Wealth of Information Services Will Pay Off in New Jobs
An odd but encouraging study sponsored by the local Bell telephone companies said last week that 1.5 million jobs will be created in this decade through developments in information services.
Unemployment, currently at 7.5% of the U.S. work force, will be only 4.2% in 2001, according to the report, done by the WEFA Group and released in Washington. It foresaw a tremendous variety of new jobs, directly in telephone and computer-related industry and by ripple effect in all other businesses.
The odd aspect of the study, distributed to the 50 congressional delegations, is that it’s part of a lobbying effort of the Baby Bells, the seven regional phone companies created by the 1984 breakup of American Telephone & Telegraph. Those companies--Ameritech, Bell Atlantic, BellSouth, Nynex, Pacific Telesis, Southwestern Bell and US West--are barred by terms of the breakup decree from owning telephone answering or cable TV services in their areas, and from competing in the long-distance business with AT&T;, MCI and Sprint.
The Bells are trying to persuade Congress to lift the restrictions. But AT&T;, MCI and the cable television and newspaper publishing industries are supporting proposed legislation that would continue to bar the Bell companies from many fields of communications on grounds that, as local monopolies with government-guaranteed profits, they would have an unfair advantage.
Clearly, the battle lines are being drawn for the dawning age of computerized, interactive, technological whiz-bang, when information services will just explode. The WEFA study probably understated the job potential.
“The telecommunications industry can look forward to $100 billion to $500 billion in fresh investment in this decade, especially if the local Bell monopolies are dissolved,” said Victor Schnee, head of Probe Research, a New Jersey consulting firm with a record for prediction.
Probe Research forecast the breakup of AT&T; eight years before it happened. Now it has published a massive and expensive study--$5,000 a copy--titled,”The End of the Local Monopolies.”
What it all means is that we’re entering phase two of the changes begun by the AT&T; breakup, a period when competition will come to local phone service as it came to long distance. It’s a time for ferment, but certainly not for fear.
If you want a useful perspective, think of telephone pioneer William McGowan, the founder of MCI who died last week of a heart attack at age 64. When McGowan first challenged AT&T; in the late 1960s, the giant monopoly said that if he were allowed to do business the world would end. But the antitrust laws protected MCI; it grew and prospered. And eventually, the law broke up AT&T.;
The result has been nothing short of competitive glory. Since 1984, long-distance charges have fallen 40% and use has soared as customers attracted by a variety of special rates are calling across the country and around the world.
Moreover, the new AT&T;, despite stumbles in the computer business, has improved. Its profitability and stock price have doubled since the breakup--not counting last year, when write-offs of old equipment distorted results. AT&T; is now a company on the cutting edge in the United States and overseas.
By contrast, the monopoly Bell companies have vegetated. Profit growth has been meager; one company, Nynex, has suffered from decline. Stock prices, after rising in the 1980s, have lagged in recent years as if the Baby Bells’ many investors smelled trouble.
The companies themselves are acting strangely. Pacific Telesis announced in April that it is considering breaking into two companies. At the end of May, Ameritech ousted four top executives in a massive shake-up. Centel, an independent phone company, just sold out to Sprint--reckoning perhaps that a small company needs help in the new era.
Cable giants Tele-Communications Inc. and Time Warner are eyeing the local telephone business. TCI is now half owner and driving force behind Teleport Communications, a small company skimming off business customers from the phone monopolies.
What lies ahead undoubtedly is gradual deregulation of local telecommunications, with customers benefiting from lower rates and added services--and industry benefiting from lots of competition. “Local telephone service is a very attractive business for those with imagination,” observed A. Michael Noll, a professor of communications at USC.
The increasing intermingling of computing with video and communications will make the business more attractive--and lead ultimately to growth in jobs.
The WEFA study was thoughtful enough to recognize that computerized advances eliminate some jobs even as they make more. Think of people in South Dakota working at home terminals to keep records for Citibank’s credit card operations. Less office space and fewer desks are required, but more home office amenities are needed--and more phone lines.
Some things we can readily foresee--opportunities for life-long instruction and learning in universities without walls.
Most advances, though, are not predictable. The spread of fax transmission was so unpredictable that AT&T; let the business go to the local companies at the breakup, and the locals never pushed it.
But customers, working mostly with Japanese fax machines, have turned it into a phenomenon of quickened information flow and economic activity. The U.S. Postal Service and Federal Express do less business, but many people and companies do more.
It’s a pretty good example of how information creates business--and jobs.
