Interesting that Verizon thinks of the high level of competition there now is in the US telecom market, but I would argue that if that was really true, the company would be having much less profit success, and the executives would be earning a lot less!

Verizon telephone workers strike

Verizon Communications’ workers have gone on strike for the first time in 11 years after failing to reach an agreement on a new contract that the US telecoms group’s chief executive says is necessary to keep costs in check.

Union officials representing more than 45,000 workers in the northeast said thousands of striking workers on Monday joined picket lines and rallies for the second day of strikes at more than 100 Verizon locations across New York and New Jersey.

Like other big US telecommunications groups, Verizon has been forced to cut costs in its traditional phone business. Customers have been switching to mobile phone services and lower-cost alternatives like Skype. Cable companies are also luring them away with offers of the ‘triple play’ bundle of video, voice calling and broadband internet access.

There have been no early reports of disruption to the company’s fixed-line services. But the strike represents one of the first tests for Lowell McAdam, who took over as Verizon’s chief executive last week.

In a letter to management posted on the company’s website justifying the need to obtain better contract terms, Mr McAdam said: “It’s no secret that the wireline business has experienced a 10-year decline in our customer base and in profitability, despite investing billions in improving our network, processes and systems.”

“We have taken many steps to offset this decline, including reducing our workforce, increasing the amount our management employees contribute to their benefits, and even selling some of our Wireline properties,” he said. “We have arrived at the point where we must make additional hard decisions.”

The strike was called after failure to reach agreement on issues including healthcare costs and pensions during last minute negotiations in New York and Philadelphia over the weekend. The existing contract expired at midnight Saturday.

The strikers are members of the Communications Workers of America and the International Brotherhood of Electrical Workers who work for Verizon’s traditional fixed-line phone operations as telephone and repair technicians, customer service representatives and operators from Massachusetts to Washington.

Candice Johnson, CWA Communications Director, accused Verizon of failure to show up for contract talks: “Verizon workers are waiting for management to demonstrate that it’s ready to bargain. In fact, we’re looking for Verizon to stop cancelling bargaining sessions that have been scheduled.”

The dispute does not affect Verizon Wireless, the joint venture mobile operator owned by Verizon Communications and Britain’s Vodafone group.

Mr McAdam added: “Now we are asking our union-represented employees to help us on a variety of issues that could streamline our processes and further reduce our wireline cost structure while keeping their overall compensation and benefits among the best in corporate America.”

Mr McAdam pointed out that the contract terms were negotiated when Verizon was under far less competitive pressure.

The unions argue that the company remains competitive and have rejected the need for concessions at a time when the company as a whole continues to report strong profits.

Copyright The Financial Times Limited 2011.