AT&T has told more than 75 call center workers in the Triad they have three weeks to either start looking for another job or consider relocating to Birmingham, Ala. if they wish to remain employed by the telecom giant.

The holiday layoff took workers partly by surprise, but some told a local Fox affiliate they felt something was coming when they noticed AT&T stopped updating the affected workers’ training to handle customer calls.

The Communications Workers of America called the announcement devastating news for career employees and their families during the holiday season. The union is trying to get AT&T to extend the deadline to give workers more time to consider their options.

Local AT&T workers have had a tough year at the company, with difficult contract talks and technicians complaining about the company’s policy to allow customers to have AT&T U-verse installed on Christmas Day.

CWA’s Local 3902 chapter, which represents AT&T workers in the Triad, claims the company has systematically tried to drive its workers out of the middle class with benefit and pay reductions and a race to the bottom mentality cutting labor costs and demanding longer work hours for less money:

[CEO Randall] Stephensons’ philosophy is as old as time. It is a belief that he is entitled and workers are not.  It has been called “wage slavery” and worse. People rose against it. Governments that stood by it have been toppled.

In America, the people began to say no more beginning in the late 1880’s. It took the Great Depression of the 1930’s to cause our great-grandparents to finally hit the streets. CWA began to see real successes in the 1950’s. A strike that lasted 72 days in 1955 set the stage for our best days. The strike itself did not win much, but it left a scar AT&T did not soon forget. Contract negotiations after that were easier. That period lasted through 1980. In that period we won solid pensions and no-premium healthcare. By 1980 we were a solid part of the middle class and thought we would be always.

By 1981 we had begun to lose our way. Those hired during the boom of the ’70’s did not want to hear of  the prior struggles. They just happily enjoyed the hard won gains of the generation before them. They began to vote against their own interests. They began to believe that AT&T and BellSouth loved them and would always take care of them. That is the period we find ourselves in today. But we are beginning to see it for what it is.

During this period we have lost most of our pension gains. We are again paying a large part of our healthcare. Our wages are stagnant. Workers are fired almost at will. AT&T is out of control. Politically, they control the state legislatures who deregulate the industry. They run roughshod over the American worker. They contract out and off-shore at will. It has been a devastating period for CWA and for all unions.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WGHP Greensboro ATT to eliminate 75 jobs in Greensboro 12-17-12.flv[/flv]

WGHP in Greensboro covered the sudden holiday announcement AT&T was letting go at least 75 North Carolina workers by the end of December unless they agreed to relocate to an AT&T call center in Birmingham, Ala.  (2 minutes)

For the third year in a row, AT&T is celebrating the holidays by telling more than 100 New Haven-area employees they will be spending a lot more time with their families this Christmas, without a job.

In mid-November, AT&T announced it was cutting 100 telephone operators. Now the company is back for more — telling 106 employees, many hard at work cleaning up storm damage from Hurricane Sandy, their services as AT&T technicians are no longer required.

As shell-shocked employees left AT&T’s New Haven headquarters with “early retirement” papers, the local union representing many of the technicians vowed to fight the layoffs.

“Many of the guys losing their jobs are the ones who go out in trucks and restore your service after a storm,” CWA Local 1298 president Bill Henderson told WTNH-TV. Henderson says the next time your U-verse or phone service goes out in Connecticut, you better be very patient because it could take a lot longer for service to be restored.

AT&T says many of the workers involved were no longer needed as consumers move away from traditional landline and wired service in favor of wireless, but Henderson wondered if that were the case, why were many of his workers forced to work mandatory overtime through much of November restoring service after Hurricane Sandy.

State regulators are already reviewing the performance of utility companies that left many residents with extended outages. Some communities said utilities were woefully unprepared to deal with the storm. Now the union wants the state’s telecommunications regulator to review the layoffs to determine if AT&T’s service in the state will decline further. The impact could be much more than an inconvenience to customers.

Off to the unemployment office we go, unless we’re willing to work elsewhere in the state.

“When we had hurricane Irene, it took our state down economically for a week and a half, and we can’t afford to do that going into the future,” Henderson argues. “We have to do better, we can’t do worse.”

