Verizon, Unions, Working with 21st Century Products, 19th Century Rules

by Jerry Cantrell
President

The return of 45,000 unionized workers to Verizon is welcome news to the customers, company and families of the striking employees. However, this reprieve, with or without a bargaining agreement, leaves all parties where they were before: trapped in a system better suited for the 19th century than the modern economy.

The unions and government need to break from a worldview that imposes layers of regulation and contracts that hamper innovation, stunt growth and are unsustainable in the current economic climate.

U.S. and New Jersey residents are moving away from hard-wired telephones in favor of a cellphone-only lifestyle. In fact, 12.8 percent of New Jersey households now go without a land line, more than double the percentage of 2007. At the national level it’s 30 percent, and that number is increasing significantly every year due to the intense competition and convenience.

While many of the workers were striking to preserve a pension system long-ago abandoned by most of the private sector, many of their children will move into a home one day and never have a traditional land line.

It is not only wireless vs. wire line that is indicative of change in the industry. Old cable companies are now offering phone service, and former phone companies are carrying hundreds of television channels.

As anyone who has watched television for more than a few minutes can attest, the competition among telecommunications and information service providers is extreme. At any given time a bewildering number of packages, features and pricing are available from at least two providers, and in some places four or five vendors if you include satellite companies.

Like most companies in most business sectors, attracting new customers requires a careful balance of better service and lower prices. In the case of the major cable and telephone companies, this has required a total investment in the area of a quarter of a trillion dollars over the past few years in technology, hardware and software alone. Add to that zoning battles over new cell towers and permitting costs for laying fiber-optic cable, and you get a sense of what these companies are facing in competing with one another in the open market.

The net result of this is the ability of your teenager to watch a missed episode of “Glee” on his or her iPhone, or you to watch a movie from your den that may have been in your neighborhood theater just a week earlier. This doesn’t happen in a vacuum. It takes the combined skills of those 180,000 unionized and non-unionized workers at Verizon and the other companies. As a result, Verizon’s profitable wireless operations are non-union, while the traditional land line operations are not.

Still, government largely looks on phone companies with the same lens it did generations ago. Elected officials demanding government intervention into a private contract dispute is indicative of this mentality.

State law in New Jersey still requires land line phone companies like Verizon, but not their competitors mentioned above, to abide by outdated service quality metrics, unnecessary filings that duplicate information readily available online, burdensome state reporting requirements already imposed by the FCC and costly and inefficient records retention rules. Companies like Verizon bear the compliance costs associated with these regulations.

The hyper-competitive communications market, characterized by falling prices and expanding numbers of services and providers, is proof that consumers are served far better by vibrant competition than by legacy regulation.

In the last five years, at least 21 states have undertaken efforts to deregulate and provide pricing flexibility in the telecommunications industry. New Jersey should follow suit.

New Jersey legislators had the opportunity to do away with many of those regulations last year, but the Senate has failed to vote on the proposal to bring the law in line with the modern marketplace.

Thus, we are left with a technologically modern cable and telephone industry infrastructure governed by antiquated rules and negotiating with demands just as dated.

New Jersey customers and its economy deserve greater freedom.

This commentary was first published in the Asbury Park Press.