The Last Time Investors Really Got Excited For Tech Infrastructure

One of the biggest questions hanging over the market right now is whether or not the seemingly unlimited appetite for more AI data center spending is slowing down or not. This type of tech infrastructure has been a massive sectoral winner over the last few years. But of course, this isn't the first time investors have gotten excited about this type of trade. The late 1990s and early 2000s are often remembered as being the time of a "tech bubble" or "dot-com bubble," but one specific aspect was the buildout in broadband infrastructure, or what became known as the telecom bubble. So what was that all about? Why were investors so optimistic? And how did it end? At our recent live episode in Washington DC, we spoke with Blair Levin, policy adviser to New Street Research. He was the chief of staff at the FCC during the telecom deregulation of the 1990s, and in the early 2000s went to work on Wall Street. He tells us about differences and similarities between then and now, plus the signs of when the ride is coming to an end. Read More: What It Felt Like When Everyone Was Hopeful, Happy, and Rich Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 0:58Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:39Speaker 02

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• 2:11Tracy Alloway?

  Hey there. Don't go just yet. We want to tell you about a new series from our colleagues here at Bloomberg. It's called Levittown.

• 2:19Joe Weisenthal?

  It's about a technology that's moving faster than the law, about dozens of young women in a New York suburb who discover manipulated photos of themselves on a porn website.

• 2:28Tracy Alloway?

  Told there isn't much the police or anyone else can do, they decide to fight back, joining a global battle against deepfakes. Please note, the trailer for the show you are about to hear features adult themes.

• 2:47Speaker 05

  Five years ago, this was a vast checkerboard of potato farms on New York's Long Island. Today, this is Levittown, one of the most remarkable housing developments ever conceived.

• 3:00Speaker 06

  Levittown, New York, America's first suburb. Row after row after row of cookie cutter homes. The picture of the American dream.

• 3:15Speaker 06

  But recently, underneath the facade of perfect order, a group of young women found themselves in an AI-fueled nightmare.

• 3:26Speaker 07

  Someone was posting photos of many of the girls that we had gone to school with. There was one picture of me in a bathing suit and I didn't have a bathing suit on anymore. It was just me naked. Well, not me, but me with someone else's body parts that looked exactly like my own.

• 3:53Speaker 06

  Over the last few years, rapid breakthroughs in machine learning have made it a lot easier and cheaper to make real-looking photos or videos of pretty much anything you can think of. But innovation comes at a price.

• 4:09Speaker 07

  I felt gross. I felt like I needed to take a shower. I felt like I wanted to cry. I wanted to throw up. I wanted to scream.

• 4:18Speaker 06

  This is a story about a technology that is moving faster than the law, where everyone is a suspect, even your neighbors.

• 4:27Tracy Alloway?

  It was always in the back of my head, like, oh, it's someone that I know. But how do you find out who that someone is when you know so many people from school, soccer, all these things?

• 4:43Speaker 06

  What we discovered in Levittown led us on a winding journey.

• 4:47Tracy Alloway?

  I just always had in the back of my mind that any of them could be the one.

• 4:53Speaker 06

  Through the darkest corners of the internet. An arms race between law enforcement and technology. And it's just, we're losing. We are absolutely losing. Where online vigilantes and enterprising detectives are joining forces. If you're given prey, you want to go and get it.

• 5:14Speaker 06

  In this story, the victims flip the script, band together, and fight back alongside some unexpected global allies.

• 5:26Speaker 06

  I'm Maggie Murphy. And I'm Olivia Carville. This is Levittown, a new podcast series from iHeart Podcasts, Bloomberg, and Kaleidoscope. Listen to Levittown on Bloomberg's Big Take Podcast. Find it on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

• 5:53Speaker 06

  Bloomberg Audio Studios. Podcasts, radio, news.

• 6:08Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 6:13Tracy Alloway?

  And I'm Tracy Alloway.

• 6:14Joe Weisenthal?

  Tracy, as you know, I am a sucker for any conversation that, you know, involves reminiscing about the dot com bubble or the telecom bubble, really anything in the late 90s. When I came of age as a young man.

• 6:27Tracy Alloway?

