U unbundling policy is having limited success in develop- ing broadband competition. The world telecommunications sector is now beginning to recover from the excessive optimism created by the Internet in the late 1990s. The overextended national carriers, such as France Telecom and Deutsche Tele- kom, have retrenched considerably. Global Crossing has essentially disap- peared as a global company, and most of its international assets have been acquired in bankruptcy by Singapore Telephone. Most of the new local entrants in Europe and the United States have been reorganized or have simply disappeared. Wireless carriers continue to develop new services, although many outside the United States are still bruised from paying enormous prices for 3G spectrum that they are only now beginning to use. And in countries like the United States and Canada, where cable television connects two-thirds of all households, the cable operators are now major players in broadband Internet communications and are preparing to offer voice services as well. The crisis is essentially over for many of these play- ers, but its after effects linger on in the form of depressed investment spending. A Look Back and a Look Forward o one looking back over the past nine years of meteoric events in the telecom sector can confidently predict what will happen in the next nine years. Who can say how the politics of regulation will affect the sec- tor after the rather disappointing impact of the 1996 Telecom Act on tra- ditional wire-based telephone operations? In hindsight, perhaps the stock market bubble and excesses of 1998-2000 could not have been avoided, for the Internet created incredible expectations. Regulators may not have created it, but they did contribute to the bubble by encouraging entrants having little hope of survival. Now, five years after the bubble burst, some important lessons are emerging from the shakeout that ensued. Clearly, it is not productive to try to create competition by allowing new, relatively small firms to exploit reg- 