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The term dark fibre was originally used when referring to the potential network capacity of telecommunication infrastructure, but now also refers to the increasingly common practice of leasing fibre optic cables from a network service provider, or, generally, to the fibre installations not owned or controlled by traditional carriers.
One reason that dark fibre exists in well-planned networks is that much of the cost of installing cables is in the civil engineering work required. This includes planning and routing, obtaining permissions, creating ducts and channels for the cables, and finally installation and connection. This work usually accounts for more than 60% of the cost of developing fibre networks. For example, in Amsterdam's city-wide installation of a fibre network, roughly 80% of the costs involved were labor, with only 10% being fibre. It therefore makes sense to plan for, and install, significantly more fibre than is needed for current demand, to provide for future expansion and provide for network redundancy in case any of the cables fail.
Many fibre optic cable owners such as railroads or power utilities have always added additional fibres for lease to other carriers.
In common vernacular, dark fibre may sometimes still be called "dark" if it has been lit by a fibre lessee and not the cable's owner.
During the dot-com bubble, a large number of telephone companies built optical fibre networks, each with the business plan of cornering the market in telecommunications by providing a network with sufficient capacity to take all existing and forecast traffic for the entire region served. This was based on the assumption that telecoms traffic, particularly data traffic, would continue to grow exponentially for the foreseeable future.
The availability of wavelength-division multiplexing further reduced the demand for fibre by increasing the capacity that could be placed on a single fibre by a factor of as much as 100. As a result, the wholesale price of data traffic collapsed. A number of these companies filed for bankruptcy protection as a result. Global Crossing and Worldcom are two high profile examples.
For many years incumbent local exchange carriers would not sell dark fibre to end users, because they believed selling access to this core asset would cannibalise their other, more lucrative services. Incumbent carriers in the US were required to sell dark fibre to competitive local exchange carriers as Unbundled Network Elements (UNE), but they have successfully lobbied to reduce these provisions for existing fibre, and eliminated it completely for new fibre placed for fibre to the premises (FTTP) deployments.
Competitive local carriers were not required to sell dark fibre, and many do not, although fibre swaps between competitive carriers are quite common. This increases the reach of their networks in places where their competitor has a presence, in exchange for provision of fibre capacity on places where that competitor has no presence. This is a practice known in the industry as "coopetition".
Meanwhile, other companies arose specialising as dark fibre providers. Dark fibre became more available when there was enormous overcapacity after the boom years of the late 1990s through 2001. The market for dark fibre tightened up with the return of capital investment to light up existing fibre, and with mergers and acquisitions resulting in consolidation of dark fibre providers.
Dark fibre capacity is typically used by network operators to build SONET and dense wavelength division multiplexing (DWDM) networks, usually involving meshes of self-healing rings. Now, it is also used by end-user enterprises to expand Ethernet local area networks, especially since the adoption of IEEE standards for Gigabit Ethernet and 10 Gigabit Ethernet over single-mode fibre. Running Ethernet networks between geographically separated buildings is a practice known as "WAN elimination".
In the last decade, many higher education institutions have bought up large quantities of existing fibre optics sitting dormant. Starting in 1999, Larry Smarr, a technology director from the University of Illinois, connected the Urbana-Champaign campus to major academic, research, and telecommunications facilities in the Chicago area. At the same time, other schools began creating large urban networks to directly connect their school campuses with hospitals and large telecommunications companies in metropolitan areas. Since then, the U.S. research and education (R&E) community have been aggressively pursuing a revolutionary new means for delivering advanced networking capabilities. With the plummeting prices of fibre due to the over abundance, the option to own fibre networks has stomped out the competitive leasing of commercial circuits elsewhere. Experts say that a mile of dark fibre that in the past would have sold for $1,200, has sold for as low $200 or less. The downturn in telecommunications has offered significant savings to schools, since intercity networks may include several hundred to several thousand miles of fibre optic cable.
According to Gerry Butters,   the former head of Lucent's Optical Networking Group at Bell Labs, Moore's law holds true with fibre optics. The amount of data coming out of an optical fibre is doubling every nine months. Thus, excluding the transmission equipment upgrades, the cost of transmitting a bit over an optical network decreases by half every nine months.[dubious ] The availability of dense wavelength-division multiplexing DWDM and coarse wavelength division multiplexing CWDM is rapidly bringing down the cost of networking, and further progress seems assured.