versus where average usage was a year ago? Thanks.

Thanks, Phil. On the Wireless service growth. Obviously I am not going to get into exactly how many customers break bundles and all that, but I think there is some things that we have to understand here that's driving it, so first off if you look at this quarter, again we had a very strong quarter with 480,000 smartphone adds that are very high quality and these are all coming in mostly on our 4G and shared price plans, some of these are 3G phones obviously, but the majority is coming in on our 4G product. The other thing, I think, you have to understand too is that we are coming up on the anniversary dates of the 3G, when the iPhone was launched and those customers now are upgrading to 4G phones and moving into shared price plans. If you look at 3G usage and the customers moving into 4G, and they start to utilize this LTE network, they are starting to realize the benefits of that and their usage significantly goes up from where they were in 3G, so that's stimulating even if we come over and I have said before the way our sales force is approaching this is they recommend 2 gigs for every device that a customer brings into shared pricing, so even with that you think about that usage versus 3G device usage, that in itself is pretty significantly higher, so that drives the revenue. Then you look at the tablets and the Internet devices, you get into machine-to-machine connections or machine-to-machine it continues to escalate quarter-after-quarter and then of course then we look at the prepaid side of the house, so I think it's a combination of all of these things that are driving that. When you think about 42% of our basis on shared plans, we still have a long way to go of converting a lot of that 3G product over to the 4G and into the shared plans, so there is still a lot of runway here to continue to grow this revenue stream for us, so that's that and I think I answered the 4G versus the 3G usage.

Then if I can just follow-up quickly on your government comment a few minutes ago it sounds like you are a little cautious on 4Q in terms of enterprise decision making and things like that. Is that a fair read?

I think the cautious is, Phil, I don't see anything changing here from 3Q to 4Q. Again, you heard me say that keep in mind our federal and state government are in our Enterprise segment and that really is declining faster than the rest of the segment right now. Now, the positive to this is, is that within our cloud services it's fairly flat, so where we see the federal government during the sequestering period pulling back in some areas, they are actually buying some of the data center and cloud products so there is a balance here, but I don't think things get a lot worse but I don't see them getting any better.

Brad, let's take the next question please.

Your next question comes from Simon Flannery of Morgan Stanley. Your line is open.

Fran, I wonder if you could update us on the VoLTE rollout, when we are going to start to see that and when you start to see the benefit of lower smartphone cost and lower subsidies going forward? You touched briefly relating to the Vodafone, about the ability to bring converged solutions together, maybe you can expand on that little bit and talk a little bit more about what we might see from the cable joint venture over the next few quarters. Thanks.

On VoLTE rollout, we are still on track, you will probably see us have a VoLTE capable handset here in the fourth quarter. As we said that we will light up the VoLTE rollout starting in the first half of next year, so we are still very much on track on that one. As far as lower smartphone cost and subsidies, look, I think the ecosystem has a lot here. You are going to see a lot of new and innovative products come out in the fourth quarter, but subsidy is done on a handset-by-handset, manufacturer-by-manufacturer. Then obviously as you have heard me say before, the more manufacturers we can get into this ecosystem, and it really comes down to an operating system, the more competitive nature this marketplace will become, so I still believe that that will happen. Obviously, you have heard me talk about VoLTE will contribute to some, as we start to remove some of the CDMA chip, but then there is other technologies like multi class, multicast that will be put into the phone. So there is a lot of technologies being removed from the phone, but new technologies that are being implemented into the phone. So this is going to be a long path, but I do think, as I said before, subsidies will gradually come down over the next two to three years. On the converged solutions side, look I mean as far as the joint venture with the cable companies, we have talked about, we still have a distribution agreement with one another and we continue to work with one another to sell each other's products. But the marketing joint venture or co-development has been terminated and we are moving in our separate ways on that. And what you are going to see here is, as we talked about Verizon Wireless, the acquisition of Verizon Wireless, we now get to more of a converged middle with our consumer products between FiOS and Wireless and we no longer have the artificial wall up between the affiliate transactions or anything like that. So I won't talk about what you will see, but I think what you will see from us is a move forward of bringing to the customer the best product available between Wireline and Wireless.

