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Fiber Overbuild

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  • Paul Rosa
    Here s a good article from today s Portland Oregonian discussing the massive overbuild of fiber optic infrastructure. It s rather lengthy, but very
    Message 1 of 2 , Dec 8, 2002
    • 0 Attachment
      Here's a good article from today's Portland Oregonian discussing the
      massive overbuild of fiber optic infrastructure. It's rather lengthy,
      but very informative.

      Amid telecom ruins, a fortune is buried

      12/08/02 Portland Oregonian

      JEFFREY KOSSEFF

      Oregon experienced one of the most extravagant building booms in its
      history during the late '90s.
      But today the state has little to show for about $1 billion invested
      in what was billed at the time as
      essential infrastructure.

      The money is buried -- most of it along the Interstate 5
      corridor -- in the form of more than 140,000 miles of
      fiber-optic cable. At most, 5 percent of the fiber is being
      used.

      Forget dot-coms. The truly excessive overinvestment of
      the technology boom was in the Internet's pipeline, the
      hair-thin strands of glass that snake across the state
      and nation, carrying pulses of light that translate into
      huge volumes of e-mail messages, Web pages and
      online video.

      Dozens of companies invested billions in fiber-optic
      networks. As it turns out, one or two would have been
      more than sufficient to meet consumer demand.

      Many lost in this race to build the information
      superhighway. Of the 33 companies that laid fiber in
      Portland, 14 have filed bankruptcy, and their investors are unlikely
      to ever earn any of their money
      back. Telecommunications stocks nationwide are worth about $1 trillion
      less than their peak
      valuation in early 2000. And thousands of Oregon telecom employees saw
      their high-paying jobs
      vanish.

      "It was very much like the gold rush," said John Walker, an economic
      historian at Portland State
      University. "For any one of them, it makes sense to build the fiber.
      For all of them to build separate
      fiber, it doesn't."

      The jobs and money are gone, but the high-tech fiber remains.

      Ten long-distance fiber-optic routes, totaling more than 4,000 miles,
      run through the state, usually
      with two or more companies each stringing dozens of strands of fiber
      within the same piece of
      conduit, according to The Oregonian's review of data from government
      agencies and telecom
      companies.

      Even applying conservative estimates to costs of construction, the
      companies spent more than $570
      million laying long-distance fiber cables across Oregon, and they
      shelled out at least $265 million
      more equipping the 5 percent of fiber that is used. Then they spent
      more than $170 million more
      digging up Portland streets to connect mainly downtown businesses.

      If they need the remaining 95 percent of the fiber in the future,
      companies will have to spend tens of
      billions of dollars more to make it usable by placing lasers and
      amplifiers on the route.

      It's the financial equivalent of building 10 Fox Towers, one next to
      another, only to be surprised by a
      95 percent vacancy rate.

      "You feel everybody involved either knew or should have known the
      spectacular risks that were
      taken," said Reed Hundt, chairman of the Federal Communications
      Commission from 1993 to 1997
      and now a senior adviser at the high-profile business consulting firm
      McKinsey & Co.

      The fiber-optic building boom took place nationwide, but it was
      particularly frenzied in Oregon, the
      most direct path to run fiber between two high-tech meccas -- Silicon
      Valley and Seattle. And
      telecom carriers also use Oregon to connect their U.S. networks to
      undersea cable from Asia.

      The shakeout from these disastrous investments partially explains
      Oregon's deep economic
      problems. Not only did the fiber carriers slash thousands of jobs in
      the state, but thousands more
      were cut at the area's numerous equipment makers such as Tektronix and
      now-defunct Oresis
      Communications.

      Economic historians say that while the amount of money invested and
      lost in fiber is staggering,
      such reckless spending is not unprecedented. Canals, railroads and
      telegraphs all sparked similar
      investment rushes in their technological infancy.

      And the overindulgent spending did create a reward for consumers -- at
      least those in metropolitan
      areas. The cost of transporting data has plunged, as the supply has
      far outpaced demand.

