City of Light: The Story of Fiber Optics

EPILOGUE: THE BOOM, THE BUBBLE, AND THE BUST 249
second on each wavelength, and could carry up to 64 channels per fiber. It’s
unlikely that any then carried a full load of channels, but higher speeds were
still in the offing. At the 1998 conference, Lucent claimed that by the end of
the year it would deliver systems that could transmit 10 billion bits per second
on 40 separate wavelengths through a single fiber—40% of the rate achieved
in its hero experiment. 37
The Bubble
The manic momentum of the stock market shifted into high gear in 1999.
In 1998, the technology-laden NASDAQ index rose from 1574 to 2193, a
healthy 39%. In 1999 it nearly doubled, reaching 4069 at the end of December.
The bubble that started with dot.com companies in the Internet market
had spread to communications.
The rationale was simple and compelling if you breathed the heady air of
the market. The Internet was going to revolutionize commerce, so big gains
would come to those who ramped up quickly to stake their claims. The telecommunications
industry would build the infrastructure needed for electronic
commerce. The fiber-optics industry would supply the hardware to meet the
booming demand.
In some ways, telecommunications seemed a safer investment than the
dot.coms. A telecommunications network was a solid physical entity. A
dot.com was little more than a Web site, a marketing campaign, and a warehouse.
Investors not ready to take the plunge into all-new Internet ventures
could feel safe with a telecommunication network that seemed sure to remain
in operation. If nobody bought dog food over the Internet, somebody would
still call long distance.
Deregulation spawned a small army of new telecommunications companies,
and they raised money to build their networks. Global Crossing was
most ambitious, but other companies had their own plans for international
networks and national backbone systems. Other companies aimed to build
regional networks. Metromedia Fiber Networks set out to build fiber-optic
loops around major cities that would connect to large businesses. Meanwhile,
cellular telephone companies were buying new spectrum to expand mobile
phone services.
The doors to opportunity seemed to be opening. A record 10,206 people
attended the optical fiber conference in February 1999, which had outgrown
the San Jose Convention Center and moved to San Diego. For the first time
in three years, a hero experiment took a big step upward in speed, as NTT
reached three trillion bits per second through 40 kilometers of fiber. 38 The
technology didn’t look very practical, but the speed was impressive.
The business was thriving. A few new companies appeared, promising
faster and better components and systems. Established companies stepped up
their development pace. Entrepreneurs with business plans in hand made the
rounds of venture capitalists. In March, the Dow-Jones industrial average