Okay, thank you.

Brad, next question, please.

Your next question comes from Michael Rollins of Citi Investment Research. Your line is open.

Hi, thanks for taking the questions. Two questions. First on Verizon Wireless. Can you give us an some update, Fran, on the net debt? Then secondly, on the Wireline side, I think you mentioned that you have less than 1 million Copper customers in your FiOS footprint, if I got that quote correct. Can you talk about the significance of that in terms of the opportunity to take those remaining Copper customers and get them over to the fiber and the potential cost savings that you could generate by moving to fiber and really getting the one network architecture within your FiOS footprint, for at least the residential customers? Thanks.

Okay, thanks, Mike. So I guess this should be the last quarter I have to answer this question on net debt. So gross debt for Wireless is $10.2 billion, cash is $6.6 billion, net is $3.6 billion. On the Wireline side, yes you did get the quote right. So there will be less than 1 million customers that are on Copper within our FiOS footprint. And you see us from our migration strategy in the last two years, I think in the last two years now when we exceed our 300,000 for this year, we will have moved close to 600,000 customers from our Copper network into our FiOS network. We will continue to approach this migration. Now, if you think that we do 300,000 a year, you are looking at three more years to get that completed, but we will continue to try to accelerate as much as we can. And from a cost benefit, obviously what you are seeing is some of those benefits coming through the Wireline results today just from a repair metric, from a truck roll metric, the reliability of this network is drastically different than the reliability of the Copper network. So you are going to see us continue to invest in the FiOS infrastructure. One of the things that we are doing now is the network team has been working over the last year in provisioning the FiOS network into our enterprise and small business customers using the GPON technology. So we fully expect to utilize this FiOS backbone much more than it had been in the past. So you are going to continue to see this migration and you are going to see the cost benefits coming through our operating results.

And Fran, I just have follow-up on one other thing. So if you think about your Wireline footprint in total, are there any updated views on what you do outside of this core FiOS footprint?

Well what you are going to see us do is, obviously now, we have done some of this in the past, but using Wireless, our Fusion technology, from a broadband perspective. So when we talk about converged solutions and bringing the best solution to our end user customer, this goes into what we do with our Copper customers outside of the FiOS footprint and what do we do for them from a voice perspective and also a DSL perspective. And obviously we have Home Phone Connect and we have Voice Link on the Wireline side that we have already started to sell to our Copper voice customers as a substitute to the Copper product. So we have already done some of this but you are going to see more technology come out here in 2014 that's going to address these issues.

Thank you.

Brad, let's take the next question, please.

Our next question comes from David Barden of Bank of America. Your line is open.

Hi, guys. Thanks for taking my questions. Two if I could. Fran, just on the Wireline side. The consumer business has been really on fire, the best performing part of that entire segment right now and it's really been in the last two quarters or so that you have added about a $500 million worth of run rate revenue in that business and I know FiOS actually was growing in terms of net adds faster last year on average than it's growing this year. Can you talk a little bit about what the real drivers of that consumer business are and can we extrapolate those into 2014? Just teasing a part of your commentary about enterprise, if you took out the CPE or kind of talking about global enterprise being flattish year-over-year, but obviously government is a wake on that. Is it then can we interpret that the basic Enterprise business coming from non-government sources is actually starting to grow year-over-year? If you could kind of elaborate on that, it would be helpful. Thanks.

