Even in uncertain times, venture capitalist Matt Rubins of M/C Venture Partners in Boston is still bullish on mobile broadband, CLEC investments and network infrastructure plays in 2008. Rubins spoke with Editor-in-Chief Carol Wilson.

On the communications industry: Communications has always been a bit of a cyclical industry going back to Alexander Graham Bell. It’s an industry with high fixed costs and relatively volatile capital flows. So you will see ups and downs. If there were a meaningful pullback, it would probably create opportunities. As a telecom investor, you have to be able to play the cycles. Some of the most successful investments we’ve ever done came out of that stage. That is when we bought ICG and sold it to Level 3. As much as it will be painful, you can find opportunities in the darkness. But it’s our view that we are not heading into that. This looks a lot more like 1990-92, It is more driven by the capital market shut down – our clients grew right through that period, they were taking share, growing. This is probably a similar period where good business models will continue to develop. We’ve had our busiest year ever in history of the firm. We are finding good businesses we can acquire at a good price or we are finding businesses that need operational focus.

On the capital market: Volatility in the capital markets is impacting the perception of the value in telecom. A lot of what drove the stock price in the past two years was consolidation and with the debt markets misbehaving the way they are now, it is harder to finance deals. It’s not impossible but it is a lot more difficult. And so valuations are reflecting the slower rate of consolidation.

On the impact on CLECs: We have been investing in competitive telecommunications for 25 years now. Typically [our companies] are less expensive than an incumbent and offer a better quality of service. Unless you are seeing many business failures, people will turn to competitive providers to reduce costs. So we see immaterial impact in terms of an economic slowdown.

On previous “slowdowns”: It is really different this time. This is not like seven years ago. There is real fundamental demand. We have investment in the managed service and data center space. A few years back, all the demand was from VC-based companies with no business models. Today we see real demand for bandwidth.

On incumbent strategies: Verizon’s strategy about rolling fiber to the home creates a very compelling product, but whether economically it makes sense I don’t know. Clearly they needed to do something and bundling that kind of fiber infrastructure is long-term the way to go. I think AT&T’s strategy, well, we would have a question about it It’s difficult to get IPTV up and running. It’s a difficult product to get it up and running and to scale. The numbers they are putting up aren’t earth-shattering. There are challenges up and down that ecosystem. IPTV is an area where there have been a lot of expectations that haven’t been met.

On the competitive strategies in this market: We’re seeing (no price war). The way we have made money in the past has been investing in specific markets around excellent entrepreneurs. When you are successful at doing that, you aren’t as subject to price issues because it is really about execution. We are not seeing price competition – some of our companies have been able to push through price increases.

On comparing this period to the telecom downturn: This is completely unlike what you have seen four to five years ago. It’s a sharp contrast to seven years ago when fiber builds were approved – then there was no business model. Now there is a consumer model and an advertising model. You look at the revenue Google is making, and others have identified advertising as a way to make money, that will fund broadband capacity. Add to that what we are seeing in mobile broadband, which will create huge demand for bandwidth to the tower. There’s a subscription model that is still valid and you can layer that on top of an advertising model.

On services to come: One of the trends we have been tracking is the need for carriers to start adding other services to their bundle. These are managed services – a range of outsourced IT services, IP Centrex, security, etc. The channel to market needs to be consolidated to the point where the carrier should have ability to sell that bundle into a small to mid-sized enterprises.

On cable’s entry into the business market: We haven’t seen it as a threat to our CLECs.