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Unions Matter: The Verizon Workers’ Victory

Its Meaning Historically & for the Future of the Labor Movement!

By Steven Weiner for Unions Matter

2015-07-25_Mass_Rally_Stand_Up_To_VerizonAs a long-time supporter of unions, who was a member of Local 2627’s Executive Board, part of District Council 37 in NYC, I want to say how proud I am of my union brothers and sisters who went out on strike recently. Nearly 40,000 women and men, represented by the Communications Workers of America and the International Brotherhood of Electrical Workers, withstood an onslaught by one of the largest US corporations, Verizon. Yet after nearly six weeks on the picket lines, they emerged victorious! A big reason for their success was expressed by Verizon worker Pamela Galpern in the midst of the strike: “What we’ve seen has really been tremendous resolve on the part of the strikers…to show that working people are prepared to stand up and to fight to protect our jobs and our families’ future.”

I believe that the powerful and hopeful meaning of this victory is explained in the issue of The Right of Aesthetic Realism to Be Known titled “The Fight in Each of Us–& in Economics.” In it, Ellen Reiss, Aesthetic Realism Chairman of Education, explains the relation among three things: 1) the failure of our profit-driven economy; 2) the ethical battle that goes on in every person; and 3) what motivated these unionized workers that resulted in such a clear and resounding victory over Verizon. For the good of America’s working men and women, I can’t think of anything more useful and needed at this time than what is said here. For example, Ms. Reiss writes, with passion and clarity:

“Decade after decade men and women in unions fought hard for and got better wages and working conditions­—lives of greater dignity and ease—for millions of working people. Because of the courage of unions, bosses were forced to lessen their robbery of those who worked for them. And that is why, as I have described in this journal, there has been such a fierce effort to kill unions, including through hideous propaganda and legislation: if unions are able to continue their beautiful work, having those who truly earn the wealth get more and more of it, the profit way will be finished.”

I urge union officials across the nation to read this issue and have others know about it. Click here for the link.

Massive Strike Against Verizon Ends As Tentative Agreement Is Reached

Union to take down pickets.
Company agrees to add good union jobs on the East Coast.
First contract for retail wireless workers.
Improves workers’ overall standard of living.

2015-07-25_Mass_Rally_Stand_Up_To_VerizonFor over six weeks now, 40,000 Verizon workers have been on strike. They have been standing in opposition to proposed cuts and potential plans to offshore American jobs.

Two weeks ago, U.S. Secretary of Labor Tom Perez along with federal mediator Allison Beck, stepped in to help me help resolve this massive strike.

“I’m encouraged by the parties’ continued commitment to remain at the bargaining table and work toward a resolution,” Secretary Perez said. “We will continue to facilitate conversations to help the unions and the company reach an agreement.”

On the 44th day of the strike, Perez announced that a tentative agreement has been reached between Verizon, the Communication Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW).

“Today, I am pleased to announce that the parties have reached an agreement in principle on a four-year contract, resolving the open issues in the ongoing labor dispute between Verizon’s workers, unions, and management,” said Perez. “The parties are now working to reduce the agreement to writing, after which the proposal will be submitted to CWA and IBEW union members for ratification.

“This tentative resolution is a testament to the power of collective bargaining. I commend the leadership of Verizon, CWA, and IBEW for their commitment to resolving these difficult issues in the spirit of constructive engagement,” Perez continued.

Perez concluded by stating, “I expect that workers will be back on the job next week.

CWA praised the announcement and the tentative agreement. The agreement includes provisions that include improving working families’ standard of living, creating good union jobs in our communities and achieving a first contract for wireless retail store workers.

“The addition of new, middle-class jobs at Verizon is a huge win not just for striking workers, but for our communities and our country as a whole. The agreement in principle at Verizon is a victory for working families across the country and an affirmation of the power of working people,” said Chris Shelton, President of the Communications Workers of America. “This proves that when we stand together we can raise up working families, improve our communities and protect the American middle class.”

“This tentative contract is an important step forward in helping to end this six-week strike and keeping good Verizon jobs in America,” said Lonnie R. Stephenson, President of the IBEW. “We will be sharing the details of it with our members for approval in the immediate days ahead.

“My thanks to our members, along with those of the CWA, who made numerous sacrifices to finally come to this point,” added Stephenson.

“Our members look forward to returning to work serving their customers, working under a strong pro-worker and pro-jobs contract,” Stephenson concluded.

The strike against Verizon was not only about the contract for the 40,000 unionized workers at Verizon, it was about taking a stand against corporate greed for all working families.

“We thank the members of CWA and IBEW. They negotiated well with Verizon and elevated working people throughout the country. We applaud them for their solidarity and hard work,” said Richard Trumka, President of the AFL-CIO.

Some say that unions are relics of the past and are no longer needed. This agreement shows that unions are the only ones to stand up for working families against the greed of Corporate America.


Author’s Note:

United_we_bargainI am pleased to write this story and congratulate all of the members of the IBEW and CWA who stood strong for 44 days. A long term strike like this can take a serious toll on workers’ families and tests the strength of their resolve.