  Well, that makes sense. I think a lot of people tend to do that. I like just bubbles in general. I do not put a time period on my bubble interest. Any bubbles, all the time, let's do it.

• 6:38Joe Weisenthal?

  One thing that I think is really interesting about that time period is obviously there was, you know, there was a bubble. But I think right now, obviously, people are really curious about the AI build out. And that really was the last time, the late 90s, when there was a specific costly capex tech infrastructure part of the story. Because at that time, it was the telecom bubble, everyone laying all the broadband to power the high speed internet that we have today. It's not a perfect analog, but it's something. That I've wanted to talk about and probably want to talk more about on the show just because of, yeah, some of the parallels to what we're seeing right now.

• 7:15Tracy Alloway?

  Right. It is the analogy that everyone uses primarily because of that big expensive capital build out that you just mentioned. I will also say the telecoms bubble, it's kind of mixed up with the internet bubble, right? Or people tend to mix them up.

• 7:30Joe Weisenthal?

  Just lump it all up, yeah.

• 7:31Tracy Alloway?

  Yeah. And actually, it was different in many ways. So we should talk about that, too.

• 7:37Joe Weisenthal?

  Totally. Well, I'm really excited. Tracy and I were recently down in Washington DC where we recorded a live show and you've already heard some of them if you've been listening to the podcast. But this was a really fun little chat that we had. We spoke with Blair Levin. He's currently a policy advisor at New Street Research, but he was actually the chief of staff at the FCC in the late 90s and who's involved in some of the deregulation that gave rise to all of the telecom bubble build out, all of the telecom build out. Then he went to work on Wall Street. So he really had like a front row seat at the story that we're talking about. And so take a listen to our chat with Blair.

• 8:23Joe Weisenthal?

  People do forget that, like they talk about the internet bubble, but it really was like it started, or at least a huge part of it was the telecom boom.

• 8:30Speaker 05

  It was a dual bubble. That is to say, there was a bubble relating to internet applications, but there was also a bubble related to telecommunications infrastructure.

• 8:40Joe Weisenthal?

  So other people could debate whether there is an AI bubble happening right now, but there is certainly an AI boom in terms of infrastructure spending. We talk all the time about data center build out, etc. Arguably, I mean, it's been going on for a while. Arguably, the sort of the catalyst, the moment that it captivated everyone was the release of ChatGPT in late 2022. What was the moment or what was the catalyst in the late 90s that suddenly got people so excited about building out tele broadband infrastructure?

• 9:13Speaker 05

  It was the release of Netscape, an operating system that caused people to understand what the internet could actually be. And of course, it existed previously, but with Netscape, Silicon Valley got very excited, Wall Street got very excited, and a few political leaders like Al Gore, who was then vice president, got very excited because he had always wanted. Wanted the information highway to connect the child in Carthage, Tennessee to the Library of Congress.

• 9:41Joe Weisenthal?

  Right.

• 9:42Speaker 05

  And now there was really a vehicle that could do it.

• 9:43Tracy Alloway?

  Joe knows a lot more about this topic than I do, but one thing I do know is when people talk-

• 9:48Joe Weisenthal?

  It's an age joke.

• 9:49Tracy Alloway?

  Yes. When people talk about the telecoms bubble, I mean, the thing that comes up is the telecommunications act of 1996.

• 9:54Speaker 05

  Yes.

• 9:55Tracy Alloway?

  It goes almost like hand in hand.

• 9:56Speaker 05

  Yeah.

• 9:57Tracy Alloway?

  Walk us through the connection there. Why does the act get the blame for a lot of this enthusiasm?

• 10:02Joe Weisenthal?

  Or the credit.

• 10:03Tracy Alloway?

  Or the credit.

• 10:04Speaker 05

  Yeah. Look, so I think people have to understand, back in 1913, let's do a little history.

• 10:12Tracy Alloway?

  Everyone's doing history tonight.

