Verizon, Unions Negotiate As Strike Deadline Looms
By Amol Sharma
The Wall Streeet Journal
Saturday, August 2, 2008

Verizon Communications Inc. was facing a weekend labor strike deadline as it negotiated Friday with unions representing about 65,000 employees.

The workers object to the company's plans to require employees to contribute toward health-care coverage costs. They also are concerned that the telecommunications provider is reducing the bargaining power of its work force by subcontracting jobs to nonunionized workers.

The unions have threatened a work stoppage if a deal isn't reached before the existing labor contract expires at 12:01 a.m. Sunday. Verizon spokesman Peter Thonis declined to comment on any specific union objections but said the two sides were making good progress. "We're very optimistic it will be resolved before the deadline," Mr. Thonis said.

Union officials weren't as sanguine about the prospects of a deal being reached. "We still have a lot of ground to cover in the negotiations," said Candice Johnson, a spokeswoman for the Communications Workers of America, which represents about 50,000 Verizon workers. The CWA and the International Brotherhood of Electrical Workers, the other union involved in the current discussions, represent workers in Atlantic states stretching from Massachusetts to Virginia. Verizon has a total of 230,000 workers nationwide.

A work stoppage, even a relatively brief one, could affect the company's aggressive rollout of a fiber-optic network that powers its FiOS television and high-speed Internet services. A strike also may disrupt customer service for existing Verizon subscribers, which the company can ill afford as it battles cable providers for customers.

Some Verizon workers have rallied in recent days to threaten a strike, and both unions have voted to authorize one. The health-care issue is particularly contentious. Verizon currently picks up the entire cost of insurance premiums for CWA and IBEW workers. Such arrangements are relatively uncommon. According to a 2007 survey by the Kaiser Family Foundation, 20% of workers with single coverage and 6% of workers with family coverage work for a firm that pays 100% of insurance premiums.

Beyond the issues being discussed, the unions have long-standing concerns about the ability of workers to organize at Verizon, especially in its Verizon Business unit, which was formed after the company acquired MCI Communications Inc. in 2006. Verizon Wireless, a joint venture of Verizon Communications and the U.K.'s Vodafone Group PLC, has very few unionized workers. The current union discussions affect only wireline division workers representing about 25% of the company's revenues, according to Mr. Thonis.

Some industry observers see a strike as unlikely. Chris Larsen, a Credit Suisse telecom analyst, predicted workers wouldn't support a strike in the end, especially given the weakening economy. "There hasn't been enough saber-rattling to indicate they really want a strike," Mr. Larsen said. One alternative to a strike is for employees to work without a contract for a certain period while negotiations continue.

Verizon recently began selling FiOS in parts of New York City, a crucial market where it will go head to head with cable providers Cablevision Systems Corp. and Time Warner Cable Inc. Verizon reported a solid second quarter based largely on strong wireless results. But its 176,000 FiOS TV subscriber additions were lower than some Wall Street analysts expected.

Write to Amol Sharma at amol.sharma@wsj.com

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