An AT&T spokesman denied the company was laying off any worker, and claimed the company is offering employees access to other positions in other parts of Connecticut.

“The affected employees all have a guaranteed job offer that ensures they will be offered another job in Connecticut,” said spokesman Marty Richter. “All employees declared surplus in Connecticut in the last two years have either found other jobs with the company, continued to work in their current job while awaiting a guaranteed job offer, or elected to take a voluntary retirement package.”

Richter suggested some the affected technicians probably won’t be moved too far away.

“It’s likely that many will be offered jobs as U-verse technicians, in which case they could still be pulled in if needed for network restoration in extreme circumstances like a big storm,” Richter said.

AT&T used to employee at least 4,000 operators in the state of Connecticut alone. Today that number is down to less than 100. When telecommunications companies look for “cost savings,” getting rid of workers or slashing salaries and benefits remain favorite targets.

“It seems like they do it every year at this time,” Henderson said. “This is a company that made $13 billion last year and is on pace to make $17 billion this year and just gave a $2 million bonus to its CEO. They’re important jobs to keep. This is a corporation that only cares about the bottom line.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WTNH New Haven ATT announces major job cuts 11-30-12.mp4[/flv]

WTNH in New Haven says more than 100 AT&T employees will lose their jobs right before the holidays. It could ultimately affect the quality of your AT&T service, union officials warn.  (2 minutes)

November 7 will be an important day if you are a rural AT&T landline customer. On that date, AT&T, in concert with Wall Street, plans to announce the future of its rural and “tier two-smaller city” landline business.

The implications for customers are enormous. AT&T could elect to exit and auction off its rural customers to companies like Windstream, Frontier Communications, CenturyLink, and FairPoint Communications. AT&T could also announce it will aggressively petition the Federal Communications Commission to decommission its copper landline facilities in favor of a new wireless IP network based largely on its national 4G LTE expansion, or it could be a combination of both: keeping existing landline facilities but transitioning them to Voice over IP technology with a gradual shift towards wireless.

AT&T CEO Randall Stephenson delivered important clues about the company’s direction in remarks at yesterday’s Goldman Sachs Communacopia Conference, attended primarily by Wall Street investors. Stephenson drew clear distinctions between valued customers in areas upgraded to AT&T’s U-verse platform and more problematic customers in smaller communities where AT&T refuses to invest in landline upgrades.

“Where you look at the footprint where we have deployed U-verse technology we do very well,” Stephenson said. “In fact we are the share leader in virtually all U-verse markets. Those markets grow nicely. Where we have not deployed fiber and U-verse technology, we are losing share and those markets are in decline and that is the whole reason behind this analysis and evaluation that we will be laying out Nov. 7. What do we do with those markets? Because we have demonstrated if you go invest you can grow the market.”

Stephenson

“We said coming into the year that we have to find a broadband solution for these assets that is cost-effective or we need to look at selling them,” Stephenson said. “I would just tell you at the 30,000 foot [line length] level we think we’re finding line of sight to some investment theses here. We can get a good competitive broadband product to a large portion of our footprint and would avoid us having to go through a number of regulatory approval processes to sell [landlines] across a large geography. There will probably be a mix of actions here, but the bottom line is we think we may have line of sight but we will flush that out on Nov. 7 in an analyst conference here in New York.”

Early indications suggest the company is considering deploying DSL extenders to reach a larger share of rural customers without a complete overhaul of its copper wire network. The upgrades could deliver results similar to what Frontier Communications has been doing in territories it acquired from Verizon Communications, which includes extending fiber optics further into neighborhoods and finding ways to reduce copper wire length to improve speeds. Frontier has set its sights on delivering up to 25Mbps over copper landlines, a speed it feels is competitive with cable broadband. AT&T could come close to these speeds without the amount of investment required in a typical U-verse deployment.

But just as likely is a largely wireless broadband solution to replace the company’s aging copper wire-based DSL service. Stephenson says he strongly believes that a wireless solution exists for rural America over the company’s new LTE 4G network.

