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Reuters
28-01-2025
- Business
- Reuters
AI and fiber bust parallel is partly hallucinated
NEW YORK, Jan 28 (Reuters Breakingviews) - The qualitative parallels between Monday's artificial intelligence bust and the one that hit wildly free-spending telecommunications firms some 25 years ago are uncanny. The quantitative resemblance is mostly hallucinated. Chinese startup DeepSeek claims to be able to train and run its cutting-edge AI model at a fraction of the cost of U.S. companies like OpenAI. That confounds conventional wisdom that brute-force investment in computing power – and, to feed it, chips, data centers and energy - was the most reliable method. This parsimony slammed the valuations of companies benefitting from rising capital expenditures. Chipmaker Nvidia (NVDA.O), opens new tab lost nearly $600 billion in market value, the largest one-day wipeout ever. The pain extended from cooling specialist Vertiv (VRT.N), opens new tab to nuclear power provider Constellation Energy (CEG.O), opens new tab. Grizzled investors might have reason to fear that it's 2000 all over again. Back then, telecom providers had gone on a splurge, laying reams of fiber-optic cable to transmit data, bidding up rights to transmit over airwaves and acquiring rivals. Companies borrowed about $2 trillion globally in the five years prior to 2001, according to Thomson Reuters data. That bubble popped. Valuation multiples had grown much faster than revenue; vendors propped up demand by offering financing to buyers. As threatens to happen now, though, the biggest hit came from technological innovations with hard-to-parse names like DOCSIS, VDSL and WDM, which vastly improved the efficiency of existing infrastructure. Prices cratered and losses ballooned. The five biggest telecom equipment firms – names like Nortel Networks, Cisco Systems (CSCO.O), opens new tab and JDS Uniphase – were worth around $1 trillion, collectively, equal to nearly $1.9 trillion in today's dollars. They lost 90% in value in a little over a year. Heavily indebted builders like Global Crossing blew up. While that sounds grim, any damage this time will be more manageable. Private-sector tech investment has increased for decades, but there has been no sudden spike like in the late 1990s, when spending as a percentage of GDP jumped by nearly a third in five years. Firms driving investment now are stronger. Sure, OpenAI's $157 billion valuation could teeter. But giant companies like $3.3 trillion Microsoft (MSFT.O), opens new tab and $1.7 trillion Meta Platforms (META.O), opens new tab are the real movers. They have not piled on leverage like fiber builders did. Microsoft's credit rating is a rare AAA. The full implications of DeepSeek's breakthroughs are also still unclear: Nvidia shares regained some ground on Tuesday. There's also an upside from the last crash to consider. Yesterday's bloated investment helped create today's tech giants. Firms like Alphabet (GOOGL.O), opens new tab and (AMZN.O), opens new tab thrived as internet connections became cheaper. If the same happens to AI, companies that use it to make more compelling products, whether existing titans or startups, will be big winners. Follow @rob_cyran, opens new tab on X CONTEXT NEWS Nvidia, the U.S. maker of chips seen as crucial for powering artificial intelligence, lost nearly $600 billion of market capitalization on Jan. 27 after Chinese startup DeepSeek released a cutting-edge AI model the previous week. DeepSeek's R-1 Zero appears to perform about as well as models from ChatGPT-maker OpenAI and Facebook parent Meta Platforms. However, its developer claims that it is dramatically cheaper to train and use. DeepSeek says final training costs for the model that powers R-1 Zero were less than $6 million. For more insights like these, click here, opens new tab to try Breakingviews for free.
Local France
27-01-2025
- Business
- Local France
Calendar: France begins work to disconnect ADSL internet cables
Over the last decade France has been working to roll-out high-speed fibre internet connections to every town, village and hamlet in the country in what is know as the Plan France Très Haut Débit (very high speed France plan). This is largely complete and is on track to be rolled out everywhere - with the exception of a few 'dead zones' known as Zones blanches - by the end of 2025, according to Orange France. Now starts the next phase - the disconnection of the fixed lines that provided the old broadband connections, known as ADSL or sometimes SDSL and VDSL. Work has now started to disconnect the million of kilometres of copper cables, which will be recycled, and Orange France has published a detailed map and calendar of when the disconnections will happen. You can find the interactive map HERE, and enter your commune name or postcode to see if there is a start date for work in your area, or your commune is n'est pas programmé pour le moment (no start date yet). Work began this week in the first communes to be disconnected and Orange will then continue on a rolling programme which is due to be completed by 2030. They explain: "The historic network first brought the French fixed-line telephone, fax, the Minitel [a proto-internet project developed in France in the 1980s] then the internet and television throughout France. "The rollout of fibre optic connections across the country, a priority for the government through the France Très Haut Débit plan, and the acceleration in the adoption of fibre by the French since the Covid pandemic, have made the closure of Orange's historic network possible. "The disconnection of the copper cables network is a project undertaken by the operator of the copper network (which is Orange France). It concerns all commercial operators (including Orange) and should be completed by 2030." What does this mean for your commune? Work has begun on disconnection in just a handful of communes - of those places that do have a start date for disconnection work, most of them are after January 1st 2026. The work will then continue until 2030 (and that's if everything happens on time), so for most people there is no immediate change. If you are already connected to the internet via fibre then nothing changes, but if you are on an ADSL connection then eventually you will have to change to fibre. You can check your connection type via your bills or on your online account for your internet provider. Your internet provider should inform you well in advance of the change, and give you options on price to make the switch. Although Orange France is doing the disconnection works, the change applies to everyone - and any changes to your account will be done via your internet provider. Depending on the services that you already have (internet, TV, fixed phone line) you may be able to make the switch to fibre via a simple phone call to your provider, or via your online account. If you have an older connection, you may be sent out a new decoder box to allow you to access fibre services - although your account itself should stay the same. The changes do not affect fixed phone lines or mobile phone contracts, but it may affect how you get your TV, if you don't already have a decoder box to access TV channels. Will it be more expensive? The exact price difference - and if there is one - depends on your internet provider. If you're signing up for a new contract, most operators now only offer fibre, so there is no choice. When it comes to switching from ADSL to fibre, price comparison websites report that for most operators there is little to no difference in price, although several sites noted that the low-cost operators RED and Sosh offer the same prices only for the first six months of a new fibre contract, before reverting to a higher price.
