May 3, 2007 - Please post and share

A report to shareholders from the Communications Workers of America
& the International Brotherhood of Electrical Workers

Verizon: Disconnecting from Employees, Communities & Investors

• Disconnecting from Employees, Communities and Investors
• Verizon at the Global Bottom
• Actions Stakeholders Have Taken Against Distrusted Companies
• Senior VP Goes "Cubicle to Cubicle" to Prevent Workers from Organizing

Disconnecting from Employees, Communities and Investors

Verizon's reputation as a corporate citizen is an important factor in the company's success as a leading player in the hyper-competitive global telecom industry.

All Verizon stakeholders should be concerned about the impact of the company's recent strategy of attacking its employees' organizing and collective bargaining rights. With this strategy, Verizon is veering away from the labor relations policies practiced by most of the world's large-market telecommunications companies, which respect and recognize employees' rights to form unions (see chart below).

Verizon is jeopardizing its market value by following policies designed to create internal strife among its 97,000 front-line union employees in the United States. By attacking the organizing rights of its unrepresented employees, the company has lowered employee morale, thus diverting attention from the external challenges the company faces.

This new low-road approach by management, taken together with growing public criticism over Verizon's abandonment of service obligations in rural communities, threatens to erode public and political support for our company at a time when new regulations and service mandates are being written.

Public concern about Verizon's treatment of employees is growing in Washington, D.C., and in the communities where our company provides service.

Growing numbers of public officials, including Senators Hillary Clinton, Charles Schumer, John Kerry, Joseph Lieberman, Bernie Sanders, former Senator John Edwards, other senators and dozens of members of the House of Representatives, have taken their concerns directly to Verizon Chief Executive Officer and Chairman Ivan Seidenberg.

Isolating & restricting employees' rights

The key issue is Verizon's ongoing effort to isolate thousands of former MCI employees (who now make up Verizon Business) from the company's union-represented workforce as a means to keep them non-union. In spite of this, many of the workers are seeking to gain union representation and bargaining rights like 97,000 of their union-represented co-workers enjoy. The same is true for growing numbers of employees at Verizon Wireless.

The tone and nature of the anti-union literature that the company has been disseminating on a regular basis to its Verizon Business employees has surprised and shocked many. "I've seen the intimidation, the threats, and the false statements in the handouts that those of you who work at Verizon Business have been getting," is how Senator Clinton described the company's so-called "union awareness" materials. She explained that it prompted her and "Senator Schumer. . . to [urge] Verizon's CEO. . . [to] recognize the workers' right to organize through card check."

VERIZON IGNORES MAJORITY SUPPORT for a union by Verizon Business technicians. The workers' majority was certified on March 18 by New York City Comptroller William Thompson, far left, Rep. Jerrold Nadler, third from left, and Rep. Anthony Weiner, far right, shown with techs.

Despite the company's efforts, more than 60 percent of the 360 Verizon Business technicians in the Northeast (Maine, Massachusetts, Vermont, New Hampshire, Rhode Island, Connecticut, and New York) have petitioned the company for union representation and bargaining rights. Their majority support for a union was certified by elected officials and community leaders in Boston and New York. In a statement refusing the workers' request, Verizon belittled their achievement and charged that the workers were being used for political purposes.

Employee resentment and disillusionment is not just confined to Verizon's frontline union-eligible workforce. Tens of thousands of Verizon mid-level managers and executive support personnel - those who do not have bargaining rights and the protection of a union contract - had their pensions frozen two years ago even though the company's pension plan is fully-funded and able to meet its future financial obligations. At the same time, the company also decided to eliminate health care benefits for new retirees. Meanwhile, the company's top executives have not seen fit to share in the same degree of sacrifice.

Abandoning customers in rural communities

Anger at Verizon is also growing among customers and elected leaders. They contend that the company is walking away from its obligation to serve customers in rural communities so it can focus entirely on providing advanced network services that are mostly available only in higher-income suburban and urban markets.

Significant political opposition is building against Verizon in Maine, New Hampshire, and Vermont, where the company is moving to sell hundreds of thousands of access lines. Its planned sale of the business to a tiny company based in North Carolina would net Verizon a big tax windfall while leaving citizens of those New England states with dim prospects for ever having access to high-speed Internet services. An earlier attempt by Verizon to sell off rural access lines in upstate New York was shelved by the company, at least for now, after meeting stiff opposition.

In April 2007, Verizon lost its bid to eliminate regulatory oversight of the sale of its telephone lines in Virginia. When Virginians learned that the company was quietly trying to slip the measure through the legislature, a vigorous campaign ensued with plenty of press attention. The measure was killed when the supporters of Verizon's special treatment legislation failed to override a veto by the governor.

All of these maneuvers are sowing political ill will toward the company as it builds a reputation for opposing the public interest. Following this kind of strategy devalues Verizon's credibility and reputation as a corporate good citizen.

