Verizon strike is causing a drop in new customers

Verizon Wireless saw a significant drop in the number of new FiOS orders and installations this quarter thanks to the ongoing strike of its telephone, cable TV and broadband installers. Although the company has sourced replacement workers, these have been focused on repairs as opposed to new installations for the past five weeks.

[related_videos title=”Top phones of 2016:” align=”left” type=”custom” videos=”688453,686965,686764,684693,679646,679576″]CFO Fran Shammo said  the ongoing strike, which began last month, could lead to Verizon recording a net loss of cable TV or broadband customers versus gains in both sectors a year ago. On April 13, approximately 40,000 employees – who install and service traditional telephone and the new FiOS offering – went on strike and for the first month, tensions were continually increasing, resulting in an armed confrontation between both sides in the Philippines.

Last month, Verizon said it didn’t expect the strike to have an impact on its financial results for the quarter but the decline in new installations and the need to use replacement workers for repairs could yet have an impact, Shammo said. He went on further to explain that while new installation expenses are categorized as capital cost, repair costs fall under regulation expenses; as a result capital expenditure should be lower but operating expenses could be higher.

The strike is a standoff between Verizon and the two unions involved: the Communications Workers of America and the International Brotherhood of Electrical Workers. Verizon says it offered a 7.5% wage increase for the new contract but requested greater flexibility to use non-unionised workers. The unions rejected this, saying they couldn’t accept the proposals, which would have allowed Verizon to outsource more call centre work to Mexico & the Philippines, use more non-union installers and reassign union employees to other cities for months at a time.

Is there an end in sight to the ongoing strike? At the moment, both sides are locked in discussions and with President Obama entering the debate on Sunday and calling for a federal mediator to be involved, it’s only a matter of time before both sides reach a solution.