• 10:14Speaker 05

  Back in 1913, the government essentially allowed AT&T to continue its monopoly. If Andrew had been there, maybe he would have opposed it, but, uh, but he wasn't there. And that continued until it was broken up. And then, once it was broken, we had the long-distance guys and you had the local guys. And the local guys wanted to get in the long-distance business, and the long-distance guys wanted to get in the local business, and the cable industry wanted to get into both of their businesses. And so during the 80s and early 90s, there were a lot of efforts to say, instead of having one judge in charge of the whole thing, let's, let's do this differently. And the key idea, and one embraced really on a bipartisan basis, but really seen clearly

• 10:56Speaker 05

  by Gore and by the chair, Reed Hunt, was, right now, we have these analog networks that are protected, and they just offer a single service. You have analog video coming over cable, you have analog voice going over the copper networks. Wireless was kind of a protected thing, long story, but there were only two wireless providers, so less than 10 million people used wireless services. And the idea of the 96 act, in a way, was, let's blow this all up by making everything go digital. That was the key, because once they're digital, they all compete with each other. We didn't express it quite that way, but that was the real idea behind it. And I would argue, you know, you can say it was a success or it was a failure, but

• 11:39Speaker 05

  for those of us, I'm showing my age, I was a 10-year-old kid in 1964, stood in line for two hours in New York at the World's Fair to watch, you know, a video conference that was like three bucks a minute. Well, we all do, you know, I do this with my grandkids for free now. So I, I view it as a success, you know, that basically by going digital, we have faster, cheaper, better- better communications through competition than we've ever had.

• 12:06Joe Weisenthal?

  What specifically did that telecom deregulation allow such that we got this incredible boom in laying fiber, laying copper, whatever it was?

• 12:20Speaker 05

  It gave the FCC a lot of authority, though that authority was challenged and we did lose a case at the Court of Appeals where the states challenged it because they wanted to have the power. But then the Supreme Court gave the power back to the FCC. But it gave the FCC a lot of authority to do things which are not commonly recognized, but turn out to be very important. For example, one of the most important things we did was wireless number portability. People didn't think about it at the time, but the question was, who owns your phone number? Do you own the phone number or does the company own the phone number? If Verizon owned your phone number, you would never leave them. And therefore, no matter how many competitors you have, there really wouldn't be competition. Another very big one goes to a very obscure thing, which are called access charges.

• 13:05Speaker 05

  So you're on one network and you call a different network. What does network two charge network one to complete that call? The most important thing for wireless was when we said to the wireline guys who had, you know, were connecting, completing 95% of the calls, you have to charge your real cost, not, you know, not 10 cents a minute, but your real cost is zero to connect. And then suddenly, big plans started to come in and wireless really took off. Here's another one. In 95, before the act was passed, the Bell companies were trying to say to Congress, we really need to charge access charges to this new dial-up internet thing.

• 13:47Joe Weisenthal?

  Yeah.

• 13:48Speaker 05

  And we said to Steve Case, we had a meeting with him, we said, you know, here's what's going on on Capitol Hill. They want you to charge you like five cents a minute. Imagine what that would have done to AOL, though. I'm not sure people in the audience can remember AOL.

• 14:02Joe Weisenthal?

  They remember AOL. They've read about it.

• 14:04Speaker 05

  Yeah, it was kind of like back in Genesis. But in any event, Steve Case got the message. If I recall correctly, within forty eight hours, there were four hundred thousand emails hitting the hill, not the charge access charges, and we were able to continue that thing. So there were obscure things. We weren't breaking up monopolies in the way that the government is currently thinking about doing with Google, but rather by saying we're going to create competitive positions, competitive situations, by looking at what is essential and then making sure that those are not barriers to competition.

• 14:56Speaker 00

  What's next for virtual assets? I'm Jacob Grease, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 15:12Speaker 02

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 15:21Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese America Ripple says. A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some eighty year old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai. Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 15:58Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Rush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting. Loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs. And hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 16:41Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 17:21Tracy Alloway?

  Okay, so people think they have an entry point into that market. There's deregulation, there's potentially more competition for new players.

• 17:30Speaker 05

  Yeah.

• 17:31Tracy Alloway?

  Why did investors want to fund what seems like a very expensive undertaking so badly? And here I have to say, the one thing I do know about the telecoms bubble, I used to be a capital markets correspondent, talked to a lot of old-school bond investor guys. It was funded with a lot of debt.

