SYNOPSIS: The New Economy is still here-- even if Dot-Com Mania is over.

On Monday, when JDS Uniphase and SDL announced their plans for a merger -- at $41 billion, the largest technology merger so far -- my reaction was the same as that of most other people: "Who? What?" After a bit of reading established that JDS is based in Ottawa, I supplemented that initial reaction with a hearty "Eh?" What ever happened to companies whose names are recognizable, or at least give some hint about what business they are in?

But the mysterious obscurity of the companies and uninformativeness of their names are part of why this story is important. Most of the real "new economy" consists not of household names with easily understood businesses -- like -- but of less familiar companies doing mind-numbingly technical things. And the JDS-SDL merger is a reminder that while the dot-coms may have had their day, the era of the new economy is by no means over.

JDS and SDL are in the business of fiber-optics -- the use of light, rather than electrons, to carry information. To transmit a short, old-fashioned piece of plain text, like this article, copper wire will do; to transmit a concert video of the latest teenage pop star, or whatever it is that tomorrow's Web consumers will demand, glass conduits for light waves are what you need. If you, too, have been mystified by those Qwest ads -- the grungy motel with the comprehensive movie selection, and so on -- now you know what they are about (though I remain puzzled about how my willingness to "ride the light" will help Qwest's bottom line).

Fiber-optics isn't a high-profile business -- much of its product is literally underground -- but it nonetheless shares five features with more glamorous high-tech industries:

Globalization: O.K., residents of the United States have a hard time thinking of Canadians as foreigners, or indeed thinking about them at all. But this is another small step toward the dissolution of the nation-state as a meaningful economic unit.

The network economy: In a literal sense, of course, JDS and SDL are selling the stuff of which the network itself is built. But in a broader sense they are also beneficiaries of "network externalities," the way the Web creates demand for itself.

Market exuberance: As the dot-com bubble deflates, we are starting to hear mutters about an old-fashioned item called "cash." But that word is not being heard much in the fiber-optics sector. True, JDS and SDL aren't or Toy; they have real products and earn real profits. But their stock prices are nonetheless extraordinary, hundreds of times earnings. And JDS, following in the footsteps of other tech companies, has in effect used the high value investors place on its stock as the basis for a series of acquisitions -- an empire built on expectations.

Neophilia: One slightly peculiar feature of the current business environment, which I discussed a few columns back, is the positive preference of the market for companies without a past, or a low-tech business on the side. This neophilia appears to have played some role in the JDS-SDL story: the rival fiber-optics company Corning was also interested in SDL, but was unable or unwilling to match the JDS offer because Corning stock sells at more modest multiples of revenue and earnings. There may be sound business reasons for the difference, but Corning reportedly feels that the market still values it a bit like a cookware manufacturer, and is considering spinning its fiber-optics off as a separate business.

Antitrust dilemmas: Even high-tech companies are not supposed to engage in old-fashioned monopolization; and last year a report on the industry by the technology magazine Red Herring declared that "three vendors -- JDS Uniphase, SDL, and E-Tek -- own their market now and for the foreseeable future." When you realize that JDS acquired E-Tek at the end of last month, you start to wonder. But on the other hand, JDS and SDL are both genuinely innovative companies; and temporary monopoly power is justified if it is the reward for innovation.

It's a judgment call; but if you ask me, the regulators should leave JDS/ SDL alone. (On the other hand, I've said that about Microsoft too.) It's a brave new world that has such mergers in it; and we should give that new world a chance to evolve before we start to place it under too many old-economy strictures.

Originally published in The New York Times, 7.12.00