This series of articles by George Gilder provides some interesting
technological and cultural background that helps prepare readers to
better understand and place in proper perspective the events relative to
the National Data Super Highway, which are unfolding almost daily in the
national press.  I contacted the author and Forbes and as the preface
below indicates obtained permission to post on the Internet.  Please
note that the preface must be included when cross posting or uploading
this article.

The following article, FEASTING ON THE GIANT PEACH, was first published in Forbes ASAP, August 26, 1996. It is a portion of George Gilder's book, Telecosm, which will be published in 1996 by Simon & Schuster, as a sequel to Microcosm, published in 1989 and Life After Television published by Norton in 1992. Subsequent chapters of Telecosm will be serialized in Forbes ASAP.

According to Web-Counter, this article has been accessed times since August 25,1996.





     What is all this commotion in Massachusetts?  The very source of
the ARPAnet at Bolt, Beranek & Newman--the cradle of the Internet--
Massachusetts is falling to the forces of Auntie Spiker and Aunt Sponge.
     These are the mingy ladies in the Roald Dahl story who rejoiced in
James's Giant Peach as long as it didn't take flight.  Now Massachusetts-
-the state that once barred Apple shares as a likely West Coast
levitation scam--looks askance at the Giant Peach of the Internet, aloft
in Silicon Valley and around the globe, with James Clark, James Gosling,
Netscape and a series of thin-air IPOs.
     Howard Anderson of Boston's Yankee Group, long an Internet tout,
thinks those wired yahoos on Wall Street and Sand Hill Road are blind to
the inevitable sine waves of advance:  What goes up must come down, he
sternly avers, trying to bring some simple physics to the scene, as if
the Internet has to obey the law of gravity.
     And now Bob Metcalfe--Metcalfe himself!--inventor of Ethernet,
pioneer of ARPAnet and the founding father of the networking era.  Here
he is, prophesying lugubriously into every megaphone he can grasp, from
the New York Times Magazine and PBS to U.S.  News & World Report and
InfoWorld, that the Internet will collapse in 1996.  Metcalfe now pr
edicts a general retreat to Intranets, shielded from the public system
and unavailable to it.

Et Tu, Bob?
     Metcalfe was striking a blow against the very solar plexus of my
prophecies.  I had founded my confidence in the Internet on the
continuing power of the law of the telecosm, an edict adapted from
Metcalfe's very own law of networks.  Metcalfe's Law ordains that the
value of a network rises by the square of the number of terminals
attached to it.
     In its most basic form, this law merely captures the exponential
rise in the value of any network device, such as a telephone, with the
rise in the number of other such devices reachable by it.  Metcalfe,
however, shrewdly added in the declining cost of Ethernet adapters and
other network gear as the Net expanded.  In the law of the telecosm, I
summed up these and other learning-curve factors by incorporating into
Metcalfe's Law the law of the microcosm.
     Based on the power-delay product in semiconductors, the law of the
microcosm ordains that the cost-effectiveness of the terminals will rise
by the square of the number of additional transistors integrated on a
single chip.  Amplified by the law of the microcosm, the law of the
telecosm signifies the rise in the cost-effectiveness of a network in
proportion to the resources deployed on it and the number of potential
nodes and routers available to it.
     As the network expands, each new computer both uses it as a
resource and contributes resources to it.  This is the secret of the
stability of the Internet.  The very process of growth that releases
avalanches of new traffic onto the Net precipitates a cascade of new
capacity at Internet service providers (ISPs).  They supply new servers
and routers, open new routes and pathways for data across the Web, and
buy new terminals and edge switches to upgrade their connections to the
Network Access Points (NAPs), the Internet supernodes that in turn exert
pressure on the backbone vendors to expand their own bandwidth.
