Four weeks ago the Company approached the union to seek its agreement to a special incentive offer.  The offer would allow certain associates who wanted to leave the payroll to do so with significant economic benefits not otherwise available under the existing collective bargaining agreement. The economic offer was the same as the offer the Company made a year ago. However, the scope of the offer changed in two significant ways:

• The offer in 2013 was limited to 4 titles in certain Force Adjustment Areas (“FAAs”) while this year the Company proposed making the offer available to 26 titles in certain FAAs.  At the bottom of this communication is a list of the titles and FAAs covered by the current offer.
• The offer provided the union with the flexibility to accept either a statewide offer by surplus title and FAA or the offer by union local and surplus title.

Unfortunately, the union has informed the Company that it is unwilling to agree to the special incentive unless the Company agrees to expand its FiOS build-out.

The Company has already invested more than $4B in New York State and more than $20B nationally in its FiOS build and continues to increase the number of small businesses and consumers who have access to fiber within its current FiOS footprint. Our focus now needs to be on driving penetration by increasing sales and retaining customers within the FiOS footprint where we have already invested significant capital and have a tremendous opportunity for future growth.

The Company has reached agreements with CWA District 2/13 covering the Potomac area, Pennsylvania and Delaware Local 13100, in addition to IBEW locals covering New England, New Jersey and Pennsylvania Livesource associates. In the negotiations leading to those agreements, the Company was flexible in responding to union demands to increase the scope of the offer so that associates in additional titles and locations would have an opportunity to consider the offer. In light of these agreements, we informed CWA District 1 of the following:

• If it was important to them, we would be willing to make the incentive offer available to Field Techs in FAA1 as well as consider other requests for FAA and/or title expansion of the offer where it makes business sense.
• At the CWA’s option, the offer could be available on both a local by local and title by title basis (for example, for some locals the offer could be made available to the Operators they represent even if the local chose not to make the offer available to Field Techs).

The CWA has suggested that by communicating with you regarding the status of these negotiations, the Company was trying to get the union to “cave-in to a one-sided offer” and that we should come to the table with a “serious proposal.” This makes no sense. Certainly CWA District 2/13 and the IBEW representing more than 22,000 associates from Massachusetts to Virginia did not “cave-in” by agreeing to a special incentive which gives their members the chance to voluntarily leave with significant additional financial benefits. The Company has made a serious proposal to address an ongoing associate surplus which is of great concern. Quite frankly, we find it puzzling that CWA District 1 would find a proposal aimed at dealing with a force surplus in a totally voluntary way, with financial benefits to its members, as “one sided” or not “serious.”  In fact, in 2010 CWA District 1 agreed to the special incentive in New York, Massachusetts and New Jersey with the same economic terms – certainly that was not a “cave-in” to a “one-sided” offer. It is also puzzling that a more flexible option allowing each local to determine whether its members would participate would be viewed as an attempt to “divide and conquer” the union.

The only thing that rejecting the special incentive achieves is preventing associates who would like to leave voluntarily from doing so with a substantial additional economic benefit while increasing the likelihood that the Company will have to find other means to reduce expenses relating to this associate population. We are hopeful that CWA District 1 will reconsider its position.

Sincerely,

Marc Reed

Chief Administrative Officer