Thousands of workers at SBC Communications, one of the biggest telecoms operators in the US, have launched a four-day strike.
SBC workers are angry at the prospect of higher medical costs
Talks between management and unions who represent 100,000 staff in 13 states broke down on Wednesday.
Union officials say SBC - whose 2003 profit was $8bn - is cutting benefits too sharply, but the company says tough competition means it must cut costs.
SBC said the strike had not noticeably disrupted its network.
Management and retirees were helping to keep things running, SBC said.
Health care cover
Basic phone service is reported to be unaffected, but the Associated Press reported that directory enquiries services were widely unobtainable.
The Communication Workers of America said its members had gauged their action so as not to cause financial damage to SBC - although it said it could ramp up action if no agreement could be reached.
The two sides are working on a new five-year contract.
SBC is threatening to tear up the deal currently on the table unless the CWA accepts it before the end of Monday night.
The company's current package gives a 4% lump sum payment in the first year with 2.25% basic pay increases annually thereafter.
But it also includes increases in medical payments, which the CWA contends would double many workers' healthcare bills.