     Because all these routes and resources are interlinked, they are
available to absorb excess traffic caused by outages, crashes or
congestion elsewhere on the Net.  Because all these resources are
growing in cost-effectiveness at the exponential pace of the law of the
microcosm, and total available bandwidth on the Net is rising at the
still-faster pace of the law of the telecosm, the Internet has been able
to double in size annually since 1970 and increase its traffic two times
faster still, without suffering any crippling crashes beyond the Morris
worm of 1988.
     Impelling the growth of the largest interconnected network, the law
of the telecosm means that the most open computer networks will prevail.
Proprietary networks lose to a worldwide web.

     I wanted to answer Metcalfe's challenger.  As the apparent winner
of a previous argument over ATM and Ethernet [see Forbes ASAP,
"Metcalfe's Law and Legacy," Sept. 13, 1993], I thought I might have an
edge (after all, Fast Ethernet outsells ATM at least 20 to 1).  But when
he met me on a rainy day late in May at his Boston townhouse on Beacon
Street, where he looks benevolently across the Charles at the MIT
campus, Metcalfe was loaded for Internet bear.  At the peak of his
influence, this smiling cover boy of June's IEEE Spectrum, winner of the
1996 IEEE Medal of Honor, was ready to explain.
     "I am way out on a limb here," he says over sushi and wasabi at a
restaurant near his house.  "I actually told a World Wide Web conference
I would eat my column if the Internet didn't collapse....
     "What do I mean by a collapse?  Well, the FCC requires telcos to
report all outages that affect more than 50,000 lines for more than an
hour.  I mean something much bigger than that." I suggested that with
enough raw tuna and wasabi, his column would go down well.  But Metcalfe
was dead serious.
     The Internet will collapse and it will be good for us, and for the
Net.  "The collapse has a purpose.  The Internet is currently in the
clutches of superstition, promoted by a bio-anarchic intelligentsia,
which holds that the Net is wonderfully chaotic and brilliantly
biological, and homeopathically self-healing by processes of natural
selection and osmosis.  The purpose of the collapse will be to discredit
this ideology.
     "What the Internet is--surprise, surprise--is a network of
computers.  It needs to be managed, engineered and financed as a network
of computers rather than as an unfathomable biological organism."
     Metcalfe's intellectual targets are not hard to find.  He dubs them
the "Wired intelligentsia, epitomized by Nicholas Negroponte," and, one
supposes, author/editor Kevin Kelly and hippie mystic seer John Perry
Barlow, celebrating a "neo-biological civilization out of control."
     For example, at a recent meeting of NANOG (North American Network
Operations Group), whenever Metcalfe brought up the problems of Internet
management--the need for a settlements-and-payments process so that
people who invest in the Net backbone can get their money back--"they
kept telling me to get lost.
     "They'd tell me, 'You just don't get it, do you?' This is the worst
possible charge of the politically correct:  'You just don't get it.'
The implication is that I am a clueless newbie.
     "But I am not a newbie and I do get it:  an accelerating pattern of
wild behavior on the Internet [caused by] a breakdown of any
relationship between supply and demand for Internet services, any way of
metering usage, any method of paying back people who invest in the
backbone.  One thing is sure:  They will not be paid by biofeedback
     "The result is bad--the deterioration of the public Internet and
the rise of private Intranets.  These are not really part of the
Internet at all.  Many of them use 'hot potato routing,' throwing any
messages from nonsubscribers back into the pot.  It is a tragedy of the
commons, a shrinkage of the public network on which we all ultimately
     Since I had frequently cited Metcalfe's Law as an answer to "The
Tragedy of the Commons" argument, this charge hit home.
     Metcalfe warns that "back when Internet backbones carried 15
terabytes of traffic per month, the world's Ethernet capacity was 15
exabytes per month, a million times higher." (Exabytes, if you wonder,
add up.  While a terabyte is a 1 with 12 zeros after it, an exabyte
commands 18 zeros).  But those were last year's numbers.  Carrier of
some 40% of backbone traffic, MCI now reports 250 terabytes per month.
Just a small shift in local traffic onto the public Net can create
catastrophic cascades of congestion.
