al telephone carriers, the competitive local exchange carriers (CLECs), suffered the greatest decline, followed by the wireless carriers and the long-distance companies. 5 Many of the CLECs and long-distance companies were forced into bankruptcy, and there is now very little market value left in these two segments of the telecom sector. Between January 2000 and January 2003, the value of most U.S. tele- communications carriers, particularly the long-distance companies and new local entrants, dropped precipitously, their total loss reaching almost $1 trillion. As a result, capital spending declined substantially in 2001-02 and continued to do SO as the bankruptcies among telecommunications carriers reached alarming levels (see table 3-1). The capital-spending boom spread far beyond fiber-optic transmission facilities. Capital spending by new local carriers increased from virtually nothing to more than $20 billion in 2000.7 In the wireless sector outlays jumped from $8.5 billion in 1996 to $18.4 billion in 2000, and among the regional Bell companies (including GTE) capital spending rose from $20.8 billion in 1996 to $35.7 billion in 2000, even though these firms were by and large banned from interstate communications. Once the stock market bubble burst and scores of carriers collapsed, a climate of depression descended on the U.S. and world telecommunica- The First Eight Years under the New Law Figure 3-1. U.S. Telecommunications Sector Capital Expenditures, 1987-2003 Index, 1996 = 100 Source: U.S. Department of Commerce, Bureau of Economic Analysis ["BEA"](2003) a. Estimated by the author based on current dollars. tions sectors, intensified by the excess capacity in data and voice transmis- sion the boom had created. The long-distance and local failures, combined with the reductions in Bell-company cash flow, brought total capital spend- ing in the U.S. telecom sector down to about $50 billion in 2003, which was even less than its 1996 level. Telecom stock prices experienced a simi- lar collapse in Europe and, to 