This is a common enough condition, spawning what looks to be the totally missable new Aussie telly series that’s started screening here (Always Greener — follow this link to read all the stunning story lines to come). Aussie soaps aside, I’ve even been known to speculate that life across the ditch might have its merits.
But all such thoughts have gone out the window in the past couple of weeks, after the stockmarkets in the US and UK started shrivelling up. Now my worry is that what’s so far been a foreign phenomenon will start exerting an influence here. An attack of the Winston Peters, you might call it.
Considering the extent of the carnage, reaction here, as the election campaign wound up, has been muted. This is hard to understand, when each morning lately I’ve been waking to the business news on the radio telling me more trillions have been wiped overnight off the value of the New York and London exchanges. I put it down to the election — and the fact that it was to no party’s advantage to spread panic about impending calamity about to reach here from across the seas. So thus far, the New Zealand stock exchange has meandered along in its usual lacklustre fashion.
Lacklustre is just fine, though, in comparison to events like the collapse of WorldCom, which is what’s helping drive overseas investor sentiment. The scale of the disaster — and potential for downstream casualties — is hard to grasp from here. But The Economist is calling it “The great telecoms crash”, for which the popping of the dot-com bubble was just a warmup. Since the beginning of last year US telcos and equipment suppliers have laid off more than 500,000 people, the magazine says.
It traces the root of the problem to hype: principally, exaggerated claims for how quickly internet traffic was expanding. Supposedly, it was doubling every 100 days. When the origins of that claim are traced, it leads back to WorldCom itself, The Economist reports.
Wherever it sprang from, once it had taken hold, no one in the telecomms world had any choice but to believe it. That led to all sorts of excess. In Europe, former state monopolies went crazy in their bidding for 3G cellular network frequencies. Now, the likes of Deutsche Telekom and France Telecom each owe more than $100 billion. Investment in terrestrial bandwidth leapt too, under the slogan “build it and they’ll come”. Today, in the US, there’s enormous network overcapacity.
While we still can, New Zealand should congratulate itself for not losing its head when echoes of the foreign boom reached us. Those, like me, who suffer from greener-grass syndrome were undoubtedly wishing we were in the thick of the excitement. But, given what’s followed, we can be thankful not to have been. In contrast to elsewhere, the local 3G spectrum auction lasted interminably and raised a modest $100 million or so for the government. A tight-fisted Telecom resisted the build-it-etc argument (so, unfortunately, there’s no cause for complaint here of an over-abundance of bandwidth).
And Telecom’s shares — to the frustration at the time of boss Theresa Gattung — never reached the stellar levels of overseas telcos (she once joked about changing the company name to Tele.com to cash in on the dot-com hysteria). Had they taken off, chances are the crashing noise being heard in the background would be their rapid return to earth (rather than the gentle ebb and flow — hovering around the $4 mark -- they’ve been subject to in the past year).
So, from this distance, it’s possible to be a little bit positive about the US and European telco market crash. For one thing, bandwidth overcapacity should mean cheaper prices. For another, a reduction in hype — which has been prevalent in the whole of the IT sector — means a calmer atmosphere for going about your daily work. And lastly, so far the disaster’s unfolding there, not here, so we’re much better off where we are.