• 17:49Speaker 05

  Huge amount of debt.

• 17:50Tracy Alloway?

  Yeah, and if you ask some of those old-school guys about like the big moments in their career, it's, okay, the 2008 financial crisis, but easily like the 2001 telecoms crash, which was huge for the bond market. Why were people so eager to pour money into this?

• 18:07Speaker 05

  So first of all, you have to understand that at the beginning of any new, really big thing, there was, in the early 1900s, a lot of money going into car companies. And in the 70s, there was a lot of money going into computer companies. Because people see what the opportunity is. So in the case of telecom, what happened was we were deregulating and increasing this digital competition at the same time that the market understood that the future is not these copper networks that the... Old AT&T local exchange carriers had, but big fiber digital networks.

• 18:47Speaker 05

  And at that point in time, MCI and other people were saying, digital traffic is growing, is doubling every quarter. Turned out, it was every year.

• 18:58Joe Weisenthal?

  Minor difference.

• 19:00Speaker 05

  But, but if you're an investor and you believe one thing to be true and it turns out the other thing is true, you can make a really big mistake. And they made some mistakes. But I think, you know, there's a difference between what happened with the big networks and what happened to Pets.com, right? Pets.com went under, investors lost money, and that was the end of it. But those networks, which were built with that debt and then had to be refinanced. And I remember there was a famous, I think it was a Forbes cover, about a company called Quest, which was building these.

• 19:32Joe Weisenthal?

  Quest, I forgot about these with a W.

• 19:33Speaker 05

  Right. And they ended up buying an old ILEC, an old phone company, and everybody thought it was genius and that the cover story was making money at the speed of light. And everybody kind of was buying off on this. Well, those networks still exist, and those are the networks which actually made Google and Facebook and others lots of money when they bought them on the cheap years later.

• 19:57Joe Weisenthal?

  Okay, so you have this environment of deregulation in the 90s during the Clinton administration. You have the sort of realization that the internet is going to be a big deal. You have these inflated claims. In retrospect, turns out, it's still incredibly fast, but doubling every year is not quite the same as doubling every quarter. What was the first cool breeze that came in? When was the first moment, from a telecom perspective, where it's like, okay, maybe we're not quite so excited? Because what people are wondering about with AI is there going to be something? So far, we haven't seen any of the major platforms, the major hyperscalers, they were like massively pulling back on K-Packs or whatever.

• 20:41Joe Weisenthal?

  But people are looking out for that moment. What was the first sort of like, ooh, what's going on here?

• 20:46Speaker 05

  So, in a way, you're thinking about, there was a kind of a False moment with AI with DeepSeek.

• 20:51Joe Weisenthal?

  Yeah, yeah.

• 20:52Speaker 05

  Where there was that moment where Nvidia's stock went down hugely one day. But then people started to think.

• 20:57Joe Weisenthal?

  Yeah.

• 20:57Speaker 05

  Well, wait a minute, we're still going to need the chips and you know.

• 20:59Joe Weisenthal?

  By and large, everyone is still, despite the market sell off, no one has actually like changed any of their investment commitment.

• 21:05Speaker 05

  Yeah, though there's lots of smaller companies that are not public because going public is different than it was in 2000. So we don't really know what's going on with them. But I would say somewhere actually where I would place it was the day after Time Warner made probably the worst deal of all time and bought AOL. That's when people like me started to go, wait a minute. Someone has really spoken something here. And that really doesn't make sense because you know, from my, our perspective AOL was kind of an obsolete company because broadband was coming on. And in a broadband world, the logic of AOL was not true.

• 21:46Speaker 05

  And then, then the applications started to fold and then about a year later, a lot of the data network started to fold.

• 21:54Tracy Alloway?

  So one of the things I remember from, I think it was Jason Calacanis when we interviewed him.

• 21:59Joe Weisenthal?

  Yeah, love that guy.

• 21:59Tracy Alloway?

