It was a crummy week for telecom gear makers and carriers as they prepared for what many believe will be an extended recession.

But the biggest casualties could be among the thousands of startups that make a living supplying products and services to telecom carriers and vendors.

And while some of the top companies are in trouble, the average analyst projection is that fewer than ten percent of the smaller products and services suppliers will outlive the recession.

“It will take several quarters for the telecom economy to adapt to a new core reality, and since this downturn is complicated by a major credit crisis, one can expect a shakeout among telecom startups,” said Joe Nordgaard, director of wireless consulting firm Spectral Advantage.

The carnage has begun.

On Monday Nortel announced its largest quarterly loss since its last financial meltdown in the wake of the dot-com bust. The Toronto-based networking firm also announced 1,300 new layoffs to go with the 1,200 announced in February. (Nortel Braces for Breakup)

On Thursday BT, the largest carrier in the United Kingdom, said it will cut 10,000 jobs, or 6.3 percent of its global work force. According to BT, 6,000 of the cuts will be outside workers including consultants and contractors.

On Friday Sprint-Nextel said that it is offering voluntary buyout packages to an undisclosed number of its employees. Also Friday, Nokia, the world’s largest mobile handset maker, lowered its fourth-quarter forecast.

Even analysts that lived through the telecom downturn of 1999-2001 are hesitant to make calls on this one.

“The last one was micro-economic and for the most part centered in the tech community, while this one is macro-economic and had its genesis in the banking industry,” said Sameer Mithal, senior principal at IBB Consulting.

The current economic malaise is directly rooted in banking and because banking overhangs the health of just about every other sector, he said, this downturn will affect demand for both capital and consumer goods.

“Nokia is seeing consumers, concerned about the economy, just not buying as many new phones, and for Nortel the carriers and cable companies are not spending as much on network upgrades,” Mr. Mithal said. “For BT and Sprint, consumers are reducing the amount they are spending on telecom services.”

And while large telecom sellers and major carriers are taking protective action through budget cutbacks and layoffs, many small suppliers will take the initial impact of the recession without much available protection.

Unless that small supplier happens to be WiChorus, a San Jose-based WiMax company, which last week got $18 million in funding from new investor Pinnacle Ventures and three existing VCs. (WiChorus Nets $18M for WiMAX)

Or the supplier happens to be Israeli WiMax chip maker Altair Semiconductor, which got $22 million seven weeks ago from Pacific Technology Fund and ETV Capital. (Israeli WiMAX Chip Maker Nets $22M)

“We were not planning to take more money this year, but because of the uncertainty in the economy we decided to seek some money as a cushion,” said Renan Jalil, CEO of WiChorus.

“A lot of the funding for WiMax projects around the world is already in the pipeline and not hurt by the current credit market,” he said.

VCs have been carefully picking their spots, funding the more robust small suppliers such as WiChorus and Altair, and leaving the other 90 percent to fend for themselves.

“Nobody knows how bad or how long this is going to be. We are all guessing at this point,” Mr. Jalil said.