“I don’t envision in major metropolitan dense population centers that LTE will serve as a broad-based fixed-line replacement or surrogate,” Stephenson said. “I do believe in less dense markets and especially when you begin to think about rural America and tier two towns, that LTE can become a fixed line replacement or even better than what you can get in fixed line out in those markets. This is one of the exciting things about the WCS spectrum [AT&T plans to acquire]. It allows you to truly begin to think about investing in and doing this.”

But AT&T’s solutions will come with strings attached: a lobbying effort to get the FCC to loosen up on regulations, acquire more wireless spectrum, and allow the company to dispose of its landline infrastructure.

“You don’t go out and put in LTE capability in rural America and leave up all your copper infrastructure in the long haul,” said Stephenson. “It just wouldn’t make sense to do both. So this is the big regulatory issue. The FCC would require us to leave that copper and TDM fixed-line infrastructure up by some mandated rules and you can’t do both. You can’t support both infrastructures. We have got to work through the regulatory implications of this, but I think LTE can prove over time to be a fixed line replacement in rural and less dense populations. I think in a five year time horizon that can become significant.”

Thus far, AT&T has been unwilling to consider upgrading smaller communities to its U-verse platform, primarily because of the cost and return on investment. The company is content with its current U-verse footprint and has begun to enjoy increased wireline margins from a growing number of urban customers as programming costs decline.

LTE: AT&T’s wireless rural broadband solution?

“The U-verse margins continue to expand,” Stephenson noted. “U-verse is one of those where you go make a really significant capital investment and then you go in as a new entrant to do programming contracts and you’re paying multiples of what the big scale guys are paying and then as you scale that over time then margins really begin to expand. We’re riding that right now and we’re getting really good margin expansion just out out of scaling U-verse and getting better economics on content terms as well.”

Wall Street has been applying pressure to Stephenson to extract higher margins and cut costs from its traditional landline business. Stephenson sought to placate concerns about the cost profile of AT&T landlines before investors.

“We have done a nice job controlling our labor costs and that has been very helpful to continue to sustain margins in the fixed line business,” Stephenson said. “Those labor costs savings we take and reinvest back in the business in the form of U-verse and looking at some future investments as well.”

Stephenson hopes the FCC will eventually let AT&T abandon traditional landline service everywhere, which could also deliver serious cost savings for AT&T.

“I do believe if we can find a path to an all-IP infrastructure in not just your major metropolitan areas but your tier two markets there are significant cost savings in the five or six year time horizon that could come out of these businesses as well,” he noted.

AT&T CEO Randall Stephenson took questions at Goldman Sachs’ Communacopia Conference about its wireless network and the future of the rural landline business. (September 19, 2012) (41 minutes)
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Nearly 100 Frontier employees may be visiting Idaho’s unemployment offices by September.

On the second anniversary of Frontier Communications assuming control of landline operations in Idaho formerly owned by Verizon Communications, Frontier has announced plans to close its Coeur d’Alene call center this summer, putting nearly half of Frontier’s workers in Idaho out of work.

“There’s nothing wrong with the employees or the work they’re doing. It’s more about efficiencies,” Frontier’s senior vice president Steve Crosby told CDA Press. “What we’re trying to do is work through efficiencies, consolidations, really moving people around, having work groups working closer together.”

Those hoping to remain with Frontier will need to move to another state and accept a large pay cut if they want to keep their jobs. Other Frontier call centers around the country will assume the responsibilities of the 100 Idaho-based employees who face termination by Sept. 18, including one opening near Myrtle Beach, S.C., that will pay substantially lower salaries.

The closure will reduce Frontier’s workforce in Idaho almost in half. Crosby said Frontier had roughly 260 employees in the state as of last week.

Two years ago, Frontier was telling Idaho a very different story about its takeover of Verizon landlines.

“I think we’ll have better service for customers,” David Haggerty, then a Verizon manager staying with Frontier, told the Bonner County Daily Bee. “Frontier brings with it a small-town mentality. It used to be you were able to pay bills in town and make human contact. That was taken away by Verizon.”

In 2010, Haggerty promised the transition would have no impact on former Verizon workers now heading to work at Frontier.

“We focus on putting the customer first,” said Frontier’s regional manager Vickie Bullard said. “That’s one of the 11 value statements we have at Frontier.”

Some of Frontier’s customers in Idaho wonder if Frontier’s “value statements” are also being downsized.