Your strength and perseverance prevailed. Now Verizon Wireless workers all across the country will see the benefit of a strong labor contract.

Non-union workers will also see how standing together against corporate greed is the only way we are going to rebuild a strong middle class.

United we bargain, divided we beg.

Verizon: Lining Their Pockets With Taxpayer Money While Workers Walk Out In Strike

NALC Members Stand With IBEW and CWA Members Against VerizonVerizon is not just a case study of what’s wrong with our economy – it’s also a classic example of what’s wrong with our politics.

A couple of years ago, the Sunlight Foundation investigated 200 of America’s most “politically active” corporations, and how much each one received in federal contracts and financial support.  Verizon was #14 on their list.  Look at the report and do the math yourselfLess than $100 million in political spending, and they received $3.5 billion back from the federal government… which would mean Verizon got about $35 back for every dollar of political spending.  And that’s just in federal contracts and federal financial support.

But their lobbying has had other benefits, too.  According to the Center for Responsive Politics, Verizon spent about $12 million on federal lobbying last year.  They had 98 federal lobbyists promoting the corporation’s interests on issues including immigration, international trade, healthcare and the environment.  But the leading issue was taxes.  LOTS of lobbying on taxes.  (See it all here.)  Which might explain the corporation’s federal tax rate.  According to Citizens for Tax Justice, Verizon’s effective federal tax rate is… negative.

————–

And that’s just at the federal level.  Verizon has a business segment of “State and Local Government Solutions.”

The National Institute on Money in State Politics shows more than $22 million in political contributions from Verizon-affiliated organizations to candidates for state and local office. (Who knew?  Verizon has “Good Government Clubs” in California, Illinois, Indiana, New Jersey, Texas, Pennsylvania and Virginia. “Clubs” ??!?)

Can’t help but notice Verizon’s recent press release: “Verizon selected as provider on $150 million Commonwealth of Virginia network and communications contract.”  The National Institute on Money in State Politics tracks $3 million in political contributions to Virginia politicians.  Can’t help but wonder if there’s a connection.

(Can’t help but wonder how many other states would show the same pattern, if anyone took the time to look.)

————–

Meanwhile – can’t help but notice – the corporation is racking up OSHA violations and FCC penalties and financial redress via the Consumer Financial Protection Bureau.

————–

Nearly 40,000 Verizon workers are now on strike, after working without a contract since last August.  Read more NHLN coverage here.

Verizon Workers Announce Strike Deadline of Wednesday, April 13th

TELECOM GIANT MAKES $1.8 BILLION A MONTH IN PROFIT, BUT SEEKS TO DESTROY GOOD JOBS FOR NEARLY 40,000 EAST COAST WORKING FAMILIES

After trying for ten months to reach a fair contract, nearly 40,000 Verizon workers from Massachusetts to Virginia will go on strike at 6 a.m. on Wednesday, April 13 if a fair agreement is not reached by then. The Verizon strike will be by far the largest work stoppage in the country in recent years.

“We’re standing up for working families and standing up to Verizon’s corporate greed,” said CWA District 1 Vice President Dennis Trainor. “If a hugely profitable corporation like Verizon can destroy the good family-supporting jobs of highly skilled workers, then no worker in America will be safe from this corporate race to the bottom.”

Even though Verizon made $39 billion in profits over the last three years — and $1.8 billion a month in profits over the first three months of 2016 — the company wants to gut job security protections, contract out more work, offshore jobs to Mexico, the Philippines and other locations and require technicians to work away from home for as long as two months without seeing their families. Verizon is also refusing to negotiate any improvements in wages, benefits or working conditions for Verizon Wireless retail workers, who formed a union in 2014.

“More and more, Americans are outraged by what some of the nation’s wealthiest corporations have done to working people over the last 30 years, and Verizon is becoming the poster child for everything that people in this country are angry about,” said Edward Mooney, Vice President, CWA District 2-13.”  This very profitable company wants to push people down. And it wants to push communities down by not fully repairing the network and by not building out FIOS.”

With negotiations at a standstill even as workers have offered hundreds of millions of dollars in healthcare cost savings, support for a fair contract is growing. Last month, 20 U.S. Senators sent a letter to Verizon CEO Lowell McAdam calling on him to “act as a responsible corporate citizen and negotiate a fair contract with the employees who make your company’s success possible.” And the working families of Verizon are reaching out to the public about the threat the corporation is posing to communities up and down the East Cost, including a new 30-second ad about the company’s efforts to offshore and relocate jobs.

“Verizon is already turning people’s lives upside down by sending us hundreds of miles from home for weeks at a time, and now they want to make it even worse,” said Dan Hylton, a technician and CWA member in Roanoke, Va., who’s been with Verizon for 20 years. “Technicians on our team have always been happy to volunteer after natural disasters when our customers needed help, but if I was forced away from home for two months, I have no idea what my wife would do. She had back surgery last year, and she needs my help. I just want to do a good job, be there for my family, and have a decent life.”

The Verizon negotiations began in June 2015, and the workers’ contract expired on August 1. At the same time, Verizon’s CEO is making 200 times more than the average Verizon employee, and the company’s top five executives made $233 million over the last five years.

