Take Action: Stop the Sale of Verizon in New England

Campaign Underway to Block Verizon Sale in Maine, Vermont and New Hampshire

August 11, 2006

CWA and the IBEW, with the support of state and local AFL-CIOs, are engaged in a massive campaign to block Verizon's plan to sell 1.6 million local access lines in Vermont, Maine and New Hampshire.

Prevent Rural Telecom Redlining, Protect the New England Economy, Defend 3,000 Good Union Jobs — that's the message that union members are taking to the public throughout the three states.

The sale would adversely affect some 2,700 IBEW members who work as technicians, clerks, operators and service reps and 350 CWA members employed as service reps throughout the three states. Estimated by the Wall Street Journal to be worth as much as $3 billion, the sale would shrink the Maine-to-Virginia area where Verizon now provides landline telephone service and reduce the unions' bargaining power.

For customers, it's also bad news, said Cheryl Ahern, president of Local 1400. "Verizon would abandon its telephone customers in these rural states to smaller companies that do not have the assets to maintain the network or provide the same level of service — just dump them and stick with the more densely populated and more profitable states. Some of these customers would never get the same level of service again."

About 75 union leaders met to put together the campaign shortly after learning of Verizon's plans in mid-May.

"As in the 2004 New York 'Stop the Sale' campaign, our goal is to pursue every available legal, political and contractual avenue to protect our members affected by the dismembering of Verizon in New England," said District 1 Vice President Chris Shelton.

Members of the two unions marched in July 4 parades in all three states to call attention to the proposed sale, Ahern said. Local 1400 Treasurer Sarah Rotcovich and Vice President Karen Cusson coordinated a phone bank in New Hampshire, alerting members of other unions. CWA and IBEW activists held a town hall meeting in Hooksett, N.H., where members expressed their concerns to former Democratic Senate Leader Tom Daschle and New Hampshire State House Leader Jim Craig.

Along with IBEW and other union activists, CWA Local 1400 District Vice Presidents Mike O'Day in Vermont and Ann Mussenden in Maine met with governors, lawmakers and legislative staffers, asking them to contact Verizon CEO Ivan Seidenberg and express their concerns about the planned sale. Several of these public officials have already done so, including Maine Gov. John Baldacci and Reps. Tom Allen and Michael Michaud, as well as Vermont U.S. Sens. Patrick Leahy and James Jeffords and Rep. Bernie Sanders.

"It has been explained to me that this offer for sale represents abandonment from Verizon's commitment to provide reliable service to rural areas such as those in Maine. Such an action would not square with the responsibilities reasonably expected of a provider of telephone service," Governor Baldacci wrote.

"Any sale would be reviewed by the Maine Public Utilities Commission and other regulatory bodies at the state and federal level," Allen wrote. "Verizon management should organize a meeting with representatives of IBEW and CWA on the potential impact on wages, benefits and working conditions of the hundreds of employees that would be involved," he said.

Plans to ramp up the campaign include Jobs with Justice Workers' Rights Board hearings in all three states, meetings with the state public service commissions, continuing workplace education and mobilization, and letter-writing by concerned union members.

Send your own message to Ivan Seidenberg, Chief Executive Officer, Verizon Communications at 140 West Street, New York, NY. 10036.

Verizon Workers Challenge De-Unionization And Dismantling of Company in New England

By Steve Early

Administrative Assistant to the Vice-President

CWA and IBEW members are dealing with multiple challenges arising from Verizon's acquisition of MCI and the company's threatened sale of every local access line in Vermont, Maine, and New Hampshire. Most of the 35,000 former MCI employees, who've just joined the workforce of Verizon, are now part of VZ Business(VZB)--a new subsidiary that management is trying to operate on a non-union basis, just like Verizon Wireless (VZW).

This classic "double-breasting" scheme--borrowed from the trucking and construction industries--is designed to siphon off existing bargaining unit work and deliver new corporate customers into the hands of un-represented (and much-exploited) technicians, service reps, operators, or contractors.

If all goes according to Verizon's de-unionization and sell-off plans, the majority of the company's revenues will be generated by its non-union entities--by the end of next year. Management hopes that this will leave union members in a more vulnerable position going into the next round of regional coverage for active and retired workers--just as it recently froze the pensions of 50,000 managers.