      But two questions linger. How did it happen? And was the money wasted
      or will the fiber-optic lines
      eventually be used?

      Deregulation opens door The door opened to the telecom boom in 1996.
      The federal government
      deregulated the telecom industry, making it possible for any new
      company to lay fiber across the
      nation and compete against the giants, such as AT&T and the Baby Bell
      local phone monopolies.

      Like teenagers who throw wild parties when their parents go out of
      town for the weekend, telecom
      companies and their investors put on their dancing shoes as soon as
      the regulators went away.

      "The only regulation was the free market," said David Leatherwood, who
      built Enron Broadband's
      portion of the $150 million FTV network, which runs through Oregon on
      its way to Boise, and now is
      president of Intelepoint, a Portland telecom consulting firm.

      At the time, research firms -- which often counted telecom companies
      as their top clients --
      predicted Internet traffic would double every few months.

      Stock analysts such as Jack Grubman, the former Salomon Smith Barney
      analyst, were bullish on
      telecom stocks while they were involved with the companies' business
      deals. (Congress and stock
      exchanges are now investigating Grubman for possible conflicts of
      interest.)

      Some telecom companies, including now-bankrupt WorldCom, misled
      investors as to how much of
      their networks were being used.

      Investors saw a brilliantly lit future. They poured billions of
      dollars into new and established
      companies. Level 3 Communications and Qwest Communications
      International, both of Colorado,
      emerged and built fiber along railroad tracks. The Williams Cos., a
      Tulsa, Okla., energy
      conglomerate, strung cable along gas pipelines. And the established
      companies -- AT&T,
      MCI-WorldCom and Sprint -- continued to expand.

      "This was the most deregulated, competitive story we've ever seen
      literally since the railroads,"
      Hundt said.

      The fiber glut looks like ridiculous oversupply now. But the companies
      that buried all that cable
      weren't seen as foolhardy at the time. Quite the opposite. Wall Street
      rewarded them. In 1999 and
      2000, shares of most companies with large fiber networks, such as
      Level 3 and Qwest, soared
      despite weak balance sheets and income statements.

      The companies all rode the market on the belief that the Internet
      would rapidly become not just
      another form of communication, but a way of life.

      "The hope was all these e-commerce models would take over and there
      would be massive
      downloading of video and music on the consumer side," said Glen
      Macdonald, vice president of
      Adventis, a Connecticut telecom research firm. "Everyone would be
      buying everything online instead
      of going to stores to shop."

      Even the government got into the act. The Bonneville Power
      Administration spent $50 million building
      a fiber network in Oregon, which it leases to telecom carriers and
      rural public utility districts. And the
      state of Oregon deregulated Qwest's profits in the state to help
      persuade the company to invest
      $120 million in the state, including $70 million worth of long-haul
      fiber and other network upgrades in
      rural areas.

      Demand falls short According to Telegeography, a Washington, D.C.,
      research firm, the long-haul
      networks that run through Oregon can carry 1,148 terabits of data per
      second -- enough bandwidth to
      run about 15 always-on, high-speed Internet connections for every
      person in the United States.

      The demand for Internet-supplied information has not proven that
      great. Although Internet use has
      increased, it hasn't doubled every few months. And most of the use has
      occurred not with
      high-speed cable modems but with dial-up connections, which gobble up
      less bandwidth.

      Adventis estimates that telecom companies nationwide spent $70 billion
      too much on long-haul
      networks.

      Ironically, the success of telecom technology research has contributed
      to the glut.

      A process called dense wavelength division multiplexing enables
      companies to cram more data onto
      a single fiber.

      On fiber-optic lines, voice and data travel over lightwaves. Every
      time a carrier is able to add another
      color to the spectrum, it adds another channel, capable of handling
      the equivalent of 32,000 phone
      calls at once. Some of AT&T's fibers carry traffic on 160 colors,
      spokesman Dave Johnson said.

