Striking Verizon landline workers say they laid the foundation for the company's booming wireless business and shouldn't be expected to give up contract benefits just because they work on a less profitable side of the business.
But management says the company has to change to stay competitive and the 45,000 landline workers can't expect to be paid the way they were when the phone company was a monopoly.
"It's no secret that the wireline business has experienced a 10-year decline in our customer base and in profitability," said CEO Lowell McAdam. "... We have arrived at the point where we must make additional hard decisions to address customer needs and the overall operating costs of the business."
A union spokeswoman said the company is seeking about $20,000 a year per worker in annual givebacks.
Thousands of strikers took to picket lines from Massachusetts to Virginia on Monday, the second day of their strike. Managers replaced many strikers and Verizon said there was only minimal impact on service. It said there may be slightly longer hold times for customer service and longer waits for repair.
However, the company also alleged a dozen acts of sabotage that affected phone, Internet and TV service in Maryland, Massachusetts, New Jersey and New York.
Union spokeswoman Candice Johnson said it was "a management tactic, rolling out the idea of sabotage."
Strikers claimed two demonstrators were hit by a replacement worker's car near Buffalo.
Negotiators met face-to-face in New York on Monday, but neither management nor labor would say if there was progress. Their contracts expired at midnight Saturday.
The workers are represented by the Communications Workers of America and the International Brotherhood of Electrical Workers.
Verizon Wireless, the non-union and much more profitable division of which Verizon owns 55 percent, was not affected by the strike. But the wireless operation was a focus of contention anyway.
Verizon phone lines are disappearing at a rate of about 8 percent per year and are down to 25 million, about a quarter of the number of devices connected to its wireless network. Verizon has invested heavily to keep its land line division relevant, spending more than $20 billion to replace copper phone lines with optical fiber so it can sell cable-like TV service. While the so-called FiOS service has staved off competition from cable, it hasn't led to profits.
Company spokesman Richard Young said the company wants to freeze the workers' pensions but is willing to enhance their 401k accounts. He said management is also demanding that workers contribute to their health insurance premiums.
Young said the workers' benefits "no longer reflect today's marketplace. ... There are dozens of competitors."
Johnson said top workers earn about $77,000 a year in New York. The company puts the figure at $91,000 and said benefits average $50,000.
Young said Verizon made $3 billion in the first six months of 2011, and strikers said it was wrong to keep them from sharing in the profits because they are the underpinnings of the profitable wireless sector.
Paula Lopez, 60, a customer service representative on a picket line in New York, acknowledged that fewer people use land line phones but said land lines were "the stepping stones and building blocks for wireless. ... That's where they got the money to start up the wireless."
Demonstrators also complained that the company was squeezing them when high-level executives were making millions. Young said executive pay was based on performance and had been approved by stockholders.
Roger Entner, founder of Recon Analytics in Boston, said the problem is "The company is half in trouble."
"Fewer and fewer people are using their traditional land lines, and only with the introduction of FiOS has that been stemmed," he said. "The workers know that, but they also know their checks come from a big, profitable company.
"So we're in concession bargaining, with the company saying we need concessions or jobs will be lost and the workers doubting jobs will be lost because the company is doing all right," Entner said.
AT&T Inc., the only U.S. phone company larger than Verizon, wrung some concessions from unions in 2009, when contracts covering about 90,000 workers expired. The negotiations ended without a strike, and with workers shouldering some premiums and co-payments for their health insurance.