City of Light: The Story of Fiber Optics

A Technology Too Good
EPILOGUE: THE BOOM, THE BUBBLE, AND THE BUST 255
Ironically, the dramatic success of fiber-optic technology also played a role in
the vicious cycle of the boom, the bubble, and the bust. Neither the market
nor the telecommunications industry was prepared for a technology that
could supply more bandwidth than anyone knew what to do with. The combination
of optical amplifiers and wavelength-division multiplexing had made
fiber too good for its own good.
The 2001 hero experiments sent a mind-boggling 10 trillion bits per second
through a single fiber. Hook up a pair of fibers so they carry signals at
that rate in opposite directions, and they could carry 129 million simultaneous
telephone calls. What does that mean? The 2000 census counted 281
million people living in the United States. Roughly 23 million are children 5
years of age or younger. You could divide the remaining 258 million people
into two equal groups, and run that pair of fibers between them. If you had
enough phones and suitable interfaces, everyone in one group could talk to
someone in the other group at once through those same two fibers.
You couldn’t buy such a system today, but that’s just as well. Nobody
needs it. Fiber optics have already given long-distance communications more
transmission capacity than it knows what to do with. The TAT-8 transatlantic
cable was shut down in 2002 because other cables could carry 5000 times
as much bandwidth on the same route. Fiber has broken the bandwidth bottleneck
of limited capacity. George Gilder predicted a decade ago that fiber
would have such tremendous capacity that bandwidth would be virtually
free. 49 The problem is that once bandwidth becomes really cheap, it’s hard to
make money selling it.
Fiber-optic technology won’t fade away. It’s simply too good to give up.
Bandwidth is addictive. Few people with working broadband Internet connections
want to go back to dial-up modems. Businesses want more bandwidth.
One big reason that the big long-distance fiber-optic pipelines are
empty is that local connections are not very good. It’s like having to go
through a snarl of narrow, winding, potholed local streets to get to an empty
12-lane superhighway.
Fiber now reaches a small but growing number of homes. The Fiber to
the Home Council 50 listed 50 sites as of August 2002, and the number is
growing steadily. Many are new developments, where construction started
from scratch and the builders decided they should look to the future. Others
are rural communities where fiber offers the best way to span wide open
spaces. A few are trials in parts of cities. For now, the big phone companies
are sticking with the plain old copper cables they already have laid elsewhere.
Look back a little over a century, and you can find historical parallels with
the fiber-optic bubble. Overbuilding of railroads triggered financial panics in
1873 and 1893. Speculative pressure drove the railroad bubble, and the aftermath
bankrupted some railroad companies. Like fiber, the railroads were
a dramatic advance over the older generation of horse and wagon technology.