City of Light: The Story of Fiber Optics

250 CITY OF LIGHT
passed 10,000 for the first time. In May 1999, a then little-known energy
company called Enron created a market for telecommunication companies to
trade bandwidth on their fibers. 39 The NASDAQ composite average kept climbing,
crossing the 3000 level in November, and closing the year just above
4000.
On March 7, 2000, the NASDAQ crossed the 5000 mark for the first time
and the annual Optical Fiber Communication conference opened in Baltimore.
Reflecting the boom, the opening plenary speaker was George Gilder, a technology
writer and analyst who heralded the potential of fiber in the pages of
his Gilder Technology Report. Will Hicks had inspired Gilder’s vision of virtually
unlimited fiber bandwidth, and Gilder, in turn, inspired a small army of wellheeled
investors to bet on fiber.
The place was mobbed, overwhelming the conference staff. Lines wound
around the outside of the convention center, where people waited hours to
get in. Business reporters thronged the press room, traditionally the realm of
technology writers. Venture capitalists and financiers roamed the crowded
convention floor. When the dust finally settled, the organizers put attendance
at a record 16,934. 40
I wandered the show floor, amazed at the scale of the exhibits sprawling
over 121,000 square feet of floor space. I was surprised to run into a laser
physicist who had worked for many years at a government laboratory. When
I asked what he was doing at a fiber meeting, he told me he’d done a bit of
consulting some years back for a laser company called Uniphase, and had
taken his pay in stock. A series of mergers had followed, building a company
called JDS Uniphase into a giant in the field, and his little stake into some
serious money. He didn’t say how much, but I guessed from the gleam in his
eyes it was several million.
The NASDAQ closed at 5046.86 on Thursday, March 9, the last day the
show exhibits were open, up 149 points and the first closing over 5000. It
opened at 5060.34 on Friday, and later hit a record 5132.52 before closing
at 5048.62. That marked the peak of the bubble. The following Monday the
NASDAQ closed at 4907.24. It was all downhill from there, but no one realized
it was the beginning of the end.
At first, it looked like investors were nervous about the dot.coms. They
had ample reason to be nervous. Some were obviously losing cash; hardly
any were obviously profitable. The first big failures came in May and June.
By late summer, dot.coms were dropping like flies, and the NASDAQ was
drifting downward.
The telecommunications bubble continued. In part, it was sheer momentum.
It takes a long time to gear up to build a large network. Construction
has to be arranged months in advance. Equipment must be ordered. Some
optical hardware had been in short supply, so companies had placed multiple
orders with different suppliers, figuring they would need it all anyway. In
part, telecommunications investors recognized that some dot.com deaths were
inevitable because too many companies were competing in some fields.