Connecting MASSACHUSETTS: Cable’S Impact on the State’S Economy

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Connecting MASSACHUSETTS: Cable’S Impact on the State’S Economy • 1 • CONNECTING MASSACHUSETTS: Cable’s Impact on the State’s Economy New England Cable & NECTA Telecommunications Association, Inc. This report was prepared by the University of Massachusetts Donahue Institute, the public service, outreach and economic development unit of the University of Massachusetts Office of the President. Published September 2011 The New England Cable & Telecommunications PARTICIPATING NECTA MEMBER COMPANIES: Association, Inc. (NECTA) is a six-state regional trade association representing cable telecommunications companies in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. NECTA retained the UMass Donahue Institute to conduct Bee Line Cable research, document the nature and scale of NECTA companies in each of the six New England states and analyze the contributions generated by its firms. NECTA represents the vast majority of cable companies in New England but is not representative of the entire industry. For this report, data were collected from various secondary sources as well as major NECTA member companies. Major NECTA OTHER NECTA MEMBERS: member cable companies operating in Massachusetts Lincolnville Communications (Maine) include Charter Communications, Comcast and Time MetroCast Communications Warner Cable. NEPSK Inc./Polaris Cable Services (Maine) Ski Sat (New Hampshire) TDS Telecom (New Hampshire) Trans Video, Inc. (Vermont) Waitsfield Cable (Vermont) White Mountain Cablevision (New Hampshire) • 2 • CONNECTING massachusETTS: CABLe’S IMPacT ON THE STATe’S ECONOMY SUMMARY OF KEY FINDINGS assachusetts’ cable companies Bolstering the regional economy contribute significantly to the state Meconomy and to local communities. • During a period when the overall economy In 2010, cable’s capital investment in network slowed, the state’s major cable companies infrastructure and operating and payroll expenses grew employment by more than 30 percent, from resulted in a total contribution of $3.46 billion 3,763 employees in 2006 to nearly 5,000 in 2010. in economic activity across the state. Further, During this same period, Massachusetts’ overall between 2006 and 2010, when the state’s overall employment decreased by 1.8 percent, and the economy slowed, Massachusetts’ major cable nation’s employment declined by 4.6 percent. companies added employees. Strong capital Change in Total Employment, 2006–2010 investments, growth in consumer demand for broadband, as well as diversified and emergent 35% cable products and services have enabled 30% this expansion. Finally, Massachusetts’ cable 25% companies also impact the communities they serve 20% through philanthropic initiatives and by donating 32.2% services to thousands of community institutions. 15% 10% Building the foundation for economic growth 5% • Massachusetts’ cable companies are significant 0% –1.8% –4.6% broadband providers within the state, contrib- –5% uting more than 60 percent of all wired high- –10% speed lines. MA U.S. Major Cable Companies in MA • Since 2005, high-speed cable broadband lines in Source: United States Department of Labor, Bureau of Labor Statistics, Massachusetts have increased over 51 percent, Current Employment Statistics & Massachusetts Executive Office of Labor from 886,000 to 1.3 million in 2010. and Workforce Development; data collected from major NECTA firms • From 2006 to 2010, Massachusetts’ major cable • Along with their own employment, major companies spent more than $1.66 billion on Massachusetts cable companies support more capital improvements, $300.3 million in 2010 than 13,700 jobs, including almost 8,700 positions alone, including investments in the network, in other industries throughout the state. head ends, customer premise equipment and vehicles. As of 2010, these investments helped support and create nearly 40,000 miles of broadband plant and almost 9,000 fiber strand miles across Massachusetts. • 3 • • In 2010, spending by Massachusetts’ major Total Economic Contributions of Major Cable cable companies and their employees generated Companies in Massachusetts, 2010 $3.46 billion in economic activity across the state. Direct spending by major cable companies Direct Additional Indirect Total Economic (capital investment, operations and employee Spending Contributions Contributions compensation) accounted for $1.81 billion of that total, and that direct spending catalyzed $1.81B $1.65B $3.46B an additional $1.65 billion in spending by other Source: Data collected from major NECTA firms, calculations by UMDI; MIG, industries throughout the commonwealth. Inc., IMPLAN System • Along with spending within the telecommunica- tions industry, Massachusetts’ major cable companies support a variety of important regional industry