The rise and fall of the 90's telecom bubble

Tue Nov 14 14:04:54 UTC 2023

" It would be nice if some folks on the list could 
provide some solid information, even if only for one 
large carrier." 

One of the busts that I never found much on was the Enron network. Where did it end up? I'd be interested in local route and POP details, offlist would be fine as well. 

----- 
Mike Hammett 
Intelligent Computing Solutions 
http://www.ics-il.com 

Midwest-IX 
http://www.midwest-ix.com 

----- Original Message -----

From: "Andrew Odlyzko via NANOG" <nanog at nanog.org> 
To: "Dave Taht" <dave.taht at gmail.com> 
Cc: "NANOG" <nanog at nanog.org> 
Sent: Monday, November 13, 2023 1:25:39 PM 
Subject: Re: The rise and fall of the 90's telecom bubble 

Dave Taht's question about all the redundant fiber that 
was put down in the telecom bubble is a very interesting 
one. It would be nice if some folks on the list could 
provide some solid information, even if only for one 
large carrier. 

My impression, from communications with various folks, 
is that much of that fiber from around 2000 was never 
lit. The reason is that better fiber came on the market. 
However, what was used (at least in some cases, again, 
this is something I would love to get real data on) was 
that some of the empty conduits that were put down then 
were used to shoot the new generations of fiber through. 
(It was quite common for carriers to put down 4 conduits, 
and only pull fiber through one of them, leaving the 
other 3 for later use.) 

Concerning the Doug O'Laughlin post that Dave cites, 
it is very good. For more on the myth of "Internet 
doubling every 100 days," my paper "Bubbles, gullibility, 
and other challenges for economics, psychology, sociology, 
and information sciences" published in First Monday in 
Sept. 2010, 

https://firstmonday.org/ojs/index.php/fm/article/view/3142/2603 

Participants of this list were very helpful in providing 
information for that paper. (Some of the correspondence is 
in the list archives, most was off-line.) 

But O'Laughlin is too hard on Global Crossing, for example, 
when he says it "was essentially a fundraising scheme looking 
for a problem." Global Crossing had a real business plan, 
it was the first transatlantic cable that was not built by 
consortia of incumbent telcos, and it planned to take 
advantage of the rising demand for transmission by offering 
capacity to new players, who would otherwise be gouged by 
incumbents. (It did get into accounting shenanigans later 
on, as competition arose, but that was later.) What is 
most interesting is that their business plan was based 
on an assumption of demand about doubling each year (which 
is what was taking place), not doubling every 100 days. 
(This I learned when I was consulted on some of the 
litigation after the telecom crash, but by now the 
information is publicly available.) What killed them 
is that their assumption that it would be difficult for 
others to get the (special undersea) fiber, the cable-laying 
ships, the permits, ..., turned out to be wrong, and so 
a slew of competitors, inspired by the myth of astronomical 
growth rates, came on the scene. (Global Crossing's expansion 
into terrestrial fiber networks was also a major contributor.) 

One of the astounding observations is that while Global 
Crossing was assuming 100% annual growth rate in traffic, 
the industry as a whole (as well as the press, the FCC, 
and so on) were talking of 1,000% growth rates. And the 
only observer that I was able to find who noted this in 
print was George Gilder, who drew the wrong conclusion 
from this! (Details are in the paper cited above.) 

Andrew 

P.S. Some interesting materials from telecom bubble era 
are available at 

https://www-users.cse.umn.edu/~odlyzko/isources/index.html 

On Sun, 12 Nov 2023, Dave Taht wrote: 

> Aside from me pinning the start of the bubble closer to 1992 when 
> commercial activity was allowed, and M&A for ISPs at insane valuations 
> per subscriber by 1995 (I had co-founded an ISP in 93, but try as I 
> might I cannot remember if it peaked at 50 or 60x1 by 1996 (?) and 
> crashed by 97 (?)), this was a whacking good read, seems accurate, and 
> moves to comparing it across that to the present day AI bubble. 
> 
> https://www.fabricatedknowledge.com/p/lessons-from-history-the-rise-and 
> 
> In the end we sold (my ISP, founded 93) icanect for 3 cents on the 
> dollar in 99, and I lost my shirt (not for the first time) on it, only 
> to move into embedded Linux (Montavista) after the enormous pop 
> redhat's IPO had had in 99. The company I was part of slightly prior 
> (Mediaplex) went public December 12, 1999 and cracked 100/share, only 
> to crash by march, 2000 to half the IPO price (around $7 as I recall), 
> wiping out everyone that had not vested yet. I lost my shirt again on 
> that and Montavista too and decided I would avoid VCs henceforth. 
> 
> I am always interested in anecdotal reports of personal events in this 
> increasingly murky past, and in trying to fact check the above link. 
> 
> So much fiber got laid by 2000 that it is often claimed that it was at 
> least a decade before it was used up, (the article says only 2.7% was 
> in use by 2002) and I have always wondered how much dark, broken, 
> inaccessible fiber remains that nobody knows where it even is anymore 
> due to many lost databases. I hear horror stories... 
> 
> The article also focuses solely on the us sector, and I am wondering 
> what it looked like worldwide. 
> 
> I believed in the 90s we were seeing major productivity gains. The 
> present expansion of the internet in my mind should not be much 
> associated with "productivity gains", as, imho, reducing the general 
> population to two thumbs and a 4 inch screen strikes me as an enormous 
> step backwards. 
> 
> (I have a bad habit of cross posting my mails to where older denizens 
> of the internet reside, sorry! If you end up posting to one of my 
> lists I will add a sender allows filter for you) 
> -- 
> :( My old R&D campus is up for sale: https://tinyurl.com/yurtlab 
> Dave Täht CSO, LibreQos 
> 

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