Thanks, David. On the Wireline consumer business, I think when we size this all up we really have three main focuses. As I have talked to you before, we have become a very disciplined pricing strategy around our FiOS product and we looked at cable a number of years ago, we looked that they were very, very disciplined in how they did price ups to match their content cost and we were not really good with that, but we started this as you know last year, very early in the year and we have a strategy going forward so we will continue to drive that strategy of pricing up the product equivalent to our content cost increases. If you look at the next level of concentration we have had is, we are going after market share. Now as far as slowness in the net adds there is some seasonality here, there is always something that happens in the environment that causes us, but look I mean there are some markets that were over 50% penetrated, so those markets have a slower growth, but we are still gaining share in some of our later markets like New York City, Philadelphia, Washington, which are, in my mind, underpenetrated to where they should be, so you are going to see a little shift. There could be some slowness though as we start to penetrate some of these markets in 50%, but the fact of the matter here is that we still have a long runway. If you look at our 39% penetration we still have a long way to go from a net add perspective, but the other thing that's driving this growth and we can't lose focus of it is the migration of these FiOS, of these Copper customers over to FiOS,…

Brad, next question please.

Your next question comes from of Brett Feldman of Deutsche Bank. Your line is open.

Thanks for taking the question. When you launched the Wireless deal, you had talked about an objective of getting back to your pre-deal leverage levels. I believe you said about four to five years, but correct me if that's wrong, but regardless of the timeframe I was hoping maybe you could just comeback and talk about some of the foundational assumptions that support that goal. For example, do you expect to see capital intensity continue to improve. I am curious what you are assuming about your ability to maintain or even grow your Wireless margins over that four to five year period? Then lastly, can you give us any color what you budgeted for spectrum purposes?

Yes, thanks, Brett. So look, I am not going to get in to the details of what we have projected. If you think about everything that we had considered here, we considered tax, we considered CapEx, we considered the incremental tax rate. As I said, our tax rate will increase to a 35% to 36% range from what we have always guided from a 31% to 33% range and that's because of the VZW coming over. We had to project out what our interest rate was. We know what that is now, based on the offering that we did. As far as CapEx goes, I have been pretty consistent here. You should consider us improving our CapEx to revenue ratio going forward. You should look at us as to what we have invested this year and we are going to do what we need to do to continue to invest in our networks, and our platforms. But moving out of this, there were three priorities that we set up to come to that four to five years. One was we will continue to invest in our networks and platforms. That is top priority for us. Next is, is we will continue to invest and buy licenses, either opportunistically or in the auctions. I can't tell you what that number is because obviously it's going to be a public auction and we have a lot of strategies around how we acquire licenses. But that was built into our model. And then finally, the dividend policy is also a very critical piece of this component to our equity shareholders and I think our board show that when they increased the dividend at the same time that they announced the deal. They are very confident in our cash flow. Then finally, we have a commitment that we will de-lever the balance sheet as quickly as possible. So look, I think if you look at the performance, if you look at our cash flow and our free cash flow this quarter, I think we are demonstrating that that four to five years is within our horizon and we will meet our targets.

And are you assuming you can maintain margins at roughly the same levels.

I am not going to get into giving guidance around margins. I think our performance speaks for itself and the margins speak for themselves.

Thank you.

Okay, Brad. Next question, please.

Your next question comes from Amir Rozwadowski of Barclays. Your line is open.

Hi, thank you very much and good morning, folks.

Good morning.

Fran, just a follow up on the prior question around VoLTE rollout. What does this mean in terms of network investment here? And specifically what I am trying to understand is are you where you need to be with respect to your network in order to provide ubiquitous VoLTE services nationwide? Or should we expect some additional investment in order to get to that level?

Yes, so, Amir, on this one, it's a good question. But look, the issue with VoLTE is coverage. And as I have always said, we will not rush the VoLTE launch until we are sure that when you connect up a VoLTE voice call, it will be very, very similar to a 3G CDMA call, because that's what our customers expect. They know what the CDMA footprint is. They know where they can call. It's an unbelievable network. We have to make sure that our VoLTE experience is the same and that's why we have taken such a long time and we believe that when we get to the first half of next year, the network will be ready, the experience will be very, very similar and that we will be ready to roll this out. But it is already built into the CapEx that we are spending. You should not see incremental CapEx for rolling VoLTE. It really is around coverage and of course it goes into the densification and capacities.

