My only concern is the investor. There are certain telecom sectors that will ride out the storm better than others.

As noted in the Wall Street Journal’s recent survey of 52 economists there is an expectation the economy will contract over the next 3 quarters.

Credit markets have tightened.  I believe that despite the Fed’s efforts credit markets will remain very tight.  The official position economists have taken, in the survey, is that the economy is approaching a recession.  Frankly, the survey is a bit dated to the extent that the results being published are the result of a year long survey so it is probably more accurate to say that over the course of the survey the economists have been predicting a recession.

How does this impact telecom?   My concern is and always has been the investor.

There will not be a collapse of telecom.  However all telecom companies will suffer.

The key thing to remember is that telecom is an infrastructure service.  Hence, telecom will be safer than let’s say Cisco.

With the market collapse, there will be very few businesses seeking to buy brand new Cisco(NMS:CSCO) equipment.  However, there will be a continued need for telecom.  Bear in mind that telecom will be needed for the following:

-    Bear essential living
-    Calling for a job interview
-    Companies calling for new customers
-    Companies calling on existing customers for new business

What you will not see is the large and rapid growth of telecom.  Yes the country and world is moving towards wireless but you can forget about seeing any exponential growth in wireless but you will see growth.

All telecom investments need to be seen as income investments rather than growth investments.

We are seeing dominoes fall now.

The efforts of the government are all about softening the crash not stopping it.

Investors need to understand that telecom will not disappear.  Investors need to view telecom as a utility and hence focus on utilities.  Avoid Competitive Local Exchange Carriers (CLECs).  Avoid Mobile Virtual Network Operators (MVNOs).  Avoid new Internet Service Providers (ISPs).  Stick to established brands.  I even believe Sprint will survive.

At a minimum the United States government will not allow a national carrier like Sprint to disappear; the impact on the country’s national security and telecom infrastructure would be profound and immediate.  Use your imagination.

With an economy contracting people will be spending less on the extravagances of telecommunications but they will be still using telecommunications services.  Even with the expected 74,000 job lost per month, the telecommunications carriers will still be selling services.  Keep in mind I just said people will still be beating the bushes for work.

Put it bluntly, what will save telecom is the very thing most investors have wished to ignore – telecom services are an infrastructure business and not a speculative one.

Most restructuring professionals are trained to see a silver lining in even the darkest of clouds.  Even in this economic disaster we are in I still see an opportunity for a reset of sorts.  If you don’t look for the silver lining you will just get depressed.

Carrier CEOs like Ivan Seidenberg are seeing a silver lining.  Albeit carriers like Verizon(NYS:VZ) will not make as much money as it could if there were no recession but it will not be closing its doors.

Telecom startups will find it nearly impossible to find financing.  I did not say impossible but nearly impossible.  Investors will not want to invest in technology development but they may be more willing to invest in marketing/growth needs.  Equipment manufacturers like Cisco will be sitting on inventory and that is never good for a manufacturer.

According to the Journal’s recent survey, the consumer spending will likely turn negative.  This means luxuries will go with most households.  However, wireless telecommunications spending will not stop.  Twenty years ago, wireless spending was a luxury now it is a necessity.

We are in a tunnel but there will be light at the end of the tunnel.