Don’t look now, but this weekend might just see a strike break out on telecommunications land. Verizon and its wireline employees are on the brink, with the current contract expiring at 12:01am on Sunday. The CWA and IBE have already voted to authorize a strike, which would impact 45,000 Verizon workers on the east coast. I’d like to think this one will be short or even that they could work something out at the last minute, but it could be that the situation is ripe for something much uglier.
Verizon’s wireline business is of course always under pressure these days from losses from the copper side of things and the expense of its FIOS fiber buildout relative to uptake. And obviously, one of their key tactics to keep costs inline is to find ways to cut benefits, limit salary growth, and of course reduce headcount. We know this story well. But Verizon as a whole is not hurting and pressure from technology and competition is part of the game. With its huge positive cash flows, the addition of the iPhone to its lineup, and its relatively lower dependence on aging copper after selling off most of its rural assets, they seem to be in the catbird seat right now and will probably find it rather more difficult than usual to generate much sympathy.
Meanwhile the rest of the world is feeling the effects of recessionary pressures, high unemployment, and general disillusionment with a recovery that benefited the likes of Verizon but not so much the little guy. Frankly there are a lot of angry people out there who aren’t going to back down easily. Lots of those people work at Verizon, and unlike with the spate of layoffs we have seen elsewhere in the non-unionized part of the sector, they have this alternative way to make themselves heard and send a little pain back the other way. I can’t say I blame them either. Meanwhile, the political situation nationally is, if anything, more divided and less interested in dialogue than I have ever seen it.
The unions say that Verizon wants to cut all sorts of stuff, Verizon says the unions aren’t willing to go along with a necessary $100/month employee contribution to health care. Doesn’t matter really, the actual points of disagreement could have been anything. This kettle may simply be ready to boil again. What that will mean for Verizon’s customers, both consumers and wholesale (e.g. CLEC), is unclear. Initially probably nothing substantial, but if things don’t get resolved quickly, who knows.
Or maybe cooler heads will prevail. After all, it’s not as if we have a brand new CEO at Verizon who needs to prove he’s got what it takes to lead the company and can’t afford to start off by backing down to the unions. Oh wait. Never mind.
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