Dark fiber - Wikipedia, the free encyclopedia

Dark fiber overcapacity

In the dot-com boom, a large number of telephone companies (or telcos) built optical fiber networks, each with the business plan of cornering the market in telecommunications by providing a network with sufficient capacity to take all existing and forecast traffic for the entire region served. This was based on the assumption that telecoms traffic, particularly data traffic, would continue to grow exponentially for the foreseeable future.

Unfortunately for them, the collapse of the dot-com boom left fiber supply greatly exceeding demand of even the least optimistic forecasts by a factor of up to 30 in many areas. The availablity of wavelength division multiplexing further reduced the demand for fiber by increasing the capacity that could be placed on a single fiber by as much as a factor of 100. As a result, the wholesale price of data traffic collapsed. A number of these companies filed for bankruptcy protection, or went bankrupt, as a result.

Just as with the Railway Mania, the misfortune of one market sector became the good fortune of another, and this overcapacity created a new telecommunications market sector.