The tidal wave of red ink flowing from telecom companies worldwide has engulfed workers and consumers no less than managers, investors and Wall Street players. After a frenzied period of deregulation here and privatization abroad--followed by destructive competition, high-cost borrowing and over-building of telecom capacity--scores of firms have collapsed, vaporizing at least $1 trillion in shareholder value in the United States alone. Some top executives with criminal responsibility for cooking the books--at Adelphia Communications and WorldCom, for example--did well-publicized perp walks. Others, like Salomon Smith Barney (now part of Citigroup) analyst Jack Grubman, who abetted the US telecom boom and bust in underhanded ways, have been forced to pay millions in civil penalties. But many recent highfliers, including Global Crossing chairman Gary Winnick, Qwest founder Philip Anschutz and his CEO, Joe Nacchio, made off with their bundles ($714 million, $1.9 billion and $248 million, respectively) before things went bad. They have yet to be touched by either civil or criminal proceedings.

Meanwhile, telecom labor is left holding the bag--with many nonunion employees losing both their jobs and retirement savings (because the latter consisted mostly of company stock that's now nearly worthless). Millions of consumers are also getting the shaft, as massive downsizing and cost-cutting cause service quality to plummet. Since 2000, more US telecom workers have retired (without being replaced) or been laid off at local and long-distance companies than in the previous half-century. Global job losses exceed 500,000, and even highly profitable companies like Verizon are still slashing their payrolls. Despite an effective union campaign linking staffing cuts to customer complaints about service, the nation's largest local service provider and wireless carrier (now ranked third in the long-distance market as well) handed out 4,000 pink slips just before Christmas.

Among those furloughed was technician Mike Martinelli, a third-generation phone worker from Brooklyn, New York, whose family has served Verizon and its predecessors for more than seventy-five years. When he sent CEO Ivan Seidenberg an e-mail protesting the layoffs, Seidenberg responded personally, saying that "it is not realistic in this day and age to expect a lifetime of employment." Newspaper ads run by Verizon last fall echoed this point and criticized Martinelli's union, the Communications Workers of America (CWA), for creating unrealistic rank-and-file expectations about job security. Of course, Seidenberg and other telecom bosses expect guaranteed rewards for themselves. For example, shortly before Martinelli lost his job, another Mike at Verizon--corporate lawyer Michael Masin--stepped down as head of its international and directory operations to join Citigroup. He was paid more than $39 million from 1997 to 2001, including options and bonuses. During the same period, Seidenberg and two other associates pocketed $195 million in salary, bonuses and stock options--compensation they claim is only mid-range for US corporations.

Subscriber Login

User Name

Password

Subscribe Now!

The only way to read this article and the full contents of each week's issue of The Nation online is by subscribing to the magazine. Subscribe now and read this article -- and every article published since for the past five years -- right now.

There's no obligation -- try The Nation for four weeks free.

• Get The Nation at home (and online!) for 75 cents a week!
• If you like this article, consider making a donation to The Nation.