Tell Verizon No Give Backs! Be at the Rally on July 30th, 140 West Street @ 11:00 am.
Dear East Associate Employee,
As you know, Verizon and leaders of the CWA and IBEW are negotiating new collective bargaining agreements to replace the contracts that will expire Aug. 6. While we face difficult issues in these negotiations, we are committed to achieving agreements that will continue to provide a great place to work.
Our Verizon Credo calls for us to communicate openly, candidly and directly. It is in that spirit that I am writing to you. We all recognize that dramatic change has occurred in our industry and the marketplace, and that the realities of today’s business environment are vastly different from those when current contracts were negotiated in 2008. Consumers are cutting the cord, competition in voice, broadband and video is increasing, and the overall U.S. economy is sputtering.
Earlier this year we had meetings with Union leaders to discuss the major shifts that have occurred in the industry and some of the financial and operational challenges we face. We can’t ignore the facts. While Wireless is a profitable business, Wireline is fighting to reverse a ten-year decline in profitability which reflects the loss of more than 50 percent of its lines. As reported in our public financial statements, the reality is that virtually all of Verizon’s earnings are attributable to Wireless.
This is despite the fact we have made tremendous investments for growth in the Wireline business. In fact, no other competitor in the Telecom markets we serve has invested more capital for revenue growth and expansion than Verizon. Since 2008, Verizon has invested more than $20 billion to build and market our industry-leading FiOS broadband and video products; improve our systems for billing, sales and services; upgrade our fleet and physical facilities; and maintain and improve our copper network. Through these investments and the quality work of our employees, we have created a business with an outstanding reputation for value and service. In FiOS, we have established a brand identity that is unsurpassed in the market.
The big question we must answer together is how do we enable Telecom to thrive?
In order for Telecom to become a vibrant, growing business, deep-rooted issues need to be addressed. Our substantial investments have Telecom moving in the right direction, but they will not solve for embedded work-rule requirements that drive up costs and hamstring operational flexibility. We realize there will be differing opinions about how to turn Telecom into a more successful and profitable business, and these opinions will be raised in the course of contract negotiations. However, what we must not spend time debating are the facts about the Wireline business; the pressures we face from economic, competitive and technology forces; or the need to achieve meaningful change to provide Telecom with the opportunity to thrive.
We have a mutual interest and desire to ensure a strong future for Telecom. That will require that we tackle the tough issues, such as a legacy cost structure driven, in part, by the growing cost of benefits. Did you know that the average expense of benefits per year for an East associate is about $50,000 – almost equal to the average U.S. household income?
One of the expense items contributing to our overall benefit cost is the high cost of medical coverage for our East associates. Our legacy health plans are not market competitive and the fragmented plan designs and vendors across the regions have prevented us from effectively leveraging our spend to help lower cost and improve the quality of healthcare delivery. Our vision to better manage the growing cost of healthcare is to have consistent plans across the enterprise, which we can leverage to drive cost and quality.
We also must address restrictive work rules that are out-of-step with delivering timely and efficient customer service. These issues place Verizon at a competitive disadvantage, something we must address in these negotiations for Telecom to be a healthy and thriving business for employees, customers and shareowners.
Verizon is committed to investing in Telecom in support of an unwavering belief in our strategy and in the ability and talents of our employees to fulfill that vision. We believe we can and will transform our Telecom business to produce profitable revenue growth and net income.
We are committed to productive discussions with union leaders regarding these issues. By addressing these business realities while balancing Verizon’s commitment to provide good jobs, wages and benefits, we can build a strong future for the Telecom business. We appreciate all you do every day to serve our customers.
Sincerely,
Marc Reed
Executive Vice President
Human Resources