“For months and months, we’ve made every effort to reach a fair agreement at the bargaining table,” said Myles Calvey, IBEW Local 2222 business manager and chairman, T-6 Verizon New England. “We’ve offered Verizon hundreds of millions of dollars in cost savings and yet they still refuse to provide basic job security for workers. We have to take a stand now for our families and every American worker.”

Even after significant worker concessions on healthcare, Verizon is attempting to make devastating cut backs, including:

  • Offshoring and contracting out even more customer service work to Mexico, the Philippines and other locations.
  • Cutting job security for all workers.
  • Requiring technicians to work away from home for as long as two months, without seeing their families. For anyone trying to balance work and family life, this is impossible.
  • Refusing to negotiate improvements to wages, benefits and working conditions for Verizon Wireless workers, who formed a union with CWA in 2014.
  • Freezing pensions at 30 years of service and forcing retirees to pay extremely high health care costs.
  • Slashing benefits for workers injured on the job.

Verizon’s corporate greed isn’t just harming workers’ families, it’s hurting customers as well. Service quality has deteriorated to the point that New York State’s Public Service Commission has convened a formal hearing to investigate problems across the Empire State. In the last few weeks, regulators in Pennsylvania and New Jersey have launched similar inquiries into Verizon’s operations.

For years, Verizon has been cutting vital staff — it has nearly 40 percent fewer workers now than a decade ago. Verizon has failed to hire the personnel necessary to properly roll out FiOS, the high-speed broadband service that is still unavailable to many of its customers. In cities like Philadelphia and New York, Verizon has failed to meet the buildout obligations under their citywide cable franchise agreements.

“Verizon wants to force through changes that would make it easier to uproot workers and hurt our communities,” said Betsy Derr, a customer service representative and CWA member in Bloomsburg, Pa., who’s worked at Verizon for over 16 years. “My job could be relocated about 70 miles away.  With three more hours of time commuting every day, I’ll be gone before my stepsons get up and maybe home for an hour before they go to bed.”

CWA Calls For New Investigation Into Verizon’s Failure To Maintain Telephone Infrastructure

CWA Petitions Maryland Public Service Commission to Investigate Verizon Service Quality, Given Lack of Investment in Telecom Network 

New Evidence Shows Verizon’s Systemic Neglect of Telephone Infrastructure Leads to Inadequate Service Quality, Dangerous Conditions

The picture above is from Frt. 1525 Walker Avenue, Parkton in Baltimore County, MD shows the remnants of a deteriorated black plastic wrap and exposed wires. There is no hard case to protect the exposed wires and the temporary plastic wrap did not last. Exposed wires are susceptible to damage from weather and animals. Damaged wires cause service outages. The discolored wires indicate long exposure to weather.

The picture above is from Frt. 1525 Walker Avenue, Parkton in Baltimore County, MD shows the remnants of a deteriorated black plastic wrap and exposed wires. There is no hard case to protect the exposed wires and the temporary plastic wrap did not last. Exposed wires are susceptible to damage from weather and animals. Damaged
wires cause service outages. The discolored wires indicate long exposure to weather.

Annapolis, MD – The Communications Workers of America (CWA) today filed a letter with the Maryland Public Service Commission calling on the PSC to re-open an investigation into Verizon’s quality of service on its copper network, which is the primary network serving much of the state, including Baltimore.  The letter included photos of deteriorating telephone equipment that pose a severe threat to service quality.  

The request comes on the heels of a request in September after Verizon admitted in a letter to the FCC that it had only spent $200 million over the last 7 years to maintain its copper landline network in Maryland and ten other states and the District of Columbia.  

“Verizon makes a profit of over $1.5 billion every month,” said CWA District 2-13 Vice President Ed Mooney.  “And yet it refuses to expand its high-speed network to Baltimore and other communities in Maryland, while systematically letting the existing network deteriorate.  Verizon needs to stop hoarding its cash and start investing in its customers and employees.” 

CWA, in the course of representing its more than 3,300 Verizon workers throughout Maryland, examined Verizon’s equipment in areas of the state where Verizon has not built its new fiber network (or FiOS) and only offers service through traditional copper wiring.  The investigation documented numerous locations that are so damaged as to impact service quality.  This includes poles that are damaged, unsecured and broken, damaged and exposed cable and splice terminals, by-passed damaged cable, and equipment that shows evidence of damage caused by animals.  

The union says that Verizon’s systemic underinvestment in its traditional landline network violates the terms of the alternative form of regulation that the company is currently operating under. 

Maryland law sets out a standard that permits the Public Service Commission to adopt – and Verizon to operate under – an alternative form of regulation.  Verizon is only allowed to operate under this alternative form of regulation if the Commission finds that it protects consumers by – at a minimum – producing affordable and reasonably priced basic service and by ensuring the quality, availability and reliability of telecommunications services throughout the State of Maryland.  The lack of investment, as evidenced by the deteriorating physical plant puts the quality, availability and reliability at risk. 

Verizon’s lack of investment is not limited to Maryland.  The union filed a similar petition in Pennsylvania, where a lack of investment has led to dangerous conditions and service quality complaints.

