CLEAN-UP COSTS

The signs of telecom recovery, if not a rebound, are all around. Most carriers have stopped the radical slashing of capital expense budgets, and some are starting to spend on innovative technology. Vendors haven't sounded this confident about the future in at least three years. To complete the recuperation process, though, carriers and vendors must start reflecting their recovered status to those outside of the industry. As two events last week suggest, it's the cleaning-up part after the devastation that might become a little messy. Nortel Networks, which suffered as much as any vendor during the past few years, put Chief Financial Officer Douglas Beatty and controller Michael Gollogly on paid leave while it reviews its finances. The suspensions came one week after the company said it would likely restate results for 2003 and possibly earlier periods as well. Perhaps it's a reflection of the industry's image that despite the company coming clean on the transition and potential implications, investors pummeled Nortel stock the day the news was announced. Archrival Lucent Technologies, which laid off the equivalent of a mid-sized town during the downturn, did its part in the clean-up by agreeing to pay a $25 million fine to the Securities and Exchange Commission because of what the feds believe was a lack of cooperation during its two-year investigation into how certain revenue was reported. Both companies are essential not only as suppliers but as representatives of the industry to the larger world. Until the world views the industry in the same light as those inside the walls, no recovery can be complete.