      So it's not surprising that, according to Telegeography, less than 2
      percent of the state's long-haul
      fiber is lit, and the remainder is dark, waiting for companies to
      spend billions more equipping it with
      amplifiers and other technology that enables it to carry data. The
      companies that use the fiber and
      some other experts estimate slightly higher use -- maybe 5 percent at
      most. Today's loss,
      tomorrow's gain? Investors have a long history of investing in hot,
      unregulated technologies until
      there is a glut. And that history tells us that investors' losses may
      eventually become society's gain.

      In the early 19th century, U.S. businesses built canals throughout the
      East to cut costs of delivering
      coal, said Mark Clark, associate professor of history at the Oregon
      Institute of Technology.

      "If you wanted to build a canal, people were more than willing," he
      said. "They said, 'If canals were a
      good idea, let's keep building them.' "

      Toward the end of the century, companies invested in yet another hot
      new form of transportation --
      trains, which Hundt said closely parallel the fiber boom because of
      the huge number of builders and
      large investment.

      And fiber's earliest ancestor, the telegraph, also spawned tremendous
      excess investment, said
      Walker, the Portland State professor. After a telegraph line between
      Washington, D.C., and
      Baltimore received attention, cities across the nation built lines,
      even though they were rarely used,
      he said.

      In all three cases, the short-term result was lost money,
      consolidation and economic pain.

      The collapse of the canal industry rocked the economy, Clark said.
      Even state governments suffered
      from their canal investments.

      "You got this craze, and they built too much," he said. "The shakeout
      led to one of the first major
      recessions."

      Once the railroads were built, their owners couldn't make enough money
      to survive.

      "More than half of all the railroad mileage in the 1870s was in
      bankruptcy," Hundt noted.

      Many telegraph lines sat idle, because, as with fiber-optic lines,
      many companies built along the
      same route.

      But under each of these disastrous investments is a bright spot.

      Although many of the canals were never completed, some, such as the
      Erie, eased transportation
      for years to come. The remaining railroad giants bought up the assets
      of those that failed and
      became an economic force. Western Union amassed telegraph lines and
      became a long-standing,
      successful monopoly.

      Despite the investor casualties of the free market, Walker thinks it's
      the only way for new
      technologies to develop.

      "It is a part of how market systems work," Walker said. "When you have
      one of these discontinuous
      leaps in technology, you get one of these gold rush reactions. In some
      short-run sense it's wasteful,
      but doing things this way is better than central planning." Treasure
      awaits discovery Benefits of the
      telecom boom have begun to show in the form of lower prices, but it's
      still unclear whether all the
      fiber will ever be used.

      Bandwidth prices have plunged to where it costs 10 percent or 20
      percent of what it once did to carry
      data. For businesses especially, that has resulted in huge savings.

      The survivors, Hundt said, are buying up fiber assets at low prices,
      and they'll be ready to meet any
      demand for bandwidth for centuries to come.

      "It's not a good story for investors," Hundt said, "but it's a great
      story for the rest of the economy."

      Of course, that will require tens of billions of dollars more in
      investments to equip the fiber with
      lasers, amplifiers and other gadgets that carry bursts of light along
      the narrow glass strands.

      About 85 percent of the cost of building a fiber network comes from
      lighting it, said Kevin Dennehy,
      vice president of networks at Montana-based Touch America, which has
      fiber on the FTV route and
      is considering bankruptcy.

      "We'll be doing additional lighting as business demand dictates,"
      Dennehy said.

      But in much of Oregon, it's difficult to take advantage of the
      long-haul fiber, because local
      connections are either unavailable or too expensive.

      Outside of the Portland, Salem and Eugene areas, it's rare to find
      much competition for local
      broadband connections, creating high monopoly pricing that reduces the
      number of services sold.

      "In many communities, the connections aren't there," said John Irwin,
      chairman of the Oregon
      Telecommunications Coordinating Council, which has proposed
      legislation to increase broadband
      availability in rural parts of the state. "In other communities it's
      there, but it's so expensive that
      businesses and consumers can't afford it."

      Another problem is that many homes and businesses don't have access to
      high-speed Internet
      connections, because phone companies have not yet upgraded many of
      their local networks.