CWA Petitions Pennsylvania Public Utility Commission to Investigate, Fine Verizon for Appallingly Dangerous Conditions

p 13 top left Chester Co Honeybrook Rte 10 & Woodland

Image courtesy of CWA

 Verizon’s Systemic Neglect of Telephone Infrastructure Leads to Broken Poles, Sagging Cables, Ungrounded Conduit, and Abandoned Equipment That Pose Hazards to Public Safety

PUC Has Received Thousands of Complaints of Inadequate Service; Customers Unable to Receive Medical Calls, Call 911 

WASHINGTON- The Communications Workers of America (CWA) today filed a petition with the Pennsylvania Public Utility Commission calling on the PUC to open an investigation into unsafe conditions at Verizon locations throughout the state. 

Image courtesy of CWA

CWA, in the course of representing its almost 5,000 Verizon workers throughout Pennsylvania, examined Verizon’s equipment in areas of the state where Verizon has not built its new fiber network (or FiOS) and only offers service through traditional copper wiring.  The investigation documented hundreds of dangerous locations that include poles designated for removal that are not stable (and in some cases broken), portions of old poles suspended in the air, terminals and other equipment not attached to poles, cables hanging dangerously low due to broken lashings that have not been replaced, plastic coverings and splice boxes placed over damaged cable and other equipment that pose a risk of insect and animal infestation and that are not properly grounded, damaged cabinets that pose a risk of insect and animal infestation, and similar conditions that pose a risk to CWA members and the public.

“Everyday, CWA members put themselves at risk climbing poles that can fall at any minute or fixing equipment that has become a home for rats and other dangerous infestations due to Verizon’s unwillingness to maintain its, equipment,” said CWA District 2-13 Vice President Ed Mooney. “Despite a billion dollars in profits every month, Verizon refuses to spend the money necessary to keep the public and its employees safe. Customers are paying every month for telephone service that’s reliable. They deserve better than this.”  

Image courtesty of CWA

Image courtesy of CWA

“AARP supports the call for an investigation of Verizon’s operations in Pennsylvania. We know that telephone service is a basic necessity, allowing older people to maintain social contact, preserve health and safety, and call for assistance in an emergency,” said Bill Johnston-Walsh, AARP Pennsylvania State Director.  “Many consumers rely on their landline service during extreme weather or other emergencies.  When the power goes out, they need to be able to communicate. AARP also encourages consumers to take advantage of advanced technologies. The Commission’s should use its investigation to ensure that Pennsylvania consumers enjoy the finest, affordable, universal, reliable and high quality telecommunications system in the nation.”

In its investigation so far, the union documented more than 200 examples in 13 counties where Verizon is failing to provide safe facilities by refusing to 1) replace damaged, bent, and broken poles; 2) repair or replace damaged cross-connect boxes and remote terminals; 3) repair or replace damaged cable; and 4) properly control falling trees and vegetation near its facilities.  The union is calling on the PUC to use its authority to conduct a public, on-the-record investigation into whether Verizon is meeting its statutory obligation to provide “adequate, efficient, safe, and reasonable service and facilities.”

Image courtesy of CWA

Image courtesy of CWA

Since 2012, the PUC has received more than 6,000 complaints of inadequate service.  Because the PUC often transfers customers to Verizon before taking a complaint, the real number of complaints is even higher.  Many of these complaints document multiple days without service over several months, and have led to missed medical calls and an inability to call 911 in emergencies.

The union says that the dangerous conditions are due to Verizon’s systemic underinvestment in its traditional landline network.   In July, Verizon admitted in a letter to the FCC that it had only spent $200 million over the last seven years to maintain its copper landline network in Pennsylvania, ten other states and the District of Columbia.  CWA also asked the PUC to order Verizon to take immediate actions to correct these dangerous conditions throughout the Commonwealth, and to fine Verizon for what appear to be willful failures to safely maintain its equipment.  According to CWA’s petition, the PUC has the authority to fine Verizon up to $1,000 per day for each safety violation.

Verizon Makes Over $1 Billion In Profits Per Month And Demands Concessions From Workers

Despite $4.2B in Profits in Last 3 Months,
Verizon Plans Cuts to Job Security, Health Care and Retirement Security
 

New York, NY – In response to today’s Verizon earnings report, the Communications Workers of America, which along with the International Brotherhood of Electrical Workers, represents 39,000 Verizon workers, issued the following statement:

“Yet again, Verizon’s quarterly report shows the strength of the company’s bottom line,” said Bob Master, Assistant to the Vice President, CWA – District 1.  “But despite another almost $1.5 billion dollars a month in profits, Verizon continues to ignore millions of consumers who want its high-speed network in both cities and rural areas. At the same time, the company turns its back on its workers, demanding the right to ship even more family-supporting jobs overseas. Verizon should stop stalling and negotiate a fair contract.” 

On October 20, Verizon reported profits of $4.2 billion in 3Q 2015 on revenues of $33.2 billion.  This is on top of $8.6 billion in the first half of 2015. The company also reported that during the first nine months of 2015 it has paid out nearly $6.4 billion to shareholders in dividends and stock buybacks.