“I just switched from Frontier to Time Warner Cable for my Internet,” says Scott Mead. “Frontier started out great in the beginning, but shortly after went downhill as issue after issue started.”

Mead reports his calls to Frontier’s national 800 customer support number, which promises 100 percent of the company’s workers are American-based, often left him flummoxed dealing with foreign-accented employees with poor English language skills.

The last one out can turn off the lights.

Another Coeur d’Alene customer endured bad service from Frontier before finally leaving, with the phone company’s collection agency chasing him not far behind:

“As far as I’m concerned Frontier can take a long walk off a short pier. When they first took over from Verizon, from whom we had good service, they sent out a service guy to get us back online. He installed the wrong equipment so another serviceman came out and replaced the wrong one with a bigger, better, and faster wrong one. Over the next 6 weeks we were down all but 12 days and we heard one excuse after another with nothing getting resolved.

So a month later, after switching companies, not only did we get a bill from Frontier for the entire 6 weeks but they charged us for several wrong pieces of equipment. When we tried to resolve the issues they simply sent us to collection and refused to talk. Se we ended up paying for over 4 weeks of service they did not provide and for 4 Internet boxes that the servicemen could not get to work.

I can only hope that Frontier has an office at the bottom of a honey bucket at a chili feed. Flippin crooks.”

One former Verizon/Frontier employee suggests the “efficiencies” Crosby is concerned with is paying call center workers less, and offering fewer benefits:

“Frontier closed a center in Elk Grove, Calif. back in June leaving 50+ people unemployed there,” he writes. “When Verizon sold their landlines and DSL to Frontier back in 2009 they only guaranteed the acquired employees jobs for two years. July 1, 2012 was the second anniversary of that acquisition. This does not surprise me at all. The leadership of both Verizon and Frontier is like any other large corporation. Bottom line is the new call center in South Carolina is cheaper to operate. Why pay people over 50K (this is including 401k, stock & medical benefits) when you can pay half that in a center that has no union.”

Another Idaho employee is bitter about the extra work Frontier employees managed for the company during its great billing and systems transition away from Verizon.

“We will be out of a job, after working massive amounts of overtime to transition this company to get them through the largest conversion in telecommunications history,” the worker shared. “They needed us to get them through it and now they don’t.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WMBF Myrtle Beach New Frontier Call Center 5-11-12.mp4[/flv]

Race to the bottom. Frontier Communications closes an “unneeded” 100-worker call center in Idaho that reportedly paid workers over $50,000 a year in salary and benefits while announcing a new, “much-needed” call center with 110 workers near Myrtle Beach, S.C. that will pay workers only $30,000 a year. WMBF in Myrtle Beach calls the new South Carolina call center a “success” for Horry County’s efforts to recruit new business to the area. Frontier applauded South Carolina’s “excellent business environment.” But that success comes at a cost to other workers in other states.  (2 minutes)

McAdam

Verizon CEO Lowell McAdam wants you to spend more with the phone company, and if his vision of Verizon’s future comes true, you will.

The company’s newest CEO spoke on a wide-ranging number of topics for the benefit of Wall Street investors at the Guggenheim Securities Symposium. A transcript of the event delivers several newsworthy revelations on the company’s future plans.

McAdam rose through the ranks of Verizon Communications with a specialty in the company’s immensely profitable wireless business. His predecessor, Ivan Seidenberg, spent his career at Verizon Communications working with the company’s legacy wireline (landline) network. While Seidenberg envisioned a new future for Verizon’s landline business with an upgraded fiber optic network called FiOS, McAdam maintained a different vision having run Verizon Wireless as a profit-making machine since 2006. McAdam believes Verizon’s future earnings and focus should be primarily on the wireless side of the business, because that is where there is serious money to be made.

“The first thing I did when Ivan sort of named me as the Chief Operating Officer was we had a very well-defined credo in the wireless side,” McAdam said. “We created it when we first came together in ’99 because we had seven different companies and we knew we had seven different cultures and we needed to tell people what it was we were really looking for. So we created that document. We spent a lot of time on it. We do a lot of reward and recognition as a result of it and that culture really took root in wireless.”

