Verizon’s new 5-year contract with its unions will cost the company $500 million less than its previous 3 year- contract, which expired Aug. 2, Verizon Vice Chmn.-Pres. Larry Babbio told investors in a conference call Fri. He estimated the new contract would cost a total of $1.2 billion, compared with $1.7 billion under the previous one, with its average annual cost being $240 million, down 60% from $570 million in the existing one.

A group of senators representing mid-Atlantic and northeastern states expressed their “deep” concerns about Verizon’s labor negotiations with the CWA and the IBEW. “We are troubled that Verizon continues to seek greater flexibility to transfer or layoff employees,” the senators wrote in a letter to Verizon CEO Ivan Seidenberg sent Tues. and released to reporters Wed. “Any such job losses from our states would jeopardize telecommunications services, and further undermine the local economies,” said the letter signed by Sens. Kennedy (D-Mass.), Dodd (D-Conn.), Rockefeller (D-W.Va.), Kerry (D-Mass.), Lieberman (D-Conn.), Reed (D-R.I.), Schumer (D-N.Y.), Clinton (D-N.Y.), Lautenberg (D-N.J.), Corzine (D-N.J.), Mikulski (D-Md.).

Negotiations between Verizon and the CWA and IBEW unions will resume Tues. at regional bargaining locations, the Federal Mediator & Conciliation Service (FMCS) said late Fri. Guided by FMCS Dir. Peter Hurtgen, who has conducted the negotiations since July 29, the parties were able to negotiate past the contract expiration of midnight, Aug. 2. FMCS said it would continue to assist the parties in their work on the new agreement. Meanwhile, Verizon said it reached a tentative agreement with CWA Local 3673 on a new 3- year contract in western N.C., ending a strike there that began May 19. The company said the agreement was ratified by the union’s membership late Thurs., and it expected its 150 striking employees to return to work today (Mon.). As the previous contract expired April 26, the parties said they had been working on the new agreement off and on since April 2. The CWA said the new settlement called for increases of 12% in wages and 4% in pensions as well as improvements in health care and other benefits and job conditions. Among major improvements, the CWA said, the settlement extends the same health care coverage used in preferred provider network to members in areas where the network isn’t available. “This is a big issue here in these small towns because a lot of our members would have to travel very long distances to get treatment from a doctor who is part of the network,” Local Pres. Thomas Pool said. However, John Ferrell, Verizon pres.-operations for southeast region, said “the 12-week strike was unnecessary as the agreement [reflected] only minor compromises on our last offer before the strike.” Changes from the offer on the table at the time of the strike include a 0.7% wage increase and an extra floating holiday, Verizon said. It said the new agreement would allow the company to “operate more efficiently in an increasingly competitive market for telecommunications services.” It said it also had gained more flexibility in controlling absenteeism, “a prime contributor to overtime expense in the region.” The new settlement calls for a joint task force to study overtime levels and make recommendations to remedy workers’ complaints. A Verizon spokesman said the strike affected employees providing wireline service in portions of 11 counties in western N.C., where Verizon serves 100,000 phone lines, as the striking employees “didn’t get any wages and health benefits for 12 weeks.” He said neither wireline nor wireless services were affected. The spokesman didn’t speculate on whether the company had lost any revenue or customers to competitors because of the strike, but said possible losses could be “offset by not paying wages to the striking employees” for the 12 weeks. The new contract will run from April 27, 2003, to April 22, 2006.

CWA and IBEW reported late Thurs. that contract renewal talks with Verizon had become more “complex” because the company had submitted new job security proposals that would have to be sorted out by regional bargaining tables. CWA said the company “broadened the scope of job security issues by seeking to change contract provisions on force adjustments and movement of personnel in ’surplus’ situations.” Talks continue but resolution of the new issues “likely will delay progress toward on overall settlement,” the unions said.

The CWA and Verizon resumed their talks at the office of the federal mediator Mon. after the parties had made “significant progress in bargaining” over the weekend, the CWA said. It said although “a few outstanding issues [remained] to be resolved,” CWA and IBEW members would “remain on the job until further notice while talks are under way.” Separate discussions on local issues also were continuing, the parties said. “We did make progress,” but “the possibility of a strike is still there… We'll see what happens,” a CWA spokeswoman said. Scott Cleland, Precursor Group analyst, said if talks broke down, a strike would “have an impact on installations.” Corporate customers “would suffer least,” as they're “well-served” by the company, he said. On the other hand, he said, Verizon local phone customers could move to AT&T, MCI or private CLECs, and its high-speed Internet users could be snatched by cable companies such as Comcast and Cablevision Systems. However, Cleland said: “It looks more like a strike will be averted.” Verizon’s contract with the CWA, which covers 60,000 employees, expired at midnight Aug. 2, but shortly before then the unions told their members to remain on the job as “enough progress had been made at the bargaining table to continue working toward a contract settlement.” The parties had a 10-hour meeting overseen by Peter Hurtgen, dir. of the Federal Mediator & Conciliation Service, Sun. focusing on “some key” issues, and they were expected to continue negotiations until late Mon., a CWA spokeswoman said. Verizon, which has 57 million landline and 37 million wireless customers, has said a strike wouldn’t significantly affect basic telephone service because the company had trained 30,000 management employees to perform union tasks and would rely on outside contractors.

