Food for thought Educator
To: lml (3321 )
From: Hiram Walker
Tuesday, Apr 6 1999 9:05PM ET
Reply # of 3322
lml et all, interesting article on the coming fiber optic bandwidth glut. This situation sort
of reminds me of the cellular glut,and competition. There is already way too much
fiber,but its all dark fiber. To light it up for 2 way will cost billions,if not trillions. But the
cost of lasers and DWDM is coming down fast,but is it fast enough?
forbes.com
Fiber frenzy
By Toni Mack
BUILDING A FIBER-OPTIC NETWORK in the right place at the right time made
Gary Winnick of Global Crossing a rich man. For Ralph Swett, it has been far less
rewarding. Swett, 64, is founder of IXC Communications, which owns one of the
nation's largest fiber networks. Austin, Tex.-based IXC and other bandwidth
builders—Level 3, Qwest Communications and Williams Cos., among them—are in the
midst of a fiber-building frenzy.
A slaughter waiting to happen? In the next two years data traffic could grow an
impressive 18-fold—but U.S. network capacity could rise more than 400-fold, says
Renaissance Worldwide, a Newton, Mass.-based consultancy. It argues that the
long-haul fiber-optic system in the U.S. could grow from enough capacity for 126 billion
simultaneous phone calls (each call tying up 64,000 bits of space on a strand of fiber) to
54 trillion in 2001.
If and when a glut arrives, the newcomers might slash prices to frightfully low levels.
AT&T, Sprint and the like would have to react. Customers would benefit, but the
bandwidth business would get ugly. Already prices are falling: Since last June the
wholesale spot price of bandwidth is down 35%, thanks to ample supply.
The bandwidth barons say Web commerce and interactive services will soak up the
supply. Better still, all that new megacapacity would cost megabillions. Fiber laid isn't
the same as fiber lit. To fully equip a 10,000-mile strand costs $3.5 billion, says Nayel
Shafei, who just left Qwest to found Enkido and work on video programming and other
new bandwidth-gobbling uses for fiber.
“Everyone talks about how much fiber they have, but fiber isn't bandwidth. The fiber is
still dark, and it will stay dark as long as lighting it is so expensive,” he says.
These days, however, Swett must quell new worries that another bandwidth glut looms.
By some estimates, 35% of the fiber already in the ground is “dark,” unused but ready.
But the sheer cost of revving up new fiber for use could help avert an oversupply. When
IXC's network is finished later this year, Swett and Scott will have spent $1 billion to
bury 24 to 48 fibers along its 15,000-mile route and to light 2 to 4 of them. Lighting the
rest of the fiber would expand IXC's network capacity at least 100-fold—but cost $10
billion.
All the fiber firms face the same hurdle. None has yet filled even 5% of its current
capacity. Qwest says it would have to spend as much as $13 billion to fully light all of its
unused fiber.
“For Qwest, Level 3 and all of us to light our networks to the max would be silly. The
demand isn't there,” declares James Guthrie, IXC's chief financial officer. He believes
the process will occur slowly as demand emerges, thereby avoiding a calamitous price
plunge. “We won't light all our fiber unless we have specific contracts to use that
capacity,” Guthrie says.
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