For an area that is so integral to our daily lives, the telecommunications industry hasn't been a bedrock of safety for investors -- or workers. Sprint (NYSE:FON) said Monday it's laying off 3% of its workforce, or 2,000 employees, as it attempts to reduce costs and streamline operations. That might not sound like much, but given tepid demand and red-hot competition, the worst may not be over.
Sprint's not the only telecom concern hanging up on workers to control costs. The move follows similar announcements by Verizon (NYSE:VZ), BellSouth (NYSE:BLS), and SBC Communications (NYSE:SBC).
Technology has been changing the demand for traditional telecom for a while. As a result, companies have been bundling services and instituting price wars to get customers signed up. I recently switched long-distance service to Sprint, and my monthly bill has been a mere couple bucks a month -- about the price of a latte.
Why? The lion's share of my coast-to-coast communication is conducted via America Online's (NYSE:TWX) Instant Messenger and email, and many people operate the same way. Special occasions may warrant a call, but in most cases I let my fingers do the talking.
Meanwhile, The Washington Post said Monday that tech-savvy adults under 30 are so enamored of their cell phones that 27% of those surveyed consider ditching landlines altogether. In addition, the study indicated that 21% of overall users -- regardless of age -- were thinking of canceling regular phone service in favor of cells.
It may not be the majority, but it seems a trend destined to continue. Mobility has become as American as frozen apple pie. And after a protracted economic downturn, consumers may look at their household costs and see redundancies, such as the chitchat overlap of cell phone and landline service.
While that may be some degree of good news for cellular providers, we all know that number portability is a big worry regarding cell plans' reception with subscribers.
It is far too early to say that landlocked phone service is about to become as old-school as 8-track tapes, or that cell providers are going to dig themselves in way too deep to vie for subscribers. However, while the market may have cheered Sprint's cost reduction news, it's obvious times in telecom are as tough as ever.
How do you feel about the myriad issues facing the telecom sector? Connect with other Fools on the Telecommunications discussion board.
Alyce Lomax welcomes your feedback at [email protected].
