Om says Verizon should walk and likely spur a proxy fight. I say he's right.
Start with the fact that Verizon now owns a huge chunk of MCI via the Carlos Slim sale, and then add in that MCI will have to cough up 250 Million smackers for breaking up the deal they agreed to and Verizon can play a waiting game, while taunting Qwest.
I say Verizon should buy Bell South, the company that has the most to really offer Verizon--full control of the east and then the southeast. After that they can figure out with SBC what to do with the QWEST pest. In my view Verizon after Verizon and Bell South merge, the combined entity can sell off their stake in Cingular to SBC, buy out Vodafone for the same money leaving the USA with three RBOC's with national reach and Sprint being largely a data company with a wireless sister, Sprint PCS.
What will then happen will be a page taken out of the cable operators. Territory or system swaps. SBC and Verizon can look at the map and swap assets that are inside the other's core territory. Phone service returns to some semblance of order on a local level, the cable operators become their target and they can begin really rolling the trucks for FTTP.
QWEST, who was before SBC went after AT&T, the most network ready, remains the most network entrenched of the RBOC's behind SBC/AT&T. That means Verizon sets its sights on Sprint and gets the national network and smarts it lacks, or what it would have gotten from MCI, but acquires a few more key markts, the whole Latin American gateway market in Miami, the growing Carolina's tech sector, Atlanta which consistently is growing farther and wider and the rapidly growing Nashville area, all of which alone are worth the price of buying Bell South.
While all of this is speculation, in my mind it makes total sense. Verizon can even sell back to Qwest for cash the Carlos Slim stock, at a hefty premium after they are done being the spoiler shareholder just by being irritating.
In doing all this, Verizon eliminates Vodafone (Verizon Wireless via SBC buying out Cingular stake), widens their reach (BellSouth and Sprint), expands their market size (BellSouth) and gets a more advanced networking company (SPRINT). This is an investment banker's dream, and what's more, a large chunk of it gets fueled by other people's money.