Here we go again?: Economist

May 22nd 2008

From The Economist print edition

A new boom in cable-laying—but this time it is rational

EVEN as data centres pop up all over the globe to support “cloud computing”, another construction boom is taking place below the waves. After years without much investment in undersea fibre-optic cables, dozens of new cables will be constructed over the next three years, at a total cost of about $7.1 billion, according to TeleGeography, a market-research firm (see chart). And this is likely to be an underestimate, since other projects are being planned.

You may be thinking: will they never learn? This new investment boom comes only a few years after a spectacular telecoms crash. In the late 1990s internet gurus convinced financial markets that worldwide data-traffic would double every 100 days; this led them to bet billions building global fibre-optic networks. In 2001 alone, network operators such as Global Crossing spent nearly $13.5 billion laying undersea cables. But when the deluge of traffic failed to materialise, the boom swiftly turned to bust...

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