The Rise and Fall of the Dotcom Bubble

The progress of browsers in the early 1990s which facilitated web pages to be viewed in a graphical format in color after that brought the benefits of the Internet to a wider community. 3The World Wide Web was to develop at an exponential rate together in terms of the number of websites as well as users as shown in Figures 1. This changed some in the business community to its potential as a means of communication also as a sales and marketing channel. 4Thus the notion of the New Economy has been hit hard since the bubble burst in early 2000. NASDAQ, the high-tech stock index, shortly after soaring to slightly over 5,000 in the first quarter of 2000, dropped precipitously in the second and the third quarters of 2000, continuing its downward trend through 2002 to roughly one-fifth its peak value. 5But the problem ran deeper than the failure of most dot.coms to make a profit. The hype around the Internet during the late 1990s included a widely accepted statistic that Internet traffic was doubling every three months. Analysts estimate that Internet traffic actually grew at a rate closer to 100 percent a year. (Marc J. Epstein, 2004)This is still hefty by most standards, but nowhere near the volume that led more than a dozen companies to build expensive fiber-optic networks, most of which remain unused. 6Millions of miles of fiber-optic lines were buried beneath streets and oceans, but only an estimated 2.7 percent of this capacity is actually being used. Much of the remaining fiber could lie dormant forever. Meanwhile, the resulting fiber glut caused bandwidth prices to plummet by an average of 65 percent, forcing most of the long-haul data-transmission companies to file for bankruptcy protectionHence two major areas of technological innovation, the Internet and advanced telecommunications hailed as ushering in a new Industrial Revolution, and indeed did help fuel the remarkable economic boom of the late 1990s, in the end, seemedto be instrumental in triggering a recession and one of the worst stock market crashes in Wall Street history.