The Problems Of A Legacy Business: Verizon's Union Freaks Out That Verizon Wants To Look Forward

from the what-a-shame dept

It's really sad to see some of the struggles that legacy businesses go through in trying to adapt to a more modern world, but not all of it is the fault of those businesses themselves. Look, for example, at what's happening with Verizon. Subsidiary Verizon Wireless -- which is 55% owned by Verizon -- began a marketing campaign pushing people to ditch their landline phone and go completely wireless. That's not a bad marketing campaign (and, in fact, might be a very good marketing campaign these days). So what happens? The union that represents Verizon's landline telco workers flips out and accuses the company of trying to undermine the union by helping Verizon get out of the landline business, so it can get rid of those workers. Seriously. First of all, there's little evidence to suggest that's true. Like most traditional telcos, Verizon still sees its basic landline business as a useful cash cow that I'm sure it intends to milk for as long as possible. Chances are, since VZW is a separate company, the marketing plan had nothing to do with the parent's marketing efforts. But, either way, at some point the company should be pushing customers to ditch landlines and other older technologies and embrace better solutions. Not because it puts old union guys out of work, but because it's where the market is headed.
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Filed Under: landlines, markets, mobile, progress, technology, unions
Companies: verizon, verizon wireless


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  1. identicon
    Andrew D. Todd, 15 Jul 2009 @ 4:53pm

    The Telephone Company's Landlines Will Get Taken Over By the Sewer District.

    Sewage is the primal public utility. Sewage is one of the two oldest utilities, going back to Roman times, the other being water supply. Sewage has undergone the least technological change over its history (the Romans used pressurized pipes for water supply occasionally, when they had to, but they mostly relied on gravity feed, as in the famous aqueduct viaducts). Sewage is necessarily the public utility most attuned to the landscape (being gravity-fed, it runs downhill). Finally, sewage has the strongest character of a public good, with its emphasis on nuisance abatement. Water and sewage are overwhelmingly undertaken by public boards, rather than private corporations. In some places, notably Tennessee Valley Authority territory, and Bonneville Power Administration territory (Washington, Oregon), these boards also supply electricity, because, at the time of organization, the electricity ultimately came from federal power dams.

    A general reform of the public utility system, conducted along whole-system lines, with a view to greater reliability and lesser environmental impact, will tend to become more focused on sewage. Publicly owned telecommunications networks would fit neatly into this system.

    The first thing we are going to have to do to prevent global warming is to install large numbers of geothermal heat pumps for space heating and cooling, and solar water heaters, with sufficiently large underground hot water storage tanks. This should nearly eliminate domestic consumption of natural gas and fuel oil, and it should radically reduce the household market for electricity. Electricity will be restricted to the things electricity really is good for, such as lighting and electronics. My best estimate is that this will reduce household electricity consumption by a factor of five or ten. In many places, people will add solar-electric panels or windmills as well.

    This will be very disorganizing to privately owned electric and gas utilities. The richest people will be the first to buy all the latest new toys for their houses ("the difference between men and boys is the price of their toys"). This means that the utility companies will be increasingly stuck with customers who cannot pay very much. The gas and electric companies will get to a point where they cannot afford to maintain their distribution networks, and then these will have to be municipalized. They will be merged into the local water districts. The surviving electric companies will sell wholesale electricity to local governments.

    It has been pointed out that one can run optical fibers through sewers without interfering with their primary use, and that this is often the cheapest way of routing fibers. Certainly, when the street eventually has to be dug up, and the sewers replaced, it is trivial to add an excess of cable ducts.

    The kind of person who puts an abundance of solar cells on his roof will also be disposed to buy a 20 Ghz Phased Array Wireless transceiver, and put that up on the roof. Such a device, which might cost a thousand dollars or so, can reach out for half a mile or more, and obtain competitive high-speed internet access at web-hosting rates, typically about a hundredth of what the telephone company and the cable company charge. The effect, like the geothermal heat pumps and the solar water heaters, will be to siphon off the cable and telephone companies' most affluent customers. There will come a point at which the landlines simply don't pay for their own maintenance.

    The unionized telephone company employees will presumably go with the landlines they service, and become civil servants. They will be cross-trained, military fashion, so that they can work on the full range of equipment the sewer district comes to own: sewers, water, gas, electric, telephone and cable, traffic lights...

    By contrast, what is happening with cellphones is that the frequency is not moving upwards, it is moving downwards. The old cellphones operate in about the same frequency range as Wi-Fi, that is, about 2 Ghz-2.4Ghz. The new territory opening up is the 700 Mhz band, freed up by the digitalization of television. A signal in the neighborhood of, say 500 Mhz, can do a better job of punching through building walls, so a cellphone on this band is more likely to work well, both indoors and out. Of course, the traditional prime voice frequencies are around 100 Mhz, eg. FM radio, and the various police, fire, taxicab (*), and aircraft radio bands. There are a lot of people down in this region with "dumb" radios and reserved frequencies. What will happen, of course, is that the users will eventually be asked to show cause why they could not use cellphones instead. The characteristic of an upscale premium cellphone will be that if it cannot get through on, say, 2.2 Ghz, it will drop down to 700 Mhz, and then to 100 Mhz. A cheap cellphone will try to get through on 2.2 Ghz, and if it can't, it will just give up.
    The scarce resource is the comparatively low frequency omni-directional signal, and that is what it makes sense to monetize.

    (*) Sidenote: A taxicab driver has his official radio, built into the cab, which is in the 100 Mhz range, just like the radio in a police cruiser, but he also has his cellphone, which he uses to make side-deals with his regular customers, side-deals which his dispatcher doesn't have to know about.

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