This weekend's Business Week
sums it all up in a special report; "THE TELECOM DEPRESSION-WHEN WILL IT END? Today's
telecom titans are experiencing is a full-blown industrial depression, one that has wiped out half a million
jobs and $2 trillion in U.S. market value. And turmoil in the $2.3 trillion global industry shows few signs
of abating. How long will the bloodletting go on? BusinessWeek spent a month examining the capacity for
each type of telecom service, from long-distance to wireless, and comparing it to worldwide demand. The
results show that capacity continues to dwarf demand. Prices in America and Europe remain under
pressure. Meanwhile, rollouts of new cables promise to extend excess capacity to regions such as Asia
that have been spared much of the pain to date. The upshot is that the crisis could last until at least
2004. In the U.S., traffic at the core of the networks is leaping ahead at 85% a year, with Europe and
Asia at similar paces. Within two years, that should soak up excess capacity of networks in operation,
which are running at 35% of capacity in the U.S. and Europe and at higher rates in Asia. An economic
upturn, expected by the end of 2003, could spell recovery for U.S. telecom carriers six months later.
Europe is expected to follow suit in late 2004. But things could get worse. If the world economy continues
to struggle or if telecom companies fail to lop off capacity and come up with lucrative new data services,
this depression could continue through 2006. Even when recovery arrives, most of the once-robust
telecom players are likely to perform, at best, like stolid, slow-growing utilities through the end of this
decade." |
