BCE, Canada's biggest telephone and media group, today announced write-downs of close to US$5.68 billion, yet another reflection of the costs of a big diversification drive in the late 1990's.

The biggest write-down was a charge for good will impairment related to the wholly owned Teleglobe, which recently filed for bankruptcy protection. BCE also took write-downs on its media and e-commerce units.

BCE needs to raise Cdn$5B to complete its purchase of Bell Canada. Its debt rating was recently downgraded, and shares are down 33% this year. BCE will sell its directories business to raise cash.

Congress and the Bush administration appear to be frozen in place when it comes to stabilizing telecommunications.

RBOCs battle their rival upstarts and press the government to eliminate restrictions on entry into the markets for long-distance voice and high-speed Internet service.

Long-distance carriers fight against sharing their networks with the locals at low costs.

The FCC remains intent on a slow deregulatory course.

Critic: "This is a disaster waiting to happen. [Deregulation] will ultimately blow up on them."

Corning, the world's largest maker of fiber-optic cable, posted a quarterly net loss of $370 million due to weak spending in the telecommunications sector (half of Corning's revenue), and said more cuts in its work force or facilities may be necessary.

"At first blush, it certainly doesn't look pretty. The company continues to lose money and the actual performance [as opposed to what?] in their core telecom business remains very weak."

[Sales will continue to slip, more cuts necessary, noncore assets must be sold. Profitability to be achieved in 2003 at any cost.]

AT&T announced quarterly financial results yesterday that it said modestly exceeded analysts' expectations, amid signs that the trends that have devastated parts of its business, if not getting better, are at least not growing worse.

Both AT&T's consumer and business-services operations are still shrinking because of continued weakness in the company's core long-distance telephone market.

CEO: "Given ongoing weakness in the economy and instability among some players in the telecommunications industry, I'm pleased with our second-quarter results. We continue to execute with purpose and integrity."

AT&T would have to assume the risk of trying to sell billions of dollars' worth of shares in Time Warner Cable at a time when the stock market generally, and cable stocks in particular, are taking heavy losses.

Shortly after BellSouth, the nation's No. 3 local phone company, sent its stock plunging yesterday by saying it would fail to meet its financial targets for 2002, one analyst released a report titled, "It's Official -- There Is No Place to Hide."

In some ways, the pronouncement was as startling as it was apt. While the carriers fought each other and CLECs withered, RBOCs could sit back with their near-monopolies and reap growth, profits and the adulation of investors.

Or so the story went.

The Bells' problems keep mounting.

Asked about growth prospects, a Verizon rep said, "We see long-term growth on the wireless side, and also a great opportunity to offer wireless services to our enterprise customers."

Lucent announced a $7.91B loss for the fiscal third quarter and 7,000 more layoffs yesterday, adding another chapter to the seemingly unending tale of the telecommunications industry's woes.

Scott Cleland: "It's bad, and there's no cavalry coming."

Nortel believed its market had bottomed out and its fortunes would soon turn up. CEO Patricia Russo: "Like many others, we were wrong."

Jeff Kagan: "This isn't going to be a ripple on a pond. It's a tidal wave from a boulder."

Scott Cleland: "This is a case of lose-lose. It's like a virus that gets spread to everyone. Suppliers get shortchanged. People who do business with them get shortchanged. A lot of bad debt will get absorbed."

Meta Group: "This is going to be the big event that we're going to look back on and say 'That was the turning point.'"

WorldCom, plagued by the rapid erosion of its profits and an accounting scandal that created billions in illusory earnings, last night submitted the largest bankruptcy filing in United States history.

The bankruptcy is expected to shake an already wobbling telecommunications industry, but is unlikely to have an immediate impact on customers, including the 20 million users of its MCI long-distance service.

The telecoms industry is in a mess. What went wrong, and how can it be fixed?

The dotcom crash was merely the warm-up. The telecoms crash is many times bigger. FCC chairman Michael Powell surprised nobody when he declared this week that the industry is facing "utter crisis". The situation is being likened to the Dark Ages.

Andrew Odlyzko, Warren Buffett, Bob Metcalfe, ...

The industry's hangover has two components: overcapacity and debt.

The bigger question is what will happen to America's struggling backbone operators.

The mobile industry faces the same challenge.