     With private networks increasingly becoming TCP/IP Intranets that
can use the Internet but shield their resources from it by "firewalls,"
the likelihood of a crippling cascade from private to public Nets grows
more acute every day.  According to Metcalfe, one way or another, such a
disaster is now at hand.
     His primary evidence is data from the Routing Arbiter at Merit (the
Michigan group that commands routing servers at every NAP and collects
Internet statistics by "pinging" routers across the Net every few
minutes).  Merit's pings yield an echo of chaos:  "a dramatic,
accelerating rise of packet losses, delays and routing instability.
This data is available on the Net.  But the Merit people are afraid of
making waves, offending the big carriers, so they don't really tell
anyone how bad it is.
     "I ask my readers [at InfoWorld], and they tell me they think the
Net has already collapsed."
     As the North American guild of network operators, what does NANOG
need?  I asked.  "One thing NANOG definitely needs," sums up Metcalfe,
"is more people in suits."  The trouble with NANOG is that it is full of
biomystics with big beards and Birkenstocks who look like Bob Metcalfe
did when he finally got his Ph.D.  from Harvard after a dramatic setback
the year before, when his thesis board flunked him at the last minute.
     (Perhaps it was because he "hated Harvard" and spent all his time
at MIT and Bolt, Beranek & Newman, laying the foundations for the
Internet with Larry Roberts rather than sitting humbly at the feet of
Crimson computer scientists refining their professorial perks and
queues.  Republished in June under the title Packet
Communication, with a new introduction from the author, Metcalfe's
thesis is now recognized as a classic text on networking that
anticipated most of the evolution from the ARPAnet to the Internet.  In
the front of the new edition is a picture of Metcalfe as a newbie at the
Harvard commencement, with a big beard and a weird shirt and jacket,
looking kind of like a bio-anarchic, Harvard-hating Hawaiian homeopath
himself, ready to help start the Internet movement back in 1973.)
     What does this all mean?  The conversion of Bill Gates into an
Internet obsessive.  The jeremiads of Metcalfe, one of my favorite
people in the industry, both as a technical seer and conservative
economic voice in a webby-minded wilderness.  What do I make of the
descent into vapor of several of my favored technologies and the
admitted biodegradation of the Net?

     Rather than debating this apparent jumble of conjectures--and for a
second time jousting with the Olympian Metcalfe--I would instead
transcend the details in a larger theme:  Marking every industrial and
economic transformation are new forms of scarcity and new forms of
     Economics has been termed the dismal science of scarcity.  Indeed,
scarcity is at the heart of most economic models; many of my critics
still live in the grip of the dismal scarcities and zero sums of pre-
Netic economics.  But what is the controlling scarcity of an information
age?  In the Industrial Age, natural resources and real estate were
scarce.  But Julian Simon of the University of Maryland has shown that,
as manifested by falling real prices, all natural resources, such as
foodstuffs, minerals, clean air and available water and energy, have
been increasing in abundance over the last century.
     If conventional resources are becoming more abundant, what is the
ruling scarcity of the information era?  Is it information?  Hardly.
The information glut has become a ruling clich‚.  As all resources--from
energy to information--become more abundant, the pressure of economic
scarcity falls ever more heavily on one key residual, and that single
shortage looms ever more stringent and controlling.  The governing
scarcity of the information economy is time:  the shards of a second,
the hours in a day, the years in a life, the latency of memory, the
delay in aluminum wires, the time to market, the time to metastasis, the
time to retirement.
     The ruling scarcities in the economy of time, however, can be
distilled to two commanding limits:  the speed of light and the span of
life.  They form the boundaries of all enterprise.
