Cryptonomicon

by Neal Stephenson

As the capacity of optical fibers climbs, so does the economic damage caused when the cable is severed. FLAG makes its money by selling capacity to long-distance carriers, who turn around and resell it to end users at rates that are increasingly determined by what the market will bear. If FLAG gets chopped, no calls get through. The carriers’ phone calls get routed to FLAG’s competitors (other cables or satellites), and FLAG loses the revenue represented by those calls until the cable is repaired. The amount of revenue it loses is a function of how many calls the cable is physically capable of carrying, how close to capacity the cable is running, and what prices the market will bear for calls on the broken cable segment. In other words, a break between Dubai and Bombay might cost FLAG more in revenue loss than a break between Korea and Japan if calls between Dubai and Bombay cost more. The rule of thumb for calculating revenue loss works like this: for every penny per minute that the long distance market will bear on a particular route, the loss of revenue, should FLAG be severed on that route, is about $3,000 a minute. So if calls on that route are a dime a minute, the damage is $30,000 a minute, and if calls are a dollar a minute, the damage is almost a third of a million dollars for every minute the cable is down. Upcoming advances in fiber bandwidth may push this figure, for some cables, past the million-dollar-a-minute mark.