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Requiem for New Jersey's telecom glory days
Sunday, April 09, 2006
BY TOM JOHNSON
Star-Ledger Staff
Not too long ago, the telecom munications sector was a driver for New Jersey's economy. Industry behemoths such as AT&T and Lu cent Technologies provided tens of thousands of high-paying jobs to talented professionals. And many of these professionals were wooed away by potentially more lucrative work at startups scattered around the state's leafy suburbs.
But that was all before the meltdown of the sector in 2000.
Now, the pending acquisition of Lucent by French telecom-equip ment maker Alcatel puts an excla mation point to a telecom saga: the steady erosion of well-paying jobs as consolidation sweeps through the sector.
The expected $13.4 billion merger, coming on the heels of last year's acquisition of AT&T by SBC Communications, means more lost jobs in a sector pummeled by layoffs and firings over the past 10 years. Lucent and Alcatel said 8,880 jobs will be eliminated as a result of their deal.
It is unlikely any of the few remaining players will fill the void, analysts and economists say.
"There never was a better economic engine than AT&T," said James Hughes, dean of the Blous tein School of Planning and Public Policy at Rutgers University. "It brought wealth into the state." In AT&T's heyday as a long-distance carrier, 97 percent of its revenue came from out of state, he noted.
To be sure, some telecoms are weathering the downturn.
Vonage, the Internet phone company based in Holmdel, is continuing to grow even while posting more than $300 million in losses since 2002.
Newark-based IDT, which has carved a niche selling prepaid calling cards and Internet phone service, is seeking to diversify by branching out into the entertain ment business.
And Lucent spinoff Avaya has righted itself after going through its own round of job cuts. It looks to capitalize on the growing migration to Internet phone service.
All of which is positive, Hughes said, but those developments -- and even the move of Verizon Communications into AT&T's massive corporate stronghold in Basking Ridge -- aren't enough to compen sate for the jobs lost in the downturn.
Consider this: It took the state's manufacturing sector 32 years to halve its work force, going from a peak of 900,000 in 1970 to 450,000 in 2004. The state's wired telecommu nications sector collapsed in only nine years, from a high of 50,000 workers in 1995 to 25,000 in 2004.
Furthermore, New Jersey hasn't benefited from the shift from wired to wireless communications, Hughes said. In 1990, 4.2 percent of the state's work force was employed by wireless companies. Two years ago, that number dropped to 2.8 percent.
New Jersey was the 20th century's pre-eminent provider of telecommunications infrastructure for the nation, but "clearly the future of telecommunications is not going to be written in New Jersey," said Robert Rosenberg, president of the Insight Research, a technology research firm based in Boonton.
"It is going to move to where in novative software is developed and optical-chip-making takes place. It won't ever come back to what it once was."
Michael Noll, a communications professor at the University of Southern California, worked at Basking Ridge in the 1970s. He blames the collapse of the sector partly on the erosion of investment in industrial research. In the days when companies such as AT&T, DuPont and Kodak were monopolies or near-monopolies in their sec tors, they had the wisdom as well as the wherewithal to invest in such research, Noll said.
With today's focus on the short- term bottom line, that just is no longer viable, Noll said. "Industrial research is a relic of the past," he said.
Former Lucent employee Tom Lauria, an analyst for Avtera Management, said the latest merger may result in more changes at Bell Labs, birthplace of the transistor, solar cell and fiber optics.
"It's sad, because we had extremely talented people and these facilities are much less than what they once were," Lauria said. "Long term, we will lose that edge."
It is difficult to gauge where the latest round of job cuts will fall in the two companies, he said, be cause there are duplicative functions on both sides of the Atlantic. The Lucent work force may be somewhat spared because the new company will need to keep some corporate functions in the United States.
Requiem for New Jersey's telecom glory days
Sunday, April 09, 2006
BY TOM JOHNSON
Star-Ledger Staff
Not too long ago, the telecom munications sector was a driver for New Jersey's economy. Industry behemoths such as AT&T and Lu cent Technologies provided tens of thousands of high-paying jobs to talented professionals. And many of these professionals were wooed away by potentially more lucrative work at startups scattered around the state's leafy suburbs.
But that was all before the meltdown of the sector in 2000.
Now, the pending acquisition of Lucent by French telecom-equip ment maker Alcatel puts an excla mation point to a telecom saga: the steady erosion of well-paying jobs as consolidation sweeps through the sector.
The expected $13.4 billion merger, coming on the heels of last year's acquisition of AT&T by SBC Communications, means more lost jobs in a sector pummeled by layoffs and firings over the past 10 years. Lucent and Alcatel said 8,880 jobs will be eliminated as a result of their deal.
It is unlikely any of the few remaining players will fill the void, analysts and economists say.
"There never was a better economic engine than AT&T," said James Hughes, dean of the Blous tein School of Planning and Public Policy at Rutgers University. "It brought wealth into the state." In AT&T's heyday as a long-distance carrier, 97 percent of its revenue came from out of state, he noted.
To be sure, some telecoms are weathering the downturn.
Vonage, the Internet phone company based in Holmdel, is continuing to grow even while posting more than $300 million in losses since 2002.
Newark-based IDT, which has carved a niche selling prepaid calling cards and Internet phone service, is seeking to diversify by branching out into the entertain ment business.
And Lucent spinoff Avaya has righted itself after going through its own round of job cuts. It looks to capitalize on the growing migration to Internet phone service.
All of which is positive, Hughes said, but those developments -- and even the move of Verizon Communications into AT&T's massive corporate stronghold in Basking Ridge -- aren't enough to compen sate for the jobs lost in the downturn.
Consider this: It took the state's manufacturing sector 32 years to halve its work force, going from a peak of 900,000 in 1970 to 450,000 in 2004. The state's wired telecommu nications sector collapsed in only nine years, from a high of 50,000 workers in 1995 to 25,000 in 2004.
Furthermore, New Jersey hasn't benefited from the shift from wired to wireless communications, Hughes said. In 1990, 4.2 percent of the state's work force was employed by wireless companies. Two years ago, that number dropped to 2.8 percent.
New Jersey was the 20th century's pre-eminent provider of telecommunications infrastructure for the nation, but "clearly the future of telecommunications is not going to be written in New Jersey," said Robert Rosenberg, president of the Insight Research, a technology research firm based in Boonton.
"It is going to move to where in novative software is developed and optical-chip-making takes place. It won't ever come back to what it once was."
Michael Noll, a communications professor at the University of Southern California, worked at Basking Ridge in the 1970s. He blames the collapse of the sector partly on the erosion of investment in industrial research. In the days when companies such as AT&T, DuPont and Kodak were monopolies or near-monopolies in their sec tors, they had the wisdom as well as the wherewithal to invest in such research, Noll said.
With today's focus on the short- term bottom line, that just is no longer viable, Noll said. "Industrial research is a relic of the past," he said.
Former Lucent employee Tom Lauria, an analyst for Avtera Management, said the latest merger may result in more changes at Bell Labs, birthplace of the transistor, solar cell and fiber optics.
"It's sad, because we had extremely talented people and these facilities are much less than what they once were," Lauria said. "Long term, we will lose that edge."
It is difficult to gauge where the latest round of job cuts will fall in the two companies, he said, be cause there are duplicative functions on both sides of the Atlantic. The Lucent work force may be somewhat spared because the new company will need to keep some corporate functions in the United States.
posted by Jones Lang LaSalle NJ News Blog at 3:47 PM
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