     The speed of light is the most basic constraint in information
technology.  As a key limit, the speed of light shapes the future
architectures and topologies of computers and communications.  For
example, the light-speed limit dictates that the fastest computers will
tend to be the smallest computers.  Electrons move nine inches a
nanosecond (a billionth of a second).  As computers move toward
gigahertz clock rates--a billion cycles a second--the longest data path
must be decisively smaller than nine inches.  Pulses of electromagnetic
energy--photons--take some 20 milliseconds to cross the country and one-
quarter second to reach a satellite in geostationary orbit (as you
notice in a satellite phone call).  At a gigabit per second, this means
that as many as 250 megabits of data--many thousands of IP packets, for
example--can be latent (or lost) in transit at any time, thus playing
havoc with most prevalent network protocols, such as TCP.
     Thus light speed is a centrifuge.  It abhors concentration in one
place, ordains that these small supercomputers will be distributed
across the globe and will always be near to a network node.  Although
the networks will be global in reach, they will depend on the principle
of locality:  the tendency of memory or network accesses to focus on
clusters of contiguous addresses at any one time.  Light speed imposes
limits on the pace of any one processor or conduit, and pushes both
computer and communications technologies into increasingly parallel and
redundant architectures.
     As a governing scarcity in the new economy, no less important than
the speed of light is the span of life.  Just as light speed represents
the essential limits of information technology, lifespan defines the
essential shortage of human time.  Although medical and other health-
related advances have increased the span of life in the United States
some 5 years in the last 25--while the media focused on aids and cancer,
and zero-sum pundits declared that our descendants, the scions of our
science, will live less well than we do--the ultimate lifespan remains
limited.  Indeed, the modal economic activity of the information economy
is exploitation of the technologies of the speed of light to increase
the effective span of life by increasing efficiency in the use of time.
     GDP and other economic numbers from the National Income and Product
Accounts (NIPA) totally miss the minting of new time through innovation:
the opening of parallel universes of choice in ideas, courses, arts,
letters, entertainments, therapies and communities.  Finding stagnation
and poverty and agonizing over new wealth, Morgan Stanley gapologist
Stephen Roach plumbs the shallows of NIPA for all the world like the CIA
economists who found the Soviets exceeding the United States in growth
for 17 years.  Video teleconferencing, telecommuting, teleputing,
digital wireless telephony, Internet mail, cybercommerce, telemedicine
and teleducation all are in the process of compressing the span of life
toward the increasingly thronged channels of the speed of light.
     If time is scarce, what is the growing and defining source of
abundance among all the material abundances in the information economy?
Signifying the definitive abundance in any economic era is the
plummeting price of a key factor of production.  In order to grow fast,
every new-era company must exploit the drop in the cost of the newly
abundant resource.  Companies that use the resource that is plummeting
in cost will gain market share against all other companies and will come
increasingly to dominate the economy.

     Over the last hundred years, there have been three such economic
eras.  The industrial era fed on the plummeting price of physical force
or energy, best measured in watts.  Some 30 years ago, with the
regulatory sclerosis of the nuclear and natural gas industries, the
price of watts began to plateau, dropping less than 0.7% per year for
the last 35 years.  The last 30 years brought the reign of the
microcosm, which fed on the plummeting price of transistors, manifested
in the exponential drop in the cost of computer MIPS (millions of
instructions per second) and memory bits.  For the last 30 years, the
price of a bit of semiconductor memory has dropped 68% per year.  With
this year's decline in DRAM prices, the trend line is being resumed
after a four-year hiatus.  The likely result is a sharp upside surprise
in PC sales--and thus in chips--through 1997.
     As fast as the price of MIPS and bits continues to drop, however,
this Moore's Law trend line will no longer dominate the economy.  Like a
great river headed for a falls, a new factor of production is racing
toward a historic cliff of costs.  Over the next 30 years, the spearhead
of wealth creation will be the telecosm, marked by the plummeting cost
of bandwidth--communications power--measured in gigabits per second.
