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Categories - Copywriting - Shopping - Free Online Business Help - Telecommunications Services Articles: Finance - Broadband and Energy Bubbles are Coming Did anyone happen to notice what happened when the government passed legislation requiring housing loans in under-served areas? How about when the Telecom Deregulation Act was passed that left TelCos regulated, while it forced them to sell their private property for less than market value? Were you there when that bubble popped, too? Rural TelCos have been installing broadband services for their rural customers for over 10 years while maintaining solvency and a reliable network. They have often had new services to their customers before the RBOCs. The U.S. is number one in the world in wind and solar installations with sites in over 40 states. Wind farms are stimulating the local economy with populations increasing in areas where they were previously declining and farmers are enjoying the much-needed additional revenue. Investment is being accepted where it is needed and wise instead of being thrown into a lottery where most of it will be lost.
In fact, things are going so well that the institutional investors that make a practice of stripping industries of needed capital, now want in. What this stimulus will do is throw billions of dollars out there for the grabs and another bubble will be created. When the money has been taken, the bubble will pop and the results will be just as catastrophic as they were before.
The regulations that will come along with this money haven't been written yet, but they will come fast and furious when they do and they will cost the TelCos and power companies more money and more nightmares as they try to wade threw them. With over 135,00 pages of federal regulations on the Congressional Record and only 60 days to check new ones for bad effects on existing ones, this is a disaster bound to happen. The reliability of the network will suffer as new technology is forced in before it is ready in order to meet government-imposed deadlines.
TelCos who do take the money and go into so called under-served areas where the population can’t afford broadband, doesn’t really want it, and it’s not economically feasible will be left holding bad receivables just like in the sub-prime crisis. On top of that, they will be stuck with payments on a multi-year loan with their entire revenue-generating infrastructure sitting quietly in underserved neighborhoods. If the sub-prime crisis taught us anything, it's that you can't create sustainable commerce in an area that won't support it. This is an artificially created bubble with no demand or available commerce to sustain it. When the government money runs out service companies will suffer huge losses while trying to maintain an infrastructure where there is no revenue to pay for it.
The healthy wind and solar industries will find themselves suddenly burdened with growth killing debt. TelCo and power companies plan in the fall, prepare in the winter, issue RFPs in the spring, and install in the summer. Manufacturers are pressed by investors for unrealistic forecasts and to make shipments all year long. While large manufacturers are able to satisfy these wishes with upgrades and replacements, startup companies are at the mercy of the service company process. The sales curve is similar to government and retail sales curves with the peak toward the end of the year, but you must spend money all year on sales and promotions to be able to participate. Investors do not like to see money going out with none coming in and may startups will have their funding pulled when they can’t possibly produce sales.
When manufacturers close up, service company plans are disrupted and their installations are often put off for another year. In their panic to get in lest they lose out, investors will create too many manufacturers for the market to maintain and this will happen more frequently. Sometimes whne one investor sees another investor pulling out, a panic is created, similar to a bank panic, and many companies are closed unnecessarily. The havoc that is created only eats up more money. These industries have been brought to their knees by previous illegal government interventions on behalf of the investment community in the recent past. They don't need to be left holding the bag again with a massive number of new regulations to pay for. Our telecom and power infrastructures are a matter of national security and the banks don’t need to be putting them in danger in oder to move more wealth to their coffers. The broadband and energy initiatives in this stimulus should be canned.
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