Rethinking the Fiber Bubble

Carl Weinschenk

The Internet bubble of the 1990s is legendary for the excesses: People were too optimistic (a polite way of saying too greedy), built too much, started online businesses without properly thinking things through and generally lost their senses.


Fast forward to 2010. Suddenly, real businesses are eating bandwidth the way middle linebackers eat breakfast. Video streaming and other voracious applications are enabling closure of a sort. The Wall Street Journal, which points to Cisco's recent broadband study as evidence of the growth in demand, says three fiber networks, which apparently lay fallow since they were built or soon after, are now being shopped around.


The story says that KDL, which operates networks in 26 states; Alpheus Communications and Fibertech Networks are back on the market. The story takes a financial angle, discussing the valuations of the companies, how much the owners hope to get by selling the networks to big providers looking to beef up their regional coverage.


As with much in life, these early players' basic idea was good, but the timing was terrible. The folks in the 1990s saw the brilliant potential of an interactive pipe into virtually all homes and businesses linked to each other and to vast repositories of educational, entertainment and business materials. What they didn't see -- what had to happen to turn that potential into a sustainable business -- is well chronicled. The explosion of demand is a vindication of sorts.


If anything, the folks in the 1990s were not optimistic enough. In addition to resurrecting the fiber networks, we are only in the beginning stages of a massive rollout of WiMax and Long Term Evolution (LTE) 4G services. Thus, even more capacity will be added to both the edge and the core of the network.


This week, I had the chance to speak with Loren Shalinsky, a senior analyst with the Dell'Oro Group. Shalinsky provided a good deal of context to augment the main point that despite the economic turbulence of the past few years, WLANs are doing well. WLANs, of course, operate at the edges of the network. All the data they handle, however, needs to be shepherded on fiber through the core of the network.


The bottom line is that the main fault of those who predicted broadband demand in the 1990s wasn't that they were wrong. It was that they were a decade-and-a-half premature.

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