In the tentative agreement with the CWA and IBEW announced August 10th, Verizon conceded on points that were headlined as key to both sides.
First, Verizon will continue to pay 100% of health care premiums for current employees and retirees. Second, some jobs that have been in the non-union Business (ex-MCI) group, and some formerly non-union temp workers, have been re-classified as permanent union jobs. Third, Verizon agreed to wage and pension band increases (10.87% compounded over three years), plus an additional cost of living bump in wages.
The agreement is complex and the specific starting positions of each side have not been disclosed, so it is unclear how far Verizon and the unions each fell short of their original objectives. For example, while the unions celebrate that formerly non-union SMB tech jobs will obtain union recognition, VZ management indicates that this is achieved by transferring positions to the unionized Telecom group rather than by admitting the unions into the Business group. Also, there is a long-standing theatrical convention, involving parts played by both management and union negotiators, that agreements must be presented by union leaders as representing hard-fought gains won on behalf of dues-paying union members. However, one of the agreement terms reveals that Verizon management believes that it did not achieve the cost savings that it sought. Unlike the earlier five-year contracts, this new agreement will run only three years which Verizon explains will provide “additional flexibility to closely align future agreements to marketplace changes.”
Each side had reasons to fight and reasons to settle. In the end, it looks like Verizon’s big reason to settle – no interruption to marketing and installation of FiOS in New York City and elsewhere – outweighed the unions’ concerns about what they refer to as “a very tough economic and political environment.”
For cable operators, this outcome of Verizon’s latest confrontation with its unions means no time off from FiOS competition, continuation of Verizon’s current labor costs, and a new benchmark for the MSOs’ own labor relations.
Verizon’s top executives may now be hunting for other ways to off-set ongoing high labor costs. It’s unlikely that their first choice will be to sacrifice their own bonuses. Perhaps, as occurred after the last Verizon labor agreement in 2003, they will find cost savings by laying off lower level managers. And then, three years from now, they’ll have an opportunity to arm-wrestle again with the CWA and IBEW.
Tuesday, August 12, 2008
Friday, August 1, 2008
DISH Network Nail-Biter As ATT Decides Next DBS Deal
In April, AT&T said it would no longer offer DirecTV in its former BellSouth territory, leaving DISH Network “for the near term” as its sole satellite TV provider across the 22-state AT&T footprint. Then, in June, AT&T notified DISH Network that its distribution contract will terminate at the end of 2008.
This does not mean AT&T will stop offering satellite TV. AT&T now forecasts that U-verse will be built-out by end-of-year 2010 to reach 30 million households, up from 11 million today. Even if this is achieved, it would still leave 40%-50% of the households in AT&T’s footprint with no “advanced TV” option unless AT&T has a satellite TV partner.
Although still needed, satellite TV seems to have lost its magic for AT&T as a draw for new subscribers, which may help to explain why AT&T would want to change its DBS distribution deal. AT&T’s growth in satellite TV connections, net of churn, declined precipitously during the last four quarters, from 140,000 (3Q07), to 130,000 (4Q07), to 116,000 (1Q08), down to just 3,000 (DISH-only 2Q08). AT&T attributes this in part to the greater appeal of U-verse, which gained 318,000 subscribers during 1H08, almost three times AT&T’s net new satellite TV subscribers during this period.
DISH Network has the most to lose if AT&T doesn’t renew. In the DISH Network quarterly SEC report for 1Q08, AT&T is credited with producing a “significant percentage” of DISH’s gross new subscribers. Of 730,000 gross ads during 1Q08, DISH gained only 35,000 net new subs. Lacking AT&T distribution, DISH may start to suffer net losses of subscribers.
In DISH’s favor, AT&T’s innovative Homezone product integrates DISH satellite TV and DSL Internet access, in order to provide VOD-like online movie downloads and remote DVR management, among other features. However, Homezone may not swing a big enough tail to wag the DISH dog. Its subscriber count is unreported by AT&T, but is probably nothing to brag about given that it is a subset of newly-added DISH Network subscribers. An AT&T deal with DirecTV would not necessarily mean the end of Homezone, although the Homezone DVR receiver would need to be adapted to work with DirecTV.
DirecTV is probably less desperate than DISH, but nevertheless would benefit from a distribution agreement that covers AT&T’s entire footprint. DirecTV’s earlier arrangement with BellSouth produced 818,000 subscribers by 4Q06, when AT&T’s purchase of BellSouth was consummated and DirecTV subscribers were last reported by AT&T separately from DISH subscribers.
DISH Network or DirecTV? “In terms of AT&T Homezone, it is premature to speculate. AT&T continues to discuss options with DISH, in addition to evaluating other short- and long-term options,” an AT&T spokesperson says.
This does not mean AT&T will stop offering satellite TV. AT&T now forecasts that U-verse will be built-out by end-of-year 2010 to reach 30 million households, up from 11 million today. Even if this is achieved, it would still leave 40%-50% of the households in AT&T’s footprint with no “advanced TV” option unless AT&T has a satellite TV partner.
Although still needed, satellite TV seems to have lost its magic for AT&T as a draw for new subscribers, which may help to explain why AT&T would want to change its DBS distribution deal. AT&T’s growth in satellite TV connections, net of churn, declined precipitously during the last four quarters, from 140,000 (3Q07), to 130,000 (4Q07), to 116,000 (1Q08), down to just 3,000 (DISH-only 2Q08). AT&T attributes this in part to the greater appeal of U-verse, which gained 318,000 subscribers during 1H08, almost three times AT&T’s net new satellite TV subscribers during this period.
