During the last few months, the national media have given a lot of high-profile coverage to the so-called "fiber glut" that apparently is plaguing the United States.
Statistics quoted in articles in The Wall Street Journal and The New York Times reveal about 39 million miles of fiber have been installed in the United States, but only about 2.6 percent is in use. The excess capacity has driven down prices and quickly commoditized long-haul, high-speed transport--a business many entrepreneurs and investors wanted to capitalize on in the late 1990s.
While it may seem like carriers, such as Level 3 Communications Inc. (www.level3.com), Qwest Communications International Inc. (www.qwest.com) or Williams Communications Group Inc. (www.williamscommunications.com), had an arduous task in putting millions of miles of fiber in the ground, they actually did the easy job first. They were able to lay fiber along established rights of ways, sometimes at the rate of a dozen or more miles a day. Though time consuming, it wasn't all that complicated to bring broadband transport to the city limits.
But in most markets, the city limits are where the broadband capabilities seriously diminish. High-speed transport comes to a screeching halt as it runs into antiquated basic telephony infrastructure in the metro area and last mile that cannot handle the same amount of traffic at the same velocity.
Several companies have begun to address this bottleneck with higher-speed metro optical networks and direct connections to major buildings. On the residential front, progress is being made as telcos, cable companies and DLECs enhance their existing infrastructure to bring broadband to the masses.
The key to resolving the perceived fiber glut is to drive demand by putting broadband in the hands of consumers and businesses. High-speed Internet access is addicting, and so to will be the services--such as online gaming, streaming media, and video-on-demand--that they'll be able to purchase once the metro and local bandwidth bottleneck has been shattered.
Investors can't give up now. If they were willing to pour money into "easy" projects, like building national and international next-gen long-haul networks, they should be willing to bite the bullet and help fund the local and metro broadband network buildouts that will break the bottleneck and drive usage of those gluttonous long-haul networks.
GAIL LAWYER
EDITOR IN CHIEF