McAdam’s leadership also aggressively challenged the long-standing telephone company philosophy of earning a stable, predictable profit as Verizon did when it was a regulated monopoly. Instead, McAdam shifted the work culture towards an obsession with shareholder value.

“We took the top 2000 leaders through what we call ‘Leading for Shareholder Value’ and that was really a cultural shift for us because, if you think about it, the wireline side of the business has come out of the defined rate of return culture and we left that competitively a while ago. I am not sure we left it culturally,” McAdam said. “So we have been far more pushing why do you make that investment, what is the return on it, what is the priority of that investment versus another investment.”

Verizon’s Plans to Abandon Rural Landline Customers – Sign Up for Our Expensive LTE 4G Wireless Broadband With a 10GB Usage Cap Instead

Some of the most revealing commentary from McAdam came in response to questions about what Verizon plans to do with its enormous landline phone network, dominant in the northeastern United States.

In comments sure to alarm rural Verizon customers from Massachusetts to Virginia, McAdam clearly signaled the company is laying the groundwork to abandon its rural phone network (and DSL broadband) as soon as regulators allow. Dave Burstein at DSL Prime estimates that could impact as many as 18 million Verizon customers across the country.

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE built that will handle all of those services and so we are going to cut the copper off there,” McAdam said. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it.”

Elsewhere, in more urban and suburban areas, McAdam also wants Verizon to purge its network of copper.

“The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper,” McAdam said. “We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.”

In other words, McAdam would shift money spent maintaining and upgrading rural landline service into the company’s wireless network in rural America and its FiOS network in more urban environments, both of which will improve profits. FiOS allows Verizon to pitch television, broadband, and phone service in one profitable triple-play package, while also discontinuing standalone DSL service. Rural customers pushed to wireless LTE for broadband will face onerous usage limits and more expensive service for phone calls and broadband. Using Verizon’s LTE network for video would be prohibitively expensive.

McAdam hints the company has used its lobbyist force to make preparations to abandon rural customers first in Florida, Virginia, and Texas where state regulators approved legislation that eliminates the requirement Verizon serve as “the carrier of last resort.” That law required Verizon to deliver landline phone service to any customer in its service area on request. With that provision stricken in those three states, Verizon can abandon any landline customer it chooses after serving written notice.

McAdam said he intends to continue lobbying other states to adopt similar deregulation, and chided legislatures in both New York and New Jersey for “being backward” because they have repeatedly refused to allow Verizon to walk away from its rural customer obligations.

Burstein thinks the changes in progress at Verizon will be a disaster for affordable rural broadband.

“This makes a mockery of ‘affordable broadband,’ especially when Verizon and AT&T are boycotting the plan for discounts for poor schoolchildren,” Burstein says. “The detente between telcos and cable companies means the prices of modest Internet speeds (3-15 megabits down) are typically going up from $30-45 to $55-70.”

Burstein also notes the change spells disaster for competitors who sell DSL service over existing phone networks.

“Nationwide, alternatives to the telco/cablecos have less than 5% of the residential market but in some areas they remain important,” Burstein says. “The most interesting, Sonic.net in California, offers unlimited calls and Internet up to 20 meg for $50/month, 20-50% cheaper than AT&T.”

“High prices, unacceptable service choices and further rural depopulation are bad policy,” he adds.

Verizon still earns enormous revenue from its remaining landline customers, revenue McAdam hopes will be replaced by selling business-focused services instead.

“Cloud [service] is continuing to pick up for us. Security is I think going to be an even more important play for us as we go forward,” McAdam noted. “I think these large enterprise accounts, offering them kind of a global service with those up the stack […and…] applications on top of it drive it as well. So there is a number of pieces in the portfolio that I think will take us up and more than compensate for some of the falling off of copper-based services like DSL and voice and that sort of thing.”

Verizon’s Unionized Employees Are Wrong-Headed Defending Verizon’s Landline Network

McAdam also blamed the company’s unionized employees for remaining loyal to the company’s traditional role in the landline business.  Unions like the Communications Workers of America continue to push Verizon to expand its FiOS fiber optic network in more places, but the company has left its FiOS expansion on hold, diverting investment into its wireless business. Both McAdam and the union agree the days of copper wire networks are numbered, but McAdam hints that union concessions (and fewer unionized employees) are required before the company will again expand FiOS.

