Dialing Elsewhere For Dollars:

Telecom stocks sizzled over the summer, even as the overall stock market hit a rough patch.

But don’t be fooled by the relative good fortune. The competitive landscape for most phone companies still looks scary.

Prices are still falling for plain-old voice services. Phone companies have slashed fees for speedy Internet access.

And revenue growth in the wireless market — one of the few bright spots — has started to slow.

So why did investors snap up telecom shares this summer? Mainly to cloister themselves in the safe haven of defensive stocks.

Phone companies big and small pay attractive dividends. Their hefty free cash flow has fueled stock buybacks.

"This is a cash-flow generating industry," said Todd Rosenbluth, analyst at Standard & Poor’s.

To sustain that cash flow, phone companies are cutting costs. They’re also trying to stem the loss of residential customers to wireless and cable TV rivals.

Discusses AT&T, Verizon , BellSouth, Qwest, and VoIP providers like Vonage , SunRocket, CableVision and Comcast.