The US telecom industry is in turmoil; demand slump, price competition and a cash crunch, have resulted in a stock-price collapse. Add to this, high-profile bankruptcies and frauds like those of Global Crossing and WorldCom and the woes of the industry seem far from over.

WorldCom's woes are just the tip of the iceberg that threatens to destroy the $300 bn US telecom industry. The industry has never experienced the kind of bedlam it faces today. Over the past few months, flaccid demand, intense pricing pressure and a cash crunch have seen the telecommunications industry through a stock-price collapse. The Nasdaq Telecommunications Index, which consists of 288 phone-service providers and equipment makers, has plummeted by 36 percent since January this year. Besides, margins on voice and long-distance continue to fall, as even the robust incumbents cut prices to garner market share. Titans like AT&T and Lucent are also feeling the pinch of falling prices and dwindling profits. The high profile bankruptcy of Global Crossing and the accounting fraud at Qwest have augmented the troubles. The promise of convergence and wireless technologies, which were buzzwords till recently, is far from being fulfilled.

Only a few years ago everything seemed to be rosybudding technologies emerged, communication networks were the order of the day, Internet was booming and the opportunities for telecom players seemed boundless. Incumbents and start-ups alike were investing heavily on building extensive communications networks across the country to carry the increasing Internet traffic. Communications equipment makers Lucent and Cisco were struggling to keep up with demand, and investors, happy to fund this building up of the `Digital Future', bought about $33 bn worth of telecom IPOs since the start of 1998.

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