Bob "I don't need DNS for dummies, I need DNS for Bob" Frankston has penned a wonderful critique of an Economist article on the subject of the Telecom crash. As he mentions, the article "...(in particular, Too many debts, too few calls) draws no distinction between the business of providing commodity Internet connectivity with the business of providing telecommunications-based services. Of course The Economist is not alone in this fundamental error but "Crash" story is a useful foil for addressing this misunderstanding."
The part that rang truest with me are his statements concerning the Internet Bubble. "Much of the foolish speculation stemmed from the misunderstanding that considers telecom a viable industry. The history of computing is littered with vast over-promises. But the value delivered by the 1% of the capability that is actually provided has been large enough to drive the economy." I haven't seen this said better yet.
I would only (hesitantly) add that - (which he goes into elsewhere from different angles) - the supportive capability of the telecommunications infrastructure is extremely limited and cannot effectively compete with the supportive capability offered by the Internet. The range of applications that the telco infrastructure supports is completely limited to those that the telco's would like you to use - and that they control. The Internet allows you to choose which applications you would like to us. Don't believe me? Try and upgrade the caller-id functionality in your phone. I fully believe that the telco's didn't quite get this and instead of trying to figure out where they could add value to the Internet economy, they chose to attempt to capture it and put it under their control. This plan required vast expenditures that they simply could not support putting them in the dire straits that we see today.
The Internet bubble only destroyed telcom's insofar as it inflated the perception of what the Internet actually was and forced the telcom's to increase the size of scope of their plans (and investments) to match what they thought was necessary to control the Internet. Had they instead focused on bringing value to the 1% of the Internet's promise that was actually important (and valued!), the world(com) might be a different place.