YOU ARE AT:OpinionKagan: The Verizon strike is different this time

Kagan: The Verizon strike is different this time

Once again Verizon workers are on strike. However, things are very different this time. The problem is a strike is like treating a cold or flu with a Kleenex. It treats the symptom but not the real problem. The real problem is something that no strike can fix. The problem is a changing marketplace. The problem is new technology. The problem is increased competition.

There are two ways to look at this Verizon worker problem. One way is from the worker’s perspective. They are families and their costs rise year-after-year. We can all feel for these families. So in a perfect world they should continue to earn more year after year as they always did.

The other way is from the perspective of Verizon. Verizon is in transition. This is a company who is faced with growing serious challenges which need to be understood and dealt with. Challenges from new competitors, new technology and a changing marketplace.

Pull the camera back

The lines are drawn between Verizon and their workers and the stakes are very high. To understand today’s marketplace, we need to pull the camera back to see the bigger picture from a longer-term historic perspective. Things are changing. In fact, things have been changing for decades. Today there is competition. Today there is new technology. Today Verizon is losing traditional telephone customers.

I have commented on Verizon strikes over the last few decades. Ten and 20 years ago I warned this day was coming. Well, it’s no longer a warning. Today that day is here.

Today Verizon only has 30% market share

Ten or 20 years ago Verizon had nearly all the market share for landline phone service. Today they have roughly 30%. That’s an incredible drop. Because of this there simply is not the need for the same number of workers on the phone side of the house.

And the costs of these workers need to be managed carefully so Verizon remains competitive or they will lose more and even faster.

Customers are leaving Verizon telephone for wireless competitors, VoIP competitors, phone service from cable television companies, and so on. Competition is growing. New technology is changing everything.

Yesterday, when Verizon agreed to worker demands they simply passed the cost along to customers. Today they can no longer do this. Today if they wanted to increase customer costs, the customer would simply leave faster. So this is simply no longer possible.

The Verizon rub

That reality is the painful part of this scenario. The only solution is workers must retrain and move to other areas of the business. As much as we understand the needs and wants of the workers, they simply cannot continue to demand more even if U.S. presidential candidates Bernie Sanders and Hillary Clinton are on their side.

This same thing has happened before in other industries. Look at cable television as an example. They are not unionized, but they are losing market share to telephone companies offering IPTV like Verizon FiOS, AT&T Uverse and their DirecTV and CenturyLink Prism.

That means cable television companies are losing market share. Their answer is to adjust their worker offerings in order to stay competitive. They can do this because they are not unionized.

Many other examples

Plus, there are plenty of other examples over the years. Remember Blockbuster video rental stores? They were growing in the 1990s, but crested and fell during the 2000s and now they are gone.

I’m sure the buggy whip industry was not happy when the first automobiles were introduced. Or when Steve Jobs of Apple transformed the music business with the iPod sending the music industry into turmoil. Or when Amazon.com changed the book business putting Borders and countless other bookstores out of business.

POTS on decline

These are important lessons we cannot ignore. The lesson we all need to learn is things don’t last forever. Plain old telephone service or POTS crested 15 years ago and is now shrinking. This is the new reality we all need to understand.

We all want what’s best for workers. They are regular people and families like you and me. However, when marketplaces changes, we need to adapt and change as well. When the marketplace changes everyone has to adjust and shift.

So workers need to retrain and move from the shrinking side of the industry to the growth side. And there are plenty of growth sides. Wireless and telecom are still booming, just changing. That’s the only solution that will save all sides in this argument and strike. It may not be what you want to hear, but it’s the truth. Think about it.

ABOUT AUTHOR

Jeff Kagan
Jeff Kaganhttp://jeffkagan.com
Jeff is a RCR Wireless News Columnist, Industry Analyst, Key Opinion Leader and Influencer. He shares his colorful perspectives and opinions on the companies and technologies that are transforming the industry he has followed for 35 years. Jeff follows wireless, wire line telecom, Internet, Pay-TV, cable TV, AI, IoT, Digital Healthcare, Cloud, Mobile Pay, Smart cities, Smart Homes and more.

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