Overcapacity
During the dot-com bubble, a large number of telephone companies built optical fibre 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.
The availability of wavelength-division multiplexing further reduced the demand for fibre by increasing the capacity that could be placed on a single fibre by a factor of as much as 100. As a result, the wholesale price of data traffic collapsed. A number of these companies filed for bankruptcy protection as a result. Global Crossing and Worldcom are two high profile examples.
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.
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