An improving economy may not necessarily lead to a slowdown in job cuts for the telecommunications sector, which has announced nearly 110,000 layoffs since the beginning of 2007. While the last two years of telecom job cuts remain significantly below the levels reached in the early 2000s, they are nearly double the 28,206 job cuts announced in 2007.
The cuts are due in large part to a major shift in the way consumers use communications devices; specifically, they are increasingly shifting away from traditional landlines to cell phones and internet-based services, such as Vonage and Skype.
Tuesday morning, Qwest Communications announced that fourth-quarter earnings fell 39%, as more than 900,000 business and residential customers disconnected their landlines during the last three months of the year. The losses would have been much steeper were it not for increases in its high-speed Internet and cell phone business, which grew 4.5% and 18.5% respectively, according to news reports.
“Verizon and AT&T also have seen significant losses in the landline customers over the past two years. Job cuts in these traditional services areas could continue to mount until each company has just enough staff to service existing lines,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, Inc.
AT&T, in fact, appears that they would just assume abandon landlines entirely. Late last year, the telecom giant filed a 32-page appeal to the Federal Communications Commission, asking that regulations requiring it to support an analog landline phone network be phased out, allowing it to go entirely with VOIP-provided phone service. The phone company pointed to the fact that between 2000 and 2008, usage of its landline services dropped 42%, while revenue generated by this service dropped 27%.
It will probably be a while before the FCC considers such drastic measures, particularly since 20% of Americans still rely solely on landlines. That percentage is unlikely to change in the near future, partly due to the lack of cell coverage and Internet access in rural areas.
“Regardless of the FCCs position, the telecommunications companies will dedicate more money and manpower to improving and expanding their broadband and wireless networks. These areas of their business will most assuredly see strong hiring over the next five to 10 years, particularly if telecoms finally commit to expanding their reach to underserved rural communities,” said Challenger.
ANNUAL TELECOM JOB CUTS, 2001 – 2010
Source: Challenger, Gray & Christmas, Inc.