The contract protections of 3,000 CWA and IBEW members are already at risk due to the company's attempted sale of 1.6 million access lines in Vermont, Maine, and New Hampshire. To raise cash for its huge investment in fiber optic cable upgrades and a buy-out of Vodafone (the now unwanted co-owner of VZW),

Verizon is peddling both its northern New England copper network and its Two years ago, an aggressive community-labor campaign thwarted VZ's bid to unload all of upstate New York for $7 billion dollars. In states where these access line sell-offs have already occurred--like Hawaii and Kentucky--they have been bad news for telecom labor and consumers.

That's why CWA and IBEW have launched a joint counter-campaign against Verizon's wide-ranging attack. The union response has taken the following forms:

*Intervening at VZ's Annual Meeting-Local 1103 Life Member Club activists Pam Harrison and Ann Roughley, plus IBEW Local 2222 business agent Dave Reardon, took the floor at the May 4 shareholder's meeting in Kansas to confront CEO Ivan Seidenberg. Reardon denounced management's "sinful and malicious" mis-treatment of retirees and its "attempt to take our bargained for work and move it to the non-union workforce inherited from MCI."

*Organizing Outreach--Working in coordination with the IBEW in New England, nine Verizon locals in New York and New Jersey have been making contacts with former MCI workers, helping them get organized, and educating them about the big disparity between treatment of workers at VZ and VZB. (For a detailed pay and benefit comparison, contact Organizing Coordinator Tim Dubnau--at Tdubnau@cwa-union.org.)

"We must mobilize and organize to give these new Verizon employees union benefits and wages and the protection of a union contract while we are protecting our own jobs as well," says Local 1103 President Bob McCracken, whose local organizer Fran Gottron has been active in the campaign.

*Grievance Filing/Coordinated Legal Response--CWA and IBEW local and national officials, plus their legal representatives, met in Washington, D.C. on June 13 to plan a coordinated legal challenge to VZ's de-unionization strategy. A joint union task force has been gathering data from around the country on the diversion of bargaining unit work to VZB, which will be used to support pending grievances, a lead arbitration case, and other legal initiatives as well.

*Membership Mobilization--As The Hotline went to press, both unions were planning nationwide leafleting on June 29 in all VZ workplaces to alert members to the VZB threat. In Boston, IBEW and CWA members have already staged two mobilization actions this Spring at VZ's New England headquarters and the home Meanwhile, Massachusetts Jobs with Justice is pursuing its efforts to get community and labor organizations to switch from VZW to Cingular.

*Campaigning Against "Rural Redlining"--Seventy-five IBEW and CWA mobilization activists met in Manchester, N.H. on May 25 to launch their fight against Verizon's abandonment of northern New England. Aided by state and local AFL-CIO labor bodies in Maine, Vermont, and New Hampshire, the four locals involved are contacting elected officials, utility regulators, and consumer groups to explain why VZ's access line sell-off would be bad for labor, consumers, the regional economy, and the future of high-speed broad band access in rural areas. Maine Gov. John Baldacci has already responded by writing to Verizon about his concerns (see excerpt on page 1).

The "Stop The Sale" campaign will be gaining visibility and momentum over the summer, at public events and with a new website. In the Fall, the unions plan to run paid ads and then introduce bills in all three states that would review of access line sales. If and when VZ finds a buyer before then, CWA and IBEW will immediately intervene in PSB/PUC proceedings to oppose the deal.

*Fighting For Regulation And Service Quality--In New York, Verizon rank-and-filers have gone on the offensive against the state Public Service Commission's attempt to deregulate the telecom industry. In a series of "Lobby Days," assisted by D-1 Legislative/Political Director Bob Master and COPE Coordinator Patrick Welsh, members have called on legislators to support passage of A.9807 and S.6787--bills that would stop the PSC's current deregulation plan and require a study of its impact. At the same time, CWAers are again working with Assemblyman Richard Brodsky on passage of A.8979B (and a companion bill in the Senate--S. 5910B) that would increase penalties on phone companies that fail to meet service quality standards.

As The Hotline went to press in late June and the legislature was nearing the end of its session, the Assembly had voted in favor of these measures but Verizon was working to kill both bills in the Senate.

"We must continue to keep the pressure on the Senate," D-1 V-P Chris Shelton said on June 14. "We need to stop the PSC deregulation plan that will lead to higher phone prices, lower service quality, and job losses.

*Using Legislative Pressure--In New Jersey, meanwhile, D-1 did mass mailings and ran an ad campaign this spring that criticized Verizon's attempt to pass a statewide video franchising bill without making a sufficient commitment to expanding broadband access in lower-income communities. In N.J. and in most other states, to compete with cable companies, VS must now apply--town-by-town--before it can provide video services on the new fiber-to-the-home (FIOS) networks, being installed by CWA and IBEW techs.