  He, he pointed out something interesting about a lot of the latest startups, which is that it's not that they couldn't necessarily make money in the good years. It was that investors weren't asking them to. Investors wanted them to grow as quickly as possible, grow market share, the sort of network effect that we were talking about earlier. And then suddenly, you know, investors start saying, actually, you need to monetize this and you need to kind of show us where the money is. And so that change in behavior means that now there's pressure to be cash flow positive. Was there a sort of similar moment or similar change in investor behavior where it didn't become about growth? And the build out, but it became about actual reality and monetization.

• 22:42Speaker 05

  Well, again, I would distinguish between the networks, which can run for a while, but they can't run forever and the applications. I do remember Eric Schmidt, Reid and I had dinner with him shortly after he became CEO of Google and he said, ubiquity first monetization later. That works in an advertising model. It does not work in a lot of other models. And one of the challenges for network folks is how do you build this network which is supposed to last for 30 years or 50 years or whatever? And not run out of money before the revenues start coming in. And we saw this with various wireless companies and we saw it with fixed terrestrial wired companies.

• 23:24Speaker 05

  And it's interesting because if you look at what the world looked like in 2000, a lot of the companies on the network side are the same. It's the cable companies, it's the wireless companies, and it's the traditional Lex. But they've changed their business model. But when you look at the device companies and the applications companies relative to 2000, totally different set of companies.

• 23:45Joe Weisenthal?

  What were the CLEX, the CLEX? What were the?

• 23:47Speaker 05

  So the CLEX were the competitive local exchange carriers. And the idea was, as one Wall Street analyst said, they are the construction companies for the long-distance company. Because the idea was the long-distance companies, what Congress really envisioned...

• 24:02Joe Weisenthal?

  I forgot about long distance.

• 24:03Speaker 05

  Yeah. Yeah, as most people, as well you should. But when I was in college, again, back in the days of Genesis, you know, we stood in line to call our parents because it was really expensive and we would call and talk for 30 seconds, just, yes, I'm okay, talk to you later, bye, you know? And now, has anyone paid a long-distance? Is there anyone here paying a long-distance bill? No, of course not. It was all a matter of regulatory arbitrage back in those days. But the idea, I think, of the act was that there would be three competitors. You would have the cable guys, the incumbents, and the long-distance guys. Everybody knew that the incumbent local exchange carriers could easily go into long distance.

• 24:46Speaker 05

  So the challenge was, how do we create a path for the long-distance guys to essentially build out new networks that'll be superior networks? And then they'll come in with the old guys who have the advantages of incumbency and the cable guys are going to get in this business. Wireless was not really seen as a competitor. Now it is. And there, again, a lot of regulatory reasons. Spectrum auctions played a big role in that kind of stuff. And we had a plan. Now, that plan was reversed by the Republican chairman of the FCC, Michael Powell, very good guy. And he basically had the view that that's really, it's not going to work. The other problem, which is kind of something you can't legislate around, Bob Allen, who

• 25:30Speaker 05

  was the CEO of AT&T, was, shall we say, my age, as opposed to the young whippersnappers of SBC at Whittaker or Ivan Seidenberg of what was then called 9X.

• 25:44Speaker 05

  And in the middle of, just after the, kind of the law passed, we're in the middle of saying, here's how we're going to make it so that the CLECs can build these networks for AT&T to eventually buy and blah, blah, blah. Allen tries to merge with SBC because he wanted to retire. And people have forgotten this little episode, but it showed up on the newspaper and a couple of days later, my boss Reed Hunt gave a speech at Brookings saying such a deal would be unthinkable. Actually, Allen, we were trying to figure out what to do. Allen gave a speech saying such a deal would not be unthinkable, which gave us the opening to say, oh, really? And Reed, who was a former antitrust lawyer, just went through this, you know, very intense

• 26:28Speaker 05

  antitrust analysis, why we cannot let them merge. Eventually, they did merge. And that was the end, kind of, of the CLEC dream.

• 26:35Tracy Alloway?

  This is great. And Joe loves reminiscing and war stories, as he said. So I got to ask, what was the craziest thing in retrospect that you saw from this era?