That's very helpful. And if I may, I just have a follow-up here, somewhat of a bigger picture question. As you mentioned this is sort of the fourth consecutive quarter in which you folks have posted 8% plus Wireless service revenue growth. How sustainable do you think this is going forward. And the way I am thinking about it is, what advantage does now controlling the full cash flow of Verizon Wireless provide you in driving initiatives to sustain this level of growth?

Well again, it goes back to the earlier answer that there is a lot of things going here and if you look at just sustaining this growth, I think I have been pretty open that says, look I can't sit here and tell you that 8% growth is going to happen forever in Wireless. I mean you are talking a huge base of revenue. So I do think that the growth rate will come down over time. But look, I mean there is so much technology being developed throughout the world that's running over LTE. If you look at our innovation center in Waltham and roll this out of our innovation center that we just opened up in San Francisco to welcome all the application developers into that center, so it really comes down to the application developers developing new technologies around LTE, so it's hard for me to determine what this continued growth rate will be but there is a lot of run way, there is a lot of technology and the growth rate is still there. Now, I will tell you that in the short-term, I do believe that we can continue on 8% growth, but over the long-term I would tell you that I think that's probably a high aspiration.

Great. Thanks for the incremental color.

Brad, next question please.

Our next question comes from Kevin Smithen of Macquarie. Your line is open.

I wondered if you could review where you are specifically in terms of the AWS rollout. I think it's been quoted from the key partner you are going to end the year at 5,000 AWS sites. Where are you at the end of Q3, and can you confirm the 5,000 number and what the target would be at the end of '14? Also maybe what kind of user speeds uplink and downlink you are seeing in the AWS markets versus the 700 markets particularly in New York, Chicago, San Francisco, you have cited higher congestion?

Thanks, Kevin. Yes. Look, I mean we are not going to get into a speed discussion, because speed has a lot to do with nobody is on the network, so obviously you are going to generate a lot higher speed, and what we are building the network for is a very consistent reliable experience and we have always said that the network engineers have designed the LTE network when it is fully loaded and that's the key here. When it's fully loaded, and obviously with 64% of data being driven through that network, it's pretty loaded, you are going to experience on average 10 megabits to 12 megabits. Now you will get burst of 20-30, and I know there was a report that came out about AWS of 80, but there's no one the network, so I think it would be irrelevant for me to speak to that, but here is the point. The point is, is that we are doing a lot around our network. We are launching the AWS. As I said, we are launching a lot of technologies and the issues what they were currently having in some of the larger cities with the densification these are started to be fixed in the third quarter and we are going to make a lot of progress in the fourth quarter, so I think that's really what's important here. To me, it's kind of irrelevant how many cells sites have what, it all comes down to the quality of the network, the reliability and the consistent performance of that network.

You touched on the incentive option. How long do you think this AWS spectrum can carry you and if the incentive option gets pushed back for whatever reason, do you have enough capacity in AWS to last you through 2016-2015? What are the scenarios?

Well, it's not just AWS, because we can re-appropriate our CDMA spectrum in [this] we need over into our LTE network, so as I said before given the timeframe we are in now, we are good for at least three-plus, four years with the spectrum holdings we have, but obviously we are going to participate in the auction, we are going to need more spectrum for the future of our business and we are going to invest in that spectrum.

Brad, next question please?

Your next question comes from Tim Horan of Oppenheimer. Your line is open.

Maybe just two Wireless clarifications and an update maybe on what your cloud strategy is at this point. I know you are launching new product, but on Wireless, can you maybe just discuss market share shifts? Sprint was shutting down the network and T-Mobile has been making some marketing initiatives. Have you seen any real changes out there in market share? Then Fran, I know you have talked about the ARPU growth, but are you seeing any resistance for the price increases. It seems that ARPU growth is really, really positive for the longer term trend as it [continues] it's doesn't kick-in. Just if you can talk about your new enterprise kind of cloud data that you launched that would be great. Thanks.