      "You've got all these superhighways out there, but you've got dirt
      roads leading up to them," said
      Jere Retzer, executive director of Northwest Access Exchange, a
      consortium that connects
      university and corporate networks in Portland.

      "There would have been good business models and potential for
      profitability if there were access out
      to the homes and small businesses."
    • refmon
      Hi, I expect the facts & figures quoted by the Oregonian are essentially correct. Based on my experience at one Portland Company, what the story is missing is
      Message 2 of 2 , Dec 8, 2002
      • 0 Attachment
        Hi,

        I expect the facts & figures quoted by the Oregonian are essentially
        correct. Based on my experience at one Portland Company, what the story is
        missing is that this whole fiasco was not just an unfortunate "gee, it
        didn't pan out", but among a myriad of other influences, it was the direct
        result of some of the worst carnival hucksters in the world teaming up with
        some of the most blustery know-it-alls in the world and trying to remold
        existing life the way they thought it should be. I was there in Portland
        and designed and installed video labs, central office video switching
        centers and many video points-of-presence around the country. Purportedly,
        these were to serve the "geometrically expanding demand" for streaming video
        and would reshape the distribution topology of broadcast television. By the
        way, the technology worked with only a few easily solved bugs. Two big
        faults:

        1) To a large extent, this was being done because it could be done-no one
        really demanded it in sufficient quantity to support the effort
        2) Nobody tells a broadcast network "our system will let you know when that
        hot LA-to-NY feed will be sent"...it's happening now, we want it now...get
        the hell out of my office. That's the networks' answer, not to mention,
        they've already got three-deep redundant systems in place.

        As I say, there were many reasons worldwide that Oregon now sits on solid
        fiber instead of bedrock, but the whole mess was not quite as gee-whiz and
        not-to-be-expected as the story sounds.

        In the process, a huge group of very fine and talented technical people lost
        their livelihoods. I expect there is a clear line in the corporate
        hierarchy above which one walked away fresh and plump, below which you
        crawled away skinned alive.

        In my current consultancies, there's a lot of drooling over the cheap, dark
        fiber, only to find out it starts nowhere and goes nowhere...hence the
        ultra-zillions required to actually tie into this ... in the spirit of
        "stupid problems require stupid solutions"...dig up each end of this wad of
        glass, build a tower, and put microwave links on it...now there's progress.

        John
        _______________________________________________________
        ----- Original Message -----
        From: "Paul Rosa" <prosa@...>
        To: <coldwarcomms@yahoogroups.com>
        Sent: Sunday, December 08, 2002 06:17 AM
        Subject: [coldwarcomms] Fiber Overbuild


