Is telecom infrastructure peaking?

[Commentary] In Washington, things may finally be starting to happen that will affect the creation of advanced information infrastructure. This follows a year of mostly words, minor symbolic actions, and procedural walkabouts. A paltry one per cent of the federal economic stimulus money had been allocated to broadband communications. Of this, a year later, the first small grants are now trickling out, just as the economic crisis has hopefully turned the corner. But a second concrete activity is approaching -- a plan by the Federal Communications Commission on how to fill in the white spots on the geographic and social maps of broadband penetration.

We should keep in mind that each new infrastructure industry goes through a cycle -- early experimentation, accelerating growth, a flattening out, and eventual decline. All American infrastructure industries had their day in the sun, followed by a pronounced decline in investment. Soon, it will be the turn of communications infrastructure investments to slow, mature, and even decline.

For infrastructure technology companies this is not a positive outlook but a wakeup call. They had hoped for an ongoing growth scenario, not declining investment levels by their best customers. Their business model will have to move to the edge of the network, to users and applications providers, and to less mature markets. But it is positive news for network providers because their need to invest declines, which improves their bottom line and lowers consumer prices in the long run.