On the edge

Bubble trouble. Economists are worried. The issue is the relationship between the stock market and the general economy.

In the latter half of the summer, the stock market has slowed down. But the market continues to reside at an elevation that seems unrelated to the general economy.

The U.S. economy is good but not great. So far it has proved resilient in absorbing the ongoing bad news from Asia. Now the Asian crisis seems to be spreading into Russia, whose economy is teetering on an awful precipice. The situation in Japan continues to be grim at best, even assuming that all the bad news is out, contrary to the practice of the secretive bureaucracies that hold Japan in iron thrall.

The global economy is weaker than it has been in several years. It is likely to grow weaker still in the months ahead. Eventually, the U.S. economy will share at least some of the pain.

At that time, if not slightly earlier, the stock market will contract. The bubble-the distance between the economy and market-will dissolve.

The telecommunications industry continues to burst with prosperity. New services are being deployed. New networks are being built. New technology is being developed. There seems to be no lack of capital for anyone-big or small, old or new-with both a reasonably plausible business plan and a professional pedigree.

The surging stock market has helped fuel the telecom boom. Certainly, there are other factors. Telecom companies, however, have leveraged robust growth in their share prices to generate substantial amounts of capital. Bernie Ebbers' WorldCom is a great example.

When the bulls started to run, Ebbers' company was young, interesting and weak. After adroitly leveraging the power created by his surging stock price, Ebbers' WorldCom is young, fascinating and a global powerhouse. Ebbers built his empire on the back of the bull.

The bubble is going to end. When it does, capital will be more expensive, increasing the cost of investments and depressing growth. The telecom industry may be the healthiest industry in the world. A slowdown, even a mild recession, will just be a blip on the industry's screen. But even the telecom industry will see business slow.

Senior telecom executives better make their plans accordingly.

Abandon no one. The information age is perfectly tailored for urban America. People living frenetically paced lives in densely populated cities served by multiple networks seem to love technology with nearly the same passion that they love movies.

Stuck in traffic? Grab the wireless phone. Flying to New York? Check the laptop. Need information? Hit the Web. Whatever it is, do it now. And telecom networks are being built and upgraded to meet that inexorable imperative.

The flaw in the information age idea has always been that important segments of American society would be denied its full benefit, some (the poor) for economic reasons and others (rural Americans) because of geography. This is not an idle fear.

Rural Americans, according to some information age apologists, wouldn't really want all the services urban Americans would, for the same reason they wouldn't want to live in high rises. People who want to live on the 35th floor move to a city, and so would people who wanted high-speed data services in their homes.

Dumb. Rural Americans may prefer small towns and open spaces to crowded commuter trains and hectic shopping malls, but they want every information service that their cousins in the city want.

Shrewd business people like the Dakota Telecommunications Group are investing to bring those services to rural America. DTG just spent $100 million with Lucent to build a fiber network. Its service area? No, it's not Dallas or Denver or Detroit, or even Des Moines. It's small communities in the thinly populated upper midwestern states of Minnesota and the Dakotas. Its services will include everything from local voice to Internet access to high-speed data.

Geography-thanks to companies like DTG-won't limit the benefits of the information age.