        > Here's a good article from today's Portland Oregonian discussing the
        > massive overbuild of fiber optic infrastructure. It's rather lengthy,
        > but very informative.
        >
        > Amid telecom ruins, a fortune is buried
        >
        > 12/08/02 Portland Oregonian
        >
        > JEFFREY KOSSEFF
        >
        > Oregon experienced one of the most extravagant building booms in its
        > history during the late '90s.
        > But today the state has little to show for about $1 billion invested
        > in what was billed at the time as
        > essential infrastructure.
        >
        > The money is buried -- most of it along the Interstate 5
        > corridor -- in the form of more than 140,000 miles of
        > fiber-optic cable. At most, 5 percent of the fiber is being
        > used.
        >
        > Forget dot-coms. The truly excessive overinvestment of
        > the technology boom was in the Internet's pipeline, the
        > hair-thin strands of glass that snake across the state
        > and nation, carrying pulses of light that translate into
        > huge volumes of e-mail messages, Web pages and
        > online video.
        >
        > Dozens of companies invested billions in fiber-optic
        > networks. As it turns out, one or two would have been
        > more than sufficient to meet consumer demand.
        >
        > Many lost in this race to build the information
        > superhighway. Of the 33 companies that laid fiber in
        > Portland, 14 have filed bankruptcy, and their investors are unlikely
        > to ever earn any of their money
        > back. Telecommunications stocks nationwide are worth about $1 trillion
        > less than their peak
        > valuation in early 2000. And thousands of Oregon telecom employees saw
        > their high-paying jobs
        > vanish.
        >
        > "It was very much like the gold rush," said John Walker, an economic
        > historian at Portland State
        > University. "For any one of them, it makes sense to build the fiber.
        > For all of them to build separate
        > fiber, it doesn't."
        >
        > The jobs and money are gone, but the high-tech fiber remains.
        >
        > Ten long-distance fiber-optic routes, totaling more than 4,000 miles,
        > run through the state, usually
        > with two or more companies each stringing dozens of strands of fiber
        > within the same piece of
        > conduit, according to The Oregonian's review of data from government
        > agencies and telecom
        > companies.
        >
        > Even applying conservative estimates to costs of construction, the
        > companies spent more than $570
        > million laying long-distance fiber cables across Oregon, and they
        > shelled out at least $265 million
        > more equipping the 5 percent of fiber that is used. Then they spent
        > more than $170 million more
        > digging up Portland streets to connect mainly downtown businesses.
        >
        > If they need the remaining 95 percent of the fiber in the future,
        > companies will have to spend tens of
        > billions of dollars more to make it usable by placing lasers and
        > amplifiers on the route.
        >
        > It's the financial equivalent of building 10 Fox Towers, one next to
        > another, only to be surprised by a
        > 95 percent vacancy rate.
        >
        > "You feel everybody involved either knew or should have known the
        > spectacular risks that were
        > taken," said Reed Hundt, chairman of the Federal Communications
        > Commission from 1993 to 1997
        > and now a senior adviser at the high-profile business consulting firm
        > McKinsey & Co.
        >
        > The fiber-optic building boom took place nationwide, but it was
        > particularly frenzied in Oregon, the
        > most direct path to run fiber between two high-tech meccas -- Silicon
        > Valley and Seattle. And
        > telecom carriers also use Oregon to connect their U.S. networks to
        > undersea cable from Asia.
        >
        > The shakeout from these disastrous investments partially explains
        > Oregon's deep economic
        > problems. Not only did the fiber carriers slash thousands of jobs in
        > the state, but thousands more
        > were cut at the area's numerous equipment makers such as Tektronix and
        > now-defunct Oresis
        > Communications.
        >
        > Economic historians say that while the amount of money invested and
        > lost in fiber is staggering,
        > such reckless spending is not unprecedented. Canals, railroads and
        > telegraphs all sparked similar
        > investment rushes in their technological infancy.
        >
        > And the overindulgent spending did create a reward for consumers -- at
        > least those in metropolitan
        > areas. The cost of transporting data has plunged, as the supply has
        > far outpaced demand.
        >
        > But two questions linger. How did it happen? And was the money wasted
        > or will the fiber-optic lines
        > eventually be used?
        >
        > Deregulation opens door The door opened to the telecom boom in 1996.
        > The federal government
        > deregulated the telecom industry, making it possible for any new
        > company to lay fiber across the
        > nation and compete against the giants, such as AT&T and the Baby Bell
        > local phone monopolies.
        >
        > Like teenagers who throw wild parties when their parents go out of
        > town for the weekend, telecom
