Strikes Loom Over SBC

Next Monday the Communications Workers of America (CWA) will vote on whether to authorize 100,000 of SBC Communications' (NYSE: SBC  ) 170,000 workers to strike. If authorized, the union could strike any time after May 8.

At issue are wages, pensions, health care, outsourcing, and job protection. The union is most concerned about jobs going overseas and SBC's use of nonunion employees to fill new positions in divisions with the highest growth, such as broadband. The union is also trying to stop SBC from increasing its health-care co-pays from 7% to 12%.

A strike could be very damaging for SBC. When the CWA struck against Verizon Communications (NYSE: VZ  ) for 18 days in 2000, it pushed the company's order backlogs out by a month. As a contingency, SBC has had nonunion management employees in emergency training to take over essential functions. But there's no getting around the fact that a strike would be highly disruptive and could result in customer defections.

The phone companies aren't the monopolies they once were. Their offerings are increasingly diversified and competitive. Many customers can choose the company they use for landline services, and long-distance plans are particularly easy to switch.

A strike could also hasten the move to voice over Internet protocol (VoIP) and prompt some customers to switch to other broadband Internet service providers (ISPs). Additionally, those customers that are very dependent on SBC's services, such as call centers and Internet service, are sure to have contingency plans in place for switching to other companies in the case of a disruption.

SBC shareholders should monitor this situation closely. If the company is unable to reach an agreement with its workers, prompting a strike, the progress it made in its just-announced first quarter could be stalled.

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Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.