TELECOM Digest OnLine - Sorted: Telecom Mergers as a Window on Job Market

Telecom Mergers as a Window on Job Market

Lisa Minter (
Thu, 17 Feb 2005 12:51:52 -0500

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Byline: Ron Scherer Staff writer of The Christian Science Monitor

(NEW YORK) Four years ago, the telecom industry had the dubious
distinction of leading the nation in layoffs. Now, it looks as if the
industry, in the midst of a major consolidation, could be one of the
top job cutters again.

But this time, employment specialists don't think the job prospects
for all those supervisors, engineers, accountants, and personnel
specialists will be as bleak. Unlike 2001, those out of work won't be
fighting for jobs with unemployed dotcomers. The layoffs also come at
a time when the economy is growing, not in recession. And online
bulletin boards report they have job postings for people in the

In fact, the experience of laid-off telecomers could be a sign of the
resurgence of the job market -- something predicted for 2005.

"It is a much more sanguine time," says John Challenger of Challenger,
Gray & Christmas, a Chicago outplacement firm. "Hopefully, people
coming out of telecom with basic business skills will find them
transferable from industry to industry."

Initially, a considerable number of resumes will be circulating from
telecom employees. SBC Communications, which is acquiring AT&T, says
it expects to cut about 13,000 jobs on top of another 12,000 that will
be eliminated before the merger is finalized. The Verizon-MCI marriage
could put 7,000 people on the unemployment line. And the Sprint-Nextel
merger could put yet thousands more out of work, although no
announcements have been made yet.

Ripple effects

As the newly acquired companies settle in, there could be a ripple
effect for their suppliers, law firms, and accountants. The mergers
could also force smaller companies to combine, says Raul Martynek, CEO
of Eureka Networks, a New York-based communications company. "It's the
only way to survive in this new reality," he says.

Eureka, in fact, is an example of the shifting dynamics in the
industry. Five years ago, the company emphasized growth. Today, says
Mr. Martynek, the business model is predicated on efficiency. For
example, in 2000, his company had 700 employees. After 9/11 and the
telecom implosion, the company downsized to 75 employees - its size

"We're doing four times the revenue we did in those days," says
Martynek, who has been acquiring companies himself. "There will be
more synergies but also more cuts."

Few layoffs will come from the blue-collar side of the companies
because these trades are highly unionized. "It's tough to lay them
off," says Martynek.

Instead, most of the cuts are expected to be on the white-collar side.
SBC has already said it would have 5,100 excess managers. An
additional 5,100 will be cut from sales and other parts of customer
support. Yet more layoffs are likely in human resources, regulatory,
and lobbying operations.

Verizon said recently its staff reductions would focus on networking,
legal, sales, and IT departments.

Executives who are running job bulletin boards are somewhat optimistic
that those looking for work will find them., a bulletin
board for former military personnel, has posted 227 telecom jobs. "A
lot of telecom skills are transferable in administration, human
resources, marketing, and sales," says Ted Daywalt, CEO of the
Atlanta-based organization. However, he adds, "it may take a 30 to 40
percent pay cut to remain employed."

Opportunities within

There may also be new opportunities within the merged companies
themselves. Paul Kowal, a customer-service consultant in Cambridge,
Mass., says the combined behemoths will need more people helping other
people. "The customers will have as many questions and issues as they
used to, so if you double your subscriber base, you need to double
your customer service to reduce churn," or people moving to other
companies for better service.

In addition, SBC and other telecoms are developing plans to offer
cable service to their huge subscriber base. For the most part, they
haven't hired staff yet.

"If you start to add cable service and other broadband packages, there
is an opportunity to sell and a need to maintain the service," says
Mr. Kowal, who is president of Kowal & Associates.

The phone companies are also expanding their services to include
streaming video on cellphones. News organizations, such as ABC News,
are trying to sell subscriptions to 24-hour news programming in this
format. And during the Super Bowl, for example, some cellphone
subscribers could receive video updates of the game. Moreover, new
cars are becoming equipped with telecommunications devices that allow
passengers to watch movies and play games.

"Companies will have to gear up, and it results in more
opportunities," says Kowal.

Some of the companies, such as Verizon, are still installing
fiber-optic cable to individual homes. There are reports the company
will be hiring up to 5,000 people to help it market and maintain this

"There are pockets in telecom that will be hiring," says Martynek. One
of those areas is likely to be new ways to use electronic devices in
homes. More appliances, such as ovens, will be controlled remotely,
perhaps through a cellphone. "They are already testing the appliances
where it will keep the food cold until a certain time and then start
to warm it," says Kowal. "But you will also be able to move the
cooking time up or down remotely."

This future market is called "device control." With the fiber-optic
cable going to a home, Kowal speculates, it could mean the phone
company could get into the home-protection business, again competing
with cable companies.

(c) Copyright 2005 The Christian Science Monitor. All rights reserved.

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