“Our employees see that it is not sustainable to keep having copper plant out there. You really can’t invest in it; it is difficult to maintain it; and they want to see us improve on FiOS,” McAdam said. “And when I am out in the field, the techs and the reps will be the first to point out kind of some of the dumb policies I call them that we have around the business. Well, a lot of those are based on rules that were negotiated with the union back in the ’60s and ’70s.”

“So we have to get the union leadership to understand that if the company is able to be more flexible in meeting customer needs then we can grow things like FiOS, which will provide good long-term jobs,” McAdam added. “Will it be the same number as what we had in the past? No.”

Verizon’s Enormous Offshore Bank Accounts: Waiting for a ‘Business-Friendly’ Administration to Let Them Bring the Money Back, Tax-Free

McAdam also signaled investors that the phone company’s profits massed in overseas bank accounts are going to remain in place until they know who wins the next election. Verizon wants to repatriate some of that offshore money, but they want to do it tax-free.

“Everybody is kind of waiting to see who controls the Senate and who controls the White House and they are waiting to make those — you have got to understand what the tax situation is going to look like, so we are all waiting to make those investments,” McAdam said.

‘Share Everything’ Lays the Foundation to Monetize Your Data Usage… Forever

McAdam is a big supporter of the company’s new Share Everything wireless plan, which charges smartphone owners $90 a month for unlimited voice calling, texting, and a small 1GB bucket of data that he is convinced customers will be prepared to spend more to enlarge.

“If I know that I have an intelligent home that I can get to any number of ways. If I know that I can do everything I want in my car that I can do in front of my TV set or my PC or on my tablet, I think it just takes away a lot of the restraints,” McAdam said. “Is it going to cost them more money? Yes, but it will probably shift their wallet spend from other things that they do individually into this sort of a bucket of gigabytes. And so I think it will be a significant [revenue] stream for us.”

FitchRatings, a credit ratings agency, agrees in a new report.

“The new pricing structure taken by the industry leader is a disciplined pricing action that could create more cash flow stability longer term within the wireless industry,” the credit ratings agency said last week.

Fitch notes data services are increasingly becoming a larger source of revenue for wireless phone companies. In the first quarter alone, data revenues at Verizon Wireless, AT&T, and T-Mobile USA — all carriers that abandoned flat rate wireless data plans, grew 19% year over to year to $14.2 billion. That represents 41 percent of the companies’ service revenues.

Despite assertions from Verizon that the new plans deliver convenience and better value for subscribers, Fitch found they actually represent a substantial price increase for many customers.

“These increases are sometimes material, depending on whether the legacy rate plans have low recurring charges for text messaging or calling minutes. As a result, prices have generally increased for new subscribers,” Fitch reports.

Fitch warns investors Verizon is likely to lose customers over its new pricing strategy, and experience a slowdown in new customer growth as well, at least until competing carriers realign their pricing and plans to be similar (or match) those Verizon introduced last month.

The Days of Your Subsidized Android/iPhone May Be Numbered

McAdam’s vision also includes a re-examination of device subsidies as customers increasingly depend on wireless devices. McAdam previously indicated the wireless device subsidy was designed to get customers to adopt and embrace new technologies, and as adoption rates have soared, the need to keep discounting technology that customers depend on diminishes.

He echoed that sentiment at the Guggenheim Securities Symposium, noting that Verizon this month abandoned subsidies on tablet devices. For McAdam, discounting wireless technology serves one purpose: to quickly establish a new business relationship with a customer that probably would not buy their first device at full price.

But McAdam recognizes changing the company’s subsidy that customers expect to receive must happen gradually. It has already started, first by eliminating early upgrade discounts, then by dropping the company’s loyalty discount “New Every Two” plan. Now, the company will only allow grandfathered unlimited data plan customers to keep those plans if they agree to forego any subsidy on their next smartphone.