In recent weeks, 13 Northeastern Mayors and the Democratic candidate for Mayor of Philadelphia sent a letter to Verizon expressing anger at Verizon’s refusal to build its high-speed FiOS network at all in some cities while in others the company fails to meet contractual and legal requirements to complete universal build-outs.  The Mayors also expressed concern about Verizon’s treatment of its workforce in ongoing contract negotiations.

The anger has been growing across the East Coast as Verizon systematically refuses to invest in its infrastructure.  In a letter to the FCC it admitted that it had only spent $200 million or $3.50 per customer over the last seven years to maintain its copper landline network in eleven states and the District of Columbia.  The Communications Workers of America filed letters in six states and Washington, DC calling on them to investigate whether Verizon was neglecting its responsibility.  

CWA and IBEW represent 39,000 workers who build, maintain, service and install FiOS and the telephone network, Verizon has not significantly moved off its outrageous initial bargaining demands, made on June 22nd, which include the following proposals:

  • Completely eliminating job security and gaining the right to transfer workers at will anywhere in the company’s footprint.
  • Increasing workers’ health care costs by thousands of dollars per person, despite the fact that negotiations in 2011-2012 have cut the company’s health care costs by tens of millions of dollars over the life of the past contract.
  • Removing any restrictions on the company’s right to contract out and offshore union jobs.  This comes on top of Verizon’s outsourcing of thousands of jobs in recent years.
  • Slashing retirement security.
  • Reducing overtime and differential payments.
  • Eliminating the Family Leave Care plan, which provides unpaid leave to care for sick family members or care for a newborn.
  • Eliminating the Accident Disability Plan, which provides benefits to workers injured on the job.

At Verizon Wireless, CWA represents about 100 long-time unionized technicians in New York State and 75 retail employees in Brooklyn and Everett, MA.  The 65 Brooklyn workers, who are primarily African-American, are the first retail workers to form a union in Verizon Wireless and are seeking a fair first contract.  Management is refusing to offer any raises, benefits or improvements to working conditions at the bargaining table for the Brooklyn workers (and also newly-unionized Everett, Massachusetts workers).  Verizon Wireless also recently violated workers’ rights by firing their leader, Bianca Cunningham, in order to intimidate the other workers.  CWA has filed charges at the National Labor Relations Board and is confident that the charges will be upheld. Any improvements for the newly-union retail workers would set a precedent for the entire company.  Verizon Wireless is also refusing to offer fair raises, benefit increases or other improvements for its long-time union technicians, who are now working without a contract. 

 

Consumers, Elected Officials, Advocates, Union Members Call On Verizon to Stop Stalling at City Council Hearing

Pressure Grows on Verizon as City Council Examines Verizon’s Broken Promise to Build-Out High-Speed FiOS Network 

New York – At a press conference and City Council hearing today, consumers, elected officials, advocates and union members called on Verizon to build out its high-speed FiOS network, as the company promised to do when it got a lucrative television franchise in 2008.  The City’s damning audit of Verizon’s FiOS rollout in New York City found that Verizon has failed to meet the terms of its franchise agreement, which requires the FiOS network to be available to any household that requests service by June 2014. 

Currently, thousands of street blocks cannot get any service at all.  Millions of New Yorkers cannot get FiOS service, leaving them dependent on their cable company for TV and internet service.  The Council’s hearing, conducted jointly by three committees, put further pressure on Verizon to build FiOS throughout the City as required by the City’s franchise agreement. 

“I have been living in Rego Park since early 2014 and have been eager to get FiOS service in my apartment, like many of my neighbors.  We are now limited to Time Warner, and they keep raising prices whenever they choose,” said Robert Kaufman.  “Every time I’ve called Verizon over the last 18 months, they’ve told me FiOS will be here in ‘six months.’  But I’m still waiting.”

“I’ve gotten signatures from hundreds of small business owners like myself looking for FiOS,” added Ernie Goldman, who owns a business on the Bowery.  “It’s been two years, and still no high-speed alternatives.  Verizon should stop stalling.” 

Examples of Verizon’s failure to deliver service include:

All of Broadway from 135th Street to 219th Street, except for one building that was once a Verizon building between 213th and 214th Streets. On this 84 block-long stretch of Broadway, there are about 10 buildings total that get the FiOS network on the street blocks directly East and West of Broadway.

  • 145th Street has no service from the Harlem to Hudson Rivers, except for 1 or 2 buildings.
  • 17th Street from 1st Avenue to the Hudson River has no service except for 1 or 2 buildings.
  • Co-Op City in the Bronx and Starrett City in Brooklyn do not have service.
  • In Sunnyside, there is no service in on the blocks that are between from 30th Street and 49th Street and 47th Avenue and either the Long Island Expressway (LIE) or 50th Avenue.
  • In Jackson Heights, there is no FiOS service from 69th Street to 89th Street between Northern Boulevard and Roosevelt Avenue.

Throughout the City, there are blocks or large parts of neighborhoods without service.  Service is especially difficult to get in Chinatown, Washington Heights, Bedford Stuyvesant, Carroll Gardens, Park Slope, Prospect Heights, Jackson Heights, Bay Ridge, Bensonhurst, and Sunnyside among other areas. 

