Marek’s Take: The telecom industry needs more qualified workers

Many companies that build and repair wireless infrastructure are experiencing worker shortages and increased pricing pressures.(Image by MaxwellFury from Pixabay)
Marek's take

Much ado is being made about how 5G networks will deliver greater bandwidth, faster download speeds and lower latency and what 5G will mean for consumers and enterprises in terms of great new applications and services. But it really doesn’t matter how much better 5G networks are if the industry can’t find enough workers to build the networks and sell the services.

Verizon, AT&T and T-Mobile have been aggressively pursuing their 5G deployments and launching new markets at a fairly quick pace. But aside from the bluster presented by the big operator executives during earnings calls and investor meetings, there are growing signs of pressure on the telecom workforce.

On one hand, wireless operators are reducing head counts so they can cut costs. But on the other hand, they are desperately trying to hire in areas where they lack expertise. In fact, in nearly every survey I’ve read about what wireless operators are most concerned about in the future, the No. 1 issue is always the lack of skilled workers in areas such as cloud computing and networking.  

But finding qualified workers is an issue for every part of the wireless industry, whether it’s network engineers, wireless technicians, tower climbers or retail sales clerks.

Perhaps some of what we are seeing is a result of wireless operator cost-cutting measures. In 2018 Verizon embarked on a restructuring plan by offering more than 10,000 employees severance packages if they voluntarily left the company. The goal was to slash about $10 billion in operational costs in preparation for its 5G rollout. AT&T had a similar initiative last year that was intended to lower its costs by $6 billion. That plan included reducing headcount.

T-Mobile, however, appears to be on a different path. The company, which laid off a number of Sprint workers after it acquired the company last year, has said it plans to create 5,000 new jobs in small towns as part of its “Hometown America” initiative. That plan also includes retail expansion and adding new stores in smaller cities and towns.

T-Mobile’s addition of workers, particularly retail workers, comes as other operators are shuttering stores. According to the Communications Workers of America union, AT&T closed 320 company-owned stores in November and December 2020. That is on top of 250 stores the company closed earlier in the year.

Verizon also is re-examining its retail business and reducing headcount. However, it’s unclear how many people are actually impacted by this process. A search of job openings in retail wireless in the Denver metro area produced hundreds of available positions from all three operators that need to be filled.

According to Jeff Moore, principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid and smartphone competition, staffing problems are a common issue among wireless retail stores. Moore added that while operators saw more online transactions during the pandemic, it’s too soon to know whether that trend will continue now that things are returning to normal.

Workforce fissuring

An October 2020 report from the Economic Policy Institute (EPI) says that the telecom workforce is suffering from a lack of wage growth, which comes from what the EPI calls “fissuring.” This is where firms shed workers and then hire subcontractors to do that work instead of their own staff. The result is that the work is usually filtered to multiple layers of subcontractors and then the large firms (in this case, the wireless operators) put the squeeze on the subcontractors to reduce their costs.

This is exactly the situation that many members of NATE, which is an association that represents communications infrastructure contractors, find is happening to them. According to Todd Schlekeway, executive director at NATE, NATE members are experiencing worker shortages and increased pricing pressures.

Schlekeway said his members’ customers, which include wireless operators, tower owners and subcontractors, are putting pressure on NATE members to reduce their fees. “There is downward pricing from the customers. Some just say take it or leave it,” Schlekeway said. And not only are they inflexible on what they will pay for the services, but they are also taking longer to pay. For example, Schlekeway said that payment terms used to be 30 days but now his members are seeing payment terms of 90 days or more. “When you are running a small business, that is hard for your cash flow,” he said.

To find more workers, Schlekeway said that NATE is working with technical colleges and community colleges to train people for these types of trades. But he noted that even with the help of these institutions, it won’t solve the problem overnight.

U.S. operators want to expand the geographical coverage for their 5G networks but without skilled workers, and better pay for those workers, it seems like these expansion goals could be hindered. Perhaps it’s time for the industry to focus on finding and training skilled workers who can build and sell 5G services rather than just continuing to talk about the wonders of this next-generation of wireless.