VOIP and Cable: A double threat to our jobs CWA – 2/2004
What is VOIP?
VOIP = Voice over internet protocol.
Can be used instead of POTS
Voice sent over internet through cable modem or DSL
Uses regular looking telephone with internet device
VOIP Quality Good VOIP with quality service = 99.53% POTS = 99.999% Wireless = 97.1% - 98.9% CWA Page
VOIP Offered By
Verizon, SBC, Bell South, and Qwest through DSL
Cable companies through cable modems
VOIP only companies (Vonage, 8 x 8)
Universities, businesses, cities over private networks
VOIP Gear Replaces Switches “ The opportunity most VOIP investors have been salivating over has been when VOIP gear replaces voice switches that connect right to customers. Instead of buying new class 5 switches AT&T, Verizon and the rest will use VOIP gear to connect directly to customers.” Mike Angell, Investor’s Business Daily January 29, 2004 CWA Page
4 of 5 CO’s to Close Verizon expects to close 4 out of every 5 central offices! The central offices that remain will be filled with computers, servers, and routers. Similar consolidation likely for every telco as VOIP likely dominant over next 3-5 years. CWA Page
VOIP Gear vs. Class 5 Switches
Class 5 Switches
Size of refrigerator and up to $10 million
Call set-up, routing and sending
Volume: Class 5 switches installed in 25,000 locations in U.S.
Size of server and router
Call set-up and routing only. Call sent via high speed internet.
VOIP runs over existing high speed internet connection. Additional equipment only needs to be in a few centers.
VOIP Cost Advantage
Installation costs 50% less than POTS ($225 vs. $430 for POTS)
Subscriber pays no taxes or subscriber fees
Significantly lower monthly bill than POTS
Subscriber pays no universal service fund fee
Cable & VOIP Only Companies Have Regulatory Advantage Over Bells
VOIP not regulated
Cable modems not regulated
Existing DSL-Fiber to Premise (FTTP) regulated
New FTTP probably less regulated
“It is not a telephone service, it is a voice application, completely indistinguishable from any other kind of application that can run on an IP network”
“If you’re going to say to me that voice over IP is something that needs regulations then you’re going to have to explain to me why e-mail isn’t also.”
Michael Powell, Chair F.C.C.
VOIP Allows Cable to go After Lucrative Voice Market
Video Market = $50 billion
Consumer High Speed Internet = $10 billion
Voice; Local & LD Market = $220 billion (excluding wireless)
2000 } Total Revenue CWA Page
Cable Ahead of RBOC’s on VOIP Expansion
Cable currently has 2% voice market (30% in areas heavily marketed)
Cable expected to have 20% voice market by 2005
RBOC’s running small VOIP trials, but slow to deploy DSL and FTTP
VOIP Jobs Non-Union
Cable industry non-union
Verizon, SBC, Bell South, and Qwest classify most VOIP related work on routers and file servers as management
VOIP Part of Bundling Strategy for Cable
Bundling is key strategy to capture and keep customers.
70% of Verizon’s bundled customers say having the bundle makes them less likely to switch.
Cable and Bells Both Using Bundling Strategy CWA Page $149 27% Bell strength 41 Wireless 12% 18 Internet 28% bundle 41 Cable/Satellite 7% offer this 10 Long Distance 2% Cable can 2 Local Toll 25% $ 37 Local Phone % of Total Consumer Spending Cost Service
Organizing/Bargaining in Cable Tough in Current Environment CWA Page 2,021 25 380 9 1,382 23 Total 115 2 75 1 -- -- MediaCom 11 1 12 1 42 2 Bresnan -- -- -- -- 11 1 Northland 15 1 -- -- 41 1 Charter 130 6 50 3 381 6 Adelphia 1, 750 15 243 4 907 13 Comcast Mem Units Mem Units Mem Units Decertifications In 1 st Contract Bargaining Have Contracts
RBOC’s behind on VOIP launch
RBOC VOIP jobs not union
Cable VOIP positioned to take off, grab 20% market
VOIP & cable not regulated DSL regulated
CWA members don’t currently have skill set
Elimination of universal affordable service
RBOC’s need significant capital expenditure for high speed internet expansion
CWA must bargain to include this work in our bargaining units
Real collective bargaining rights for cable workers
Treat all high speed internet providers the same. Either regulate or deregulate all.
RBOC’s encourage members to get VOIP training. CWA Nett/Academy provides.
Mandate high speed internet at affordable price for rural and urban America
VOIP Threat Solution Strategy CWA Page
What Can My Local Do?
Educate members on VOIP and future nature of jobs
Fight to make these jobs, at telco’s union job
Fight for a fair regulatory structure in my state
Fight to keep universal affordable service
Promote CWA/Nett Academy to upgrade member skills – www.cwanett.org