Table: The Telecom Meltdown Gets Worse
Forecasts for spending on telecom equipment are being scaled back big-time. A Lehman Brothers survey found spending will fall to $82 billion next year, down from $102 billion this year--which is already a 5% drop from 2000.
Carriers are reducing their spending because the binge investments of the past couple years have resulted in overcapacity. On Aug. 29, WorldCom said capital spending for next year will be $5.5 billion, or $1.5 billion lower than this year.
Growth markets aren't meeting targets. For example, revenue from high-speed data may increase 15% next year, about half of expectations.
The number of upstart carriers going belly-up is growing weekly. Over the summer, high-speed Net access providers Covad Communications and Rhythm NetConnections filed for bankruptcy protection.
Internet service providers like PSINet are seeking bankruptcy protection. That's a big reason why forecasts for spending on Internet infrastructure have fallen 46% since last year.