April 5, 2005

CWA: Verizon's Failure to Bundle Wireless, Wireline Services Is a Competitive Blunder

To build the case that Verizon should beat Qwest in the battle to buy MCI, Ivan Seidenberg said that Qwest lacks an "organic" wireless capability. (Qwest does not own its own wireless network; it resells service from Sprint under the Qwest name.)

However, Seidenberg is hypocritical on this point. Verizon doesn't take advantage of its own "organic" capabilities to bundle wireless for residential customers 

• Verizon customers receive no discount on wireless when they combine it with other services.
• Verizon customers cannot get sales or customer service help from one source.
• The two websites are completely separate; customers cannot log into one site for Verizon wireless and wireline accounts.
• Verizon Wireless customer service representatives know little or nothing about wireline, broadband, or video (DirecTV) services, availability, or pricing.  The most they can do is transfer customers.

CWA recently sent a letter, reprinted below, to Carlos Slim Helú.  As MCI's largest investor, Mr. Slim would become a significant investor in Verizon should it succeed in its bid for MCI.

NEWS RELEASE
For Immediate Release
3/29/2005

For More Information:
Jeff Miller or Candice Johnson
CWA Communications, 202-434-1168

Washington, D.C. – President Morton Bahr of the Communications Workers of America today spotlighted Verizon Communications' failure to fully provide the bundled services that customers want.

In a letter to Carlos Slim Helú, MCI's largest shareholder, Bahr said that providing fully bundled services is the winning strategy for the communications industry. Unfortunately for residential customers, Verizon does not bundle wireless with its wireline service, a definite disadvantage in both CWA's view and that of much of the industry, Bahr wrote.

This is a big mistake, particularly in light of the huge battle between communications companies like Verizon and the cable industry. Being able to offer wireless service, along with DSL, local and long distance telephone and other services, would offer a tremendous advantage over cable competitors, a position Verizon is unable to take advantage of because of its insistence on maintaining "a firewall between its wireless and wireline operations," Bahr said.

As MCI shareholders consider acquisition offers, CWA wanted to make certain that "the important operational issues of bundling wireless and wireline services" have been accurately described, Bahr wrote.

"Customers care about price and ease of use—that means discounts and one-stop shopping and service," Bahr wrote, adding that Verizon customers cannot get sales or customer service help from one source and must use different accounts and different websites for wireless and wireline accounts, among other shortcomings.

As CWA members, "the people who work at Verizon and actually sell service and interact with customers, we have witnessed Verizon's failure to provide any meaningful bundled services," Bahr wrote. It is important that MCI shareholders, who we hope share our conviction that bundling is necessary for success in the industry, have full information on how such services are—or are not—provided, Bahr concluded.

Here Come the Proxies

Proxies have started hitting mailboxes. Make your proxy a vote for real bundled services, for protecting our work, and for shared success at Verizon by returning your proxy to your local by April 29th.

Here's the message we're sending to management:

Bring back telephone work from our competitors. Management has asked for our help in winning back customers from the cable companies and other new competitors. We too want FiOS and other services to succeed, and we're glad that management recognizes that our skills and experience are critical.

But that's not all we need to bring back . . .

Bring back 3,000 DSL tech support jobs from contractors. The company is opening 5 new union Fiber Solutions Centers (FSCs) around the country to handle tech support for broadband customers who use fiber, but it's still sending tech support for broadband customers on DSL to contractors in the U.S. and Canada. All broadband support should be performed by union employees at the FSCs. It doesn't make business sense to contract out these jobs. To compete effectively, we've got to retain our current DSL customers and persuade them to move to fiber when it's available; we'll do this with great service and tech support, not with short-term contractors with little training and no long-range interest in Verizon's future.

Bring back real bundled services. Even though management touts Verizon's strength as an all-in-one telecom company, it doesn't offer true bundled services—because that would mean allowing union workers to sell Wireless. Separating Wireless just to keep it non-union is hurting Verizon's competitive edge. Let's focus on competing and winning against cable.

Bring back neutrality at Wireless. Ivan promised it, but never delivered. Instead, he's overseen a campaign of intimidation, captive audience meetings, and firings of Verizon Wireless workers trying to organize. It's unfair to workers, and it's a distraction from Verizon's business.

To have the union deliver your proxy to Verizon: Vote your proxy by placing an "X" in the For, Against, or Abstain box for each proposal. We recommend votes FOR proposals 4, 5, 6, and 7. Sign and date the card where indicated. Bring back the proxy card and the return envelope to your local by April 29th.

The annual meeting will be held in Houston, TX, on May 5th.

March 29, 2005

Mr. Carlos Slim Helú
c/o Rafael Robles Miaja
Galicia y Robles, S.C.
Boulevard Manuel Avila Camacho 24
Torre del Bosque, Piso 7
Colonia: Lomas de Chapultepec
Mexico City 11000, Mexico

Dear Mr. Slim:

I am writing to express concern about comments made by Mr. Ivan Seidenberg in support of Verizon's proposed acquisition of MCI and its advantages over Qwest in the area of bundled communications services. Specifically, Mr. Seidenberg claims that Qwest has no "organic" wireless capability which will hamper its ability to sell bundled wireline and wireless services.

The Communications Workers of America (CWA) has approximately 400,000 members working in the communications and media industries.  As the employees who work at Verizon and actually sell service and interact with customers, we have witnessed Verizon's failure to provide any meaningful bundled services because the company maintains a firewall between its wireless and wireline operations.  As the largest shareholder of MCI and a potential future owner in Verizon or Qwest, we would like to share our observations with you regarding bundling of wireless and wireline services.

From a customer's point of view, whether or not the company's wireless service is facilities-based (or "organic" in Mr. Seidenberg's terms) is irrelevant since customers care about price and ease of use.  That means discounts and one-stop shopping and service.  Verizon does not bundle residential wireless service with any of its other services.

• Verizon customers receive no discount on wireless when they combine it with other services.
• Verizon customers cannot get sales or customer service help from one source.
• The two websites are completely separate; customers cannot log into one site for Verizon wireless and wireline accounts.
• Verizon Wireless customer service representatives know little or nothing about wireline, broadband, or video (DirecTV) services, availability, or pricing.  The most they can do is transfer customers.

Our experience at Qwest is quite the contrary with regard to providing bundled services.  Sprint wireless service (voice and data) is marketed as Qwest service and is bundled through contact with Qwest for sales, customer service and billing.  From Qwest's website, a customer can choose from several different bundles that include wireless services.  By reselling Sprint service under its own name, Qwest is able to offer national coverage and advanced wireless features without making its own network investments.

We believe that bundling is the winning strategy for the communications industry and hope that as a significant investor in our industry, you share this view.  While we maintain a neutral stance between the bidders for MCI, Verizon and Qwest, we believe that the important operational issues of bundling wireless and wireline services be accurately described.

Sincerely,

Morton Bahr

President

cc:     Nicholas Katzenbach

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