Unions and DSL Customers: Verizon Knocks Out Two Birds With One Stone

If you are a current or potential Verizon customer, by now you know that you no longer have the option to order stand alone DSL. When the business decision became public knowledge in April, DSL Reports.com looked into the apparent step backward and found existing customers were grandfathered in but:

However, if you disconnect and reconnect, or move to a new address -- you'll have to add voice service. Users are also being told that if they make any changes to their existing DSL service (increase/decrease speed) they'll also be forced to add local phone service. One customer was actually told that he needed to call every six months just to ensure they didn't change his plan and auto-enroll him in voice service.

By alienating customers from DSL, Verizon can begin shifting more customers to its LTE service, which is more expensive. Susie Madrak, from Crooks and Liars, speculated on possible repercussions for rural America:

Rural areas could see the biggest impact from the shift, as Verizon pulls DSL and instead sells those users LTE services with at a high price point ($15 per gigabyte overages). Verizon then hopes to sell those users cap-gobbling video services via their upcoming Redbox streaming video joint venture. Expect there to be plenty of gaps where rural users suddenly lose landline and DSL connectivity but can't get LTE. With Verizon and AT&T having killed off regulatory oversight in most states -- you can expect nothing to be done about it, despite both companies having been given billions in subsidies over the years to get those users online.

The belief is that current DSL customers who don't want (or can't afford) the switch to the LTE service will move to Verizon's cable competition. Normally, losing customers to the competition is to be avoided, but when your new marketing partners ARE the competition, it's no big deal.

Recall that Verizon entered into an agreement with Time Warner Cable, Cox, Bright House (collectively SpectrumCo) to a purchase spectrum. A related agreement, wherein Verizon and the cable companies cross-market each others' services, received approval from FCC and the DOJ. The deal appears inevitable, regardless of concerns from consumer groups, economic and telecommunications policy leaders, and labor.

Madrak makes another critical observation: Verizon Wireless is a non union company, while Verizon Wireline employees belong the the Communicatons Workers of America (CWA).

The CWA has engaged Maryland Senators Barbara Milkulski and Benjamin Cardin to press the FCC and DOJ to move carefully. The pair recent sent a letter to both agencies citing major job loss concerns from CWA and lack of competition concerns from consitutents. From the letter [pdf]:

Our concern is that we are turning former competitors into business allies, that may be violating the concept of open and fair competition.We also are very concerned… [that] it appears to limit Verizon’s incentive to invest in its all fiber FiOS network, potentially depriving consumers of the competitive alternative to cable, broadband and, video services. What this means is that you...could be impacting [72,000] middle class jobs.

Eliminating unions and forcing DSL customers to switch to a more expensive service translates into even more profits for Verizon. How will this strategy affect the broadband situation in America? Madrak summed it up in her coverage:

It's all a very ingenious play by Verizon, though it will have a massive competitive and connectivity impact on the U.S. broadband market that will be studied for decades. What's most amazing is that nobody (analysts, regulators or the press) seems to have really noticed what Verizon's up to: turning a massive swath of the country from a marginally-competitive duopoly with union labor, into an even less competitive and more expensive cable and telco un-unionized cooperative monopoly.

Absent action from communities, the future will be one with less competition to deliver broadband services, not more. Community networks can create jobs, competition, and savings -- a far better alternative than watching Verizon's plans come to fruition.