Cutting the Cord: Telecommunications Employment Shifts toward Wireless: The Telecommunications Industry Employment Rapidly Grew in the Late 1990s into Early 2001; Ever-Changing Technology, Advances in Wireless Technology, and Declining Profits Resulted in the Telecommunications Bubble Bust

By Carbone, Christopher C. | Monthly Labor Review, July 2006 | Go to article overview

Cutting the Cord: Telecommunications Employment Shifts toward Wireless: The Telecommunications Industry Employment Rapidly Grew in the Late 1990s into Early 2001; Ever-Changing Technology, Advances in Wireless Technology, and Declining Profits Resulted in the Telecommunications Bubble Bust


Carbone, Christopher C., Monthly Labor Review


The telecommunications industry experienced unprecedented employment gains in the latter half of the 1990s and into early 2001, growing by 36 percent from January 1996 to March 2001. (1) This fast-paced growth was fueled largely by changes in Federal regulation, the anticipated demand for telecommunications products associated with those changes, and with rapidly developing technology. The subsequent employment downturn, one signal of the end of the "tech boom," was large and quick. The industry as a whole regrouped and changed its focus to new and emerging technologies as consumer demand for telecommunications services shifted from traditional land-line based services to emerging wireless services. Telecommunications shed 25.3 percent of its employees from the March 2001 peak through 2005. (See chart 1.) This employment bust took only 4 years, about a year less than the employment boom. This article details the telecommunications industry's growth and subsequent bust.

Anticipating deregulation

Throughout the early 1990s, telecommunications employment growth was nonexistent. In fact, employment declined by 43,000 or 4.4 percent between January 1990 and August 1993. (See table 1.) Wired telecommunications was the driving force behind the employment loss, while telecommunications resellers also lost jobs. In contrast, the wireless telecommunications industry added 25,000 employees to their payrolls and cable and other program distribution added 7,000 employees.

Anticipation of changes to telecommunications regulations had begun by mid-1993, and employment trends began to reflect the expected changes. From August 1993 through December 1995, just prior to the passing of the Telecommunications Act of 1996, employment recovered to near its January 1990 level. The gain, however, was concentrated within the wireless industry. Wired telecommunications payroll employment continued to decline and would not experience a notable increase until 1997, in the wake of the Telecommunications Act.

Prior to the Telecommunications Act, the telecom industry could be characterized as having only a few large firms providing services in local monopolies. Local telephone service was generally offered by a lone regional provider, usually one of the "Baby Bell" companies like BellSouth or Verizon. Long distance services were supplied by a limited number of national carriers, such as MCI, AT&T, and Sprint. The wireless industry mirrored this structure with services provided by large national carriers such as Cingular or Verizon Wireless. (2) These companies were rather specialized, focusing mainly on one form of telecommunications service. This structure is evidenced by the distribution of long distance revenues amongst providers. In 1996, more than 68 percent of industry revenues were distributed among only three carriers. (See chart 2.)

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The Telecommunications Act of 1996

The Telecommunications Act of 1996 greatly influenced employment in the telecommunications industry after its enactment. The change in regulatory policy was the first major overhaul to communications laws in 62 years. The main goal of the Act was to "let any communications business compete in any market against any other." (3) It was widely believed that by opening telecommunications markets up to competition, consumer prices would fall.

Technological advances in fiber optic cable dramatically increased data transmission capacity and coincided with the passage of the Act. Over the past decade, fiber optic transmission capacity has grown by a factor of 200. Average fiber capacity in 1996 was about 10 gigabytes per second. By 1998, the figure had increased tenfold to 100 gigabytes per second. (4) Also, new technologies allowed more efficient transmission of wireless signals over the frequency spectrum allotted by the Federal Communications Commission (FCC). When coupled with the prospects of a deregulated market and rising Internet usage, investment in telecommunications took off, and the employment boom began.

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Cutting the Cord: Telecommunications Employment Shifts toward Wireless: The Telecommunications Industry Employment Rapidly Grew in the Late 1990s into Early 2001; Ever-Changing Technology, Advances in Wireless Technology, and Declining Profits Resulted in the Telecommunications Bubble Bust
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