In a recent investigation Council staff found that Verizon call center representatives did not offer an explanation for a lack of service or any estimate of when service would be available.   

“We plan to take a thorough examination of the work Verizon has completed under this contract, as well as the work they continue to complete moving forward,” said Council Member Donovan Richards, chair of the Council Subcommittee on Zoning and Franchises. “Our ultimate goal is to ensure that Verizon is keeping its promise to all New Yorkers throughout the five boroughs.” 

“Earlier this year the federal government made sure that throughout our country access to the internet was treated as a public utility,” said Councilmember Ydanis Rodriguez. “Yet, months later because of a lack of competition, prices are still on the rise. Verizon FIOS promised New Yorkers that they would give residents in neighborhoods like the ones I represent, Washington Heights and Inwood, a new option for internet access but they have failed. Instead they continue to benefit from the franchise agreement they’ve signed with the city while failing to uphold their end of the bargain. We must come together to hold Verizon accountable. I am a proud member of a broad coalition of advocates, unions, and elected working towards more equitable access to the internet.” 

“Verizon promised the City fast broadband, but instead the company has spent seven years dragging its feet and breaking its contract,” said Council Member Rory I. Lancman. “Verizon needs to stop stalling and start installing.” 

“We’ve heard from literally hundreds of our members in New York City.  So many are frustrated because they cannot get FiOS and want the competitive choice between providers for broadband and phone that the FiOS franchise agreement held out,” said Susan Lerner, Executive Director of Common Cause/NY. “We are encouraged by the DoITT Audit and today’s City Council hearing. Common Cause/NY urges the deBlasio Administration and the City Council to continue to vigorously perform their oversight role and bring a competitive telecom marketplace to  New York City residents.”  

“In its 2008 agreement with the City, Verizon agreed to build the FiOS network to all New York households that want the service by mid-2014,” said Dennis Trainor, Vice President of the Communications Workers of America – District One. “Today, thousands of street blocks and large parts of many neighborhoods do not have any service, leaving millions of New Yorkers without access to FiOS.  Instead of trying to reduce its workforce by eliminating job security, Verizon should be hiring more workers here in New York City to ensure every household can get FiOS.”

 “We’ve received literally dozens of stories from New York City consumers who are frustrated that FiOS is still not available where they live,” said Chuck Bell, Programs Director for Consumers Union.   “We are also very concerned that New York City’s audit of the Verizon franchise agreement found that Verizon did a poor job of logging and following up on inquiries from prospective customers.   We urge the de Blasio administration and the City Council to hold Verizon’s feet to the fire to rapidly complete the FiOS buildout, so all city residents can finally have a choice of at least one alternate provider for internet and cable service.” 

As a result of its franchise agreement with Verizon, New York City surrendered the right to regulate basic cable rates, since the FCC deemed the New York City market to be “competitive” because of Verizon’s entry into the market.  Yet in reality, head to head competition is sharply limited because of Verizon’s failure to live up to the terms of the franchise.

The hearing comes days after the Communications Workers of America (CWA) launched a TV ad on local broadcast and cable channels slamming Verizon’s broken promises. The 30-second ad highlights a New York City audit of Verizon’s FiOS rollout in New York City that found that Verizon has failed to meet its promise to deliver high-speed fiber optic internet and television to everyone in the city who wanted it. 

 

Buying (and Selling) the Future on Wall Street

Verizon as a case study of why our economy doesn’t work, part six

The “ah-ha!” moment came during a conversation with a friend. What we realized: the way we usually talk about the stock market doesn’t match the reality of our modern economy. Things we assume about stock ownership often aren’t really true.

NYSE_09_26_1963_US_News_World_Report

New York Stock Exchange, 1963 (Photo by US News and World Report via Library of Congress)

Start with the basics: what is a share of stock? Most of us think “Investors give a business money and get back shares of stock that give them a fractional ownership of the company.”

But try applying that concept to Verizon, and it doesn’t fit. Verizon stockholders buy and sell shares on the open market – and none of that money goes back to the corporation. The money that investors pay when they buy stock… goes to the investors who sold the stock.

So buying stock isn’t “an investment in the company”… it’s an investment in the stock itself. If you later sell that stock for more than you paid for it, that profit is what’s known as a “capital gain.” If you sell it for less than you paid for it, that’s a “capital loss.”

Stock ownership does give shareholders a “fractional ownership of the company.” But what does that mean? There are more than 4 billion shares of Verizon stock outstanding.  If you own one of those shares, you don’t have rights to any particular network router or mile of transmission line.  Instead, you own slightly less than one-four-billionth of the corporation’s “stockholder’s equity.”  That means if the corporation were to be liquidated tomorrow, you – along with all the other stockholders – would share whatever remained after the corporation’s assets were sold and its other debts were paid.

And that’s probably when, if you were a stockholder, you would start remembering the $49 billion in long-term debt that Verizon acquired in 2013.

