et euphoria, and wireless companies bid aggressively for new spectrum auctioned by the FCC. A number of major companies were started in the late 1990s or formed from a series of merg- ers, including WorldCom, Qwest, and Global Crossing. By the middle of 2000, it was apparent that the very large rise in stock market values in Internet-related companies, including telecommunica- tions carriers, could not be sustained. The U.S. NASDAQ average, domi- nated by technology stocks, began to fall as dramatically as it had risen, declining from more than 5,000 in March 2000 to about 1,114 in Octo- ber 2002, roughly equal to its level in February 1996. 11 The new local Introduction telecommunications start-ups fell by much more, and most were forced into bankruptcy. The long-distance companies met a similar fate, exacer- bated by various accounting scandals arising from their desperate attempt to maintain the illusion of growth. Because many of these telecommuni- cations carriers had expanded with loans from their equipment suppliers, the latter, such as Lucent and Nortel, were also devastated. The United States was not alone in experiencing this boom-bust cycle. The value of telecommunications equities soared throughout the devel- oped world, propelled by excessive enthusiasm for the Internet and the new technologies. 12 The prices paid for spectrum in European auctions to accommodate the "third generation" (3G) of wireless services reached his- toric levels in 2000. 13 Newly privatized carriers, such as British Telecom and France Telecom, expanded aggressively beyond their national borders through acquisitions and new capital spending. 14 When the equities mar- ket soured on these and other Internet-related stocks, many of the major telecom companies scrambled to scale back their operations, while large numbers of new entrants collapsed. As capital spending plummeted, the world's telecom sector sank into a three-year depression, from which it is only now slowly recovering. Chaos, Regulation, and Market Structure No regula