SBC Cuts 11,000 Jobs, Blames Economy, Unbundling, Cableco Advantage

SBC Communications Inc. said today it plans to cut 11,000 jobs in the fourth quarter and early next year in response to a weak economy and unfavorable regulatory policies.

The San Antonio-based telecommunications giant said it will cut 9,000 jobs in the fourth quarter with most of the remaining cuts occurring next year. SBC anticipates a third of those cuts will affect managers in the company’s 13-state region.

SBC already had eliminated 10,000 positions by August and recently implemented a voluntary unpaid leave program for managers. The company also noted a continued reduction in network investments, adding it expects to earmark $5 billion to $6 billion in capital expenditures next year.

SBC chairman and CEO Ed Whitacre pinned the blame for the cuts on “a continued weak economy and outmoded regulation that could threaten the future viability of its telecommunications networks in many of its states.” Whitacre was paraphrased in the release saying that wholesale prices set by state regulators are below cost and in some cases up to 60 percent below retail rates, allowing competitors to purchase network access at deep discounts and pocket the difference. He added that these competitors routinely target business and high-end residential users -- the most profitable customers -- leaving SBC to serve basic residential users. "Consumers now have wide-ranging choices for local service, including wireless and cable television,” Whitacre said. “Mandating the repackaging and resale of network services through deep discounts that are simply pocketed by competitors not only doesn't benefit consumers, but undermines the viability of the entire network. Everyone would benefit if government simply allowed the market to work."

The company also blamed its predicament on federal rules the company says give cable operators an unfair advantage in being able to offer broadband services, and delays in federal approvals necessary to provide long-distance service within its region.

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