And that’s probably when you’d realize that Verizon’s corporate balance sheet shows less than $12.3 billion in “total stockholder equity.” And there are more than 4 billion shares of stock outstanding.

Which means each share of stock represents less than $3 in stockholder equity.

VZ stock chart

Verizon Share Price

Verizon has been trading above $40 a share since… April Fool’s Day 2012. (Back when there were less than 3 billion shares outstanding and the balance sheet showed stockholder’s equity of about $11.76 per share.)

That’s a huge difference between the per-share value of stockholder equity and the per-share price stockholders have been paying… for years now.

So… what else are stockholders buying? (in addition to that minuscule percentage of a relatively small amount of stockholder equity)

Each share also confers the right to receive a dividend, when and if the corporation issues dividends.  And – no surprise – Verizon has been issuing steadily-increasing dividends for more than a decade.  At this point, it’s issuing dividends that total more than $2.20 a year.  With shares trading between $40 and $45, that means stock purchasers can expect to make back – in dividends – about 5% a year on their investment. Which is way more than the rest of us can get in bank interest right now, if we put money into a savings account.

But although those dividends represent a whopping big “return on investment” – there’s still the risk that you could lose money on the stock itself.  Think about it: if you bought a share of Verizon stock last October, you paid about $49 a share. Since then, you’ve received about $2.20 in dividends. But the price of each share of stock has dropped to about $44. So even though you’ve received 5% in dividends… if you sold the stock now, you would still have “lost” about $2.80 per share.

So corporate executives pay a whole lot of attention to share prices.

VZ_Exec_Comp_Program_from_ProxyFor two reasons. First, because executives’ compensation is largely “pay for performance.” For Verizon executives, 90% of compensation is “incentive-based pay.” And what’s the objective? “Align executives’ and shareholders’ interests.”

Second reason: because most corporate executives own a lot of stock in their company.

VERIZON SHARES OWNED by executivesAs of this past February, when stock incentives were awarded, Verizon’s top 10 executives reported owning a total of more than 645,000 shares of corporate stock – worth, at the time, $49.31 per share… or, more than $31.8 million.

But Verizon stock is now trading at about $44 per share. That means those same executives’ shares are now worth only about $28.4 million.

So is it really a surprise that corporations spend trillions of dollars buying back their own stock, to bump up share prices?  Is it really a surprise that corporations borrow money to pay dividends and fund buybacks?

I don’t see anything here that provides an incentive for corporate executives to grow a company long-term.  Nothing that provides an incentive to pay employees a fair wage.  Nothing that provides any incentive to “create jobs” (no matter how low the tax rate goes).

The only incentives are: to keep stock prices high and to pay dividends. (And an incentive for corporate executives to take as much money as they can, however they can, while it’s still available.)

And so for the rest of us, the economy doesn’t work.

— — — — —

retirement eggWondering why you should find time to care about this, with everything else that’s going on right now?

Because of that huge difference between the per-share value of shareholder’s equity and the actual price per share.

And what happens during recessions.

And the fact that almost everybody’s retirement money is – in one way or another – invested in the stock market.

Here in the Granite State, the NH Retirement System lost 25% of its value in the last recession.

In June 2007, before the Wall Street meltdown, the NHRS had $5.9 billion in investments, including
•  $29.7 million of stock in Citigroup, Inc.
•  $23.5 million of stock in American International Group, Inc. (AIG)
•  $14.0 million of bonds issued by Federal Home Loan Mortgage Corp. (Freddie Mac)
•  $13 million of bonds issued by Federal National Mortgage Association (Fannie Mae)

Two years later, when the recession was in full force,
•  Citigroup stock had plunged to only about 6% of its former value
•  AIG stock was worth only about a penny on the dollar and
•  Freddie Mac and Fannie Mae had both been placed into federal conservatorship

That’s what happens to stock values, during recessions.

Remember hearing about the Detroit bankruptcy? Which supposedly was triggered by unsustainable public employee pension costs? The Detroit pension systems were fully funded, as of June 2008. Then the recession hit.

All those defined-contribution 401(k)s? Across the country, families lost an estimated $2 trillion (with a T) of their retirement savings when stock values plummeted during the last recession.

Artificially-high stock prices hurt almost everybody, in the long run.

— — — — —

Yes, there’s more.

Smashed Piggy Bank RetirementVerizon’s balance sheet includes $24.6 billion of “goodwill” and $81 billion of “intangible assets.” And if you factor those out, Verizon has “net tangible assets” of minus $93.4 billion. That’s what most of us would think of as a negative net worth… of about minus $23.35 per share. While investors are paying about $44 per share to buy the stock.

The good news, from the investors’ perspective: they’re not personally liable for that $116 billion in long-term corporate debt. If – and this is purely hypothetical – if Verizon were to declare bankruptcy and default on that debt, stockholders would not be expected to pitch in $23.35 per share to satisfy the corporations’ creditors.

The bad news is, somebody out there would take that loss… and retirement systems across America invest in corporate bonds. (At last report, the NH Retirement System owned more than $433 million worth of corporate bonds.  Can’t tell, from here, whether any of those include Verizon.)

