Unemployment and fear of fiber

In October 1955, a Congressional committee having the windy name, Subcommittee on Economic Stabilization of the Joint Committee on the Economic Report, held hearings on a subject called "Automation and Technological Change," featuring a host of labor and business leaders. The recent layoffs in the telecommunications industry make the report worth reading. The president of the Communications Workers of America (CWA) told Congress, "What does it really matter if it takes 30 seconds instead of only 15 to complete most long-distance calls if we gain this speed at the price of unemployment...we [are] disconcerted by popular use of the telephone industry as an example of how automation all by itself has the happy result of increasing employment."

The CWA's president, Joseph Bierne, was expressing American labor's fear that technology causes job loss. The "anti-progress" comment prompted questions from Sen. Ralph Flanders of Vermont: "Are you not making a plea for abandoning...mechanization...you are not opposing these improvements?" Bierne's reply was prophetic: "No sir, we are not. We welcome technological improvements. We think they will make a better life [but]...we say timing the introduction of [new technology]...is important...[U]nless automation is accompanied by literally fabulous increases in utilization...it must of necessity result in job displacement...[T]he only way employment opportunities can be maintained...in the Bell System...is to have tremendous increases in telephone service...[W]e think it unlikely that the kind of increases which have taken place in the last decade [will continue]."

Telecom management agreed with Bierne on the need for investment to be matched by service growth but disagreed that service growth would decline. Michigan Bell's president, Clifton Phalen, told Congress: "[T]echnological progress...has increased the variety of services we offer. As of today, there are more than 400 separate services available to customers...picture transmission service...school-to-home services for convalescing children...automatic answering devices...hands-free telephone...[T]echnological improvements will come with ample time for adjustment and retraining of workers."

Bierne proved to be more accurate than Phalen, given that 500,000 people have recently lost jobs in the telecom sector. Employment is still the CWA's top issue. The union says it supports national telecom policies that "promote the growth of good-paying, high-skilled union jobs." Such jobs are dwindling, just as Bierne predicted, and thanks to fiber optics, today's long-distance call is set up in milliseconds instead of the 15 sec that Bierne imagined. But a federal official unfamiliar with American labor and in office because of working in the law firm of Richard Wiley, the FCC chairman in the first Bush Administration, suggests the unemployed have fiber to thank for their plight.

Nancy J. Victory, head of the National Telecommunications and Information Administration, gave a speech in October focusing on misdeeds of long-distance carriers instead of the culpability of the carriers in her audience. Speaking to the United States Telecom Association, the chief trade association for local phone companies, Victory said, "The excesses and misdeeds are startling and unacceptable. They have caused a perfect storm of contracted demand, capacity glut....WorldCom substantially added to these woes with the largest bankruptcy in history"— capacity being a clear reference to fiber because it has been paired with "glut" in hundreds of news stories this year. Victory's remedy? "We must remove barriers to broadband deployment at all levels of government," meaning deregulate the incumbent phone companies.

The union supports incumbents in their battles with the FCC and competitors, because the incumbents—compared to companies such as Sprint, WorldCom, and the cable industry—are unionized and maintain stable working relationships with the CWA, which has sponsored a steady flow of policy papers supporting the incumbents. "Prospects for Employment in Competitive Local Telephone Markets," published in 1997, repeated the incumbents' criticism of the FCC: "[A]llow[ing] competitors to obtain access to network facilities and services at prices set below the actual cost...of the incumbent...[will] thwart the goals of new jobs and the advancement of telecommunications services."

The most recent study, "Putting Broadband on High Speed," published in August, advocates the reversal of federal policy that may limit the spread of DSL technology and accepts at face value several so-called "studies" with rosy claims: 250,000 jobs to build the DSL networks, one million additional jobs created by the network, all the jobs paying 85% more than the average wage in the country. The study says, "[F]or DSL speeds to improve, telephone companies need to extend fiber closer to customers." The union wants fiber deeper in the loop so DSL can work but does not advocate taking fiber all the way home—a poor policy.

Assuming Bierne was correct—that telecom employment is created by the expansion of services rather than network investment, per se—an open-access fiber-to-the-home network is surely the best platform for employment and service growth. For the union to support a national construction effort by 250,000 skilled, well-paid workers to push fiber deeper into the loop and then limit employment and service growth by capping fiber with DSL is genuinely self-defeating for the union and the nation.

"Automation and Technological Change" was an intelligent and courteous discourse between labor, management, and Congress nearly 50 years ago, a rare event in today's public affairs. So management should be given its due. Back then, Phalen told Congress that fiber and "broadband" were coming, but he did not use those terms: "Another new development is the hollow-tube wave guide. Unlike wires and coaxial cables, these tubes possess the unique property of diminishing transmission losses as frequencies rise, thus permitting use of...higher and...wider range of frequencies...[O]ne day, a single one...will carry simultaneously tens of thousands of cross-country telephone conversations as well as hundreds of television channels."

Almost 50 years have passed and the "new development" is still not in the local loop. Do we have to wait another 50 years?

Stephen N. Brown writes on public policy in telecommunications. He can be reached by e-mail at policywork@aol.com or telephone: 615-399-1239.

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