May 31, 2016
Verizon reached a tentative agreement with union workers over the Memorial Day weekend that promises to send employees back to their jobs starting June 1 after more than six weeks on strike. Most of those union employees are on the wireline side of Verizon's business, although a few retail wireless workers are also gaining a contract as part of the new agreement. Among the provisions in the new employee deal, Verizon has agreed to add 1,300 new call center jobs on the east coast, provide raises of more than 10% over four years, offer select signing bonuses and preserve certain job security conditions.
Buried within the Verizon statement announcing the agreement, however, is additional language that hints at the company's evolving attitude toward its wireline business. The telco says its goal is "to accelerate growth in wireline broadband" and that "the company is focused on growth opportunities and serving customers in areas that welcome and encourage new business."
After years of prioritizing its wireless business over wireline operations, Verizon Communications Inc. (NYSE: VZ) is now taking a moment to emphasize its fiber infrastructure again. It's also plainly stating that further investments will be targeted in regions where it has economic support.
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As AT&T Inc. (NYSE: T) and rival cable companies expand their fiber buildouts, Verizon is now under pressure to extend its wireline foundation in order to compete as a broadband provider. That expansion is less about being able to offer new wireline services, however, than it is about being able to support next-generation wireless broadband. Deep fiber is necessary for new 5G network development.
Verizon's wireline strategy was readily apparent in the deal it formed with Boston just one day before workers went on strike in April. In that agreement, Verizon built in provisions that will give it right-of-way access to install new wireless equipment in the city and begin trialing smart cities applications. (See Verizon Throws Surprise FiOS Party for Boston.)
The acquisition of XO Communications is also a move to gain new fiber infrastructure to support future wireless service deployments. (See Dish Wants FCC to Block Verizon's XO Buy Because of 5G Concerns.)
Verizon's note about investing in areas that are business-friendly may be an allusion to the types of arrangements Google Fiber Inc. has been able to make with cities as it expands its gigabit network services. Intentionally or not, Google Fiber has set a precedent that could impact new fiber deployments, like those promised by Verizon, for years to come.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading
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