DISH Network has the most to lose if AT&T doesn’t renew. In the DISH Network quarterly SEC report for 1Q08, AT&T is credited with producing a “significant percentage” of DISH’s gross new subscribers. Of 730,000 gross ads during 1Q08, DISH gained only 35,000 net new subs. Lacking AT&T distribution, DISH may start to suffer net losses of subscribers.
In DISH’s favor, AT&T’s innovative Homezone product integrates DISH satellite TV and DSL Internet access, in order to provide VOD-like online movie downloads and remote DVR management, among other features. However, Homezone may not swing a big enough tail to wag the DISH dog. Its subscriber count is unreported by AT&T, but is probably nothing to brag about given that it is a subset of newly-added DISH Network subscribers. An AT&T deal with DirecTV would not necessarily mean the end of Homezone, although the Homezone DVR receiver would need to be adapted to work with DirecTV.
DirecTV is probably less desperate than DISH, but nevertheless would benefit from a distribution agreement that covers AT&T’s entire footprint. DirecTV’s earlier arrangement with BellSouth produced 818,000 subscribers by 4Q06, when AT&T’s purchase of BellSouth was consummated and DirecTV subscribers were last reported by AT&T separately from DISH subscribers.
DISH Network or DirecTV? “In terms of AT&T Homezone, it is premature to speculate. AT&T continues to discuss options with DISH, in addition to evaluating other short- and long-term options,” an AT&T spokesperson says.
Verizon Strike Talks Down To The Wire
Union contracts at Verizon East (former NYNEX and Bell Atlantic) will expire at midnight, tomorrow, August 2nd. There has been no public indication of progress on key sticking points between Verizon and the CWA and IBEW. Union members have authorized a strike which could start on August 3rd if a new contract is not agreed.
The Unions are providing a running update on the negotiations, from their perspective, at http://www.cwa-union.org/verizon/. Excerpts follow:
Verizon Northeast (former NYNEX), 25 July.
CWA/IBEW 2213 and IBEW New England resumed negotiations with Verizon this morning in Rye, New York. …The focus of today’s meeting was on the marketing department side of Verizon. The Unions has raised the issue of the jobs of the future during numerous bargaining sessions since the beginning of these talks. No progress has been made on this important matter.
Our contracts expire on Saturday (sic), August 3rd. Strike preparation continues on both the National and Local Union levels. Members should be contacting their Locals about picketing and strike duty assignments if they have not already done so.
Verizon Mid-Atlantic (former Bell Atlantic), 28 July
The Unions and the Company met today and the Company provided counter-proposals to the Unions' health care proposal made in earlier meetings. The meeting adjourned and the Union will assess the counter-proposals and prepare a response.
Only a few more days remain until the contract expiration and we are still far apart on all critical issues and without any agreement on any issue. While it is still possible an agreement can be reached, it is most important that we are ready in the event this contract has to be negotiated in the street.
This contract is about the future. It will do us no good to win wages and benefits and then lose our jobs. Our members have made it clear that they understand and support our bargaining agenda. Special notice: Alpha Units and Moonlight Units are to stay on stand-by. Absolutely no jumping the gun. These units must act at the same time when the signal is given.
Meanwhile, Verizon is starting this week to install FiOS in New York City in the midst of an intensive marketing campaign. A strike that disrupts growth of FiOS in this market, and elsewhere, will be inconvenient for Verizon’s wireline business which increasingly relies on FiOS to compensate for decreases in local phone lines and DSL connections.
The Unions are providing a running update on the negotiations, from their perspective, at http://www.cwa-union.org/verizon/. Excerpts follow:
Verizon Northeast (former NYNEX), 25 July.
CWA/IBEW 2213 and IBEW New England resumed negotiations with Verizon this morning in Rye, New York. …The focus of today’s meeting was on the marketing department side of Verizon. The Unions has raised the issue of the jobs of the future during numerous bargaining sessions since the beginning of these talks. No progress has been made on this important matter.
Our contracts expire on Saturday (sic), August 3rd. Strike preparation continues on both the National and Local Union levels. Members should be contacting their Locals about picketing and strike duty assignments if they have not already done so.
Verizon Mid-Atlantic (former Bell Atlantic), 28 July
The Unions and the Company met today and the Company provided counter-proposals to the Unions' health care proposal made in earlier meetings. The meeting adjourned and the Union will assess the counter-proposals and prepare a response.
Only a few more days remain until the contract expiration and we are still far apart on all critical issues and without any agreement on any issue. While it is still possible an agreement can be reached, it is most important that we are ready in the event this contract has to be negotiated in the street.
This contract is about the future. It will do us no good to win wages and benefits and then lose our jobs. Our members have made it clear that they understand and support our bargaining agenda. Special notice: Alpha Units and Moonlight Units are to stay on stand-by. Absolutely no jumping the gun. These units must act at the same time when the signal is given.
Meanwhile, Verizon is starting this week to install FiOS in New York City in the midst of an intensive marketing campaign. A strike that disrupts growth of FiOS in this market, and elsewhere, will be inconvenient for Verizon’s wireline business which increasingly relies on FiOS to compensate for decreases in local phone lines and DSL connections.
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