Companies such as WorldCom, Global Crossing, and Lucent Technologies had achieved enormous market valuations based on expectations of continued growth and profitability.
Many companies had taken on substantial debt to finance their expansion, and investors had poured billions of dollars into the sector based on unrealistic expectations of growth and profitability.
[12] The industry owed a trillion dollars "much of which will never be repaid and will have to be written off by investors" according to a testimony by Federal Communications Commission Chairman Michael Powell to the Senate Commerce Committee on July 30, 2002.
Hong Kong's 2013 approach was to share in the profit from a spectrum allocation rather than issue a potentially damaging upfront payment for licences.
[18] The pension liabilities also added to the financial troubles of telecom companies and the 2013 auctions in the United Kingdom produced disappointing results.