[Excerpt from The World Is Flat, Chapter 2, "The Ten Forces That Flattened the World," p. 57 ff.]

What Netscape did was bring a new killer app -- the browser -- to this installed base of PCs, making the computer and its connectivity inherently more useful for millions of people. This in turn set off an explosion in demand for all things digital and sparked the internet boom, because every investor looked at the Internet and concluded that if everything was going to be digitized -- data, inventories, commerce, books, music, photos, and entertainment -- and transported and sold on the Internet, then the demand for Internet-based products and services would be infinite. This led to the dot-com stock bubble and a massive overinvestment in the fiber-optic cable needed to carry all the new digital information. This development, in turn, wired the whole world together, and, without anyone really planning it, made Bangalore a suburb of Boston . . .

In the years before the Internet became commercial . . . scientists developed a series of "open protocols" meant to make everyone's e-mail system or university computer network connect seamlessly with everyone else's . . . These protocols were (and still are) known by their alphabet soup names: mainly FTP, HTTP, SSL, SMTP, POP, and TCP/IP. Together, they form a system for transporting data around the Internet in a relatively secure manner, no matter what network your company or household has or what computer or cell phone or handheld device you are using . . .

. . . Netscape wanted to make sure that Microsoft, with its huge market dominance, would not be able to shift these Web protocols from open to proprietary standards that only Microsoft's servers would be able to handle . . .

It turned out that the value of compatibility was much higher for everyone than the value of trying to maintain your own little walled network. This integration was a huge flattener, because it enabled so many more people to get connected with so many more other people . . .

. . . Booms and bubbles may be economically dangerous; they may end up with many people losing money and a lot of companies going bankrupt. But they also often do drive innovation faster and faster, and the sheer overcapacity that they spur -- whether it is in railroad lines or automobiles -- can create its own unintended positive consequences.

That is what happened with the Internet stock boom. It sparked a huge overinvestment in fiber-optic cable companies, which then laid massive amounts of fiber-optic cable on land and under the oceans, which dramatically drove down the cost of making a phone call or transmitting data anywhere in the world . . .

It was actually the coincidence of the dot-com boom and the Telecommunications Act of 1996 that launched the fiber-optic bubble. The act allowed local and long-distance companies to get into each other's businesses, and enabled all sorts of new local exchange carriers to compete head-to-head with the Baby Bells and AT&T in providing both phone services and infrastructure . . .

. . . So when the dot-com bust came along, there was just way too much fiber-optic cable out there . . .

It was a disaster for many of the companies and their investors . . . , but it turned out to be a great boon for consumers. Just as the national highway system that was built in the 1950s flattened the United States, broke down regional differences, and made it so much easier for companies to relocate in lower-wage regions, like the South, because it had become so much easier to move people and goods long distances, so the laying of global fiber highways flattened the developed world. It helped to break down global regionalism, create a more seamless global commercial network, and made it simple and almost free to move digitized labor -- service jobs and knowledge work -- to lower-cost countries . . .

The broad overinvestment in fiber cable is a gift that keeps on giving . . .

"Every layer of innovation gets built on the next," said Andreessen, who went on from Netscape to start another high-tech firm, Opsware Inc. "And today the most profound thing to me is the fact that a fourteen-year-old in Romania or Bangalore or the Soviet Union or Vietnam has all the information, all the tools, all the software easily available to apply knowledge however they want."