Wireless telephony grew rapidly

  • A consequence of increased competition at every level of the telecommunications value chain was that the industry players found themselves operating with tighter margins and lower revenues.

    The 1996 Telecommunications Act and subsequent FCC decisions led to a further evolution of the regulatory environment. The impact of these developments on innovation and R&D—and on the industry more broadly—has been the subject of much debate. Some caution, for example, that such policies as unbundling and the use of total element long-run incremental costs in the regulation of incumbent local exchange carriers had the effect of dampening investment by the local exchange carriers because competitors could appropriate some of the investment made by the carriers. Others cite significant benefits of these policies to the consumer (reduced prices) and the market (lower barriers to market entry).

    From about 1990 to 2000, the period of high growth in the telecommunications industry meant that there were sufficient revenues to attract many new entrants into the telecommunications market, each of which invested heavily in creating new network facilities. This time period also saw venture capital play a more prominent role in the telecommunications industry Capital expenditures by these new carriers provided significant revenue streams to equipment vendors, and it appeared that research in telecommunications was continuing at a pace comparable to that of the Bell System prior to divestiture. But once this large build-out had been completed, and as the Internet bubble popped, investment declined significantly.

    When the so-called Internet bubble burst at the end of the 20th century, much of the telecommunications industry was faced with a glut of infrastructure investments as the demand for these facilities slowed, leading to wholesale failures of major companies throughout the industry. During the boom years, companies had accumulated debt on the order of several trillion dollars across all players in the industry and suddenly had to service the debt with rapidly decreasing revenues. A result was wide-scale layoffs of workers, failures of several major telecommunications players, and drastic reductions in capital spending by carriers

    More info: field engineer