RealTime IT News

BellSouth to Cut 5,000

It's been a bad week to work for a phone company, with BellSouth announcing Friday staff cuts of nearly 5,000 in the coming months.

Executives don't expect to surprise employees with a pink slips, instead opting for a voluntary separation plan to both managers and non-managers. The Communications Workers of America union will oversee the non-management reductions.

BellSouth expects to take a $250 to $300 million charge to pay for the employee reductions.

The reduction is necessary because of a slow economy, increased competition and regulatory pricing pressures, according to Duane Ackerman, BellSouth's chairman and chief executive officer.

"We face a fiercely competitive marketplace, and we must continue to reduce our cost structure in order to compete," he said. "We also must continue to deliver our products and services at competitive prices to meet the increasing demands of our customers."

Most local exchange carriers have blamed their woes on The Telecom Act of 1996, which opened up the industry to competitors, and has been fought tooth-and-nail by the Bells since its adoption.

On Tuesday, SBC Communications announced its own round of layoffs, totaling 5,000, and also attributed it to a slow economy and government regulations.

In its release, SBC President William Daley also pointed the finger at the Federal Communications Commission (FCC), the agency responsible for telecom enforcement.

"As the rules stand now, SBC is discouraged from investing in new infrastructure or new jobs," he said. "These rules are not economically rational and they are uncertain at best."

Ackerman's statement Friday comes as no surprise to many industry analysts, who quickly point to BellSouth's stellar success deploying digital subscriber line (DSL) service to its customers.

His statements belie the fact the company has experienced a 188 percent growth rate (or 625,000 lines) in broadband deploymentt over the last quarter, which Ackerman touted as tops in the country.

Two weeks after making the statement in January, Ackerman went on to say that despite the success last quarter, the government still needs to change its telecom policies because it "was not designed for today's competitive marketplace nor is it designed for the emerging world of digital communications."