CWA report: Verizon deal a jobs killer

CWA Study: Verizon Wireless Cable Deal is Job Killer

WASHINGTON, D.C--The proposed deal between Verizon Wireless and the big cable companies will cost workers and communities 72,000 jobs, according to a new report by the Communications Workers of America.

The Federal Communications Commission (FCC) and the U.S. Department of Justice are reviewing a proposed deal that would allow Verizon Wireless and companies including Time Warner and Comcast to cross-market each other's products, thereby eliminating competition and job-creating investment. The cross-marketing deal eliminates Verizon Communications' incentives to expand and promote its state-of-the-art all-fiber FiOS network to compete with its new cable partners' broadband and video service.  In comments filed at the FCC today, CWA emphasized that the proposed spectrum swap between Verizon Wireless and T-Mobile does nothing to address the job loss and consumer harm that will result from the anti-competitive cross-marketing agreements that are a central component of this transaction.

To safeguard jobs and protect the interests of consumers and communities, CWA is calling on regulators to impose these conditions on the deal: 1) prohibit Verizon Wireless and the cable companies from cross-marketing in Verizon's landline footprint, 2) require Verizon to build the FiOS network to 95% of Verizon households in its landline footprint, including buildout in rural and low-income areas, and 3) ensure that Verizon Wireless and other cable companies are not able to lock out competitors.

Verizon has made it clear that it will not follow through with an expansion of its FiOS service--the state-of-the-art all-fiber optic network-- to customers and communities that do not currently have access to it. Despite the fact that FiOS is profitable for Verizon, CEO Lowell McAdam said that the company plans to stop its build-out of FiOS television and Internet services in the next several years and "wind down the FiOS spend."

Under the proposed deal, Verizon simply will resell the cable companies' services and undercut its own existing FiOS service. More than 7 million customers--30 percent of the area Verizon now covers with landlines--will be left without the FiOS option for high-speed Internet and TV, as well as the jobs the build-out would create.

But if Verizon were to build out its network, about 72,000 new jobs would be created, the CWA report found. Job growth would be concentrated in eight Eastern states and Washington D.C.

"If done right, the proposed deal would add tens of thousands of new jobs and allow underserved communities access to high quality broadband service. The FCC has the obligation carefully to assess this deal in terms of likely job loss.  We expect regulators to reject this deal unless the parties accept conditions that would create jobs, increase network investment, and promote consumer choice," said Debbie Goldman, CWA  Telecommunications Policy Director.

Some previous assessments by the FCC of the impact of mergers and other deals on jobs haven't held up. The FCC failed fully to consider how the AT&T-T-Mobile USA merger would positively affect jobs.

Regulators did not approve that merger, and last month, T-Mobile USA shut down seven call centers, affecting the jobs of 3,300 workers while T-Mobile USA continues to offshore work to Asia and Central America.

The CWA report's estimates are based on a projection of direct, indirect and induced employment that would result if Verizon builds its high-speed fiber-optic FiOS wireline network to 95 percent of households in its footprint - one of three conditions that the CWA is asking federal regulators to impose on the deal so that it is in the interest of consumers and communities. Job creation projections in the study are calculated in job-years, which are units of employment for a one-year period. Direct job creation would be concentrated in multiple sectors, including the telecom, manufacturing, maintenance,
construction, architectural and engineering sectors.

Job creation projections include:

1)  Direct: 18,754 jobs directly related to the FiOS build, e.g., technicians, installers, engineers.

2)  Indirect: 20,914 jobs created from the inputs needed for the FiOS build, including fiber optic cable and telecom equipment.

3)  Induced: 32,042 jobs created in communities where those employed in the FiOS build or its inputs would purchase goods and services.

The study's estimates are consistent with or are more conservative than other studies on telecom investments. For example, analysis by the Economic Policy Institute wireless investment found that a $1 billion wireless investment creates 12,000 jobs years--consistent with CWA's projections in the new report. Another study by the Information and Technology Innovation Foundation estimated that every $1billion investment in broadband infrastructure would create 50,000 jobs.

The full report can be found here:

CWA Study: Verizon Wireless Cable Deal is Job Killer (CWA news release, Jul. 10, 2012)

Employment Impact Of Investment In The Fiber-To-The-Premise Network (Helene Jorgensen, Ph.D., CWA, Jun. 27, 2012)

Verizon deal with cable providers draws even more criticism (Wash. Post, Jul. 10, 2012)