Communications

The United States is the most technologically advanced country in the arena of communications. Presently, there are about 151 million phone lines, 42 million cellular phone users, 10,000 radio broadcast stations, 1,000 television broadcast stations, 10,000 cable television systems, 600 million radios, 200 million televisions sets, 30 ocean fiber-optic cables, and scores of satellite facilities.

Clearly, the communications industry is in state of transition. Emerging technologies, increased demand, and comprehensive regulatory changes have dramatically altered the landscape in which communications companies operate.

In the arena of regulations, the U.S. Telecommunications Reform Act of 1996--the first comprehensive rewrite of the Communications Act of 1934--dramatically changes the ground rules for competition and regulation in virtually all sectors of the communications industry, from local and long-distance telephone services and the Internet, to cable television, radio and television broadcasting to equipment manufacturing. The Telecommunications Act is a watershed event in the development of the U.S. communications industry. For decades, communication policy—including ownership and service restrictions that maintained protected monopolies at both the state and federal levels—has been set largely by the Federal Communications Commission, state public utility commissions (e.g., Washington Utilities and Transportation Commission), and the federal courts’ enforcement of the 1984 antitrust consent decree that dismantled the Bell System. With the Act, Congress has reasserted primacy in setting U.S. communications policy and has set a course that clearly adopts competition as the basic charter for all communications markets.  

Figure 1

Washington Communications Wage & Salary Employment, 1981-1998
Source: Employment Security Department

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Much of the focus has been in the arena of telecommunications. Over a decade ago, most telecommunications firms supplied basic voice services. Today, "voice traffic" accounts for about 80 percent of telecommunications firms’ sales, and voice service revenues are growing by 3 to 5 percent annually. By the year 2000, however, it is projected to make up only 60 percent of revenues, with the remaining 40 percent coming from emerging voice, data, information systems, networking and integration services, mobile communications, advertising services, and interactive services. The demand for high-speed local-access networks driven by the Internet promises to generate the next wave of infrastructure development as well as provide multiple new paths for communication. Such demand for high-speed access to the Internet is also encouraging cable TV companies to offer interactive capabilities rather than simply the traditional one-way broadcasting. Terrestrial and satellite broadcasters are also developing technologies that will allow Internet services to be broadcast over the radio spectrum. With such a backdrop of increased competition, a more mobile work force and customer base, the convergence of telephone, computer and broadcasting technologies, many communications firms are carefully assessing their current operations and services.

An important factor in infrastructure growth is mobile communications like pagers, cellular phones, specialized mobile radio, and wireless data. In 1998, revenues from mobile communications were estimated at $35 billion, a doubling of the market in three years. Cellular phone users alone are estimated at 70 million subscribers with about 8-10 million net additional users projected for each of the next few years.

Current Status

Communications services in Washington include local and long distance telephone, cellular, pager, electronic mail, radio and television broadcasting, and cable TV broadcasting services. Communications consists of seven industries disaggregated to the 4-digit Standard Industrial Classification (SIC) level of detail. In 1998, over 960 communications establishments employed 29,800 workers statewide. Telephone communications represents the largest component of the industry with over two-thirds of the employees. Up until 1994, employment within telecommunications had shown a downward trend, losing more than 3,100 workers. Despite the considerable downsizing by leading telecommunications firms, it is the new network-based activities mobile cellular networks, resale, value-added services, Internet access, and so on—where employment has grown most strongly. Between 1988 and 1998, the average annual growth rate of radio telephone communications (e.g., paging services, cellular telephone services) employment was over 30 percent. In 1998, employment in this rapidly growing sector of radio telephone communications stood at 7,078 workers.

Figure 2

Number of Establishments in Washington Communications, 1981-1998
Source: Washington Employment Security Department

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Figure 3

Telephone, Radio & Telephone Communications Workers, 1988-1998
Source: Employment Security Department

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Figure 4

Average Hourly Wages of Communications Workers, 1997
Source: Employment Security Department

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In general, communications is a high-wage industry. Average covered wages for communications workers was $52,578 in 1998, among the highest in the state. Communications services (not elsewhere classified) workers and radio telephone communications workers were the industry leaders in 1998 covered wages, earning on average $76,616 and $66,800 respectively. Nearly half of all communications workers earn over $20 per hour, compared with the rest of the state where about a quarter of the workers earn more than $20 per hour.

Table 1

Real Average Wages for Washington Covered Communications Workers, 1981-1998 (1998 dollars)
Sources: Washington Employment Security Department,
U.S. Bureau of Economic Analysis

The labor force in the communications sector is dominated by clerical and administrative support workers and operatives and laborers. Common communication occupations within the clerical and administrative support group are customer service representatives, office clerks, and operators. Operatives and laborers group include telephone and cable TV installers, frame wirers, and repairers. Professional and technical occupations—accountants, engineers, reporters, and broadcasters—are also important in communications.

 
Contribution of Communications to the Washington State Economy

Over the past decade, there has been increasing recognition of the importance of access to communication infrastructure and services for enhanced social and economic development. For the nation, the communications sector has grown in proportion to the economy as a whole, despite the expanding use of communications. This apparent discrepancy can be explained by the overall decline in prices. Moreover, many services are now being provided by companies more efficiently outside the traditional communications sector once typified by restrictive competitive regulations.

Table 2

Occupational Profile of Communications Workers in Washington,
1998 and 2008
Source: Employment Security Department

Compared to the nation, the relative importance of communications to the Washington economy is high and generally trending upward. Since 1978, the index of specialization for Washington communications has remained above 1.0 (an index of 1.0 signals the same importance of an industry for Washington as for the U.S.). The index implies that Washington is more specialized than the nation in the delivery of communication services.

Figure 5

Index of Specialization: Washington Communications, 1977-1997
Source: U.S. Bureau of Economic Analysis, Gross State Product Series

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Although most communications establishments in Washington service local markets, a share of services is sold outside to regional and foreign customers. According to a latest Washington State input-output study, communications sold about 11 percent of its total 1987 sales of $2.77 billion to other domestic and foreign markets.

 
Outlook

Communications has under-performed the state economy during the last fifteen years. While total nonfarm employment in the state has grown at an average annual pace of 2.8 percent since 1981, communications employment has remained relatively flat throughout the period.

Overall, emerging technologies, increased competition, and new products reflect a bright outlook for the U.S. communications industry. However, these technological innovations and productivity gains will not translate into robust employment gains.

For the Washington communications sector, the recent judgement by the Washington State Supreme Court allowing new entrants in the local telephone market will probably not translate into employment gains. Deregulation in the communications industry is expected to result in higher operating efficiency and productivity gains, but a decline in employment. Overall employment in communications is expected to increase by 11 percent by 2000, remain relatively flat for the next 10 years, and then drop by 11 percent by 2020.

Figure 6

Washington Communication Wage & Salary Employment Forecast,
2000-2020
Sources: Washington Office of Financial Management,
Washington Employment Security Department

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