Kagan: Verizon, AT&T and the CWA union

Why is AT&T able to strike a deal with the Communications Workers of America and Verizon Communications is not? Why is Verizon still struggling while their workers are on strike? This seems to make no sense in a competitive marketplace where customers can easily leave. I don’t have an answer. Do you? I would love to hear your thoughts on this question, so chime in.

After my column last week, “Verizon strike different this time,” I heard from Verizon workers, executives, investors and the CWA sharing their thoughts. Some agreed with what I said. Some did not agree, but were polite. Others did not agree and were rude and inflammatory. They don’t understand there are multiple ways of looking at any situation.

With all that said, there is still this nagging question: why was AT&T able to come to terms with the CWA once again, and why is Verizon still struggling with this strike? This is an important question for investors and customers as AT&T and Verizon transform themselves into the next generation of company.

CWA perspective

We can all understand this from the worker’s perspective. This is their job. Their career. Their source of income. We feel for each and every worker. On the other hand, we can also understand this from the company perspective. The industry is changing. Verizon is going wireless and retiring wireline. They face more nonunion competition. The economics and competition of the marketplace is changing.

One important thing to remember is Verizon cannot go all wireless. Even if they did, every wireless call is only wireless until it connects to the nearest cell. Then it travels over the wireline network. So wanting to get out of the wireline business simply means they don’t want to deal with business and consumer customers issues with the POTS network.

Wireless and telecom are changing. I heard that a decade or two ago Verizon may have had a lock on the local marketplace, but not today. Today their POTS market share is down to 30% and falling. Customers are leaving and going wireless. Some are switching to Voice over Internet Protocol services from Verizon or from their cable television company. And more changes are on the way.

Verizon competes with nonunion companies

So it’s important as they continue to compete with nonunion shops they have the ability to answer competitive threats. Either that or Verizon will simply shrink and fade away. Then everyone loses.

As with AT&T, both carriers are moving away from POTS and toward Internet, FiOS, wireless, IPTV and more. This is the future. The phone company of tomorrow looks very different from the phone company of yesterday. That’s good. However, customers often take longer to understand and to willingly make the switch.

AT&T and CWA were able to come together

All that is true, yet the same nagging question keeps popping up. Why was AT&T able to do a deal with CWA and not Verizon? Why is AT&T’s relationship with the CWA seemingly so much better than Verizon’s?

What is the rub? Is there something that the marketplace is not yet aware of? I have been in this industry for nearly 30 years. During that time, I have seen and commented on many similar strikes. However, unless I am wrong, most similar strikes were with Verizon. Not so much with AT&T, CenturyLink, Qwest or countless other Baby Bells, long distance or wireless companies over the decades.

Why Verizon and CWA can’t strike a deal

Both Verizon and AT&T are similar companies. They are the two largest Baby Bells in the United States. They offer local phone service, which is shrinking. Growing parts of their business are wireless, Internet, IPTV like U-verse or FiOS, and much more.

Going forward they are starting to change who they are. Verizon is making acquisitions like acquiring AOL and trying to acquire Yahoo. We have not seen much in the way of growth, but we hope they are on that track.

AT&T acquired DirecTV and is offering wireless television. They also acquired a Mexican wireless carrier and are now a big time wireless player in Mexico. AT&T seems to be on a stronger growth pattern. Plus, I expect to see much more growth from both companies.

Very exciting time in wireless and telecom

There are so many areas that both Verizon and AT&T are moving into and that’s the good news. Their growth has been strong in wireless over the last decade. Now that is changing and expanding. They are moving away from POTS and toward new technology. So going forward I don’t think we will compare AT&T and Verizon as much as we once did.

This is a very exciting time in this industry. Both AT&T and Verizon are transitioning. Both are on the verge of a brand new growth opportunity. However, going forward I see AT&T and Verizon taking different paths based on their current plans. So they will still be growing companies, just not as similar as they have been.

What’s your opinion?

With all that said, once again, there is that same nagging question. Why does AT&T do such a great job with the CWA and why is its chief competitor still struggling under the growing weight of the strike? So what do you think? Weigh in. Maybe then Verizon will understand your concerns and maybe something good will happen.