Questions for all! What could Verizon gain by extending this strike, and also what could they lose? Also, what would be the impact on WSTL?
Possible gains?
An extended strike would put a halt to Verizon's ADSL deployment and at the same time damage CLEC's deployment through Verizon's CO equipment. Since Verizon will now own their #1 ADSL competitor, there's very little pressure to push the ADSL deployment. The only pressure would come from the cable modems. It's common knowledge that the ROBOCs have been dragging their feet on ADSL deployment because ADSL replaces the much more profitable T1 lines.
The ROBOCs would like to keep the high margin revenues from T1 as long as possible. IMO, the strike and purchase of NPTN provides VZ with a vehicle to once more postpone ADSL and continue their milking of T1 revenue. VZ has only installed some 200,000 ADSL lines. There are virtually millions of customers demanding cheap broadband through ADSL but the RBOCs continue to resist because ADSL installations often replace the very profitable T1 lines.
So, an extended strike coupled with the purchase of NPTN looks like a win win scenario for VZ! If this analysis is correct, we might see VZ dragging their feet in the negotiations as they continue to reap high profits on T1 lines and also continue to position themselves in the ADSL market.
The above scenario would, of course, damage WSTL's sales and profitability in their next Q. I would appreciate a critical response to this scenario. These are just ideas I've been playing with for the last couple of days.
Other gains for VZ would be:
1. They reduce their labor costs by some $17,000,000 per day.
A 10-day strike would save the company $170 million dollars.
A 100-day strike would save the company $1.7 billion dollars.($20/hr. times 87,000 employees.)
2. A long strike would force significant concessions from the union.
3. A long strike might also reduce the pressure from the FCC's for deployment of broadband as soon as possible.
How about the negatives?
1. VZ would lose some non-ADSL business.
2. Possibly some credibility with the customers.
3. Cable broadband deployment could steal potential VZ customers.
4. An extended strike will sour their relationship with their workforce.
I invite a critical refutation of these thoughts because I believe such a dialog may uncover some hidden motives in this strike. |