"Our future is FIOS--and we want the company succeed in that market," says D-1 Assistant to the Vice-President Dennis Trainor. "But Verizon must be stopped from creating new subsidiaries and then trying to build walls around them like they've done in wireless and are trying to do again at Verizon Business.

What if they created a new FIOS company and moved all that work out of reach of our members?

For more information on "Fighting For Our Future At Verizon,"go to www.cwa-union.org, click on Verizon and sign up for regular Unity@Verizon e-mail updates.

Stop the Sale of Verizon

in Vermont, Maine, & New Hampshire!

*Prevent Rural "Telecom Red-lining"

*Protect the New England Economy

*Defend 3,000 Good Union Jobs

For over 100 years, Verizon and its predecessor companies have built and operated a telephone network in northern New England. The construction of this network was largely financed by the rate-payers and its operation was regulated by the states to insure universal service, particularly in rural areas.

Now, Verizon wants to abandon all its "low-value" landline customers in Vermont, Maine, and New Hampshire. The company's proposed sale of 1.6 million local access lines would be bad for workers, consumers, and the regional economy.

As reported in The Wall Street Journal on May 10, 2006, Verizon is shopping "a package of access lines in three entire states." Its operations in Vermont, Maine, and New Hampshire "could carry a value of some $2 billion to $3 billion."

2,700 members of the International Brotherhood of Electrical Workers (IBEW) and 350 members of the Communications Workers of America (CWA) would be directly affected by the sale. These Verizon employees work as technicians, clerks, operators, and service reps fo business and residential customers.

Verizon is Abandoning Northern New England To Invest In Broadband Elsewhere And Expand Its Stake In Wireless According to The Journal, the impending sale is "part of the New York based phone giant's strategy to delve deeper into wireless and broadband arenas, while getting out of the traditional phone business in U.S. areas that aren't slated for fiber upgrades--which allow the company to sell more Internet-based services." Vermont, Maine, and New Hampshire don't figure into Verizon's plans for new "fiber to the home" technology--so they "are less valuable to the company in the long run."

Shedding its landline operations helps Verizon "finance its fiber upgrade as well as pursue buying out Vodafone Group's 45% stake in the two company's joint venture, Verizon Wireless."

Among The Potential Buyers--A Smaller Phone Company Or Private Equity Firm Seeking to Maximize Cash Flow by Minimizing New Investment?

Published reports so far indicate that the potential buyers include smaller rural exchange carriers, like CenturyTel, which has a $4.3 billion market capitalization, and Citizens Communications, Inc, with a market value of $4.4 billion. (WSJ, 5/10/06; Associated Press, 5/11/06; Telephony, 5/22/06). As Jeffrey Bartash reported in Market Watch on May 10, 2006, "Citizens, for one, does not have a good track record with Vermont regulators. The company, which used to distribute electric power in parts of Vermont, had several run-ins with state officials several years ago and the bad blood lingers even though Citizens no longer does business in the state."

In a different sell-off scenario--which has already unfolded in Hawaii--the buyer could be a private equity firm like The Carlyle Group. Private equity firms and other speculators use the predictable cash flow of local telephone operations to leverage significant borrowing, thus making outsized gains on a small equity investment. By maximizing cash flow and minimizing capital investment and jobs, their ownership can result in reduced service quality. Carlyle paid Verizon $1.6 billion for its local access lines in Hawaii and now describes itself only as the "interim owner" of Hawaii Telecom.

While Carlyle ponders whether its new acquisition should "be taken public or privately sold," customer complaints are mounting. Before April, when Hawaii Telecom took over all customer service responsibilities from Verizon, "90 percent of customer calls were answered within 20 seconds. Now there are customer complaints of waiting 15 to 30 minutes," The Honolulu Advertiser reported on May 12.

Customer Service and Our Regional Economy Will Suffer If Verizon Abandons Northern New England and High-Speed Internet Access Becomes Even Harder to Obtain.

As Jessica Zufulo, telecom analyst for Medley Global Advisors told MarketWatch May 10:"The sale of switched access lines is a huge public issue. These lines are in need of upgrades."

Northern New England's economic future depends on access to the most up-to-date communications technologies available, including high-speed data networks. Now, Verizon's threatened pull-out makes it questionable whether any successor company--without the resources of America's second largest telecom firm--will adequately maintain the existing copper wire network, much less invest in high-speed broadband connections..

