Wireless Industry Overview:
The Impact of Competition and
Financialization on Wireless Workers
CWA Wireless Workers
Conference
November 2016, San Antonio, TX
1
The Wireless Communications
Industry is Dynamic
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2
Wireless coverage
approaching 100%.
Majority of households
soon to be wirelessonly
Market penetration at
116% of subscribers
Data is taking off!
Wireless Data Traffic
(Billions of MB)
77,200
9,650
867
3,230
2011
2013
Sources: CTIA and Cisco
2015
2020 (est.)
Content Companies & Network Carriers in the
Wireless Industry: A Virtuous Circle
Google, Netflix, Facebook, etc.
Content:
Web Sites
Social Media
Music
Video
VOIP
Games
Smart Car
Smart Home
AT&T, Verizon, T-Mobile, Sprint
Infrastructure:
Cell sites
Spectrum
Satellites
Fiber
Copper
Services: Voice, Text, Email, Internet Access
3
The Companies Who Build and
Service the Networks
New Entrants:
Google
Cable Cos.
4
Networks Require Greater Investment
than Apps & Social Media
CapEx for Wireless and Content Companies in 2015
($ billion)
$11.7
Network Carriers
Content Providers
$9.9
$8.9
$6.0
$4.7
$2.5
$0.5
AT&T
Mobility
5
Verizon
Wireless
T-Mobile
Sprint
Google
Facebook
LinkedIn
$0.0
Pandora
Employment at the Network Carriers
Leveling Off – but watch out for contractors
Direct Wireless Carrier Employees
250,393
235,818
233,067
184,449
Contractors
68,165
21,382
2,727
1985
1990
1995
Source: CTIA, Annual Wireless Survey
6
2000
2005
2010
2015
Wireless Market Share
(and the fight over subscribers)
Total Wireless Subscribers for Wireless Service Providers
2Q2016 (millions)
142.8
131.8
67.4
58.4
Verizon Wireless
AT&T Mobility
Source: FierceWireless, August 15, 2016
7
Sprint
T-Mobile
Price Competition Drives Down
ARPU (average revenue per unit)
Estimated Monthly ARPU
2010 vs. 2016
$51.51
$48.92
$49.68
$47.96
Negative ARPU trend puts
pressure on network
companies to deliver profits

Company response:
$46.50
$37.89
$33.89

$34.77
–
–
Verizon
Wireless
AT&T
Mobility
Source: BoA Merrill Lynch
8
Sprint
T-Mobile
2010: Solid Color 2016: Striped
Sales programs to attract
and retain customers
“efficiency” programs to cut
labor costs
Company Response:
Attract and Retain Customers

Company Goals:
–
–
–
9

Maintain current

customers to stabilize
churn
Acquire new
customers to increase
profitability
Increase number of
devices, services,
accounts per customer
Company Tactics:
Sales and marketing
programs
–
–
–
–
–
Bundling
Early Termination Fee
buyouts
Free devices
No contracts - EIPs
Retention
Company Response:
“Efficiencies” to Target Workers

Company Goals:
–
Reduce overhead
and labor costs

Company Tactics:
–
–
–
–
–
–
10
Performance metrics
Monitoring
“At risk” pay
Outsourcing
Replace workers with
technology
Forced overtime
Outsourcing – Tactic to Cut Costs

Use non-union, low-wage call centers
–
–
–
–

Shift retail function to third-party, authorized dealers
–
–
11
AT&T has presence in the Philippines, Mexico, and
elsewhere
VZ contracted out over 5,000 jobs in the Philippines,
Dominican Republic, and Mexico
TMUS has 17 in-house and 25 outsourced centers
Sprint has cut 6,000 customer service jobs in three years
due to technology and outsourcing
–
GameStop now owns 1,421 AT&T authorized stores
20% of 10,000 T-Mobile retail stores, are corporate owned
All carriers sell through Best Buy, Costco, Target, etc.
Unreasonable Metrics Drive Bad
Customer Service
Ratio of Consumer Complaints about Fraudulent Enrollment
per One Million Subscribers, 2013-16
10.1
7.1
5.9
5.0
T-Mobile
12
Sprint
Verizon
AT&T
In This Competitive Environment,
Some Prosper More than Others
Changes in Productivity, Share Price, and Wages for Customer Service
Representative at AT&T Mobility Texas 2004-2015 (2004=100)
147%
108%
43%
Productivity
13
Share Price
Wages
Some Prosper More than Others,
Part 2
Wirelesss Industry and Inequality
John Legere (3-year avg)
TMUS Call Center Worker
Wichita, KS
$20,405,296
$29,286
R. Stephenson (3-year avg)
AT&T Mobility
CSR 1 Texas
$20,750,211
$36,656
L. McAdam (3-year avg)
14
VZ retail worker
Brooklyn
$23,940,766
$58,421
Financial Strip Mining at AT&T and
Verizon

Financialization = Financial strip-mining:
–
–

Shareholder Reward = Dividends + Share
Buybacks
–
–
15
Company is seen as a cash cow
Rewards flow to shareholders
126% of net income at AT&T, 2011 - 2015
98% of net income at Verizon, 2011 - 2015
Consquences of Financial StripMining in a Competitive Industry


16
Competition exerts
 Could lead to
pressure on revenue
– Increases in debt
and earnings
– Delay in network
upgrades
Financialization
– Decline in network
siphons off profits for
quality
investors and execs, so
less money is available – Decline in service quality
– Increase in income
for cap ex and wages
inequality
and benefits
Summing Up…
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17
Wireless industry is dynamic
Content companies are thriving but not
paying their fair share of building the network
Network carriers in fierce competition
Pressure to cut costs harms workers
Aggressive sales tactics harm customers and
may be unethical
CEOs and shareholders rewarded
handsomely
The Challenge for CWA
Union-Eligible Jobs in the
Wireless Industry
Organized  Increase union presence
Unorganized
Sprint
13%
AT&T
Mobility
33%
TMobile
21%
VZW
33%
18
Contractors
CWA’s Goals:

Negotiate for our share of
success

Take on Wall Street

One Industry, One Workforce,
One Fight