Level 3 Communications
Question to Tiddman

Format for Printing

Format for printing

Request Reprints


By Tiddman
October 31, 2001

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

And by 2004-2005, the chance of one or more of those empty conduits being needed for a new load of state-of-the-art fiber and state-of-the-art optronics is also near 100%.

Yes, and not for the reasons that a lot of people think. Some "analysts" just look at the total amount of capacity that you can have in one conduit, and then assume that when you start to run out of capacity there, you would start to fill the other conduit (as if these were just big water pipes or something).

But I don't think that this is necessarily the case. The question is, where can you most COST EFFECTIVELY create new capacity? Say you have one conduit that is full of fiber and is currently at 40% capacity (i.e. it's full of fiber, but only 40% of it is lit), and another conduit that is empty, and you have customers that want a bunch of new capacity. It might very well be possible to blow new fiber through the empty conduit and light it with the newest equipment at a lower UNIT COST than lighting the fiber you already have laid in the first conduit. When you consider price/performance increases of 40-120x from one generation of fiber and equipment to the next, that seems quite feasible. That is, it might cost 3x as much to blow new fiber and buy the latest equipment, but if you get 40x as much performance, it's still worthwhile (very much so).

So you might be in a situation where demand is increasing, but you leave "some" or "most" of the fiber in one of your conduits unlit, because it isn't cost effective to do so -- compared to running new fiber and equipment.

Of course, if you don't have any empty conduits... well... your competitors with conduits are going to eat your lunch.

This is a major point that I think a lot of analysts miss. They say "well I have a conduit full of 196 pairs of fiber, and it's only at 20% capacity, thus current demand for bandwidth has to increase by a factor of 4 before I even use up this fiber, so it will be a long time before I even get to the new conduits". This is where the "fiber glut" argument comes from.

But it's not true! I might be only 20% of the way through lighting the fiber in one conduit, and new equipment comes out that will give me a 40x increase in capacity if I blow new fiber, I'll forget about that 80% of fiber in the conduit -- it will never be lit or used -- and blow new stuff that provides me a compellingly lower unit cost of bandwidth.

Crowe said this years ago, that a majority of the fiber in the ground will remain unlit, because it won't be cost effective to light it... and I'm just now getting it.



TMF Money Advisor
Got money questions? Your answers are just a phone call away! TMF Money Advisor puts you in touch with an objective Financial Planner whenever you need it.