Telecoms companies are having a hellish time. Not only is overcapacity and debt weighing on profits, but competition regulations are preventing a natural consolidation of the industry. Unfortunately, things are likely to get worse before they get better. Another week, another crop of bad news from the telecoms industry: WorldCom, Qwest, Siemens, Marconi, JDS, Telewest, NTL ... Analyst: "No bottom in sight." There is evidence of bigger structural problems in the industry that will not be solved by an economic recovery. That suggests the industry must undergo painful rationalisation before things start to improve. How did this happen? Bets have gone spectacularly wrong. In fixed-line telecoms, the problem is overcapacity. Bankruptcies and mergers would appear to be the solution. But bankruptcies do little to solve the problem of overcapacity. ... Telecoms firms bet everything on a surge in demand that has so far failed to materialise. Backing out of these bets is proving to be very unpleasant. The carnage will continue for some time yet. | 
