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Cellular 3G Broadband and WiFi

  • Jerry Hausman
Part of the Contributions to Economics book series (CE)

Abstract

This chapter focuses on a potentially important emerging telecommunications market, cellular 3G broadband and WiFi. This study also concerns competition, and the role of both business and the Government. This topic is particularly interesting, because through to 2000 the industry remained buoyant with stock prices appreciating. Until then, telecommunications companies had invested in new technology, wireless spectrum licenses and acquisitions at an extremely high rate. From the enactment of the US Telecommunications Act of 1996, through 2000, the telecommunications industry raised approximately US$ 1.3 trillion in new equity capital from Wall Street. An even greater debt accumulated. According to the Wall Street Journal, telecommunications firms borrowed about US$ 1.5 trillion in debt from banks, and issued US$ 630 billion in corporate bonds from 1996 through 2001. By 1999–2000, new telecommunications-related equipment accounted for 12% to 15% of capital investment among the Standard & Poor 500 firms. As this equipment was being installed demand for new telecommunications services grew at up to 100% per quarter. Demand for additional services continues to grow, but at a tenth of that rate. Much of this optimism, and related aggressive investment activity, was based on the premise that high demand for broadband access to voice, video and data would provide room for many competitors backed by their infrastructure. Financial markets eventually realized the true state of the industry. About US$ 2 trillion of telecommunications industry value was lost through plummeting stock values and defunct corporate bonds. Of course, now things are in the basement, the important question is, where to next?

Keywords

Federal Communication Commission Consumer Welfare Digital Subscriber Line Broadband Service Cellular Telephony 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

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Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Jerry Hausman
    • 1
  1. 1.Department of EconomicsMassachusetts Institute of Technology E52-271aCambridgeUSA

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