Economist: The Great Telecom Crash
The cover story of the July 20 edition of The Economist is The Great Telecom Crash. It calls the bankruptcy of Worldcom, Global Crossing, 360networks, etc., "ten times bigger than the better-known dotcom crash" and says that "the rise and fall of telecoms may indeed qualify as the largest bubble in history".
We will probably find that the deployment of multiple independent fiberoptic networks by competing companies across North America, Europe, and Asia, will be similar to the initial overbuilding of railroads in the 19th century:
- many early investors will lose/have lost their shirts,
- consolidation will render the competitive marketplace unrecognizable compared to what it has been, and
- it will take a long time for the world to soak up all of the excess network capacity.
Unsurprisingly, The Economist concludes that "The likely winners, it is already clear, are the former 'Baby Bells' in America and the former monopoly incumbents in Europe. Because they own the 'last mile' of the network that runs into homes and offices, these operators have a firm grip on their customers and solid revenues."