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Is there a bubble ready to burst?
Tuesday 13 June 2006 10:55:00 by Andrew Ferguson

Boom and bust is very often the economic cycle and ZDNet UK is warning that we need to watch out for the formation of the next mini-bubble. Back in the mists of time of 1999/2000 just before the rollout of ADSL in the UK, a big bubble burst in the telecoms sector and almost all players reined in investment. For the UK this meant a slow roll-out of ADSL and generally a lack of investment willingness from possible competitors to BT - racing forward to 2006 we seem to have plenty of companies obtaining capital to pay for LLU roll-outs, and offers that two years ago would have been considered impossible.

All of this money available, and a desire by teleco's and Internet providers to branch out into what is seen as the holy grail of convergence means many are branching into the calls/landline/mobile businesses when the core company does not have the expertise possibly. For some companies this is a fairly painless exercise as expertise is bought by acquiring other companies, with the only real convergence actually occurring in the billing department.

The UK already has the lowest priced broadband possible if the marketing is correct, since you can now get free broadband, so any company trying to compete head on with these is going to have problems. What the consumer may notice over the next few months and years, is that while the headline prices are great and a good deal for many, if for example you use 0845 numbers a lot, going back to BT may be a cheaper deal. In other words do not get excited by something that is free and miss the parts of a product designed to generate income for the company.

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