This Saturday I was privileged to be on the Motley Fool Radio Show. We were talking about Nortel Networks (NYSE: NT), which I've written about quite a bit here. On the show, the Fool interviewed Clarence Chandran, chief operating officer at Nortel.

Clarence spoke about growth in the local Internet, which is an interesting concept. I spoke to David Chamberlin from Nortel that afternoon and we agreed to make arrangements for further discussion of this issue. It will make an interesting column before long, and in this medium I can give it more detailed attention than we can on the radio.

I emphasized when I spoke with the Gardner brothers on the radio show that investing in companies such as Nortel and its competitors is not an easy decision process. These companies provide a broad array of services and products, many of which you and I don't use every day. Few of us have even seen much of the equipment these companies make, much less purchased it. So, how do you determine which stock to buy?

You can usually determine which company is the leading personal computer manufacturer, or which sells the most popular cola, or which is the leading discount retailer. However, do you know who is the leader in fiber-optic equipment? Can you explain the difference between ATM and IP without looking it up in a book? If the answer is "yes" to these questions, you either work in the business or have done a lot of research.

If we go with the "buy what you know" rule of investing, does that permanently block out companies such as Nortel, or other "Pathfinder" Drips such as Enron (NYSE: ENE)? I give a qualified "no" response to that question.

Look at yourself -- are you reading this article on the Web? Will you post your thoughts or send an e-mail to share what you think afterward? Do you check your stock quotes on the Fool after reading this? Do you shop on the Internet? Do you access the 'Net on a palm-top as you travel? If so, you can see firsthand how this communications medium is growing. I'm old enough to remember when telephoning from overseas meant getting an operator, waiting a long time for a line, and paying through the nose. This year I went to Korea and called home for 10 cents a minute. An operator was not needed, and getting a line (or not!) was not even something to think about.

Knowing that the world is quickly "coming together" through telecommunications, we can imagine the growth that this sector will see. However, the next step involves real work. To find the good companies, we need to research, research, and research. This is not the no-brainer approach of index investing (which is one of the approaches I use -- there is no reason not to take several approaches to your investments). It's not the 30-minutes-a-year approach of the Foolish Four. No, investing smartly in Pathfinders, and especially telecommunications companies, takes a good amount of time.

Fortunately, a lot of research can be done right on the Web. The first place to research any company is its website. See what the company's products are, and look at its annual reports. Also, a couple of sites have good information on technology. There are two sites that have provided me with the bulk of my information: and Both of these sites provide well-researched technical articles that are pretty well broken down into layman's terms. Then, to discuss and ask questions about companies, I don't know of any discussion boards better than those here at the Fool.

Sprung from the Fool boards, a welcome new resource for investors are research reports written by Fool community members. These reports often cover tough topics in ways that you can understand them, while still being in-depth. The reports are sold on the Fool's (and if you have a report you'd like to write, you can sell it on, too). Some of the best-selling reports on Soapbox have been about wireless telecommunications -- so, consider these reports. Also, consider the Motley Fool Research Internet Report on the Wireless Web.

Finally, I like these books: The Essential Guide to Telecommunications by Annabel Z. Dodd, Understanding Telecommunications and Lightwave Systems by John G. Nellist, and Newton's Telecom Dictionary by Harry Newton.

In upcoming weeks, I'm going to get with Cisco Systems (Nasdaq: CSCO) to get a response to Nortel's Open IP Environment. I want to look at Motorola (NYSE: MOT) and cellular phone manufacturers such as Nokia (NYSE: NOK). Also, in October it will have been a year since I visited Scientific-Atlanta (NYSE: SFA), so it will be time to pay it another visit.

Before I end this article, I'd like to make a request of you all. What do you think about cellular phone manufacturers? Do you think that this is a good area in which to invest, or will we see cellular phones become a commodity item with razor-thin profit margins? Please share your thoughts (and favorite cellular phone companies, if you have them) on the Drip Companies discussion board.

I look forward to seeing what you all think. Stay Foolish!

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Related Links:
Researching Telecommunications, Drip Portfolio, 5/8/00
ATM vs. IP, Drip Portfolio, 5/15/00
Nortel's Wireless Strategy, Drip Portfolio, 8/3/00
Internet Report: Wireless Web, Motley Fool Research
Qualcomm, Siebel, and other Standard Bearers, Fool on the Hill, 8/7/00