Verizon (VZ) - Get Report and its two largest unions are preparing to chat again as their standoff drags on into its third week.

A bargaining session conducted by the Federal Mediation and Conciliation Service, an independent labor negotiation group, was recessed last week as the massive power outage crippled parts of the Northeast and Midwest. Talks are to resume today in Washington. The sides have been talking on and off since the latest deal expired Aug. 2.

About 80,000 technicians and service representatives have been negotiating a new labor contract with the nation's largest phone company. Yet despite Verizon's claims two weeks ago that a

"framework" for discussing the issues had been put in place, updates from the union's regional offices indicate that many differences remain.

According to one recent update, issued Friday, union representatives have been advising local affiliates to "maintain a high level of preparedness for the possibility of a short-notice strike."

A representative with Verizon's largest union, the Communications Workers of America, said she has been asked by the mediators to refrain from making any comments on the discussions.

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Verizon is seeking job cuts and increased health care contributions from employees to help offset the effects of a weak economy and continued declines in its local phone business. The unions want job security and cite oversized executive pay packages and the company's solid profits to challenge Verizon's claims that it needs to reduce the size of its workforce.

Wall Street is watching the discussions for signs of a strike that could disrupt business. The big phone company's suppliers, such as

Lucent

(LU)

, are seen as being especially at risk. Verizon shares have been steady during the talks this month; they slipped a dime Tuesday, to $35.75.

Analysts point out that the union has a $200 million strike fund at the ready, should workers walk off the job. That kitty is estimated to be enough to cover a month's worth of wages for the strikers.

A strike during the last labor contract negotiation in 2000 lasted two weeks.