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

“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.

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