Thanks, Tim. On the market share side, look, I mean we did 927,000 net adds this quarter which was a strong quarter. Obviously, we could have done more, but there was constrains in the iPhone, especially around the 5s, and I think that constrained us for this quarter, but that will roll into our fourth quarter here, so from a market share standpoint, we continue to gain market share. Now, I can't sit here and tell you that we don't lose customers to our competitors. If you look at some of the other things that we were dealing with, I mean we do have some low end, if you will, some single line basic phone customers and older 3G smartphone customers. And what we see the shift here is, we are seeing them shift out of postpaid into our retail prepaid products, but we are also seeing some of them shift off to some of the lower end price plans of our competitors. We did launch some things in September and we saw some improvement there and we will continue to get aggressive with those types of customers here in the fourth quarter. But from a market share perspective, we are gaining market share. I mean I think we will still post the best quarter of any competitor out there. As far as the ARPA trend, look, I mean this just goes what I have said before, as the focus going forward is not necessarily how many net adds I do, it's how we generate the growth of our topline that produces the margins. And this goes around everything I have talked about this morning with the quality of the network, 3G to 4G, all of these other devices and some of this ARPA growth, as we say, is revenue…

Thank you.

Brad, we have time for one final question.

Your last question comes from Jennifer Fritzsche of Wells Fargo. You may go ahead.

Thanks, Fran. Two quick questions. First on SMB. Cable seems to be moving more upstream, at least that's from some of the (inaudible) we are hearing. I am just wondering if you are seeing that and how critical is Wireless as a part of your sales pitch to this segment, because that's obviously an advantage for you. Then quickly on pre pay. AT&T has made some more recent comments that they are going to be more aggressive on pricing there, probably more to your league. So just your quick thoughts on your prepaid strategy here? Thanks.

Alright, thanks, Jennifer. So on small business, look, I always split this between two segments. We have a segment that's within FiOS and a segment that's without, outside of FiOS. Obviously Verizon Wireless does an unbelievable job with small business and Wireless products. But within our footprint, within FiOS and outside of FiOS, there is two things. One is, within FiOS we are actually gaining share in the small business environment. The issue is that obviously we have to pass those small businesses with FiOS and quite honestly that has not been not been a concentration of ours. Most of it was to residential homes within our footprint. So now it's building out all of those malls and so forth. So we have gone down the street. Now the issue is getting that in to the small stores of these small businesses. So within FiOS, we are doing a fairly good job. Outside of FiOS, it's hard for me to compete with the speeds that cable can offer them through the DOCSIS 3.0 type technology. So yes, we are using Verizon Wireless. We are using Fusion where we can. But it's hard to compete because Fusion can't supplement a hard wired broadband connection into a very populated area. So that segment, we are loosing share. Within FiOS we are gaining share. On the prepaid strategy, I have said all along, we have our prepaid on 3G and the theory here is to keep the 3G network as full as possible to contribute contribution margin since we are not investing in that any more and we will continue to get as aggressive as we can and you can see that over the last year and a half we have become more aggressive in the prepaid environment but we also use our resellers to drive the lower end of prepaid, because we don't want the brand of Verizon Wireless connected to that low end environment with the quality premium network of Verizon, so that's the differentiation I think between us and our competitors, but you can see we continue to make strides in prepaid and we will be as aggressive as possible on the 3G network to be competitive.

Before we end the call, I would like to turn it back over to Fran.

Okay. Thanks, Mike. Just a few comments here before we end the call. Our industry has a very healthy competitive environment and we are forecasting continued strong demand for our video and broadband across multiple networks. We are executing effectively within this competitive environment, consistently delivering strong results, positioning ourselves for future revenue growth, earnings and cash flow growth and we will continue to invest in all of our networks to deliver the most reliable customer experience and that's what they expect. We are excited about the future as we continue to invest, innovate and deliver for our customers, our shareholders and our employees. Thank you for joining the Verizon call this morning and have a great day.

Ladies and gentlemen, that does conclude the conference call for today. Thank you for your participation and for using Verizon Conference Services. You may now disconnect.