Worldcom's Chapter 11 filing is the biggest restructuring ever attempted by a company under US bankruptcy laws.

It is, however, just the latest in a succession of similar filings by telecommunications firms with significant Irish operations.

International carriers Global Crossing, 360networks, NTL and Metromedia Fibre Networks - which have collectively invested more than $750 million (€743 million) in the Republic - have all filed for Chapter 11 protection since last year.

This meltdown in the telecoms sector has uncovered irregularities in accounting procedures at companies, further eradicating confidence in the industry. But it has also highlighted the unsustainable business plans pursued by some of the new breed of telecoms firms that emerged in the 1990s.

These firms invested billions of dollars laying miles of telecoms networks across the globe in anticipation of a rapid explosion in internet traffic that has simply never materialised. The bursting of the dotcom bubble in 2000 highlighted the massive overcapacity of global networks, driving prices to record lows and making it impossible for companies such as 360networks and Global Crossing to service their debt and recoup their capital investments.

This over-supply of telecoms capacity and the rapid collapse in the price of capacity even caught the Irish Government by surprise.

The State signed a €126 million contract with Global Crossing for the supply of capacity in 1999 but, by time it had landed its undersea telecoms cable here, prices had fallen to a level whereby the deal was not an attractive proposition for Irish telecoms firms to utilise.

Following Global Crossing's Chapter 11 filing and the announcement of investigations into the firm's accounting, the Government appointed two law firms to assess the consequences. The Government has been advised that the firm would be sold as a going concern and its contract - which was renegotiated to take account of the rapid fall in prices - would be intact.

Similarly, WorldCom's operation here, which generates about €20 million annual revenue, is unlikely to close down. Even if Worldcom's US restructuring does not go as planned, its Irish operation and customers could be sold on to another operator. But the current gloom, which is heightened by ongoing investigations into several telecoms firms' financial accounts and the collapse of global stock markets, is likely to drive the price of telecoms assets down further. Last month a major US telecoms and internet firm, Worldport, held a fire sale at a state-of-the- art centre in Dublin.

The assets, which cost $75 million in 1999, were sold for a fraction of this figure.

Shareholders in the growing band of telecoms firms under Chapter 11 protection in the US will also be lucky to recoup even a fraction of their original investment. Debt for equity swaps are likely to leave them with nothing.