t developed at a more rapid pace. In 1996 capital spend- ing by the local entrants, excluding the CAPS, was only $1.2 billion, but it increased rapidly thereafter, more than doubling each year through 1999.32 In 2000 entrants reportedly spent $12 billion on capital facilities. 33 Unfortunately, despite these expenditures, few of them were able to attract subscribers rapidly, SO by 2000 they were beginning to encounter severe financial difficulties. Capital Spending and Equity Values By the end of 1999, entrants, excluding the CAPs, had spent at least $22 billion on capital facilities, but they had attracted only 8.2 million subscribers, 3.5 million of which derived from the low-margin resale of incumbent services. 34 Even ignoring the CAPs' lines altogether, the new entrants' cumulative 1996-99 capital spending amounted to $4,700 per Local Competition under the 1996 Act Figure 4-2. Market Value per Line for RBOCs and CLECs, December 31, 1999 Thousands of dollars Source: Author's calculations and www.quote.yahoo.com. UNE or facilities-based line, or $2,700 per total line, including the lines offered through simple resale. At end of 1999, the publicly traded CLECs were valued at an astound- ing $116 billion, or about $20,000 per switched access line (excluding the CAPs). 35 By contrast, as figure 4-2 shows, the weighted average of Verizon, Bell South, and SBC market values per switched access line (excluding their wireless operations) was less than $2,500, or about one-twelfth the value of the leading CLECs at the time, namely, Allegiance, Time Warner Telecom, XO, McLeod, Teligent, and RCN. Obviously, the financial mar- kets had a very optimistic view of the future prospects of these new local entrants in late 1999. This view would change with a vengeance by the middle of 2000. When the market value of telecom firms dropped sharply in 2000-02, CLEC equities took the steepest dive, driving the value of the listed CLECs from $116 billion to just $10 billion (see figure 4-3). The total value of the surviving CLECs was