|
TELECOMS AND SOFTWARE NEWS
|
|
|
Possible strike by CWA won't affect short-term capital spending
Ron Kline
Possible strike by CWA won't affect short-term capital spending
AT&T is in the midst of renegotiating contracts with the Communications Workers of America (CWA), its largest labor union representing about 110,000 workers. Given the state of the current economy it is likely that AT&T will take advantage of the situation to reduce healthcare costs and capex.
First contract negotiations for the new Ma Bell
Five years have passed since the last contract was signed, and once again AT&T is at odds with the CWA over job security and healthcare benefits. This is the first contract negotiation since the mergers of AT&T, SBC and BellSouth, and reaching an agreement will likely be more difficult as the balance of power has shifted in the company's favor.AT&T has already reached a tentative agreement with the CWA covering more than 20,000 union employees working for its Mobility operation. The union is currently soliciting votes on whether to agree to a proposed deal from its members which will be counted on 2 April - two days before the majority of its other union contracts covering workers other than those in the Mobility division expire. AT&T's Mobility division is a much younger entity than its wireline operations, and the unions typically have less bargaining power and its employees pay more for healthcare than wireline employees, so the new contract could hamper negotiations with the other CWA unions. It has long been a standard RBOC practice to make preparations in anticipation of a work stoppage, and this is the case with AT&T. Management workers have already been trained to take the place of non-management personnel. What's different now is that management employees on the wireless side have also been trained to fill in should a strike occur. Also different this time around is the fact that the company has not increased capital spending in an attempt to get planned work done in advance of a potential work stoppage. A strike will have little impact on the optical networking market, unless its long
In the short term (1-3 months), a strike would have little effect on vendor revenues even though the company did not pull up its ILEC network spending in anticipation of the strike. In response to the US economic recession, AT&T pulled back its optical spending in 2H08 and has been slow to release funding for new projects so far in 2009. We believe 1H09 optical network spending by AT&T will be lower than 1H08, regardless of any work stoppage. However, a prolonged work stoppage could be more harmful to the market and to AT&T's wireline vendors, mainly Alcatel-Lucent, Cisco, Ciena, Fujitsu, Juniper and Nokia Siemens Networks. A prolonged strike could also harm enterprise sales as it will be difficult to provide competitive responses and complete installations in a timely manner. Verizon would be the largest benefactor. CLECs and other facilities-based competitors could also benefit. AT&T would also take a hit from state regulators because installation and repair times will lengthen; however, the economic benefit of not having to pay the striking workers will go a long way in helping the company improve profitability. As a former manager at Verizon's predecessor firm Bell Atlantic/Nynex, I have had the experience of working past strikes. These strikes lasted from weeks to months, depending on the year and the issues at stake. Management workers are typically required to work 13 out of every 14 days. The longer the strike, the more strain on managers, as the pros of overtime and hands-on experience running the network - both typically denied to managers -are outweighed by the cons of exhaustion, the stress of harassment by union members, time away from family and friends, and - for those with unlucky strike assignments - the drudgery of operator duty or the challenge of installation and maintenance work in unsavory neighborhoods. In short, management gets to put itself in union workers' boots or shoes, and it is typically quite an eye-opening experience, both positive and negative.Given the state of the market and the economy overall, a strike might be more likely as AT&T wants concessions on health benefits for current and retired workers and, with the restructuring going on in other industries like automotive, momentum may be on its side. Plus the reductions in opex and capex associated with a strike will flow right to the bottom line.
About:
This article is an extract taken from Ovum's Straight Talk service. This daily email bulletin provides our expert's views and opinions on important news and events in global IT and telecoms. If you have a comment or question regarding this article then please submit your details here:
If you would like to find out more about Straight Talk please contact StraightTalk@ovum.com
If you would like to find out more about Ovum services then please click
here for details
|
|
|
|
|
|
|
|
Search
|
|
|
|
|
Contact Us
|
|
|
Expertise
|
|
|
|
|
