RealTime IT News

SBC Coping During 4-day Strike

By Ron Miller

SBC's networks continue to run at a 99.9 percent reliability rate even though 100,000 unionized SBC employees in 13 states went on a 4-day strike at midnight Thursday, the company said.

SBC spokesperson Selim Bingol said the company implemented its strike plan when workers walked off the job.

"We've had a contingency plan in place for some time, and it's active right now," Bingol said. "We have 40,000 managers, contractors, and retirees [covering for the striking workers] and the network is operating smoothly. There has been no impact on service."

Bryan Van Dussen, an analyst at telecommunications research concern The Yankee Group, said that telephone companies have spent the last several years automating many functions, which he thinks should help minimize the impact of the strike.

"The truth of the matter is, the old telcos of yesterday have invested a great amount of capital and energy in automating and improving processes, making them increasingly less manual. I would expect any phone company to ride out or manage a [brief] strike without a lot of heartache," Van Dussen said.

The union, represented by the Communications Workers of America (CWA), hopes to increase job security, especially in new growth areas of the company and wants to avoid having the company shift escalating healthcare costs to its members.

Union president Martin Bahr said the purpose of the strike is to show SBC's resolve without having a major impact on the company's future.

"We are making this a limited job action right now to drive it home to SBC that our members are serious about securing their future at SBC," said Bahr. "We know that a prolonged strike could cause a loss of major customers and do significant damage to the company, and hopefully that can be avoided."

SBC's Bingol said the company is merely trying to keep up in an increasingly competitive marketplace and that it needs the union's support to help it through tough times.

"We are facing a very severe economic and competitive challenge. [At the same time] we are trying to get a better handle on healthcare and trying to deal with competitors who are non-unionized. We are trying to maintain jobs and benefits and we need the union to help us along. The issues really revolve around them picking up more cost of healthcare and other job security issues," Bingol said.

Bryan Van Dussen concurs that traditional telephone companies have faced competitive pressures recently with challenges from alternative phone sources, but Van Dussen feels Voice over IP (VoIP) is not a factor yet. However, he said he thinks SBC is actually well positioned to expand in growth markets such as wireless and broadband, even if these are smaller than the traditional markets.

"VoIP isn't factoring into it at all," Van Dussen said. "It's not having a material effect on revenue or loss of share. As far as wireless or broadband, the other two dimensions of the market place that are likely to dislocate revenues, hell they are in the thick of it. I don't think those things are materially affecting the company."

He continued: "I think they are well positioned to attack new growth markets, but these markets are still relatively small compared to traditional telephone markets. There are still drops in revenue and we will continue to see top line numbers that pressure valuations on these companies," Van Dussen said.

But Dave Burstein, editor of DSL Prime, an online industry publication that tracks DSL and cable issues, isn't so sure it's so clearly about competitive pressures. He said one has to factor in the enormous salaries of the SBC CEO (and other industry executives), and the impact that has on workers.

"Telephone workers are sick and tired of $50 million annual salaries for their CEO, and at the same time being asked for give backs. $50 million is not a big number for a company the size of SBC, but the actual cost in terms of worker resentment and government skepticism is [much higher] than the cost of paying that kind of salary," Burstein told internetnews.com.

"Every phone company is constantly begging for price increases in state after state. It's pretty hard to justify raising everyone's phone bills to pay for $50 million salaries and private jets to golf tournaments," said Burstein.