Verizon will reinstate more than 2,300 N.Y. employees it laid off in Dec. as a result of an arbitrator’s decision last week, a spokesman confirmed Mon. The arbitrator, Shyam Das, ruled Fri. that the company’s action wasn’t permitted under its labor agreement with the CWA. The spokesman said that although there were cases when an arbitration decision could be argued, “it’s not applicable in this case. Even though we disagree with the decision,” which will cost Verizon $25 million, “we believe it was made right. We expect to go ahead and do what the arbitrator told us to do.”

AT&T said it reached tentative agreements with the CWA and the International Brotherhood of Electrical Workers (IBEW) for a 2-year extension of their national collective bargaining contract. The settlement, which covers 22,000 AT&T workers and applies to all company contracts in the U.S. and Puerto Rico, calls for across-the-board wage increases totaling 5.75% in 4 steps over the 2 years, a 5% increase for both defined benefit and cash balance account pension plans, and improved subcontracting committee provisions, the CWA said. It said the settlement extended the current contract, which was to expire Nov. 8, through Dec. 10, 2005. Among job security improvements, AT&T agreed that layoffs shouldn’t result from subcontracting of work, the CWA said: “This applies beyond the specified ‘geographical commuting areas.'” The parties also agreed to negotiate new union-represented job categories for supporting business clients’ computer hardware. CWA Vp Ralph Maly, the union’s chief negotiator, said AT&T had requested the early negotiations, and it was agreed from the beginning that the company wouldn’t seek any contract concessions. He said it was “important… that we protected all contractual rights,” including “health care for active and retired workers, pensions and severance protection.” The CWA also said it would start regional negotiations with Verizon June 23 in N.Y.C. for workers in N.Y. and New England, and June 26 in Washington for workers in the mid-Atlantic region. CWA Pres. Morton Bahr said he was “optimistic” that a “fair settlement” could be reached before the current agreement, which covers about 60,000 CWA members, expires Aug. 2. The CWA said its key bargaining goals were: (1) The preservation of quality jobs. (2) Access to jobs in the new growth areas of the company. (3) Improvements in pensions. (4) A wage increase. “We don’t want to see service quality suffer because of a lack of investment in plant and equipment and skilled workers, and that’s exactly what has been happening,” Bahr said. He said Verizon cut investment 39% last year: “Ignoring and cutting back on needed repairs affects quality service, as we've seen in the New York region and elsewhere.” However, the CWA said, Verizon’s productivity level was “more than twice the national average,” and the company was “still leading the [telecom] industry or near the top in a number of indicators.” Verizon began separate contract negotiations with IBEW in New England Mon. (CD June 17 p5).

Formal negotiations between Verizon and the IBEW began Mon. in New England and will move to other company territories in the next couple of weeks as both sides look to agree on new contract terms before the current one expires Aug. 2. Negotiations will begin with the CWA next week, with that contract also ending Aug. 2, officials said in a press conference call, but serious discussions between groups probably won’t get under way until after July 4.

Telecom equipment maker Avaya announced a tentative 3- year agreement with its 2 unions Mon. The accord will be submitted to CWA and the International Brotherhood of Electrical Workers (IBEW) for ratification, which the parties expected to take 4-6 weeks. The pact marks the first contracts Avaya has negotiated with its unions since its Oct. 2000 spin-off from Lucent Technologies.

SBC said it would refile its Sec. 271 application for Mich. within 30 days, after withdrawing it early Wed. because of “the need to clarify the record.” The company withdrew the application to offer long distance service in Mich. only hours before the FCC was to act on it. The agency was statutorily required to vote on SBC’s application by the end of the day Wed. SBC Senior Vp James Smith called pullback “a minor delay.” He said there was no question the state had strong local competition and a statement by FCC Chmn. Powell after the withdrawal indicated the agency’s concerns were “very narrow.”