Canada’s broadcast regulator has long acknowledged that Canadians enjoy limited competition for high-speed Internet services. In response, the Canadian Radio-television and Telecommunications Commission has supported independent Internet service providers, or ISPs, by requiring incumbents such as Bell Canada to provide wholesale broadband Internet service at regulated rates. While it is difficult to compete on price – the Bell wholesale pricing creates an effective minimum price...

SAN FRANCISCO: For decades, Silicon Valley has been the land of eternal optimism and high anxiety, traits that pitch into overdrive anytime a seismic business event washes across the corporate and entrepreneurial landscape here ? like, for example, Microsofts blockbuster $45 billion bid for Yahoo on Friday.

The legions of high-tech entrepreneurs who have set up camp here with clever ideas, a willingness to scramble for financing and the energy to weather round-the-clock days have typically tethered their dreams to a singular outcome: getting fabulously rich by selling to one of the three Internet giants, Microsoft, Google or Yahoo.

But if Microsofts takeover bid for Yahoo succeeds, that calculus becomes more harrowing because of a simple reality: the field of large, lushly endowed suitors will narrow by one. And that is a fact sure to jangle nerves already strained by growing fears of an economic recession.

“From a start-up and investor perspective, if there are more companies trying to vie for the same businesses, there are more exits,” said Bismarck Lepe, a former Google employee and now chief executive of Ooyala, a year-old video host and advertising company. “Its not great for competition if there are only two acquisition targets instead of three.”

To be sure, a Microsoft-Yahoo deal could be good for Silicon Valley, funneling money into the economy and triggering a round of copycat deals as other players like Google and the News Corporation look to keep up.

But Microsoft is buying Yahoo because it has steadily fallen behind Google in the lucrative online search market and because the future of computing may not be forever linked to the desktop market that Microsoft now dominates. Apparently unable to keep up with Google through internal efforts, the legendary software giant in Redmond, Washington State, has gone outside to solve its problems by trying to buy Yahoo.

So the rationale for the proposed mega-deal is based on Microsofts own particular corporate needs and may not be a harbinger of rampant deal-making in the Valley.

Moreover, with an economic recession looming in the United States, the unsolicited bid for Yahoo comes at a difficult time for the normally cocksure world of high tech. Visibly, much of the region maintains an almost obstinate belief that it can weather any economic storm that emerges. Consumers are still flocking online, advertising is following, and the current generation of start-ups has been built frugally ? with lessons from the dot-com bust of several years ago still very much in mind.

Venture capitalists also raised nearly $35 billion last year, more than at any other time since before the dot-com crash, according to the National Venture Capital Association. Those financiers are ready to make bets on countless entrepreneurs who hope to build the next Google, Facebook or YouTube.

But as the stock market lolls and an outsider, Microsoft, bids to gobble up a company that once was one of Silicon Valleys crown jewels, the regions innovators and corporate stewards appear to be growing ever more anxious. That trait is most visible in the top executives at public companies whose eyes are trained on parallel declines in consumer confidence and public equities.

Shares of Google had dropped nearly 20 percent since the beginning of the year ? and then they fell an additional 8.6 percent on Friday after Microsoft made the play for Yahoo. Apple has dropped 33 percent since the start of the year. That was enough to prompt Steven Jobs, Apples chief executive, to send a reassuring memo to options-sick employees last week that concluded: “Hang in there.”

Many in the typically overconfident venture capital world say it is foolish to believe the technology sector is somehow sheltered from the storm.

“All markets are linked,” says Peter Rip, a general partner at Crosslink Capital, adding that the pain might trickle down from the public markets to large private companies and eventually to smaller start-ups. “We just asked every one of our companies to take a sharp pencil to their hiring plan this year. It is going to be a bumpy ride for a while.”

In a blog posting last week titled “Downturn, Now What?,” Will Price, a partner at the San Francisco venture capital firm Hummer Winblad, said the recession could punish technology investors for succumbing yet again to investment fads and high valuations for companies without proven business models.

He calls these companies “Field of Dreams” start-ups, because their entrepreneurs believed that if they built popular online services, advertisers would inevitably come. Now that might not necessarily be the case.

Treasury Secretary Henry Paulson revealed plans for the most sweeping overhaul of financial regulation since the Great Depression. Work on the 218-page “blueprint” began before markets unraveled last August. It offers no quick fix for the credit crisis that has roiled Wall Street and left millions of Americans in danger of losing their homes. And it’s sure to face stiff resistance from Capitol Hill, within the financial sector and from various government bureaucratic interests,...