The telecommunications business has always involved some risks. But now two of telecom's largest companies are investing in thin air.

Lucent Technologies is spending $450 million on a joint venture with Seattle-based TeraBeam Networks to build communications systems that will transmit light directly between buildings, skipping optical fibers altogether. Not to be outdone, rival Nortel Networks is developing a line of similar equipment with San Diego-based AirFiber. The goal of both ventures: shoot laser beams between medium and large businesses in downtown areas or office parks, providing vastly more voice and data capacity than ordinary phone lines without the expense and delay of laying fiber-optic cable.

The explosion in the Internet means that businesses have an ever-growing appetite for bandwidth. Fiber optics, which can carry data at gigabit speeds, can readily provide that capacity, but less than 5 percent of downtown office buildings are currently "wired" with fiber. New installations take time, and construction costs can be staggering. Ever try digging up the sidewalk in mid-town Manhattan?