How strange. This is just the sort of market distortions that you have to
expect from the MVPD business.
Much of this article is about supporting "middle class jobs," but it should
instead be on supporting a sensible, undistorted market. Here are some key
points that are just superficially mentioned:
"Over 99 percent of the striking employees work on the so-called wireline side
of its business - that is, the traditional phone landlines and the fiber optic
network, called Fios, which offers subscribers Internet, voice and video
service. It is a business where growth is slow or declining, as more and more
consumers give up landlines and traditional subscription television."
BS, right? You can't conflate land line telephone service with cabled broadband
service. Verizon even goes to the extreme of justifying itself by talking about
"nostalgia for the rotary phone era." How disingenuous. Demand for cabled
broadband is going up, and remains strong. Not just strong, but stronger than
demand for legacy MVPD service. We've seen this fact stated from many sources.
No one is crying over rotary phones, for pete's sake. And wireless is not yet
priced where it becomes a replacement for cabled broadband service, and more
people want broadband than want traditional MVPD service.
*And yet*:
"Ian Olgeirson, an analyst at the media research firm SNL Kagan, said one
reason for this reluctance to expand is that the rising price of television
programming has put pressure on margins for video, which makes the economics of
the entire fiber optics investment less attractive."
How is this not absurd? The rising price of a declining service impacts a
service sector that is growing, and in greater demand than that declining one
with rising costs?
Instead of waxing eloquent about "good paying jobs," why didn't the NYT pay
attention to this?
Also mentioned is Verizon's lukewarm interest in FiOS and their overly
lucrative wireless business. Combined, it becomes impossible to make Verizon
the good guy, eh?
Bert
------------------------------------
http://www.nytimes.com/2016/04/14/business/verizon-workers-strike.html?action=click&contentCollection=Technology&module=RelatedCoverage®ion=Marginalia&pgtype=article
Business Day
In Verizon Strike, Blue-Collar Stress Hits the Sidewalks
By NOAM SCHEIBER and BRIAN X. CHENAPRIL 13, 2016
The roughly 36,000 Verizon workers who went on strike Wednesday as a contract
dispute entered its ninth month have brought into sharp relief one of the most
fundamental questions facing the United States: Can an economy in the throes of
dizzying technological change be a source of new middle-class jobs for
blue-collar workers?
The company, which is seeking rule changes that would make it easier to
outsource work, seems to cast some doubt on that proposition, through its
actions if not its words. It argues that technological change and shifts in
consumer demand have rendered self-defeating many of the promises made to
workers a generation or two ago.
"Our objective in these negotiations is to preserve good jobs with competitive
wages and excellent benefits while addressing the needs of our ever-changing
business," Lowell C. McAdam, Verizon's chief executive, wrote in an essay
posted on LinkedIn. But "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. We're determined not to find ourselves in that
same boat."
The two unions involved, whose members at Verizon currently earn an average of
$130,000 a year in wages and benefits, insist this level of compensation can be
not just sustained but shared with more workers, if only it were a higher
priority. The company, they point out, is highly profitable and sells services
that consumers are clamoring for.
"The biggest issue in this conflict is trying to preserve good jobs," said Bob
Master, assistant to the vice president of District 1 at the Communications
Workers of America, one of the unions on strike.
Both sides have a point. Over 99 percent of the striking employees work on the
so-called wireline side of its business - that is, the traditional phone
landlines and the fiber optic network, called Fios, which offers subscribers
Internet, voice and video service. It is a business where growth is slow or
declining, as more and more consumers give up landlines and traditional
subscription television. Profits are low.
The wireline business generated about 29 percent of Verizon's revenue in 2015,
but accounted for only 7 percent of its operating income.
By contrast, the wireless business, which is largely not unionized and where
wages and benefits for rank-and-file workers are lower on average, is booming
and highly profitable. Over the last few years, Verizon's wireless business has
consistently grown at least 7 percent a year, whereas its wireline business has
shrunk slightly - in the last year, about 2 percent.
At the same time, Verizon's wireless margins are the highest in the industry.
More than 40 cents of every dollar of revenue on the wireless side becomes cash
flow.
Verizon's strategic decisions reflect these diverging fortunes. In the last few
years it has reduced investments in its wireline operations, even selling
operations in California, Florida and Texas last year for $10.54 billion to
Frontier Communications.
"At this point it's treating wireline as a sort of cash cow rather than
something to be invested in heavily, whereas wireless is where the future
growth is," said Jan Dawson, an independent technology analyst for Jackdaw
Research.