     This result means that the growth of bandwidth will outpace the
growth of processor power.  After an entire career keyed on Moore's Law,
Bill Gates remains skeptical, foreseeing an era of middleband nets, with
shared cables bogging down in gigabytes from tomcruise, com/vrml and
fiber gushing into twisted copper cul-de-sacs.  The usually savvy
Network Computing columnist Bill Frezza believes that bandwidth is
inherently a slower-moving technology than processing, because bandwidth
has to be delivered at once to an entire area while processors can be
sold one at a time.  Robert Lucky, Bell system laureate, and Paul Green
of IBM debated these points two decades ago.  Stressing the dependence
of bandwidth on the labor-intensive digging of trenches and stretching
of wires across continents and under seabeds, Lucky doubted that
communications could ever be truly cheap.  Paul Green, a computer
network man, thought that digital computer communications could join the
Moore's Law learning curve.
     The evidence mounts that Green was more than right.  Impressed by
Green's own achievements in fiber optics, Lucky now acknowledges that
communications power will grow at least tenfold more than computing
power over the next decade.  Using the rough metric of Moore's Law,
computer power doubles every 18 months.  Bandwidth is now doubling at
least every year.  Over a 10-year period, this means a hundredfold rise
in computer power and at least a thousandfold rise in bandwidth,
measured at any point in the network from the home to the backbone.
     The reason communications power has lagged behind computer power is
not the difference in technology but in regulation.  Moore's Law in
bandwidth has given way to what venture capitalist Roger McNamee calls
Moron's Law, the labyrinthine tangle of tariffs and rulings and FCC
dockets that frustrate the implementation of communications advances.
With an acceleration of technology and a tsunami of new Internet demand
for bandwidth, this bottleneck is breaking at last.
     Backbone capacity is leaping upward today.  As TCP/IP coinventor
Vinton Cerf of MCI told Forbes ASAP in December, his company correctly
predicted its backbone bandwidth would increase from 45 megabits per
second to 155 megabits per second this year, or by a factor of nearly
four.  But on March 11, MCI Vice-President of Enterprise Marketing
Stephen VonRump told Gordon Cook of the Cook Report on the Internet that
MCI will jack up the speeds to 622 megabits per second before the end of
the year, or nearly fifteenfold in one year.  Meanwhile, cable modems,
telco Digital Subscriber Line technologies (from HDSL to ADSL and SDSL)
and digital wireless advances promise even larger factors of expansion
in the bandwidth to homes, though unlike the backbone expansion, the
impact will be incremental.
     Shaping the future, however, will be breakthroughs in laboratories.
As "Into the Fibersphere" maintained, the ultimate source of bandwidth
expansion is the immense capacity of optical fiber.  Now comprising a
global installed base of 40 million miles (some 25 million miles in
North America), each optical fiber, as Paul Green of IBM estimated to
Forbes ASAP four years ago, commands an intrinsic available
bandwidth of 25,000 gigahertz.  At the time, the world record
transmission over a significant distance was still approximately 20
gigabits per second, and the highest deployed capacity was just 2.5
gigabits per second.  Moreover, the light pulses had to be converted to
electronic pulses every 50 to 70 kilometers to amplify and regenerate
the signal.  This electronic bottleneck restricted the speed of long-
distance transmission to the maximum speed of the optoelectronics, or
some 10 gigahertz.  So Green's projections provoked incredulity in many
     Early this year, however, Green's visions were becoming more
plausible.  On Feb. 26, 1996, at the conference on Optical Fiber
Communication (OFC '96) in San Jose, Calif., papers from Lucent
Technologies' Bell Labs, Fujitsu and NTT Labs all reported successful
transmissions at a landmark rate of a terabit per second, one twenty-
fifth of Green's limit.  For these terabit rates, Fujitsu and Bell Labs
used between 50 and 55 separate bitstreams or wavelengths, each some 20
gigabits per second.  NTT, which employed 10 separate bitstreams, also
reported diffraction grating receivers that could resolve 64 different
wavelengths at once.
     At the same time, erbium-doped fiber amplifiers were smashing the
electronic bottleneck.  Impelled by a pump laser (light amplification by
stimulated emission of radiation), these all-optical amplifiers are now
being deployed in networks around the world.  They open a new era.
