The Telecoms Boom and Bust 1996-2003 and the Role of Financial Markets

Financial crises are still as much a part of the modern, information-and-communication-technology-based (ICT) economy as they were of previous economies. Why are we apparently unable to learn lessons from the past and avoid what Charles Kindleberger (2000) has called “manias, panics and crashes”? Why is it that our sophisticated stock of information, made readily and relatively cheaply available to us by our investment in ICTs, and our abundant theories and models, have not allowed us to steer clear of these financial excesses? The aim of this paper is to highlight some of the processes and mechanisms that have played a significant role in causing the Telecoms Boom and Bust, 1996-2003. The question of whether anything can be done about these processes and mechanisms in order to try and modify such financial excesses in the future is taken up in the conclusion. Copyright Springer-Verlag Berlin/Heidelberg 2004