The relatively new wireless data services are also now starting to improve U.S. productivity. In 2004, we estimate that these productivity gains were worth in excess of $8 billion. To put this savings in context, the nascent wireless data segment is roughly as large as the entire economy of the country of Bahrain, one of the oil producing countries in the Persian Gulf.

Wireless Generates U.S. Employment
A significant indicator of the growth of the industry and the positive impact it is having on the United States’ economy is the number of U.S. jobs now dependent on wireless telecom. The industry is a major generator of employment in the U.S., as we estimate that 3.6 million jobs in the U.S. are dependent on the industry. 534,000 jobs are generated by direct employment in the industry; firms which provide support services to the industry employ a further 1,344,000 staff; and the
industry generates a further 527,000 jobs indirectly.

Finally, we needed to take account of the multiplier effect, which induces further
employment. The 2,405,000 U.S. jobs that depend either directly or indirectly on the U.S. wireless telecom services industry generate expenditure in the economy, which, in turn, creates other jobs. For example, employees of wireless carriers spend money on restaurants, vacations, clothing, food, etc., and generate additional jobs as a result. Applying a conservative multiplier of 1.5 increases the number of jobs dependent on the U.S. wireless services industry from 2,405,000 to a total of 3,608,000. This figure is estimated to increase to by an additional
two to three million by 2015.

Wireless Contributions to Public Spending
The industry and its employees are also a major contributor to government revenue, wireless telecom companies and their workers paid $63 billion2 to federal, state, and local government in 2004 in the form of various taxes and other fees.

We estimate that directly or indirectly, 3.6 million jobs were dependent on the U.S. wireless services industry at the end of 2004 with an average wage of $33,400 per annum. The average worker paid 7.5 percent in social security payments and 13.8 percent in income tax; employers, in addition to paying employees, paid 7.5 percent of their wages in social security payments to the Government. Furthermore, on average, end-users paid federal, state and local sales taxes, fees and surcharges of 14 percent on $104.4 billion in wireless service sales and on average, end-users paid sales tax of 6.9 percent on handset equipment sales of $12.3 billion. In addition, wireless carriers paid 2.5 percent of their interstate telecom service revenues into federal Universal Service Funds, representing 33 percent of the total contributions to federal universal service funds.

Ovum and Indepen analyzed the impact that the United States wireless telecom industry had on the U.S. economy in 2004 and the projected impact it will have over the next 10 years. The following is a summary of that report, which is based largely on publicly available data concerning wireless carriers, wireless handset and equipment manufacturers and the overall wireless telecom industry, as well as on Ovum’s own independent analysis and research.

 

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