Telecom Landscape Recast

Wednesday’s federal government decision to let stand a court ruling that threw out FCC rules requiring local phone companies to share their lines at a discount will likely have far-reaching effects on the telecom sector.

For long-distance companies like troubled AT&T – which plans to continue to fight the battle alone – and MCI, the ruling will likely mean loss of business and more layoffs. The Baby Bells have apparently agreed to leave rates alone until next year, avoiding a potentially difficult shakeout in an election year.

The decision is also likely to boost Voice over Internet Protocol (VoIP) technology as a cheap local alternative. Picking a winner in that fight could prove difficult, however, as smaller players like 8X8 and Delta Three will likely face bigger rivals and more competition.

The telecom shakeout may soon enter a new phase.

Stocks rebounded Thursday on strong chip sales and earnings and merger news, while traders ignored a Bank of England rate hike and disappointing jobless claims and import price reports.

The markets will be closed Friday in honor of former President Reagan.

The Nasdaq rose 9 to 1999, the S&P 500 gained 5 to 1136, and the Dow rose 41 to 10,410. Volume declined to 1.17 billion shares on the NYSE, and 1.36 billion on the Nasdaq. Advancers led 18-14 on the NYSE, and by a few issues on the Nasdaq. Upside volume was 60% on the NYSE, and 55% on the Nasdaq. New highs-new lows were 49-27 on the NYSE, and 40-40 on the Nasdaq.

EMC declined 2% after reaffirming guidance.

Net2Phone fell 3% on its results, while National Semi edged higher after beating estimates.

ECI Telecom surged 12% on a Fibre to the premise (FTTP) deal with British Telecom .

SCO Group tumbled 10% on a wider than expected loss.

Boston Communications fell 11% on news that Verizon plans to use its own wireless platform instead of BCGI’s.

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