Technology and Telecom Jobs

PoleIn case you haven’t noticed, the big companies in the industry are cutting a lot of jobs – maybe the biggest job cuts ever in the industry. These cuts are due to a variety of reasons, but technology change is a big contributor.

There have been a number of announced staff cuts by the big telecom vendors. Cisco recently announced it would cut back as many as 5,500 jobs, or about 7% of its global workforce. Cisco’s job cuts are mostly due to the Open Compute Project where the big data center owners like Facebook, Amazon, Google, Microsoft and others have turned to a model of developing and directly manufacturing their own routers and switches and data center gear. Cloud data services are meanwhile wiping out the need for corporate data centers as companies are moving most of their computing processes to the much more efficient cloud. Even customers that are still buying Cisco boxes are cutting back since the technology now provides a huge increase of capacity over older technology and they need fewer routers and switches.

Ericsson has laid off around 3,000 employees due to falling business. The biggest culprit for them is SDNs (Software Defined Networks). Most of the layoffs are related to cell site electronics. The big cellular companies are actively converting their cell sites to centralized control with the brains in the core. This will enable these companies to make one change and have it instantly implemented in tens of thousands of cell sites. Today that process requires upgrading the brains at each cell site and also involves a horde of technicians to travel to and update each site.

Nokia plans to layoff at least 3,000 employees and maybe more. Part of these layoffs are due to final integration with the purchase of Alcatel-Lucent, but the layoffs also have to do with the technology changes that are affecting every vendor.

Cuts at operating carriers are likely to be a lot larger. A recent article published in the New York Times reported that internal projections from inside AT&T had the company planning to eliminate as many as 30% of their jobs over the next few years, which would be 80,000 people and the biggest telco layoff ever. The company has never officially mentioned a number but top AT&T officials have been warning all year that many of the job functions at the company are going to disappear and that only nimble employees willing to retrain have any hope of retaining a long-term job.

AT&T will be shedding jobs for several reasons. One is the big reduction is technicians needed to upgrade cell sites. But an even bigger reason is the company’s plans to decommission and walk away from huge amounts of its copper network. There is no way to know if the 80,000 number is valid, but even a reduction half that size would be gigantic.

And vendor and carrier cuts are only a small piece of the cuts that are going to be seen across the industry. Consider some of the following trends:

  • Corporate IT staffs are downsizing quickly from the move of computer functions to the cloud. There have been huge number of technicians with Cisco certifications, for example, that are finding themselves out of work as their companies eliminate the data centers at their companies.
  • On the flip side of that, huge data centers are being built to take over these same IT functions with only a tiny handful of technicians. I’ve seen reports where cities and counties gave big tax breaks to data centers because they expected them to bring jobs, but instead a lot of huge data centers are operating with fewer than ten employees.
  • In addition to employees there are fleets full of contractor technicians that do things like updating cell sites and these opportunities are going to dry up over the next few years. There will always be opportunities for technicians brave enough to climb cell towers, but that is not a giant work demand.

It looks like over the next few years that there are going to be a whole lot of unemployed technicians. Technology companies have always been cyclical and it’s never been unusual for engineers and technicians to have worked for a number of different vendors or carriers during a career, yet mostly in the past when there was a downsizing in one part of the industry the slack was picked up somewhere else. But we might be looking at a permanent downsizing this time. Once SDN networks are in place the jobs for those networks are not coming back. Once most IT functions are in the cloud those jobs aren’t coming back. And once the rural copper networks are replaced with 5G cellular those jobs aren’t coming back.

Decommissioning Copper Lines

FCC_New_LogoThe FCC just released new rules in WC Docket 13-3 having to do with the decommissioning of copper lines. These rules apply to all regulated LECS, not just to the large RBOCs. The order also declared that the large telcos are no longer considered dominant carriers.

These rules are needed because AT&T and Verizon have been pestering the commission for five years to let them tear down copper lines. What has always surprised me about this Order is that it has been included in the docket looking at the transition of the PSTN from TDM technology to Ethernet. Decommissioning copper has nothing to do with that topic since copper lines for customers would function the same as today even with an all-IP network between carriers. But the two big telcos flooded this docket with the end-user network issues until the FCC finally caved and included the topic.

The order establishes rules that carriers must follow if they want to automatically decommission copper. A carrier must file a plan with the FCC that guarantees that:

  • Network performance, reliability and coverage is substantially unchanged for customers.
  • Access to 911 and access for people with disabilities must still both meet current rules and standards.
  • There must be guaranteed compatibility with an FCC list of legacy services that include such things as fire alarms, fax machines, medical monitors, and other devices that might not work on an IP network.

If a carrier can meet all of these requirements then they can file plans for each proposed copper retirement with the FCC. The company then needs to go through a specific notification process with customers.

While the FCC was not quite as explicit with a rule, they also expects that any replacement service to copper remain affordable for customers.

If a telco can’t meet any one of the many requirements, then they have to file with the FCC and go through a formal review process to see if the retirement will be approved. The FCC is making it clear that there will be no guaranteed timeline for the manual process.

The main regulatory impact of the rules is that now all telcos have to go through a formal process before tearing down copper. There have been, in the past, many examples of telcos taking down copper with no notification to customers or to regulators. Small telcos that have been installing fiber to customers must take notice of these rules since they now apply to them as well. These rules also means that a small telco can’t force a customer onto a fiber connection until they have gone through the FCC process.

There is still a lot of concern in rural areas that copper landlines will be taken down with only cellular service offered as the alternative. That may still happen under this process, but it’s likely that those sorts of situations will require the more detailed FCC review process and won’t be allowed automatically.

The dominant carrier issue is interesting. The FCC notes that in some markets traditional copper landlines have dropped nearly to single digit penetration rates. By ending the dominant carrier requirement for the large telcos, the FCC has lowered the regulatory burden on the large companies. For issues like 214 compliance they are now considered the same as smaller telcos. Any FCC rules that were different for dominant versus non-dominant carriers now default to the non-dominant rules. But this ruling does not end any rules that were determined by the difference between price cap and rate-of-return carriers. Those rules remain in place.