sectors, including cable programming; advertising and related services; and professional, scientific and technical services. • In 2010, Massachusetts’ major cable companies contributed $71.9 million in state and local taxes and $63.3 million in franchise fees. Supporting local communities • Massachusetts’ major cable companies annually donate cable and broadband services worth $6.2 million to nearly 4,850 schools, libraries, nonprofits, government facilities and other community institutions in their service. • Additionally, in 2010 alone, Massachusetts’ major cable companies contributed more than $7.1 million in cash and other in-kind support to nonprofit organizations in their local communities. • 4 • CONNECTING massachusETTS: CABLe’S IMPacT ON THE STATe’S ECONOMY INTRODUCTION BUILDING THE FOUNDATION FOR Massachusetts’ cable companies provide the ECONOMIC GROWTH foundation for economic growth in an increasingly Massachusetts relies on cable to connect sophisticated economy. Connecting more than 1.8 million residential and business subscribers, Broadband has revolutionized the way people live major cable companies1 in Massachusetts are and work in New England, and cable companies in expanding technologies to provide a diverse range Massachusetts are significant players in providing this of video, data and voice products and services. crucial infrastructure to the commonwealth’s economy. Through investments in an increasingly expansive In response to consumer demand, the number of communications network, cable companies play high-speed Internet lines in Massachusetts (including a major role in growing broadband connectivity cable, DSL, mobile and FTTH) has grown explosively throughout the commonwealth. Major investment over the past decade, with year-over-year growth in the in the communications backbone is accompanied by double digits. In 2009, there were more than 3.2 million ongoing investment in human capital to support the high-speed lines, nearly 40 percent of which were cable. operations of the sector. When considering high-speed lines supplied by strictly wired providers (without mobile), the cable sector Day-to-day operations and capital investment activities makes up 64 percent of the total.2 High-speed cable have a major effect on the Massachusetts economy, broadband lines alone have increased over 51 percent contributing $3.46 billion to the state’s economy in the commonwealth since 2005, from 886,000 to in 2010. In 2010, major cable companies employed 1.3 million in 2010. close to five thousand workers across Massachusetts and, in the last five years, their employment numbers FIGURE 1 grew significantly despite a struggling state and Growth in High-Speed Cable Broadband Lines national economy. While making significant economic in Massachusetts, 2005–2010 contributions, cable companies also provide ongoing 51.1% growth service and charitable contributions to community 1,400,000 institutions, promoting better access to broadband and 1,200,000 other technologies. Through their uniquely extensive and advanced broadband infrastructure, and as 1,000,000 providers of essential communications technologies, 800,000 1,339,000 1,309,000 cable companies in Massachusetts are indeed at the 1,291,000 600,000 cutting edge, driving economic growth throughout 1,136,000 1,044,000 the region. 400,000 886,000 200,000 0 2005 2006 2007 2008 2009 2010 Source: Federal Communications Commission, Internet Access Services Status as of June 30, 2010. Table 22, http://www.fcc.gov/wcb/iatd/comp.html • 5 • Investing in the region’s broadband Cable supports the Massachusetts IT industry infrastructure With more than $1.66 billion in capital spending In response to increasing consumer demand for over the last five years, Massachusetts major cable broadband capacity, the cable sector has been investing companies depend heavily on other information in critical communications infrastructure throughout technology firms within the commonwealth to support the region. From 2006 to 2010, major cable companies the infrastructure so integral to their industry and the in Massachusetts invested more than $1.66 billion in economy. Analysis of capital investment spending capital improvements, $300.3 million in 2010 alone, shows that cable companies also invest heavily in all including investments in the network, head ends, other information technology sectors. Capital spending customer premise equipment and vehicles. Investments is particularly focused on IT firms for communications, accelerated through 2008 and 2009. As of 2010, these computer and plant hardware, and equipment. investments helped to support and create nearly 40,000 Major Massachusetts cable companies also spend miles of broadband plant and more than 9,000 fiber significantly on communications infrastructure firms strand miles across
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