Telephone landline's decline to cost retirees

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By RICHARD PIERSOL / Lincoln Journal Star

The decline of landline telephone business is going to cost some retirees locally, assuming a federal court agrees.

About 900 people who retired before 2001 from Aliant and Lincoln Telephone Co., predecessors of Windstream, are going to have to start paying for part of their medical insurance premiums in January,  Windstream said. 

Assuming health care costs continue to rise, the insurance could cost them even more in the future.

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Employees have challenged the company’s right to make the change, and Windstream has asked the U.S. District Court in Nebraska to say it can do so.

People who retired from Lincoln Telephone or Aliant before 2001 paid nothing for their health insurance while they were working, nor during their retirement, Windstream said.    

People who retired after 2001 from Aliant or Alltel, another predecessor to Windstream, have paid a portion of their health premiums, said Chris Hunt, spokesman for Windstream.

Among those unhapy is Jan Simodynes of Lincoln, a service rep who retired from Alltel.

“When we were negotiating a contract, I retired in June of 2001, for fear we’d lose our insurance benefits,” Simodynes said.  “We were reassured we’d be able to keep our insurance of the previous contract.

“I didn’t particularly want to retire at 51, but felt there was a need to, in order to keep my insurance intact,” she said. 

In letters to those who retired before 2001, Windstream explained that the decline in its traditional landline telephone business has accelerated over the last ten years primarily due to competition from wireless and cable TV companies.

“Access lines have declined almost 25 percent in Nebraska during this period,” the letter said.  “The revenue loss from this decline has created tremendous financial pressure and forced us to make difficult decisions ...

“Spiraling health care costs have further compounded this financial strain,” the letter said.

Rather than terminating benefits, as some companies have done, Windstream said it will ask retirees to share a portion of the cost for medical coverage.

Because Windstream was made up of a combination of several companies, its health coverage for retirees is a patchwork over 16 states.

“We have a lot of retirement plans, based on where you live, who you worked for and when you retired,” said Hunt.  “It might be in the dozens.”   

That makes health plans very inefficient to administer, with a wide variety of payments being made to different providers, sometimes different  providers inside a state, Hunt said, so Windstream is trying to consolidate plans. 

Benefit costs for those retirees at issue were about three times greater than the costs for other Windstream retirees, according to federal court filing by Windstream. 

Windstream was formed in 2006 from the merger of Alltel’s wireline telephone operations and Valor Communications, a Texas company. Alltel acquired Aliant, formerly the Lincoln Telephone Co., in 1999. 

In 2010, Windstream intends to use the dollar amount of its 2009 payment for each retiree as the base for future health-care contributions, Hunt said.

Retirees would be responsible for the difference between the anticipated future plan costs and Windstream's fixed contribution level, the 2009 payment, the company said. 

Furthermore, Windstream said it retains the right to change its contributions in the future.

In addition, the company is terminating the Aliant Plan for Employees' Disability Benefits and Death Benefits on Jan. 1, 2009. In its place, the company  said it will privide basic life insurance coverage for retirees of $5,000.

Windstream met with a group of retirees and union representatives last week to discuss the changes.

During the meetings, retirees objected and  questioned Windstream's authority to make these changes. 

So Hunt said Windstream has asked for a declaratory judgment in federal court to clarify the rights of retirees and the  company.

Windstream says retirees are not represented by the CWA, which represents some active employees,  and the company has always reserved the right to modify retirement benefits. 

Union officials could not be reached for comment. 

Aliant and Lincoln Telephone employees who retired before 2001 are the last group not already paying for at least part of the health insurance offered by Windstream, Hunt said.

In 2001,  a deal negotiated between Alltel and Local 7470 of the Communications Workers of America specified  those who became eligible to retire that year or as late as 2004 would continue to receive a fully paid health-care and dental benefit. Those who become eligible to retire in later years were supposed to pay a greater share of the health premium, according to Journal Star archives.

An agreement in 2004, further limited the company’s spending for those who retired after 2006, the archives show. 

Of the 900 people covered by Windstream’s new policy, 826 live in Nebraska, the rest in 25 other states, according to the Windstream petition to federal court.

Hunt said he knows of no other company in Nebraska that paid the entire cost of retiree’s health care, as predecessors of Windstream did.

Simodynes sees a continuing deterioration of the telephone industry.

“In 2000,  Aliant employees rallied against Alltel moving in,  but they (the city’s political leadership) welcomed them with open arms,” she said.  “We’ve lost over 1,000 jobs in Lincoln.”

Reach Richard Piersol at 473-7241 or at dpiersol@journalstar.com