• 26:45Speaker 05

  Oh, gosh. You know, what was crazy about it, but totally wonderful, was, and this will sound odd, Congress gave us ridiculous deadlines. Ridiculous deadlines. And a Republican guy said, you know, Blair, we gave you deadlines, you're never going to meet them, and then you're going to be so screwed. And I said, thank you, that's great. But Reed understood that deadlines, particularly if you're like a chief of staff, are a great thing. So the day after the act passed, we had all the lobbyists in, we had, here's all the rulemakings, here's where we're going to do everything, you know, like, just, and went to the other commissioner offices and said, with each of these things, you're going to have five days to read the stuff, you know, like, no excuses.

• 27:30Speaker 05

  And so, we felt enormously energized and pressured. The over, the, the, the heating bill at the FCC for like, one month was like, an extra $400,000. That's a good detail. We were all working so hard, but it was truly, it was a wonderful spirit. And we thought we were doing something important. And I, and by the way, at the same time, we were negotiating World Trade Organization agreement to enable digital traffic to travel much more cheaply around the world. It was really exciting and fun time.

• 27:59Joe Weisenthal?

  All right, I have one last question, which is, there are various ways to play a boom, right? So, some people were buying shares in Corning, the glass company, because you have to lay a lot of glass-based fiber. Some people were buying AOL, some people were buying Pets.com, you know, various different, like, sort of ways into it. Is it the ISP? Is it the website? Is it the glass, etc.? Obviously with AI, it's the sort of same thing. Is it going to be the model makers? Is it going to be the companies that make the chips? Is it going to be the companies that make the cooling systems for the data centers? Various different ways into any sort of boom. From the telecom era, what is the takeaway about who makes the money in the end? Because even in the crash, like, who makes the money in the end?

• 28:43Tracy Alloway?

  The lawyers.

• 28:44Joe Weisenthal?

  Yeah, but that's the lawyers, yeah. And the heating company.

• 28:47Tracy Alloway?

  Yeah, the heating companies at the FTC.

• 28:49Speaker 05

  You know, I will give you my answer, but I have to tell you, if I actually knew the real answer, you'd have to pay me a lot more money.

• 28:56Joe Weisenthal?

  I know, I'm not even asking for the AI. I'm just like, you know, like, what?

• 28:59Speaker 05

  Because I'm just, I do Wall Street analysis, but I'm just telling people what the policies are going to be. I'm not telling-

• 29:04Joe Weisenthal?

  People paid $50 to get in.

• 29:05Speaker 05

  Oh, that's right, $55. You deserve a better answer. No, look, what I love about Wall Street is you have these debates every day. And, you know, one of the big debates in my space is what is Charlie Ergen going to do? Or should the telcos, the wireless guys buy more fiber? All those kinds of debates. What I would say about that is, number one, infrastructure always has value. But it's also true that, as every real estate developer knows, it's often the third owner who actually makes the money, right? So, but the data centers are going to have value forever. There will be a couple of applications that capture the market share and that the, you know, 20 years from now, the FTC will be

• 29:48Speaker 05

  saying, "Why didn't we stop these people, you know, back in 2025 when we could have?" And whether it's OpenAI, or it's Perplexity, or it's any of the others, who knows? But if you capture that, the market, you know, the return on scale is tremendous. The difference now is you do have these really well-established companies, Amazon, Microsoft, Alphabet, Meta, who are in the space. You know, one answer to it would be the cloud guys. I think cloud is just going to be incredibly important in all of this, and they win no matter what.

• 30:24Joe Weisenthal?

  Blair Levin, a real treat. Thank you so much. So great to chat with you. I love reminiscing. Thanks for coming down to Odd Lots Live.

• 30:44Tracy Alloway?

  That was our episode, Looking Back at the Telecoms Bubble with Blair Levin. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 30:52Joe Weisenthal?

  I'm Joe Weisenthal. You can follow me at TheStalwart. You can follow Blair at Blair Levin, though I don't think he's posted in eight years. Maybe if a bunch of people follow him, he'll start posting again. Follow our producers, Carmen Rodriguez at CarmenArman, Dashil Bennett at Dashbot, and Kel Brooks at KelBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have all of our episodes and a daily newsletter. And you can chat about all of these topics, especially including AI and bubbles and stuff like that, in our Discord, discord.gg/oddlots.

• 31:22Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we reminisce about bubbles, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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