On Wednesday this week, around 36,000 Verizon employees walked out in a strike to protest about changes taking place in the business. These union workers belong to the Verizon Mid-Atlantic and Northeast wireline businesses, providing landline ‘phone, television and Internet services. In particular, it’s the network maintenance, home installation and tech support, and customer service teams that have walked out. Verizon has been preparing for the strike for a number of months by training temporary non-union workers to take up these posts. In an emailed statement, Rich Young explained in an email statement that the temporary workforce are trying to handle day-to-day operations as best they can but there are some impacts to services. Verizon has cancelled new installations of its high speed Fio Internet and TV service for the next one to two weeks. Jeff Kagan, a telecommunications anslyst, explained the likely impact to consumers: “…if you have no problems with your phone service, you’re not going to notice but, if you have a service call, or an installation or anything that requires them to do some work, you’re going to be out of luck for a while.”
As the strike drags on, so customers may expect more and more issues. Currently, any problems are centred around the fixed line services but it is possible that ongoing staff shortages will impact Verizon’s primary business: wireless, where they are America’s largest carrier. And this highlights the issue at the centre of the strike: Verizon, which has almost 178,000 employees, is shrinking its slow-growing wireline business in response to changing consumer habits. Customers are using landlines less and less and instead switching to smartphones. Similarily, paid television use is slowing and instead people are opting for a wireless television service, such as Hulu or Netflix. From a business perspective, Verizon is doing the right thing by concentrating on the wireless side. As part of the slimming, the company is attempting to consolidate call centres and reduce health care costs. Employee unions also claim that Verizon is increasing its reliance on cheaper, outside contractors for certain jobs and that they are working to preserve good-paying American jobs. It’s something that Democratic candidate, Bernie Sanders, spoke about earlier in the week although he also claimed that Verizon were not paying taxes, something the company denied.
Verizon’s Chief Executive Officer Lowell McAdam explained via LinkedIn that: “Nostalgia for the rotary phone era won’t save American jobs, any more than ignoring the global forces reshaping the auto industry saved the Detroit automakers.” Verizon is trying to manage the situation as best it can, aware that the wireline business faces stiff competition and any price increases could result in more customers switching away. However, the longer the strike goes on and the more people are impacted, the greater the risk that customers will switch away anyway: something both Verizon and the unions must surely be aware of.