        > companies and their investors put on their dancing shoes as soon as
        > the regulators went away.
        >
        > "The only regulation was the free market," said David Leatherwood, who
        > built Enron Broadband's
        > portion of the $150 million FTV network, which runs through Oregon on
        > its way to Boise, and now is
        > president of Intelepoint, a Portland telecom consulting firm.
        >
        > At the time, research firms -- which often counted telecom companies
        > as their top clients --
        > predicted Internet traffic would double every few months.
        >
        > Stock analysts such as Jack Grubman, the former Salomon Smith Barney
        > analyst, were bullish on
        > telecom stocks while they were involved with the companies' business
        > deals. (Congress and stock
        > exchanges are now investigating Grubman for possible conflicts of
        > interest.)
        >
        > Some telecom companies, including now-bankrupt WorldCom, misled
        > investors as to how much of
        > their networks were being used.
        >
        > Investors saw a brilliantly lit future. They poured billions of
        > dollars into new and established
        > companies. Level 3 Communications and Qwest Communications
        > International, both of Colorado,
        > emerged and built fiber along railroad tracks. The Williams Cos., a
        > Tulsa, Okla., energy
        > conglomerate, strung cable along gas pipelines. And the established
        > companies -- AT&T,
        > MCI-WorldCom and Sprint -- continued to expand.
        >
        > "This was the most deregulated, competitive story we've ever seen
        > literally since the railroads,"
        > Hundt said.
        >
        > The fiber glut looks like ridiculous oversupply now. But the companies
        > that buried all that cable
        > weren't seen as foolhardy at the time. Quite the opposite. Wall Street
        > rewarded them. In 1999 and
        > 2000, shares of most companies with large fiber networks, such as
        > Level 3 and Qwest, soared
        > despite weak balance sheets and income statements.
        >
        > The companies all rode the market on the belief that the Internet
        > would rapidly become not just
        > another form of communication, but a way of life.
        >
        > "The hope was all these e-commerce models would take over and there
        > would be massive
        > downloading of video and music on the consumer side," said Glen
        > Macdonald, vice president of
        > Adventis, a Connecticut telecom research firm. "Everyone would be
        > buying everything online instead
        > of going to stores to shop."
        >
        > Even the government got into the act. The Bonneville Power
        > Administration spent $50 million building
        > a fiber network in Oregon, which it leases to telecom carriers and
        > rural public utility districts. And the
        > state of Oregon deregulated Qwest's profits in the state to help
        > persuade the company to invest
        > $120 million in the state, including $70 million worth of long-haul
        > fiber and other network upgrades in
        > rural areas.
        >
        > Demand falls short According to Telegeography, a Washington, D.C.,
        > research firm, the long-haul
        > networks that run through Oregon can carry 1,148 terabits of data per
        > second -- enough bandwidth to
        > run about 15 always-on, high-speed Internet connections for every
        > person in the United States.
        >
        > The demand for Internet-supplied information has not proven that
        > great. Although Internet use has
        > increased, it hasn't doubled every few months. And most of the use has
        > occurred not with
        > high-speed cable modems but with dial-up connections, which gobble up
        > less bandwidth.
        >
        > Adventis estimates that telecom companies nationwide spent $70 billion
        > too much on long-haul
        > networks.
        >
        > Ironically, the success of telecom technology research has contributed
        > to the glut.
        >
        > A process called dense wavelength division multiplexing enables
        > companies to cram more data onto
        > a single fiber.
        >
        > On fiber-optic lines, voice and data travel over lightwaves. Every
        > time a carrier is able to add another
        > color to the spectrum, it adds another channel, capable of handling
        > the equivalent of 32,000 phone
        > calls at once. Some of AT&T's fibers carry traffic on 160 colors,
        > spokesman Dave Johnson said.
        >
        > So it's not surprising that, according to Telegeography, less than 2
        > percent of the state's long-haul
        > fiber is lit, and the remainder is dark, waiting for companies to
        > spend billions more equipping it with
        > amplifiers and other technology that enables it to carry data. The
        > companies that use the fiber and
        > some other experts estimate slightly higher use -- maybe 5 percent at
        > most. Today's loss,
        > tomorrow's gain? Investors have a long history of investing in hot,
        > unregulated technologies until
        > there is a glut. And that history tells us that investors' losses may
        > eventually become society's gain.
        >
        > In the early 19th century, U.S. businesses built canals throughout the
        > East to cut costs of delivering
        > coal, said Mark Clark, associate professor of history at the Oregon