“If you look at the telematics industry today [services like OnStar], the car companies subsidize a device that goes into the car. So I think that we have a tendency over the years to sort of look and say, oh, something is going to happen very quickly,” McAdam said. “Things have a tendency to evolve over a long period of time, so I think you will have some devices, like the tablet today, that [are] not subsidized and you’ll probably still have certain devices that are because you want to establish that relationship with a customer and that is the easiest way to get there.”

Verizon Wants You to Use the Cable Industry’s Growing Wi-Fi Network

McAdam’s vision also offloads as much of Verizon’s 3G and 4G traffic to other networks as possible. Ironically, one of the biggest networks he hopes customers will use instead of his are the growing number of Wi-Fi services offered by his competitors in the cable industry.

“It is interesting that a lot of people have said, well, I can’t believe you’re going to partner with [cable companies],” McAdam said. “You are not going to use their Wi-Fi are you? Well, of course, we are. I mean we want to shift as much onto FiOS or onto the fixed network where we can and then provide — use that capacity to provide those higher demand services like video.”

McAdam added he does not want customers sitting in their homes watching video over his LTE 4G network. He also wants that traffic shifted to Wi-Fi.

“So our thinking going forward as we talk about kind of the ‘One Verizon’ approach is we want to use every network asset we have and if that means jumping onto FiOS or using the cloud services for mobile as well as fixed line, using security across all of our different access technologies, we want that network to be seamless and that is what our CTO, Tony Melone, is driving hard on in the business right now,” McAdam said.

One preview of that thinking at work can be found on Verizon Wireless’ hottest new device — the Samsung Galaxy S3. Verizon’s version of the phone browbeats customers with prominent menus that encourage Wi-Fi use wherever possible. The phone’s persistent reminder has become a pest according to many of the phone’s owners, who consider both the message and the difficulty keeping Wi-Fi shut off obtrusive.

Verizon’s partnership with large cable companies including Comcast, Time Warner Cable, Cox, and Bright House Networks originally involved the acquisition of excess wireless spectrum cable companies originally intended to use to compete with the mobile phone industry. With the cable industry abandoning those plans, the proposed collaboration involving Verizon Wireless grew to include cross-marketing each other’s products and services, and now apparently includes sharing the cable companies’ growing Wi-Fi networks.

Verizon Believes The Future of Telecommunications Needs to Be In the Hands of Two Companies — Verizon and AT&T

A point of shared belief between market leaders Verizon CEO Lowell McAdam and AT&T CEO Randall Stephenson is that excessive competition just does not make sense. Both believe federal regulators have it all wrong when they push to maintain the level of competition that still exists in the telecommunications business. When the Department of Justice effectively pulled the plug on a merger between AT&T and T-Mobile, Stephenson was outraged and, in one investor conference call, launched a tirade against regulators and suggested that AT&T would throw in the towel on expanding rural broadband in a retaliatory move.

McAdam and Stephenson both believe that competition in telecommunications represents wasted investment, inefficiency, and value destruction.

“I think the fundamental problem here, and it is sort of like fighting gravity I think, is that it is so expensive to build these networks that you are not going to support seven or eight carriers,” McAdam told investors. “I don’t — frankly, I think you’ll be lucky if you can support three in a healthy environment.”

But McAdam recognizes that if it achieves a wireless duopoly with AT&T, it must be a benevolent one, or else the marketplace abuses the wireless industry has a track record engaging in will invite regulatory scrutiny.

“We have a tendency to create a great club and hand it to our detractors and say please beat me with this because we do some dumb things like fighting some of the number portability and trying to push a direct wireless directory,” McAdam said. “I mean there are things that have really upset customers and that invites regulation. So I think the industry has the responsibility to act in the best interests of the customer as part of the mix with a shareholder, but I think there is always going to be the battle with regulation.”

McAdam admits he is uncomfortable with the fact the Obama Administration has allowed the regulation pendulum to swing more towards enforced competition and checking the power of dominant carriers in the marketplace. He prefers the Bush Administration’s “hands-off” approach that allowed both Verizon and AT&T to snap up smaller competitors with scant regulatory review.

McAdam believes the Obama Administration’s FCC and Justice Department is slowing down wireless investment, innovation, and the industry’s ability to earn profits at a time when unemployment in sky high and increased investment will help drive the economy forward.