Simple broadband amplifiers made of a coiled fiber thread, they replace
optoelectronic repeaters comprising nine custom bipolar microchips that
must be duplicated for every frequency or modulation scheme used in the
fiber.  Thus the new amplifiers make possible the creation of vast
broadband fiber networks bearing hundreds or even thousands of separate
carriers, and permit the sending of thousands of separate messages
around the globe or under the seas entirely on wings of light.  The
bandwidth of these all-optical amplifiers is now up to 4.5 terahertz, or
close to 20% of Green's estimated limit.
     The ultimate capacity of fiber is not a merely academic issue.  At
a rate of 4,000 miles a day, fiber deployment is beginning to make a
dent in neighborhoods.  David Charlton of Corning estimates that over
the past five years, the top 10% of U.S. households, comprising most of
the early technology adopters, have drastically improved their access to
fiber.  Five years ago these homes were, on average, 1,000 households
away from a fiber node; this year, they are just 100 households away.
Milo Medin of @Home estimates that 15% of U.S. cable TV subscribers had
systems directly connected to fiber nodes at the beginning of 1996.  By
the end of the year, that number will be close to one-third.
     Hostility to cable TV remains high and politically useful; many
city governments subsist on cable TV franchise fees and regulate these
companies into a stupor.  Eerily mimicking computer experts of the 1960s
who attested that telephone wires were too beset with noise and
interference to carry digital data, telco experts today pronounce cable
plant entirely unsuited for Internet bits.  But the fact remains that
cable TV coax is the only truly broadband link already in most U.S.
     Flaws in the transmission of analog video, in which every glitch of
interference is visible on the screen, fall away in digital systems that
can deliver flawless images at a signal-to-noise ratio more than 1,000
times lower.  DirecTV, for example, does not outperform cable TV because
it is harder to send a signal a few thousand feet down a coaxial cable
than to zap it to a satellite 23,600 miles away, beam it to an 18-inch
dish on a roof, then send it down a coaxial cable to your TV.  The
superiority of Directv derives from its digital nature.  Essentially,
the picture is created in the set rather than at the station.  Using a
variety of new cable modems, possibly including Cisco and Terayon's CDMA
for upstream signals (CDMA finesses interfering frequencies by spreading
codes through them all), cable TV plant will prove to be entirely
adequate for digital transmissions, both upstream and downstream.
     But what about switching, ask the critics of cable?  Claude Shannon
of MIT and Bell Labs, the inventor of information theory, had the answer
in 1948:  Bandwidth is a replacement for switching.  Rather than
performing the processing at some central point, you use routers in the
Net and filters in the terminals.  If you have adequate bandwidth, you
can emulate any switching topology you want.  Cable commands a potential
of some 8 gigabits per second of two-way bandwidth.  Linked to the
potential terabits of fiber bandwidth, cable plant has as much chance of
accommodating the explosive growth of the Internet as the telcos do.
     The two essential models for the distribution of information are
select and switch or broadcast and select.  Select and switch is based
on intelligence in central servers that search databases for desired
material, and on intelligence in switches that channel the material to
the desired address.  Select and switch uses computer power at the
servers and switches to compensate for the lack of bandwidth on the
network and the lack of storage and processing power in the terminals.
By contrast, broadcast and select is based on bandwidth in the network
and on intelligence and storage in the terminals.
     Envisaging video servers, information warehouses and other
centralized schemes, select and switch is the model pursued by much of
the industry today.  In some schemes, agents from networked terminals
search through large banks of data looking for specified items, which
are switched through the network to the terminals.  Computers reach out
and grab data they need from servers with large storage facilities.
     Epitomized by the World Wide Web today, the marvels of this select-
and-switch model are evident to us all.  It is far superior for personal
two-way communications and one-to-one file transfers.  But it is not
superior for everything, as companies trying to send movies point-to-
point over ATM switches discovered in Orlando and elsewhere.  The
success of select and switch, using the storage of servers, has been too
total for the health of the Internet.
