From: marialina.h.dominguez@verizon.com
Sent: Thursday, May 27, 2004 4:53 PM
To: rule-comments@sec.gov
Subject: Comment on Concept Release No. 34-49405 (s7-13-04)





File No. S7 – 13 – 04
Concept Release: Securities and Transactions Settlement, Release No. 34 –
49405

Ladies and Gentlemen:

Verizon Communications Inc. strongly favors action by the Securities and
Exchange Commission to eliminate physical securities certificates from the
U.S. trading markets and clearance and settlement systems.  We
wholeheartedly concur with the comments submitted by the American Society
of Corporate Secretaries (ASCS) on May 10, 2004.  In particular, as a
Delaware corporation, we would welcome the Commission’s support of efforts
at the state level to amend state laws to permit issuers to eliminate the
issuance of physical securities certificates.  [We have indicated to the
Securities Industry Association that we support the removal of the
requirement under Delaware law that shareowners have the option of
requesting a physical certificate.]  Rather than reiterate the observations
set forth in the ASCS letter, we thought it would be helpful if we provided
some concrete examples of why we believe that dematerialization would
provide both shareowners and issuers with significant benefits and cost
savings.

A Dow 30 company, Verizon is one of the world’s leading providers of
communications services, with a current market capitalization of
approximately $100 billion.  We have over 1 million registered shareowner
accounts, approximately 46% of which are in the Direct Registration System
(DRS).  Despite the fact that nearly one-half of our registered accounts
are in DRS, we still have about 1.4 million physical share certificates
issued.  In 2003 we responded to over 110,000 separate inquiries from our
shareowners specifically relating to their physical share certificates.

Lost certificates and the processing of routine certificate transfers
represent significant activities involving both our transfer agent and our
corporate staff.  Difficulties encountered by our shareowners with
presenting proper documentation, together with the expense of delivery,
safekeeping and, in some cases, surety fees, often translate into loud
calls of dissatisfaction from our shareowners with the current system of
transferring ownership in our securities through physical certificates.
Nonetheless, many of them are clearly “attached” to their physical share
certificates because a physical share certificate has traditionally
represented the only means through which a retail investor can own an
equity interest in a company.

While we acknowledge that some shareowners may feel that there is a benefit
to holding a physical certificate, our experience of managing certificated
share positions both on a routine basis and through numerous mergers, stock
splits and odd-lot buybacks confirms the opposite: for shareowners, the
risks of holding physical share certificates far outweigh the benefits.
Shareowners who hold book-entry positions, on the other hand, benefit
greatly from the efficiencies of an electronic settlement system.  We
continue to believe that some shareowners do not fully appreciate the fact
that they may own their shares in Verizon through DRS without the need to
maintain a brokerage account or pay any one-time or annual maintenance fees
for this privilege.

Our last merger, when GTE Corporation combined with Bell Atlantic
Corporation to form Verizon, provides a good example.  Prior to the merger
GTE had over 400,000 registered shareowner accounts.  At the merger close,
all DRS and other book-entry accounts were automatically exchanged for
Verizon shares.  Approximately 52% of the former GTE registered shareowner
accounts, however, did not present their physical share certificates at the
time of the merger close.  A year after the merger close more than 50,000
of those accounts still had not exchanged their shares, and today, despite
the fact that we have spent over $30,000 on mailing costs alone for
follow-up reminders, about 15,000 remain unexchanged.  These shareowners
have not received their dividend distributions and run the risk of
escheatment on the unexchanged shares.  Clearly, the shareowners holding
book-entry positions had a far more efficient and risk-free experience.

Our experiences and those echoed by our peers and industry organizations
support the conclusion that dematerialization is beneficial for issuers and
shareowners.  A legal mandate from the Securities and Exchange Commission,
and other appropriate regulatory and listing agencies, will assist issuers,
such as Verizon, in facilitating the elimination of physical securities.

Sincerely,

Ms. Marialina Dominguez
Executive Director – Shareowner Services
Verizon Communications Inc
1095 Avenue of Americas, room 3619
New York, New York 10036
212-395-1846 (office)
212 921-2917 (fax)
marialina.h.dominguez@verizon.com