Myths about Internet growth

An anonymous reader writes "An article in The Economist outlines WorldCom's role in starting the myth that Internet traffic doubles every 100 days. This helped inflate the telecoms bubble."

Comments

Capacity doubled - usage didn't

[hughk]

Nobody would put down a single fibre. It is too expensive to physically lay it. You lay two (or more) fibres instead but leave them unused (dark fibre). However, repeaters are there it is just they aren't attached wither end. Theoretically all you need is to connect a switch and you have your extra capacity.

This should have meant high bandwidth and low prices, but as suppliers like Worldcom had to borrow heavily for their infrastructure costs, they were stuck with high prices. Something similar happened with Deutsche Telekom in Germany. They built a fibre network through the former DDR but borrowed heavily to finance it. The things is that nobody was going to pay for that capacity at a premium price. Telekom didn't mess around with their predictions in the way that Worldcom did, but they also came unstuck.

The problem comes down to the revenue models and the telecom analysts in the banks. If I have a bank of 64K connections and I upgrade them to 1024K, I can't simply charge 16 times the price. A few customers can afford this (think banks), but many others can not.

Capacity including dark fibre definitely was doubling every 100 days but usage wasn't and certainly not revenue.

Price of Bandwidth

[_Sprocket_]

We've all heard talk of over-built data networks and "dark fiber". What interests me is how this apparent over-capacity does not seem to match up the price of bandwidth and the apparent bandwidth management of consumer-level heavy users.

Is there a mismatch? Do we actually have a demand that's being held in check by an inappropriate pricing schedule (perhapse even businesses with a lack of vision)? Or does potential capacity fail to overcome the cost of "lighting up" and maintaining these over-built networks?