        > Institute of Technology.
        >
        > "If you wanted to build a canal, people were more than willing," he
        > said. "They said, 'If canals were a
        > good idea, let's keep building them.' "
        >
        > Toward the end of the century, companies invested in yet another hot
        > new form of transportation --
        > trains, which Hundt said closely parallel the fiber boom because of
        > the huge number of builders and
        > large investment.
        >
        > And fiber's earliest ancestor, the telegraph, also spawned tremendous
        > excess investment, said
        > Walker, the Portland State professor. After a telegraph line between
        > Washington, D.C., and
        > Baltimore received attention, cities across the nation built lines,
        > even though they were rarely used,
        > he said.
        >
        > In all three cases, the short-term result was lost money,
        > consolidation and economic pain.
        >
        > The collapse of the canal industry rocked the economy, Clark said.
        > Even state governments suffered
        > from their canal investments.
        >
        > "You got this craze, and they built too much," he said. "The shakeout
        > led to one of the first major
        > recessions."
        >
        > Once the railroads were built, their owners couldn't make enough money
        > to survive.
        >
        > "More than half of all the railroad mileage in the 1870s was in
        > bankruptcy," Hundt noted.
        >
        > Many telegraph lines sat idle, because, as with fiber-optic lines,
        > many companies built along the
        > same route.
        >
        > But under each of these disastrous investments is a bright spot.
        >
        > Although many of the canals were never completed, some, such as the
        > Erie, eased transportation
        > for years to come. The remaining railroad giants bought up the assets
        > of those that failed and
        > became an economic force. Western Union amassed telegraph lines and
        > became a long-standing,
        > successful monopoly.
        >
        > Despite the investor casualties of the free market, Walker thinks it's
        > the only way for new
        > technologies to develop.
        >
        > "It is a part of how market systems work," Walker said. "When you have
        > one of these discontinuous
        > leaps in technology, you get one of these gold rush reactions. In some
        > short-run sense it's wasteful,
        > but doing things this way is better than central planning." Treasure
        > awaits discovery Benefits of the
        > telecom boom have begun to show in the form of lower prices, but it's
        > still unclear whether all the
        > fiber will ever be used.
        >
        > Bandwidth prices have plunged to where it costs 10 percent or 20
        > percent of what it once did to carry
        > data. For businesses especially, that has resulted in huge savings.
        >
        > The survivors, Hundt said, are buying up fiber assets at low prices,
        > and they'll be ready to meet any
        > demand for bandwidth for centuries to come.
        >
        > "It's not a good story for investors," Hundt said, "but it's a great
        > story for the rest of the economy."
        >
        > Of course, that will require tens of billions of dollars more in
        > investments to equip the fiber with
        > lasers, amplifiers and other gadgets that carry bursts of light along
        > the narrow glass strands.
        >
        > About 85 percent of the cost of building a fiber network comes from
        > lighting it, said Kevin Dennehy,
        > vice president of networks at Montana-based Touch America, which has
        > fiber on the FTV route and
        > is considering bankruptcy.
        >
        > "We'll be doing additional lighting as business demand dictates,"
        > Dennehy said.
        >
        > But in much of Oregon, it's difficult to take advantage of the
        > long-haul fiber, because local
        > connections are either unavailable or too expensive.
        >
        > Outside of the Portland, Salem and Eugene areas, it's rare to find
        > much competition for local
        > broadband connections, creating high monopoly pricing that reduces the
        > number of services sold.
        >
        > "In many communities, the connections aren't there," said John Irwin,
        > chairman of the Oregon
        > Telecommunications Coordinating Council, which has proposed
        > legislation to increase broadband
        > availability in rural parts of the state. "In other communities it's
        > there, but it's so expensive that
        > businesses and consumers can't afford it."
        >
        > Another problem is that many homes and businesses don't have access to
        > high-speed Internet
        > connections, because phone companies have not yet upgraded many of
        > their local networks.
        >
        > "You've got all these superhighways out there, but you've got dirt
        > roads leading up to them," said
        > Jere Retzer, executive director of Northwest Access Exchange, a
        > consortium that connects
        > university and corporate networks in Portland.
        >
        > "There would have been good business models and potential for
        > profitability if there were access out
        > to the homes and small businesses."
        >
        >
        >
        >
        >
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        >
        >
        >
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