2profitable and went burst culminating in what is known today as the dotcom bubble burst.Some of the casualties include WorldCom, Tyco, global crossing, Adelphiacommunications and many more.When these companies went bankrupt, their massive investment in national andinternational fiber optic networks lay unutilized and was bought for throw away prices bynew investors such Comcast and Sprint. So low were the prices that some cable wasbought for 60 US cents per Mbps per kilometre in 2002 compared to the 37 US dollarsper Mbps per kilometre the Seacom cable is costing to build in 2009.Because of the heavy investment in the cables connecting Africa, the operators have nooption but offer prices to the consumers that will ensure profitability to the investorsbecause any attempt to emulate their American counterparts will lead to failure to break even or even make a profit.
According to Gerry Butters, the former head of Lucent's Optical Networking Group atBell Labs, Moore's law holds true with fiber optics. The amount of data coming out of anoptical fiber is doubling every nine months due to improvement in modulationtechniques. Thus, excluding the transmission equipment upgrades, the cost of transmitting a bit over an optical network decreases by half every nine months. This isindeed very good news for operators and consumers alike as this effectively brings downthe cost of using an optical fiber connection for data transmission.Over the past decade alone, the cost of moving bits over fiber has dropped sodramatically that if the automobile industry could match it, you could buy a BMW for just a dollar or two.The downside to this is that operators must pass this reduction in transmission costs tocustomers. This has the effect of lowering the average revenue per user (ARPU) and theoperator must increase his customer base fast enough to break even or be substantiallyprofitable.