Narrowing Broadband
By Lincoln D. Stein
A little more than a year ago, I suggested that the Internet boom might be like the California Gold Rush ("Profit, the Prime Directive," Web Techniques, November 2000). I predicted that most pure-play e-commerce companies that rushed in to grab the gold would crash, while those responsible for the infrastructure—purveyors of pickaxes and shovels during the Gold Rush, providers of routers and fiber optics in the Internet rush—would make out like bandits.
I was half right. E-commerce companies have either gone belly-up (Webvan), have been integrated into successful brick-and-mortar retailers (Williams-Sonoma), or are still hurtling forward on the boom-years momentum (Amazon) toward an uncertain future.
However, the pickaxe-and-shovel sector hasn't made a spectacular killing either. Fiber optic makers like Nortel and Corning apparently bought into the Gold Rush mentality, investing in vast fiber optic capacity for a networking boom that never came. These companies are now sitting on a pile of debt. Corning announced in July that it was closing three plants involved in its fiber optics business. Cisco, the NASDAQ darling and purveyor of fine routers, is struggling to turn a profit and has seen its stock value drop by more than 40 percent since the beginning of the year.
Then there's broadband. Companies that provide DSL service have been going bankrupt as fast as dot-coms, with well-publicized closures of NorthPoint and Rhythms DSL providers, AT&T's plan to spin-off and possibly sell its cable division, and the financial distress of broadband ISP giant Excite@Home.<>
