Hubbard: No Fast Telecom Recovery

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Washington -- President Bush's top White House economic adviser said Monday
that he expects the performance of the telecommunications sector to lag behind
the recovery of the broader economy.

"It's clear that the telecom sector is going to take longer to recover than
the general economy," R. Glenn Hubbard, chairman of Bush's Council of Economic
Advisers, said in a breakfast briefing here to leaders of the United States
Telecommunications Association, which represents hundreds of phone
companies.

In the wake of industry deregulation and the Internet boom,
telecommunications carriers both new and old became magnets for vast amounts of
investment capital.

Since March 10, 2000 -- when the telecommunications- and technology-heavy
NASDAQ market index hit its all-time high -- the telecommunications sector has
lost $1 trillion in market capitalization and 500,000 jobs. About $1 trillion in
debt remains on the books.

"The excess capacity in this sector is far greater than elsewhere in the
economy," Hubbard said.

On Thursday, the Federal Communications Commission is expected to adopt rules
designed in part to restore investor confidence in the telecommunications
sector.

Asked about potential congressional action, Hubbard said the White House does
not have "a firm position" on so-called regulatory-parity legislation, which
would apply the same set of FCC regulations to all providers of high-speed-data
services.

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