If Verizon has its way, consumers will not see one penny of the proceeds of any access line sale-- even though they, not Verizon shareholders, ultimately funded the local phone network through decades of state-regulated rate paying.

While Verizon seems intent on abandoning rural America, its major rival, AT&T, just announced plans to provide broadband service to 5.5 million low-income households in 13 states within three years. These customers will have access to a package including "TV, voice, and high-speed Internet services."

According to a May 9. 2006 Wall Street Journal report, AT&T will "begin using satellite and new fixed wireless technologies to offer this broadband connection to households in rural areas that can't get it over phone lines."

Telecom Labor Will Face Pay And Benefit Cuts

IBEW and CWA members in Vermont, Maine, and New Hampshire are currently part of a Maine-to-Virginia bargaining unit that has one of the best union contracts in the telecom industry. It covers 75,000 workers and is up for renegotiation in August of 2008.

Even if a successor employer in northern New England is forced to abide by the terms of this agreement for the next two years, subsequent negotiations will most certainly revolve around management demands for pay and benefit givebacks.

In 2001, Verizon sold 1.275 million access lines in Kentucky, Alabama and Missouri for $4.1 billion The sales agreements included the stipulation that workers would retain their collective bargaining agreement. In Kentucky, where the new owner is a smaller company called Alltel, management proceeded to make many unilateral changes in employment conditions. In 2003, Alltel refused to extend the old Verizon contract any further, resulting in a 4 and 1/2 month strike over work rules, pensions, retiree health care, and other issues.

There is a Better Alternative!

Vermont, Maine, and New Hampshire Can Prevent the Dismantling of Verizon--Like New York Did in 2004!

Two years ago, Verizon tried to sell off all of its holdings in upstate New York--a $7 billion dollar deal that would have affected 2.5 million access lines and 5.500 jobs. Labor and the community rallied against this scheme, generating thousands of letters and phone calls to state legislators and the chairman of New York's Public Service Commission (PSC). CWA and IBEW members held workplace protests and lobby days in Albany. They got state, county, and municipal elected officials to speak out against the sale or adopt resolutions against. Union-run radio and newspaper ads rallied public opinion against accepting "second class phone service" in small towns and rural areas. In September, 2004, Verizon announced that it had "suspended" all activities related to the possible sale of access lines in the upstate region.

Join Us in Urging Our Governors, State Legislators and Regulators to Stop The Sale of Verizon!

Under state utility law in Maine, Vermont, and New Hampshire, public regulators- like the PSC in New York--must approve any sale, transfer or lease of telephone lines by Verizon. These officials need to hear from us about why it's not in the public interest to let such a deal go unchallenged.

*Demand public hearings on the impact of a sale--on telecom jobs, customer service, and the regional economy.

*Urge state legislators to oppose Verizon's "telecom red-lining.

*Support Universal High Speed Broadband Access!

For more information on how you can help, contact Maine IBEW Local 2327 (at 207-623-2901), New Hampshire IBEW Local 2320 (at 603-669-8657), Vermont IBEW Local 2326 (802-316-7238) or CWA Local 1400 (covering all three states at 1-800-910-4388).

Unions Set to Fight if Verizon Sells Units

By Jay Fitzgerald, Boston Herald General Economics Reporter

Thursday, May 11, 2006

A union representing thousands of Verizon workers is vowing a major fight if the giant telecom company tries to sell off its phone-line businesses in Maine, New Hampshire and Vermont.

Calling such a sale a "form of rural redlining," a spokesman for the Communications Workers of America said Verizon is trying to unload operations in sparsely populated states rather than invest in new fiber-optic lines in those areas.

"This is going to trigger quite a controversy," said CWA spokesman Steve Early, noting that selling phone lines to smaller companies would hurt both consumers and union members.

Early, who said 3,100 Verizon workers in the three states are union members, noted that labor and consumer groups successfully blocked Verizon's plan a few years ago to sell its land-line telephone business in upstate New York - and they will mobilize now to oppose any sale in New England.

Verizon confirmed a report yesterday in the Wall Street Journal that it's eyeing a possible sale of its businesses in northern New England, with its 1.6 million customers. It's also reviewing a possible sale of its Midwest landline operations.

But no decisions have been made yet, said a spokesman.

Verizon has made no secret of its desire to focus more on services carried over its fiber-optic lines - including cable television and broadband Internet access. Its older copper phone lines have been steadily losing customers to both wireless and Internet phone services.