— — — — —

Photo by Stand Up to Verizon via Flickr

Photo by Stand Up to Verizon via Flickr

If you want to support the 39,000 Verizon employees who have been working without a union contract since August 1st, you can sign the petition here.

Stand Up to Verizon is on Facebook here.

Part one of this “Verizon as a case study” series is here.  It focuses on Verizon’s $5 billion stock buyback last February, and the short-term bump in stock prices which followed.

Part two of the series, showing how Verizon executives benefited from that $5 billion buyback, is here.

Part three, looking at the disconnect between Verizon’s reported profits and the dividends it pays its stockholders, is here.

Part four, about phantom stock and how Verizon executives are avoiding taxes by investing in imaginary assets, is here.

Part five, about how Verizon is borrowing money to pay stockholders and executives while demanding givebacks from unions, is here.

This is part six.  And yes, there will be more.

East Coast Mayors Representing Over 12 Million People Blast Verizon

East Coast Mayors Representing Over 12 Million People Blast Verizon: Stop Stalling, Start Building High-Speed Internet – and Guarantee Good Phone Service to All Consumers

In Some Cities, Verizon Ignores Legislative and Contractual Buildout Requirements; In Others, Refuses to Build FiOS at all, While Letting Traditional Landline Network Deteriorate Everywhere

WASHINGTON- Mayors of 14 cities with over 12 million residents are fed up with Verizon.  The Mayors expressed anger at Verizon’s refusal to build its high-speed FiOS network at all in some cities while in others the company fails, to meet contractual and legal requirements to complete universal build-outs.  The Mayors also expressed concern about Verizon’s treatment of its workforce in ongoing contract negotiations. 

In a letter to Verizon CEO Lowell McAdam, the Mayors called on the company to sit down to discuss ways the company can better serve customers and resolve disputes with the Verizon workers who are in the midst of a contract negotiation. 

”As Mayors, we understand firsthand how vital Broadband is to the growth of our local economies and to nurturing a healthy, competitive marketplace in our state. Our residents use the Internet to search for jobs, build home-based businesses, educate their children and engage in the civic life of our cities.

“But consistently and increasingly, our consumers have complained that FiOS service is not available to them. These are not isolated complaints – there are millions of residents in communities throughout the Northeast who have been left without service, and with no plan or promise for future resolution,” wrote the Mayors.

“At the same time, we are hearing concerns that both in cities covered by a FiOS franchise or in which FiOS is still completely unavailable, Verizon has been abandoning the copper network and traditional landline customers are experiencing frequent service outages, delays in repairs and installations, and forced migration to the inferior VoiceLink product. As you know, the New York Public Service Commission stated in its recent Staff Assessment of Telecommunications in NY: ‘In many areas of New York City, the legacy copper infrastructure is in such poor condition that copper failures due to weather conditions can cause long delays for service restoration and Commission service quality standards are missed,’” the letter continued.

In a sign of the growing frustration with Verizon’s refusal to invest in its wired network, the letter was signed by the Mayors of New York, Pittsburgh, Newark, Jersey City, Buffalo, Worcester, Paterson, Syracuse, Lowell, Albany, Brockton, Trenton and Revere and the Democratic candidate for Mayor in Philadelphia.

The anger has been growing across the East Coast as Verizon systematically refuses to invest in its infrastructure.  In August, it was the only major U.S. telecommunications company to turn down federal funding to build broadband in unserved, primarily rural, communities, leaving many residents in eight states and the District of Columbia without access to vital communications options.  The company was offered $568 million over six years by the Federal government to bring broadband to 270,000 locations in Washington, DC, Delaware, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, and Virginia. 

In New York State, the company refuses to avail itself of Governor Cuomo’s $500 million New New York Broadband Fund, which offers up to 50% subsidies to companies willing to build high-speed service in underserved areas.  For years, Verizon has steadfastly refused to bring its high-speed internet service (or FiOS) to areas like Buffalo, Syracuse, Albany, Rome, Utica and numerous other upstate New York cities, as well as much of Eastern Suffolk.  At a series of hearings held by New York State, elected officials from Buffalo, Syracuse, Albany, the North Country, the Southern Tier and the Hudson Valley decried the lack of FiOS in their communities.

Campaigns in Pennsylvania and Massachusetts have also called for FiOS to be built in their communities.

A damning audit of Verizon’s FiOS rollout in New York City found that Verizon has failed to meet its promise to deliver high-speed fiber optic internet and television to everyone in the city who wanted it.  During its negotiations for a city franchise, Verizon promised that the entire city would be wired with fiber optic cables by June 2014 and that after that date, everyone who wanted FiOS would get it within six months to a year.  The audit found that despite claiming that it had wired the whole city by November 2014, Verizon systematically continues to refuse orders for service.  The audit also found that Verizon stonewalled the audit process. 

At the same time, Verizon has been letting its traditional phone network deteriorate.  In a letter to the FCC it admitted that it had only spent $200 million or $3.50 per customer over the last seven years to maintain its copper landline network in eleven states and the District of Columbia.  The Communications Workers of America filed letters in six states and Washington, DC calling on them to investigate whether Verizon was neglecting its responsibility. 

 

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