AT&T Layoffs Just the Beginning of Telecom Pain

AT&T’s elimination of 12,000 jobs is just the beginning of cutbacks that will radiate throughout the telecom industry, BusinessWeek reports. As pinched consumers cut back on communication spending, job and capital-expenditure reductions will only continue. One surprising statistic shows how consumers are downsizing telecom budgets: The fastest-growing segment of iPhone buyers is people who earn less than $50,000 a year.

Why is that bad for telecoms? Because many of those iPhone buyers are disconnecting their now-redundant landlines and even internet connections. One-fifth of Americans already live without landlines, and decreasing subscription will force telecoms to cut capital expenditure—as much as 34%, by some analysts’ estimates—forcing cutbacks among those who build equipment for the phone firms. (More AT&T stories.)