UPfront: The Telcos toll for whom?

One thing the Worldcom debacle has helped highlight is that genuine profits in telecommunications are getting little harder to come by – if an industry giant is reduced to telling porkies about how well they’re doing.

The headlong rush into an ever-braver, ever- newer world of telecommunications is expected to slow as competition takes its toll on margins.

The prediction from US analysts is that new service rollout is likely to slow as telcos adopt more conservative approach to capital investment – moving behind rather than ahead of market demand.

In reporting its first ever loss of $188 million in the year to June 2002, Telecom New Zealand flagged its own concerns about the future of broadband given the glut of global capacity. It is concerned this excess will push down the value of network assets such as its own half share in the Southern Cross Cable that links New Zealand and Australia with the United States.

Acquiring licences for the “next generation” of 3G wireless data services made bit of worrying dent in balance sheets and competition in the industry is keen.

Vodafone Australia recently announced the loss of 181 jobs as the company cuts costs in its technology division in bid to remain competitive against industry frontrunners, Optus and Telstra.

Telecom analysts’ predictions for the future include less competition on price, slower roll-out for service innovation and greater industry consolidation.

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