Verizon has placed a big bet on the future of the wireless business. In 2013,
Verizon Communications paid $130 billion to take full control of Verizon
Wireless, in which it had previously shared ownership with Vodafone of Britain.
Yet these broad trends obscure some of the ways that Verizon could sustain and
expand good-paying work even on the wireline side. Foremost is Fios, widely
regarded as state of the art when it comes to broadband networks, and which the
union and the company agree can serve as a foundation for sustaining desirable
jobs.
But Verizon remains ambivalent about Fios. In 2004 the company pledged to lay
fiber that could serve as many as 18 million homes. It fulfilled that plan
according to its own measure, but has shown little desire in moving much beyond
it, leaving several million households with little hope of getting access to
the network. Until Verizon announced on Tuesday that it would be making Fios
available throughout Boston, it had been several years since the company had
committed itself to a major expansion.
Ian Olgeirson, an analyst at the media research firm SNL Kagan, said one reason
for this reluctance to expand is that the rising price of television
programming has put pressure on margins for video, which makes the economics of
the entire fiber optics investment less attractive.
Still, there continues to be great demand for the broadband service, where
margins are quite high. And while companies that invest in fiber optics like to
see good returns on multiple services rather than just one to justify the
expense, Mr. Olgeirson notes that some of Verizon's competitors have not been
deterred by this issue.
"You do see evidence of a little more enthusiasm for the wireline business at
AT&T," Mr. Olgeirson said.
Given the potential social benefits of a broadband expansion - in terms of both
jobs for those working on the network and opportunity for those using it - many
experts see a rationale for a government role in at least nudging the process
forward, even if the economics are too challenging for private carriers to
undertake on their own. But this has not been forthcoming either.
"The F.C.C. doesn't have an effective policy to build out broadband in the
U.S.," said Jeffrey Keefe, a professor emeritus at the Rutgers School of
Management and Labor Relations, who has studied the telecom industry for
decades. "Fios is a state-of-the-art broadband network. The F.C.C. has not
provided the appropriate incentives."
The two unions - the second is the International Brotherhood of Electrical
Workers - have made no secret of their intention to also open a political front
in the dispute. After the New York City government audited Verizon's
performance in building out its fiber optic network there, union leaders asked
the City Council to hold hearings.
The unions also procured a letter from 14 mayors about the fiber optic issue
and one from 20 United States senators urging Verizon to act as a "responsible
corporate citizen" and negotiate fairly with its workers.
"The purposes of the strike are to build public support for the workers and to
put pressure on the politicians and the regulators to put pressure on Verizon
to settle this thing," Professor Keefe said.
Even as the unions seek to build support from outside, they argue internally
that there are several categories of jobs that could sustain middle-class
lifestyles if the company were willing to think about them differently. One of
the major points of contention between Verizon and its unions are call centers.
The company currently outsources some of its customer service and sales calls
to centers in lower-cost regions of the United States, and it is proposing rule
changes that would allow it to do more of this.
But the cost savings that outsourced call centers appear to offer often prove
illusory. Rosemary Batt, a professor at the ILR School of Cornell University
who has extensively studied the moving of service work to call centers, says
turnover is lower and performance and customer satisfaction are substantially
higher when the work is done in-house.
"There are real opportunities to increase revenue by bundling and packaging
different products," she said, giving an example. "But you need a more
sophisticated work force that's trained and committed to the company to do that
well. Outsourcing is penny-wise but pound-foolish."
To be sure, the company is hardly oblivious to the good-jobs question. It is
not seeking wage concessions, and officials there express genuine enthusiasm at
the economic benefits that Fios confers on its workers. Tami Erwin, president
of Verizon's consumer and mass business unit, emphasized in an interview that
the Boston expansion would mean a lot of "great high-paying work."
But despite that expansion, the company's overall posture does not appear to be
intended to pursue a business model that maximizes the number of middle-class
incomes it produces. Asked about the possible benefits of keeping call center
workers in-house, Ms. Erwin said: "It's my responsibility to make sure we've
created an environment where people have the right tools, the right resources.
If we do that, it doesn't matter whether they're a contractor or an employee."
Correction: April 15, 2016
An article on Thursday about the broader economic questions behind the strike
at Verizon misstated the day Verizon announced that it would expand its Fios
service in Boston. It was Tuesday, not Monday.
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.