OECD Economics Department Working Papers
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
After the Telecommunications Bubble
An unprecedented “boom and bust” investment cycle occurred in the high-tech industries at the turn of the century, in particular in the telecommunications sector. Regulatory reforms and technological innovation fuelled expectations of robust growth in traffic, revenue and earnings. Eventually, however, the volume of traffic expanded less than anticipated. Faced with severe financial difficulties, telecommunication firms sharply curtailed their investment and embarked on restructuring. The impact of such restructuring on the overall economy has been relatively small, but it has had severe upstream effects on equipment suppliers and technology firms. Confidence is now slowly returning to the sector thanks to the efforts of companies to strengthen their balance sheets and to renegotiate their debts. Although the necessary restructuring now underway in the industry is painful, governments and regulators should resist the temptation to provide relief to companies by easing competition ...
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