SBC plans to cut 11,000 more jobs
By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Friday, September 27, 2002
SBC Communications Inc. said Thursday it will cut another 11,000 jobs late this year and early in 2003, blaming its declining revenue on a weak economy and adverse regulations.
About 9,000 of the job reductions will occur in the fourth quarter, with the rest taking place early next year. The cuts will affect both management and nonmanagement jobs.
The company did not give details on how many jobs will be trimmed in Texas but signaled that the cuts will be lighter here than in other parts of the country.
The Associated Press reported that 1,700 nonmanagement positions will be cut from the company's five-state Southwestern Bell service region, compared with 2,400 jobs in its Ameritech region in the Midwest and 2,300 in the Pacific Bell area of California and Nevada.
SBC, the nation's second-largest phone company, already has cut 10,000 jobs companywide this year, including nearly 2,500 jobs in Texas. It employs 183,000 people in 13 states, including 36,700 workers in Texas and about 2,000 in Austin.
SBC also said it will reduce its spending on new equipment to between $5 billion and $6 billion next year, compared with the estimated $8 million that it expects to spend this year.
The phone company said it has lost nearly 3 million customer telephone lines in the first eight months of the year and that its revenue dropped more than $1 billion in the first half of the year. But the company has been highly profitable in recent years, making $7.2 billion on revenue of $45.9 billion in 2001.
The company claims that state and federal regulations are largely to blame for the cuts, by forcing SBC to allow competitors, including AT&T Corp. and WorldCom Inc., to use parts of its phone network at rates that SBC claims are below its cost. The company wants the freedom to raise the prices it charges to competitors.
"These actions that we're forced to announce today should be of concern to every consumer in states we service, whether they are SBC customers or not," said chief executive Edward Whitacre, who added that state regulators are forcing his company to sell services to competitors at rates that are up to 60 percent below retail rates.
"Under this pricing scheme, a century of regulatory policy has been turned on its head," Whitacre said. "Instead of subsidizing prices for average consumers, we now subsidize competitors, who in turn siphon revenues out of the market."
Whitacre said his company's problem is made worse by lengthy delays in getting approval to offer long-distance service in many states and by rules that give cable companies an "unfair edge" in the rollout of broadband Internet service.
But some industry analysts say SBC is overplaying its hand about the harmful effects of regulation.
Analyst Jeff Kagan said SBC and other big phone companies are blaming all their problems on regulation as a way to gain more regulatory relief.
Regulatory price setting "is a factor, but it's only one of many factors," Kagan said. "Competition, reduced spending by customers and a weak economy are also big factors. It's clear they are using these job cuts as leverage" on regulators. |