     In its extreme form, select and switch contravenes the laws of the
microcosm and telecosm.  These laws will increase storage at the
terminals far faster than at the centralized server and will expand the
network's bandwidth faster than its switching capability.  For many
uses, the broadcast-and-select method is appropriate--indeed, inevitable-
-and its spread will relieve many of the pressures on Internet capacity.
     Broadcast and select is the system used in wavelength division
multiplexing systems in the new multi-bitstream terabit-per-second fiber
tests.  Broadcast and select conforms closely with the strengths of the
cable system.  In late April, for example, Wave Systems (where I serve
as a director) launched its Cablepc project in the heart of Silicon
Valley with the Palo Alto Cable Co-op.  Supporting the test are 26 other
companies with equipment and services, including cable modems from Com21
and En Technology; a merchandising engine from; the Destination
PC/TV from Gateway 2000; game machines from MAK Technologies; and
content from Simon & Schuster Interactive, Network News, William Morris
Agency, Microsoft's interactive software arm and an array of CD-ROM
     This system uses cable bandwidth to broadcast huge amounts of
digital information and entertainment.  Originating anywhere from the
World Wide Web and DirecTV satellites to CD-ROMs on a PC, the rush of
bits will be filtered and downloaded by the PC at the programmable
specifications of the viewer.  Customers pay for material by the piece
and only when they choose to decrypt it through an onboard "credit chip"
or WaveMeter that may be periodically tapped over telephone lines from a
transaction center.  Rather than millions of people downloading new
versions of Netscape one at a time over 28.8 modems, for example, you
can program your machine to download all new Netscape browser releases
to your hard drive when they are broadcast, probably late at night.  The
next day you can decide whether to buy, save or delete the program.
Explains new Wave Systems president Steven Sprague, "This system creates
a new channel where the customer pays only for what is used, when it is
used, and the owner of intellectual property benefits from each use."
     Together with systems of mirroring, replicating and local buffering
being pioneered by @Home, the Cablepc project is one of many ways to use
cable bandwidth to relieve pressure on the Net and to exploit the ever-
rising intelligence and storage in the terminals.  Other broadcast-and-
select systems include PointCast for the PC, which uses the screensaver
as a way to display programmably filtered news and other information.
Another large contribution of broadcast-and-select bandwidth for the WWW
will come from digital satellite systems, such as DirecTV, that devote
channels to Internet services.
     Meanwhile, coming to the rescue of the Net backbone are an array of
technologies incorporating asynchronous transfer mode (ATM), an
elaborate set of standards for broadband switching.  Supported by some
800 companies in the ATM Forum, ATM resembles RISC (reduced instruction
set computer), which accelerates speeds by making all instructions the
same length and processing them in silicon.  Similarly, ATM breaks all
data into 53 byte cells, small enough to be processed in a semiconductor
chip at speeds fast enough to accept voice, video or data at once.
Conceived as an end-to-end system from your phone or PC through the
"cloud" to your Internet service provider and beyond, ATM seems a
panacea for the protocol zoo emerging in data communications.
     ATM to the desktop faces dire challenges, however.  Paul Green
noticed that the most popular booth at the early May ATM Year '96
conference in San Jose was by a company called Ipsilon.  Now partnering
with Hitachi, Ipsilon makes an IP switch that dispenses with all ATM
software and uses ATM cells only for fast hardware switching.
Similarly, NetStar [see Forbes ASAP, "Angst and Awe on the Internet,"
Dec. 4, 1995], now being purchased by Ascend Communications for $300
million in stock, offers an IP crossbar switch in gallium arsenide with
a backplane throughput of 16 gigabits per second.  Meanwhile, vendors of
Fast Ethernet and Gigabit Ethernet attracted increasing attention.  Why
transform your network when you can get most of the advantages of ATM
through new forms of Ethernet and TCP/IP?  But in one form or another,
ATM switches are still the fastest switches and use their advantage in
silicon integration to dominate the top-of-the-line slots in the
backbone of the Internet.

