Boom and gloom in the global telecommunications industry

Abstract

The combination of telecommunications deregulation, an exponential increase in Internet IP applications, and the popularity of mobile services has created tremendous growth in the telecommunications service industry for the past several years. As a result of unprecedented demand for network infrastructure, telecommunications equipment manufacturers also enjoyed sales and revenue growth—that is, until the economic downturn near the end of 2000. Among telecommunications service providers and equipment manufacturers, swings from prosperity to downturns have been reflected in their respective stock performances. However, the more recent and fairly abrupt slowdown, particularly in capital spending on networking equipment, has resulted in massive corporate restructuring and workforce realignment in the telecommunications industry. In this article, we examine the “business drivers” and “business draggers” that contributed to the telecommunications boom and subsequent downturn. We review lessons learned from the bursting of the bubble among Internet dot.com companies and the decline in the global telecommunications industry. Finally, we discuss recent developments in the telecommunications industry as it prepares for the next wave of opportunities.