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Conflict and Controversy: Windstream, AT&T, Arrests, Layoffs Create Channel Buzz

Surprised Businessman

There’s been an abundance of drama in the world of telecommunications and information technology — particularly in one of its important subsets, the channel.

Among the expected news of the day, such as new hires, breaking M&A and changes in channel strategy, there also are controversies that get the channel talking. There have been quite a few in just the past few months.

Recent hubbub involves the ongoing labor dispute between AT&T and the Communications Workers of America (CWA), Broadcom’s co-founder facing drug-trafficking counts in Las Vegas, and New York State’s decision to revoke its approval of the 2016 merger of Charter Communications and Time Warner Cable, and bar Charter, doing business as Spectrum, from operating in the state.

The ongoing net neutrality fight and continued layoffs also created buzz.

Click through the slides below to revisit the controversies and conflicts that have rocked the channel since spring.

Telinta Infrastructure
Broadcom Co-Founder Busted in Vegas

Earlier this month, Broadcom co-founder Henry T. Nicholas III was arrested in Las Vegas on suspicion of narcotics trafficking after police discovered heroin, cocaine, meth and ecstasy in his suite at the Encore hotel.

Las Vegas Metropolitan police detained Nicholas and a woman after hotel security called authorities to the room. Nicholas and his companion were arrested and booked on suspicion of trafficking several illegal drugs.

Nicholas stepped down as chief executive of Broadcom in 2003.
Social Media
Frontier Communications vs. CWA

In March, Frontier Communications workers in West Virginia and Ashburn, Virginia, returned to work after reaching agreement on a new contract. The 1,400 workers are members of the Communications Workers of America (CWA) and were on strike for three weeks.

Frontier obtained a temporary restraining order against the striking workers in West Virginia, barring them from picketing in large numbers, using violence and interfering with business. It said the order was in response to “dangerous, destructive and reckless behavior” by some CWA members. Ed Mooney, vice president of CWA District 2-13, said the request for the injunction was an “overreaction by the company to the lawful activity of our striking members.”
Channel Partners Channel Futures 2018-19 Editorial Calendar 3
Windstream Fights 'Devastating' CLEC Rate Hike

Windstream and USTelecom asked the Federal Communications Commission (FCC) to approve an agreement on wholesale network access with no price increases on unbundled network elements (UNEs) until at least February 2021.

USTelecom asked the FCC to eliminate a requirement for larger ILECs to offer UNEs at regulated prices. The proposal included an immediate 15 percent price increase followed by an 18-month transition period.

In his blog, Tony Thomas, Windstream’s president and CEO, said the proposal “would have been devastating for competitive providers (CLECs) and their customers.”
Net Neutrality War Rages On

Last December, the Federal Communications Commission voted to end net neutrality, but the issue is far from settled as Democrats in Congress introduced a resolution aimed at overturning the decision. Also, attorneys general representing 22 states and the District of Columbia have asked a federal court to reinstate net neutrality.

And this week, a coalition of trade groups representing companies including Alphabet, Facebook and Amazon urged the court to reinstate net neutrality.
Direct vs. Indirect
Layoffs Continue to Mount

It's been a cruel summer for a number of workers as companies with channel programs scale back to restructure or cut costs. This month alone has been particularly tough for workers.

Symantec said it plans to lay off 8 percent – or about 900 – of its 11,000-plus workforce after reporting disappointing revenue and profit for its first quarter and a weak outlook for its second quarter. Also, West confirmed it is laying off nearly 150 workers in Wisconsin after a major client suddenly canceled its contract with the company.

And Xerox confirmed layoffs across the United States and Canada as part of an effort to optimize its operations globally.
Charter vs. New York State

Last month, New York State not only revoked its approval of the 2016 merger of Charter Communications and Time Warner Cable, but also barred Charter, doing business as Spectrum, from operating in the state.

The New York State Public Service Commission (PSC) determined that Charter failed to deliver the benefits to New Yorkers that were “at the core of the merger approval.” Charter is the largest cable provider in the state. It provides digital cable television, broadband internet and VoIP telephone service to more than 2 million subscribers.
CenturyLink's Continuing Legal Woes

Oregon is the lead plaintiff in a national securities class-action lawsuit against CenturyLink, alleging the company’s revenue contained “ill-gotten gains that were unsustainable.” A federal judge in Minnesota confirmed the Oregon Public Employees Retirement Fund as lead plaintiff in the case. The pension fund is suing to recoup losses the state says it experienced due to the company’s actions.

The initial lawsuit was filed in 2017 after “revelations the company urged employees to add services and lines to customer accounts without obtaining the necessary clearance, leading to millions of dollars in unauthorized charges,” the announcement reads.

In addition to Oregon, class-action suits have been filed against CenturyLink in Alabama, Arizona, California, Colorado, Idaho, Nevada and Washington. There’s also a suit filed by Minnesota Attorney General Lori Swanson and numerous investor class-action suits.
Security Merger
Verizon's Gigantic Fine

In March, the Federal Communications Commission (FCC) fined Verizon and one of its subsidiaries $614 million. The agency said Verizon is paying up for Straight Path Communications’ failure to use spectrum licenses allotted to it by the FCC. This came on the same day that Verizon completed its acquisition of Straight Path.

It’s the largest civil penalty for a settlement in the history of the FCC.
Professional Services
OpenText CEO Slams IBM Watson

At OpenText's Enfuse 2018 conference in Las Vegas, Mark Barrenechea, the company's vice chair, CEO and CTO, called artificial intelligence (AI) the "new frontier" for digital transformation. He then blasted IBM Watson, saying his company’s Magellan AI platform is superior.

“What I don’t like about Watson is it is expensive, takes a long time to use, and doesn’t fit our belief system,” he said. “Customers want to move fast.”
Bundle of Sticks
GDPR Compliance Still a Struggle for Many

Several weeks after the deadline for General Data Protection Regulation (GDPR) compliance, the vast majority of companies still were either working on it or had yet to begin the process.

That’s according to July research from TrustArc, which surveyed 600 IT and legal professionals responsible for privacy at companies required to meet GDPR compliance in the United States, the United Kingdom and the European Union — one month following the May 25 deadline.

Only one in five (20 percent) companies surveyed believed it is GDPR compliant, while 53 percent were in the implementation phase and 27 percent had not yet started their implementation. EU companies, excluding the U.K., were further along, with 27 percent reporting they were compliant, versus 12 percent in the U.S. and 21 percent in the U.K.
Broadcom's Confounding CA Technologies Bid 

Four months after President Trump stopped its Qualcomm acquisitionBroadcom announced it is making an $18.9 billion bid for CA Technologies in a deal that had investors and one analyst scratching their heads.

Broadcom lost $19 billion in market value as its stock plunged 19 percent to $197.50 — the company’s worst day ever. And Channel Partners contributor Michael Finneran of dBrn Associates said when he initially heard about the deal he was confused because of the “total lack of synergy between the two parties” and after further consideration, “it makes even less sense.”

"If Broadcom wants to go this far outside of their area of competence, what don’t they buy a pizza company?" Finneran said.
Cloud Server
CWA vs. AT&T

Last month, AT&T reported higher profit for the second quarter of this year compared to the same quarter in 2017. However, the Communications Workers of America quickly weighed in, saying the telco’s latest earnings “reveal how little the tax break that America’s largest telecom company received is doing for workers and consumers.”

More than 1,000 AT&T workers in the Midwest and some Legacy T locations were on member-initiated strikes in June as negotiations continue for 14,000 workers covered by Midwest and Legacy T contracts.

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