Bell Atlantic: Playing Chicken On The I WayAaron Bernstein
Bell Atlantic Corp. Chairman Raymond W. Smith long has seen himself as a soaring visionary who intends to be a pioneer of the Information Age. Bell Atlantic has aggressively pursued such ideas as wiring homes with fiber optics and video on demand.
Now a powerful labor union may drag Smith back to earth. In recent weeks, the six other Baby Bells have signed new pacts with the Communications Workers of America (CWA) that give union members the right to work on the fiber optics likely to be the backbone of the Information Superhighway.
Smith is having none of the union's demands. Bell Atlantic wants to pay I-way workers 40% less than the $40,000 a year CWA members get for phone work. It wants to subcontract work to cheaper suppliers. Plus, it says the other Bells' pay hikes are just too high (table). The union opposes the demands and worries that giving in would prompt requests for concessions from other Bells.
A nasty, drawn-out strike looks increasingly likely: Bell Atlantic's contract expired on Aug. 5 and the CWA can walk out any day. In preparation, the union has earmarked $5 million for a massive campaign of negative advertisements and to get pension funds to dump the company's stock. The union is even threatening to oppose the telecommunications deregulation bill pending in Congress. So far, though, the company shows no sign of budging. "Bell Atlantic has always led the way for the other Bell operating companies, and I think we'll do that again with our labor agreements," says Tyler Williams, Bell Atlantic vice-president for labor relations.
The heart of the dispute concerns jobs that may be created to build and service the I-way. Not much of this work is under way yet, although Bell Atlantic and other Bells have some experiments going. But long-term, many believe homes will be wired into fiber-optic networks, which will carry phone calls as well as services such as video on demand. Fearing their current jobs may barely exist, CWA members want to ensure they do
I-way work at their current wage.
Bell Atlantic argues that the CWA's $20-an-hour wage for technicians makes it uncompetitive with lower-paying nonunion cable companies. To level costs, management wants all I-way work performed at a customer's home done by a newly created unionized subsidiary that would pay $8 to $12 an hour. It also wants to subcontract more work to lower-paying outside suppliers. So far, Bell Atlantic has farmed out nearly 4,000 CWA jobs, leaving 37,000 union members.
WIGGLE ROOM. The CWA says it's willing to horsetrade to make Bell Atlantic more competitive. Officials don't believe that most cable workers are direct rivals. U S West Inc. actually raised wages for some technicians after finding out that its higher-skilled workers earned less than similar cable company workers. Still, the CWA says it will give Bell Atlantic the 40% lower pay scales, but only if the jobs are returned to current union wage levels should phone and I-way lines ever merge. As an alternative, the CWA wants an end to all subcontracting.
The union thinks it has left the company wiggle room. "I've probably gone further than most members would give me license to do, but I'm willing if that's what it takes to avoid a war," says Peter G. Catucci, the vice-president in charge of the CWA's bargaining. But Al Koeppe, president of Bell Atlantic-New Jersey, who is overseeing the company's bargaining, says these ideas "don't have a great deal of promise."
Other Bells, however, are happy with far less than Bell Atlantic is demanding. The other Bells did win lower pay scales on less-skilled I-way jobs. But even though they got nothing close to Bell Atlantic's demands, "the sum of the agreement makes us very competitive," says Pacific Telesis Group labor relations director Robin G. Macgillivray.
Bell Atlantic is well-positioned to withstand a long walkout. It is one of the most profitable Bells, and much of its network is automated. However, the CWA's $90 million strike fund would allow it to hang on for a long time, too. If Bell Atlantic wins, its rivals could be left scrambling to catch up. But if the result is a costly labor war that nets little, Smith's I-way dreams could be disrupted by some sleepless nights.