The Millennial NetWorld

The NetWorld + Interop show in Atlanta this week showed all the signs of glorious excess.

There were the big booths filled with vaporware, like Ricochet’s mobile broadband network that’s only starting to be rolled out. There were a ton of new magazines and copycat booths. The most popular tchotchke seemed to be a headband holding devil horns, handed out by BSDi, a Unix vendor.

In the center of the West Hall, Avaya, a Lucent spinoff, threw a Cirque-like group of acrobats through a wispy floating set with loud music that drowned out poor Mr. T, who was trying to draw a crowd next door at Cable & Wireless. (You really had to pity the fool.) This was oddly symbolic, because even after visiting the booth and seeing Avaya’s TV commercials several times, I still can’t figure out exactly what Avaya does. (Is it German web translations?)

Most of this spectacular excess seemed wasted on the audience of 55,000. Most of them were trying to deal with simpler problems of backup, security, and capacity.

On the other hand, perhaps buyers weren’t the target audience at all. Perhaps the audience was the Wall Street types. The exhibitors at NetWorld are often called Internet “arms merchants” on The Street. They build the optical networking equipment, the DSL and cable modems, and the wireless broadband services that everyone else depends on. And while other investors in the Internet economy have been taking a bath, buyers of these stocks are still happy.

The question, however, is for how long. There are some disquieting rumblings. AT&T and WorldCom shares have been falling like Yahoo. Competitive local exchange carriers (CLECs) like Covad are called dead meat by those with 20/20 hindsight because connecting DSL modems to Bell lines has turned out to be a losing proposition.

The arms merchants have two weapon systems tempting capital to try again, however. Optical cable and switching can deliver 10 Gbps speeds per fiber that can then be used for voice, data, video, or anything else your heart desires. (Qwest, which bought U S West based on its optical network capacity, is now worth more than WorldCom.) And wireless systems for the “local loop” (phone talk for your neighborhood), running at frequencies as high as 5.8 GHz, are now said to have the capacity to bypass phone and cable entirely in local networks. The future looks like cell phones and optical cable, with no copper at all.

The question is, who’s going to buy this stuff? The Bellheads and cableheads are flat on their backs paying for upgrades that now look worthless. Their competitors are flat on their backs because piggybacking on those systems didn’t work on the bottom line. When a market is all sellers and no buyers, it falls, and it falls hard, no matter how nice its new stuff looks.

“So drink up, NetWorld,” I thought as the train took me away from the World Congress Center. The next crash may be your own.

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