Wireless Industry Sheds Jobs

In May 2011, on the heels of a record year for industry revenue, employment at U.S. wireless carriers hit a 12-year low of 166,600, according to U.S. Labor Department figures released earlier this month. That's about 20,000 fewer jobs than when the recession ended in June 2009 and 2,000 fewer than a year ago. Some will wonder what that means.

While the industry's revenue has grown 28 percent since 2006, when wireless employment peaked at 207,000 workers, the work force has shrunk about 20 percent. Some will point to productivity gains as the possible reason for job loss, and it is hard to deny some impact in that regard.

"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," the Wall Street Journal says.

The number of customer-service workers at wireless carriers, for example, dropped to 33,580 last year from 55,930 in 2007, according to the Labor Department. "It used to be you had to scale your customer-care resources linearly with the number of customers you had," said Dan Hays, a telecom consultant. "We don't do that anymore."

Beyond all that, one might argue that the hugely capital intensive infrastructure business must dramatically reduce its operating costs if revenue is expected to be difficult on the top line. In other words, in a business with huge sunk costs, facing headwinds in the revenue area, with value and revenue shifting to third party parts of the ecosystem, lower operating costs are almost essential.

That isn't to argue that access providers are "only or primarily" providers of low-margin, moderate-revenue" access services. It is to note that much of the new value and revenue will flow largely to application providers in the ecosystem. Prudent executives will work to create as much of a role in the new revenue areas as possible, but also will plan for tougher going in all the existing lines of business.

Generally speaking, that means simplifying operations and taking out cost, allowing more generated cash to be invested in growth initiatives, and providing some protection from slowing growth in core revenue segments.

Wireless Jobs Evaporate Even As Industry Expands (subscription required)