City of Light: The Story of Fiber Optics

EPILOGUE: THE BOOM, THE BUBBLE, AND THE BUST 247
Venture capitalists and entrepreneurs arrived on the Internet scene with
gold glittering in their eyes and briefcases crammed with business plans. They
were all too eager to believe the Internet would continue doubling every three
or four months. Soon, that growth rate became an Internet myth, repeated
time and again and quoted everywhere, but with its sources always vague.
In reality, the growth rate settled down to a respectable doubling every year
by 1997, but nobody noticed. 33 Or, more to the point, nobody wanted to
notice.
Like any gold rush, the first people on the scene staked the most obvious
claims, and some made serious money selling out to newcomers. Their profits
drew more investors, ready to throw money at anything related to the Internet.
No one seemed to care that few of the new businesses were profitable.
Everyone was looking to the future. Businesses were warned that the Internet
was changing everything; life was accelerating to ‘‘Internet speed.’’ Wild
claims were made that the Internet economy would replace old fashioned
‘‘bricks and mortar’’ stores.
As hype eclipsed reality, the Internet boom became the Internet bubble.
Investors fell for it hook, line, and sinker. More investors followed, fearing
they might miss their chance to grow rich from the Internet revolution. Other
investors, thinking they had lost their chance to get in on the ground floor
of the Internet, looked around for related fields where they might have a
chance to cash in. Their eyes soon fell on telecommunications.
The connection was clear. Telecommunications was the infrastructure vital
for operating the Internet. Network operators were adding new fibers to
handle the new traffic generated by the Internet, creating a market for new
hardware. Fiber-optic technology was advancing steadily. And telecommunications
seemed to offer a safer bet for the cautious investor. Communication
systems were solid compared to ephemeral ‘‘dot.com’’ companies. Communication
systems were real hardware, more substantial than a business that
consisted of a web site, an advertising program, and a warehouse full of pet
food.
The Telecom Boom
Wavelength-division multiplexing emerged from the lab as the Internet was
going through its peak growth in 1995 and 1996. The cable division of the
Italian giant Pirelli, the Lucent Technologies group spun off from AT&T in
October 1996, and a Maryland-based startup named Ciena all introduced
commercial systems. 34 Ciena squeezed an impressive 16 channels into the
range of erbium optical amplifiers, with wavelengths only 1.6 nanometers
apart.
In theory, multiplying the number of optical channels could multiply a
fiber’s capacity. You could start with a single wavelength, and add new wavelengths
as you needed to upgrade the capacity. In practice, it wasn’t that
easy. Many old fiber systems wouldn’t meet the new transmission require-