In this dissertation the impact of the Internet bubble on the development path of the telecommunication sector is being explored and explained. The insights obtained are used to provide recommendations for the formation of government policy and firm strategy in the aftermath. Periods of euphoria are a recurring feature of economic development and the brevity of our “financial memory” and our tendency to pursue quick gains will stimulate the development of future bubbles. While periods of euphoria are inefficient and even wasteful, when they occur as part of the diffusion of a new technological revolution the over-investments in the related infrastructure will provide the basis for reaping the benefits of the new techno-economic paradigm, including its productivity improvements. The process of Telecom Reform has fundamentally changed the “rules of the game” in the sector and has moved strategy formation to the forefront of corporate activity. The Internet bubble period is characterized by a quickly expanding range of business opportunities and an accelerated shift from circuit-mode to packet-mode and from fixed to mobile communication. In the period of frenzy “consensual vision” was taking over. In this euphoric period the incentives appear to have driven the behaviour of managers. The linkage of telecommunication to the diffusion of the new techno-economic paradigm is extending policy formation from Telecom Reform, to ICT policy and beyond. Many of the changes the paradigm shift has evoked are still very much emergent, and have not led to a full alignment between the technological, economical and social domains. Hence, the potential benefits are not yet realized. Therefore, it is recommended to revisit the current policy formation process against the back drop of the diffusion process of the “CT-driven” technological revolution. The prospect that upon an appropriate adjustment of the institutional environment a period of prosperity, a âgolden ageâ, may develop, should present a compelling “incentive for action” for all actors involved.
