The biggest story in Washington now, of course, is the debate over the debt limit. Telecommunications policy plays a role in this debate -- specifically on a decision to include spectrum auctions as a way to raise revenues for the federal government. (See, too, S 911 Public Safety Spectrum and Wireless Innovation Act) But this debate remain very fluid, so we'll hold off for now for a full update. Instead this week we'll focus on jobs.
On July 18, the Wall Street Journal reported that the wireless industry is booming as more consumers and businesses snap up smartphones, tablet computers and billions of wireless applications. But for the industry's workers, the story is less rosy. Employment at U.S. wireless carriers hit a 12-year low of 166,600 in May -- about 20,000 fewer jobs than when the recession ended in June 2009 and 2,000 fewer than a year ago. While the industry's revenue has grown 28% since 2006, when wireless employment peaked at 207,000 workers, its mostly nonunion work force has shrunk about 20%.
"The disconnect between employment and industry growth reflects the broader head winds lashing the U.S. job market, as consolidation, outsourcing and productivity gains from new technology and business methods combine to undermine job growth.," writes WSJ's Anton Troianovski.
Although the Communications Workers of America backs AT&T's proposed purchase of T-Mobile our friend Art Brodsky at Public Knowledge recently pointed out that more consolidation in the telecommunications industry isn't likely to be good news for workers. Or, more precisely, Brodsky noted that CWA had made that point to California legislators last year. James Weitkamp, vice president of CWA District 9, told the California state senate, "While the workforce of these telecommunications giants has been decimated by corporate downsizing, over the past three years AT&T reported $37 billion and Verizon earned over $33.5 billion in corporate profits. The public suffers, while these companies pad their pockets." On July 19, Public Knowledge followed up on the Wall Street Journal article and Brodsky's good piece with a letter to the Federal Communications Commission citing potential job losses as a reason to deny the proposed AT&T/T-Mobile merger. "Since 2006, the industry has contracted significantly as AT&T merged with Cingular and Verizon merged with AllTel, along with numerous smaller mergers," PK wrote. "There is every reason to suppose that this merger would follow a similar pattern and allow the merged company to increase its 'efficiency' by cutting jobs."
The Computer and Communications Industry Association warns that the AT&T/T-Mobile combination will give AT&T and Verizon too much control over the market for mobile software applications and services -- and negatively affect handset makers, who would have fewer potential buyers for their wares.
The concerns about job cuts are not lost on Members of Congress. On July 17, Rep. Jay Inslee (D-WA) sent a letter to AT&T and T-Mobile expressing his concern that their proposed merger could destroy jobs, especially in his Washington district (the headquarters of T-Mobile is just outside of Inslee’s district). Reps Ed Markey (D-MA), John Conyers (D-MI) and Anna Eshoo (D-CA) also raised concerns about jobs in a letter they sent to the FCC and the Department of Justice on July 20. On July 26, Sen. Al Franken (D-MN) told federal regulators that they should deny AT&T's request to acquire T-Mobile because the merger would drive up prices for wireless customers and likely cost thousands of jobs.
The issue of jobs and labor may soon be grabbing more headlines. On July 28, CWA announced that in balloting by 35,000 of its members at Verizon, 91 percent had authorized their leaders to call a strike as soon as Aug. 7, after the contract expires. Verizon Communications is seeking major concessions from 45,000 unionized workers in the Northeast and mid-Atlantic states. The company earned $6.9 billion in net income for the first six months of this year, amid strong growth in its majority-owned Verizon Wireless cellphone operation. And Verizon’s hefty investment in its FiOS TV and Internet services is starting to pay off. Verizon Wireless, the largest U.S. wireless carrier, approved a $10 billion distribution to owners, Verizon Communications and Vodafone Group Plc, the first payout of that kind in more than five years. The payment will be made on Jan. 31 and distributed to the two companies in proportion to their ownership in Verizon Wireless. (Verizon Communications holds 55 percent of the wireless venture, while Vodafone owns 45 percent.) Verizon Wireless will still have enough funds to buy assets, such as any divestitures that may be part of AT&T’s acquisition of T-Mobile USA, said spokesman Peter Thonis. Verizon Wireless generates more than $10 billion in cash annually, leaving it with money to make its own deals, Thonis said.