Telecom after the storm. (By the Numbers).

Believe it or not, the telecommunications industry is coming back from the dead. Having crashed harder than any other sector (after soaring higher than any other), telecom is poised for a comeback, though its success is both less spectacular and less speculative than in its heyday.

Overall, the U.S. telecom market will grow at a compound annual rate of 9 percent though 2006, according to the Telecommunications Industry Association. "We're sanguine," says Mary Bradshaw, vice president of global enterprise development for the Arlington, Va., trade group. "It's not going to be the kind of mindless, heady growth we saw in late '9 Os, but that was unsustainable. Now growth is based on what you're earning, not on how many eyeballs you attract or engineers you employ."

But the source of telecom growth is seeing a huge shift. Sales of network equipment and local and long distance service--which in 1999 made up 75 percent of the then-$541 billion telecom market--will grow at a ho-hum 6 to 7 percent over the next three years. By 2006, this sector will account for only 60 percent of a $963 billion market, according to the industry association. The fast movers will be wireless services (11 percent growth) and high-speed Internet access (27 percent).

In another shift, according to the FCC the number of U.S. land lines dropped by nearly 4 million in 2001-the first such decline since the Great Depression. One reason was that many consumers were trading in their home phones for wireless services-a trend that continues today. By middecade, the number of mobile phones will likely surpass land lines in the U.S., with about one-third of the devices connected to the Internet.

Another reason for the continuing drop in traditional phone lines is the inexorable shift to broadband Internet service. As consumers upgrade to cable modems and digital subscriber lines, they often cancel the second phone lines they once used for dial-up. Within three years, more than 44 million people in North America will be accessing the Internet via DSL or cable, according to research firm In-Stat/MDR.

Of course, the increase in Web use means more data traffic, which in turn will spur carriers to upgrade their networks, buy more bandwidth and sell more services. Now, as was the case in the '90s, as the Internet goes, so goes telecom. "Even in a tough economy," says Bradshaw, "I defy you to find anyone who's spending less time on the Internet today than he did a year ago."

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RELATED ARTICLE: Phone Facts

* Change in U.S. spending on telecom equipment, 2000 to 2001: -15.4%

* Number of international calls made from U.S. in 1980: 200 million; in 2000: 6.6 billion

* Number of cable telephone customers in 1999: 300,000; projected for 2006: 6.5 million

Sources: TIA, FCC, Paul Kagan Associates