The most important story of the last 30 years

By Stephen Hardy

Looking back through the Lightwave archives reminds us of a host of trends, pinnacles, and obstacles that have either propelled or impeded the advance of fiber optics. However, one event, about midway through our 30 years of publishing, stands out as the most influential. For better and worse, the Optical Bubble – that period between 1999 and 2001 when it seemed anyone who could spell f-i-b-e-r could get $20 million out of a venture capitalist – made the optical communications industry what it is today.

An Internet bandwidth demand hockey-stick curve from our July 2000 issue. While the forecasted numbers seem small compared to today's traffic, they were enough to ignite a frenzy of investment in optical networks and technology. Source: RHK Inc.

Nothing succeeds like excess

An offshoot of the Internet Bubble of roughly the same vintage, the frenzy around optical communications grew from the belief that, because of the near-term explosion in bandwidth the expected Internet boom would cause, communications capacity demand likely would double every year – or every six months or weekend, depending on the breathlessness of the prognosticator.

Spurred by this certainty, new carriers began to deploy national networks to ride up the hockey-stick-like bandwidth demand curve. Dozens of equally new systems companies appeared to deliver hardware for these new networks, while component suppliers materialized to feed the systems houses' production lines.

Life rocked. Fiber optics created numerous millionaires (on paper, anyway), helped Silicon Valley forge its reputation (all aspects of it), and kept numerous tradeshows afloat.

However, toward the end of 2001, it became apparent that bandwidth wasn't growing as fast as predicted, that eight carriers with business plans that called for control of 60% of the market couldn't succeed by focusing on the same five routes, and that having an engineering star on the top of the company masthead didn't guarantee the development of a marketable product (or, in some cases, any product). The Optical Bubble deflated even faster than it expanded, leaving a bad taste in the mouths of investors that more than a decade hasn't quite washed out.

End of the Silk Road

The end of the bubble begat several unfortunate outcomes, the most immediate of which was the Fiber Glut. Whether real or perceived, the Glut arose from the notion that those knucklehead new wave carriers had installed, then abandoned, so much fiber that new capacity wouldn't be required for years – or decades or eons, depending on the negativity of the once burned, twice shy prognosticator. It wasn't until around 2007 that infrastructure builders could propose new deployments without getting laughed out of their financiers' offices.

Consolidation at all levels of the communications ecosystem became a necessity. The previous article detailed the alacrity with which Ciena has pulled out its checkbook over the intervening years, and the formation of Alcatel-Lucent serves as another salient example of systems level consolidation. Finisar and Oclaro have aggressively followed JDSU's lead at the components and subsystems level.

The irony of the Optical Bubble is that its basic premise was sound. Network capacity demands do grow as the use of the Internet (and the services that can be carried over it, such as video) expands. Yet it seems that, thanks in part to the outsized expectations set during the bubble, then rejected after it, that a clear vision of how much capacity is needed now and in the future remains elusive.

And how to pay to enact that vision once it's finally established may prove to be the most important story of the next 30 years. Let's hope it doesn't take all 30 years for that story to be written.

STEPHEN HARDY is editorial director and associate publisher of Lightwave.