The Positive Effects of Competition on Employment in the Telecommunications Industry

Abstract

Government data on employment in the telecommunications industry reveals a substantial increase in sector employment following passage of the Telecommunications Act of 1996. This increase in employment reversed the declining jobs trend prior to the Act. Econometric analysis indicates that competitors are the primary source of job growth in wireline communications. While employment has declined in the wake of a recession, the collapse of the internet bubble, and the near complete demise of the competitive telecoms segment, the residual competition resulting from the 1996 Act, based primary on unbundled elements, has allowed current employment levels in the wireline telecoms sector to remain 17% above historical trend, presently adding about 92,000 jobs to the wireline telecommunications segment of the industry. Because the Federal Communications Commission's recent Triennial Review Order raises substantial entry barriers in the form of fixed regulatory expenses and increased risk, one also can expect that employment in the telecommunications industry will decline as entry slows and the potential for exit rises.