entrants- excluding AT&T, WorldCom, and the cable television companies- invested $35.8 billion in capital facilities. A conservative estimate total entrants' capital spending over this period would be $55 billion; the en- trants' trade association claims that $75 billion was invested between 1996 and 2003. 74 Even with only a 15 percent capital charge to cover the before- tax cost of capital and depreciation, the annual capital charges required to amortize this cumulative investment would have been in excess of $8 bil- lion.75 Thus the entrants would have incurred at least $8 billion in annual capital charges to generate a net welfare gain of just $0.8 billion in 2002. These calculations ignore the considerable expenditures made by the entrants on marketing and general administration, including executive salaries. According to financial analysts, in 2000 the largest entrants were spending approximately one-half of their revenues on sales, general, and administrative (SG&A) expenses. 76 By comparison, the SG&A expenses of the large incumbent GTE were only 17 percent of revenues in 2000. 77 The high entry costs are understandable since most of the new entrants were still in a start-up phase and had to spend large sums on marketing to shift customers to a service that was little different from what they already had. But these higher costs must also be deducted from any potential gains of the new competition. Indeed, the additional SG&A by itself swamps any conceivable estimate of the net benefit to the economy.78 By 2000 the new entrants were accounting for almost 12 percent of employment in the fixed-wire sector.79 At the same time, they had a much smaller share of industry revenues and added even less to national output Local Competition under the 1996 Act Figure 4-8. Labor Productivity growth in Wired Telecommunications, with and without the CLECs, 1987-2002 Average annual growth rate (percent) Actual fixed-wire Without CLECs 1987-96 1996-2002 Source: Bureau of Labor Statistics and author's calculation. because m