OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

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.

English, French

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 ...


Keywords: bubbles, telecommunications, auctions, regulation
JEL: L96: Industrial Organization / Industry Studies: Transportation and Utilities / Telecommunications; D84: Microeconomics / Information, Knowledge, and Uncertainty / Expectations; Speculations; L5: Industrial Organization / Regulation and Industrial Policy; D44: Microeconomics / Market Structure, Pricing, and Design / Auctions
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