Cooperation is key to Verizon's future

As union employees at Verizon, we are extremely proud of having played a major role in building our company into a leading player in the nation's telecommunications industry. This growth was achieved in a generally cooperative environment based upon a 60-year-long collective bargaining relationship that we developed with the company.

Verizon's future success and growth depends on employees being respected by and working in cooperation with our company's top executives.

We - labor and management - should be working together, as we are at most of our company's major competitors and counterparts in the United States and around the globe. Instead, our company's top executives have chosen to create, and increasingly foster, an antagonistic relationship.

Such a strategy can only serve to erode Verizon's future success, growth, and, ultimately, its value to shareholders and the public.

Verizon at the Global Bottom

Company Is One of Few Telecoms in World to Attack, Interfere with Employees' Collective Bargaining Rights

In the first global ranking of large-market telecoms based on their respect for employees' right to form unions, Verizon came in at the bottom along with TelMex and Vodafone.

Like its Mexican counterpart TelMex and wireless partner Vodafone, Verizon tolerates unions only for workers covered by existing collective bargaining agreements. It actively works to  reduce union representation by fighting to prevent further unionization by unrepresented employees. Artificial walls are erected to prevent non-union employees from gaining union representation and bargaining rights.

Even under conditions where Verizon has agreed to neutrality and expedited elections, such as at the former GTE operations, Verizon fiercely opposes unionization and violates its written commitment to refrain from anti-union coercion (see separate report).

At Verizon Wireless, the company has shut down and relocated call centers where employees have sought to unionize and it has been cited for federal labor law violations for harassing and even firing union activists.

By contrast, France Telecom has negotiated a global agreement with its unions on participation in corporate policies and promotes and respects collective bargaining.

Telefonica has negotiated global agreements with trade unions and respects workers' rights to organize.

AT&T and Qwest follow this global trend.  Both respect the collective bargaining process and do not campaign against or interfere with employees who want to unionize.

In Japan, NTT has worked with its unions in deploying high speed networks to virtually all of Japan.  It respects employees' rights to form unions.

Deutsche Telecom respects its employees in Germany - indeed there is a system of co-determination there. However, the company so far has not required that same policy of tolerance and democracy to its U.S.-based managers at its subsidiary, T-Mobile, where anti-union campaigns have been waged and have caused labor turmoil.

Actions Stakeholders Have Taken Against Distrusted Companies

-- From 2007 Edelman Trust Barometer

A global survey of opinion leaders conducted by Edelman, the world's largest independent public relations firm, found that the "proper treatment of employees" is the new "green" approach being followed by corporations that believe in being socially responsible in their policies toward employees and the public.

The findings were included in the 2007 Edelman Trust Barometer, the annual survey the firm conducts for global business leaders. The survey of 3,100 opinion leaders in 18 countries found that 60 percent of respondents said fair treatment of employees was most important, with responsible environmental practices ranking second (54 percent).

The study found that being seen as socially responsible is not simply a convenient public relations opportunity. Corporations' efforts in this area have emerged as a major driver of shareholders' trust and as an integral and crucial factor in building and maintaining a company's reputation.

As the chart above illustrates, losing the trust of stakeholders has major consequences. Eight of ten opinion elites surveyed refuse to invest in a company which they do not trust, and they criticize its policies to others. Even more - 85 percent - said they would refuse to buy products or services from a company which has lost their trust.

For stakeholders, how employers treat their employees was the most important factor in measuring a corporation's social responsibility. Employees are trusted far more highly than a corporation's chief executive officers.

In Long Beach, Verizon violates contract to defeat workers

Senior VP Goes "Cubicle to Cubicle" to Prevent Workers from Organizing

Verizon claims that it respects employees' organizing and collective bargaining rights, yet the use of intimidation and other coercive means to scare union supporters is condoned by the company's top executives.

This April, concerned that a unit of 170 unrepresented employees in Long Beach, California, might vote in a union, Verizon chief operating officer and president Denny Strigl held a conference call for California managers. His message to them was clear: There was no way the company would allow the workers to organize a union.

The company dispatched its senior vice president for network operations 3,000 miles across country to carry a warning to union supporters. It also deluged the workers with an almost daily stream of e-mails attacking the union and collective bargaining.

The day before the election, the senior vice president walked cubicle to cubicle, telling each worker that they would not get raises or a union contract if they voted in a union. Such tactics are a clear violation of Verizon's neutrality and organizing rights agreement with CWA. With workers fearing harsh consequences, the workers' campaign failed by a 79-72 vote. Just weeks' earlier, 105 of the workers had signed cards supporting union representation.

CWA has filed charges against the Verizon for intimidating and coercing workers in direct violation of the union's neutrality and election agreement with the company. Management has employed similarly harsh treatment toward its unrepresented employees at Verizon Wireless and Verizon Business.

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