The tidal wave of red ink flowing from telecom companies worldwide has engulfed workers and consumers no less than managers, investors and Wall Street players. After a frenzied period of deregulation here and privatization abroad–followed by destructive competition, high-cost borrowing and over-building of telecom capacity–scores of firms have collapsed, vaporizing at least $1 trillion in shareholder value in the United States alone. Some top executives with criminal responsibility for cooking the books–at Adelphia Communications and WorldCom, for example–did well-publicized perp walks. Others, like Salomon Smith Barney (now part of Citigroup) analyst Jack Grubman, who abetted the US telecom boom and bust in underhanded ways, have been forced to pay millions in civil penalties. But many recent highfliers, including Global Crossing chairman Gary Winnick, Qwest founder Philip Anschutz and his CEO, Joe Nacchio, made off with their bundles ($714 million, $1.9 billion and $248 million, respectively) before things went bad. They have yet to be touched by either civil or criminal proceedings.
Meanwhile, telecom labor is left holding the bag–with many nonunion employees losing both their jobs and retirement savings (because the latter consisted mostly of company stock that’s now nearly worthless). Millions of consumers are also getting the shaft, as massive downsizing and cost-cutting cause service quality to plummet. Since 2000, more US telecom workers have retired (without being replaced) or been laid off at local and long-distance companies than in the previous half-century. Global job losses exceed 500,000, and even highly profitable companies like Verizon are still slashing their payrolls. Despite an effective union campaign linking staffing cuts to customer complaints about service, the nation’s largest local service provider and wireless carrier (now ranked third in the long-distance market as well) handed out 4,000 pink slips just before Christmas.
Among those furloughed was technician Mike Martinelli, a third-generation phone worker from Brooklyn, New York, whose family has served Verizon and its predecessors for more than seventy-five years. When he sent CEO Ivan Seidenberg an e-mail protesting the layoffs, Seidenberg responded personally, saying that “it is not realistic in this day and age to expect a lifetime of employment.” Newspaper ads run by Verizon last fall echoed this point and criticized Martinelli’s union, the Communications Workers of America (CWA), for creating unrealistic rank-and-file expectations about job security. Of course, Seidenberg and other telecom bosses expect guaranteed rewards for themselves. For example, shortly before Martinelli lost his job, another Mike at Verizon–corporate lawyer Michael Masin–stepped down as head of its international and directory operations to join Citigroup. He was paid more than $39 million from 1997 to 2001, including options and bonuses. During the same period, Seidenberg and two other associates pocketed $195 million in salary, bonuses and stock options–compensation they claim is only mid-range for US corporations.
Like the thousands of workers who rallied last fall for “Jobs, Not Greed” at Verizon, telecom unionists are begining to organize, here and abroad, around the issues of corporate accountability and executive pay, public regulation and service quality, and the need for universal service at affordable prices. Union Network International (UNI), a global alliance of 2.5 million telecom union members, is helping to coordinate this campaign. Grassroots activities by UNI affiliates and other unions have ranged from protest strikes, including a big walkout at France Telecom in November, to shareholder initiatives aimed at curbing executive perks and creating new accounting standards. At Verizon’s annual meeting this April, stockholders will have the opportunity to limit Seidenberg’s pay to fifty times that of an average company employee. Management strongly opposes this resolution but has already agreed to another union-backed proposal, submitted last fall, that would require executive stock-option grants to be treated as an operating expense.
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Telecom unions are emphasizing the connection between customer service and maintenance of a skilled, trained work force. Despite a dazzling array of new products and services, the telecom industry generates near-universal complaints about indecipherable billing (especially for cellular service), installation and repair delays, and lack of access to service reps who can solve customer problems. Even in a unionized customer service center, workers are pressured to sell rather than provide quality service, and nonunion call centers are often high-turnover electronic sweatshops. Where local land-line operations are still regulated–for the most part at the state level in the United States–labor and consumer groups are fighting for tougher service-quality standards. But some companies, like AT&T, are now outsourcing long-distance customer service work to lower-cost contractors with facilities in New Delhi. Through UNI, India’s main telecom union has been enlisted as the newest sponsor of a worldwide “Customer Service Solidarity Day,” on October 2, which will highlight the need for improved pay, benefits and conditions for call-center workers.
Another cross-border initiative is targeting British-based Vodafone, one of the world’s biggest wireless companies has consistently resisted union recognition and collective bargaining (it is part owner of Verizon Wireless). Organizers in North America, Britain, Ireland, France, Belgium and elsewhere have created a website and e-mail network to share information about Vodafone personnel policies and to coordinate union recruitment efforts.
UNI’s action plan for industry reform, titled “Telecoms for the Long Run,” addresses the plight of would-be telecom users in less-developed countries. Most of the world’s population still lacks phone service in any form, much less high-speed Internet access. Universal, affordable voice and broadband service, for both rural and urban areas, won’t come from the same “market forces” that produced the telecom meltdown. The modern, high-speed communications networks needed for balanced economic growth and a narrowing of the digital divide will require public investment and closer regulation of private firms. The spectacular failure of telecom deregulation, privatization and financial speculation opens the door for renewed debate, here and abroad, about the future of this crucial industry. If labor and consumers join together to increase their political clout, telecom policy will no longer be shaped solely by those making a fast buck at our expense.
