The Telecom Mess

from the worse-before-it-gets-better dept

The Economist takes their stab at explaining the current telecom mess, which they point out is really a much bigger bubble than the dot com bubble ever was. They also discuss what’s likely to come next with the Baby Bells and former national monopolies in Europe buying up the pieces and creating new monopolies. They expect things to get worse before they get better – as companies that emerge from bankruptcy with little to no debt will put pressure on other firms that still have too much debt. There’s also a brief discussion as to whether or not deregulation caused this mess – and the conclusion is that it didn’t. While deregulation did create the environment where there were simply too many competitors taking bets that were way too big, it also has led to many new services and lower fees for consumers. The real problem was that investors bet too much money on each bet, and most of those bets have failed.

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