In
the communications industry, there were several
events both domestic and international that contributed
to GenTek’s disappointing results. Unable to
meet their financial targets, competitive local
exchange carriers (CLECs) in the United States faced
restricted access to capital markets, which in turn
halted their ability to continue operations amidst
consistent losses. As a result, numerous CLECs declared
bankruptcy. Incumbent Local Exchange Carriers (ILECs)
and Regional Bell Operating Companies (RBOCs) didn’t
fare much better and have significantly reduced
spending, canceled construction and delayed equipment
orders. The premise telecommunications business
– providing connectivity within local-area
networks to transmit voice, data and video throughout
buildings – was also hit hard by the economic
downturn as companies decided not to invest in expanding
their information technology infrastructure.
Outside the United States, the rollout of 3G/UMTS
(Universal Mobile Telecommunications System) - Europe’s
third-generation wireless standard - experienced
delays following the bidding frenzy for spectrum
licenses. The high cost of the licenses, unfavorable
economic conditions and slowing demand for telecom
services contributed to the debt loads of the European
carriers. As a result, many carriers were forced
not only to delay the actual construction of the
networks, but also to forego a substantial portion
of their fixed-line spending.
