AT&T prepares more than 2,500 layoffs

In a move underscoring AT&T's efforts to be a broadband powerhouse, the telecom giant is preparing a series of layoffs across its long distance network support division.

John Borland Staff Writer, CNET News.com
John Borland
covers the intersection of digital entertainment and broadband.
John Borland
3 min read
In a move underscoring AT&T's efforts to transform itself into a broadband powerhouse, the communications giant is preparing a series of layoffs across its long distance network support division.

The company has proposed a series of job cuts that will be completed by early August, targeting between 2,500 and 3,000 skilled network technicians around the country, a company spokesman confirmed.

AT&T representatives are currently negotiating with the Communications Workers of America, a labor union that represents most of the targeted employees, over the final terms of the layoffs.

"The offer on the table needs their consent," said Burke Stinson, an AT&T spokesman. "We could change terms and conditions and do without their consent, but we don't want to play it that way."

The news comes several days after management briefed some employees on the pending job cuts, sparking widespread rumors and concerns about job security in many offices around the country.

The proposed layoffs in the company's traditional business centers comes even as AT&T is accelerating the pace of its entry into new markets, most recently with its bid on cable company MediaOne.

Chief executive C. Michael Armstrong has spent the last year pushing the company to reduce costs in its long distance business, which has experienced slower growth and has lower profit margins than new data and Internet divisions.

Early last year, Armstrong proposed between 15,000 and 18,000 employees be cut across the company, and analysts say he has reduced the ranks of middle management substantially since that time.

While the company reduces its headcount, however, it still continues to bring new players on board following the acquisition of companies such as Tele-Communications Incorporated.

The current round of layoffs would focus more heavily on rank-and-file employees than Armstrong's previous efforts to cut middle management.

The company will encourage senior employees, who have severance packages that can total 80 weeks of pay for 25-year employees, to leave the company, Stinson said. But under union and company contractual rules, the rest of the layoffs will come among the newest employees.

Stinson said that the job cuts would come from around the country, but that they would likely be more heavily concentrated in Texas and Georgia, where the company has large operations centers. The company plans to save close to $200 million a year with the cuts, he added.

The proposed layoffs come as AT&T plans to close operations support centers in markets around the country, and create "megacenters" in Denver, Colorado, and near Atlanta, Georgia, company sources said.

Centers in Richmond, Virginia, Pittsburgh, Pennsylvania, Lisle, Illinois, Dallas, and New York will be closed, sources said.

Stinson said the layoffs and the consolidation of operations centers were necessary to keep AT&T on par with competitors like MCI WorldCom and Sprint.

"Customers are looking to save pennies on calls, and we have to do something to do keep costs of running business competitive," he said.

The CWA union, which released a statement on the proposed layoffs today, is opposing AT&T's current efforts.

"AT&T has already cut its workforce to the bone," said CWA vice president Jim Irvine in the statement. "Clearly, losing this many skilled employees will have a detrimental impact on quality service."

Analysts said the layoffs were predictable, given falling margins and new competition in the long distance business.

"AT&T's not bad. The world is changing," said Hillary Mine, a telecommunications analyst with Probe Research. "Revenue growth in the long distance business is pretty minimal, and they have to transfer resources to their other businesses."

Mine also said that most skilled employees would likely have little trouble finding new jobs in the booming telecommunications sector.

"Even a low-tech service guy is going to get snapped up by a CLEC [competitive local exchange carrier]," she said.