Year in review 2011: Verizon's wireline strike saga

The news: When Lowell McAdam took control of Verizon (NYSE: VZ) as the company's CEO in August, the former Verizon Wireless chief wasted no time in laying out his plans to streamline the service provider's business and become more entrepreneurial.

To reach those goals, McAdam asked the service provider's two main unions--the International Brotherhood of Electrical Workers (IBEW) and the Communications Workers of America (CWA)--for a number of concessions on pension and healthcare contributions. In addition, the telco asked for changes in work rules such as vacation and sick days.

The unions, however, did not like these proposals and union employees at Verizon's wireline division officially went on strike when their old contract expired on Saturday, Aug. 6.

It was the first time in 11 years the service provider had to deal with a strike. In 2000, 80,000 union workers went on strike for three weeks until the unions and Verizon came to an agreement.

Similar to the confrontational environment that emerged between AT&T (NYSE: T) executives and its union workers, tensions also ran high during the Verizon strike.

A New York Times report revealed that there were 143 reported cases of network damage incidents allegedly by striking union workers. What's more, striking union workers showed up at the Nyack, N.Y. home of then Verizon chairman Ivan Seidenberg to hold what they called a "funeral for the middle class." Later, they organized a protest in front of Lowell McAdam's home in Mendham Borough, N.J.

Ultimately, the two-week strike came to an end on August 14 with union workers agreeing to return to work under their existing contract. In the aftermath of the strike, the telco was saddled with a backlog of 100,000 FiOS orders and it fired 40 workers for alleged misconduct.

As of the end of December, the two unions continue to work under the existing contract as the two sides tried to hammer out a new agreement.

Why it's significant: While wireline service providers are using new wireless and video services to offset wireline voice losses, service providers are thinking of new ways to cut costs to stay on a competitive footing with cable. This trend isn't just relegated to Verizon as its smaller ILEC brother Hawaiian Telcom (Nasdaq: HCOM) is revising its labor terms with its union telephone workers.

Year in review 2011: Verizon's wireline strike saga