     The readers of Forbes ASAP will recall Gordon Jacobson and Avi
Freedman, East Coast ISPs who have graced these pages contemplating a
national network.  Tonight, in New York, they are debating the future of
the Net with each other and with two executives from a San Diego company
called ATMnet who have similar ambitions.  I am there to get a view from
the pits of the Internet on Metcalfe's lament.  Jacobson has a problem,
though.  He wants to take us to Le Colonial on East 57th Street, which
he describes as the hottest bar and best French-Vietnamese restaurant in
the city.  But the bearded Avi Freedman has shown up in a green T-shirt
and Birkenstock sandals, which won't cut it at Le Colonial.
     A second-floor hideaway, Le Colonial looks like Rick's place in
Casablanca, so they say, and it sounds like a bar on the Champs-
Elysees.  More important to guru Gordon, it allows him to flaunt a
tycoon's cigar, unlike P.J. Clarke's, his other favored haunt, which has
succumbed to nicotine correctness since Dan Jenkins's novel on the
Giants, Semi-Tough, celebrated its smoke and grit.  Unlike P.J.
Clarke's with its elderly Irish trolls, Gordon tells us, Le Colonial
offers "the most beautiful bartender in all New York.  You got to see
her." Avi, though, has more important things on his mind.  Polynomials.
     They're a dilemma, those polynomials.  But Gordon decides to act
anyway.  We will start out with dinner at Clarke's and then move on to
Le Colonial for after-dinner drinks.  At the bar, Le Colonial will
tolerate the T-shirt, and perhaps, with adequate lubrication, we will be
able to relieve the pressure of the polynomials.
     The Internet is in the process of a horizontal explosion, with new
network exchange points popping up everywhere--two in L.A., one each in
Tucson, Phoenix, Atlanta, Cincinnati--you name it, a hundred or more
network exchange facilities coming online.  ATMnet is beginning one in
San Diego and has plans to participate in those in L.A.
     Meanwhile, the P.J. Clarke's waiter, delivering salad with home
fries well done and a Diet Pepsi, is struggling with the demands of
serving different meals to five customers (that's 25 different
possibilities).  With mental buffers overflowing and packet losses
mounting, he resolves on a polling algorithm, offering the plate to each
of us around the table before settling on Avi.  Gordon is looking
worried; Avi is questioning his confidence that ATM switching can
resolve most of the complexity problems on the Internet.

     I ask whether the problem arises from scanty RAM buffers in the
Cisco routers.  Avi says no.  An entire global routing table still takes
just 14 megabytes and virtually everyone on the Net can now handle that.
Soon they will be able to handle a gigabyte of routes, no sweat, enough
to deal with any foreseeable growth of the Net.  Yes, I observe, it's
exponential; I talk about it all the time.  No, Avi corrects me,
complexity growth is not exponential.  It is polynomial.
     This problem will have to wait, however, says Gordon, hailing the
waiter. It's time to leave for Le Colonial. Gordon wants Jim Browning
and John Mevi of ATMnet to explain how their ATM systems can transcend
all these complexities.
     ATMnet is visiting New York to consult with Gordon and Avi about
ATMnet's plans to create a new national 155-megabit backbone across the
country. ATMnet already has a 155-megabit-per-second backbone on the
West Coast connecting San Diego, L.A.  and San Francisco. But they are
dependent on the caprices of long-distance carriers to cross the
country. Gordon pays the waiter and we're off to Le Colonial.
     After dinner, Avi's T-shirt and sandals pass. But upon arrival,
Gordon is crestfallen:  The exponential bartender is off for the night.
When Gordon recovers, we all troop to a table in the corner. Thronging
the room are models in miniskirts--tall, lithe and pneumatic. Across the
table, in front of a large framed photograph with a wraithlike image of
Ho Chi Minh in a Huey Newton chair, a sleek young couple in black
hungrily writhes through hot kisses.  A sultry Asian waitress in a red
kimono blouse emerges from behind palm leaves to take orders of port,
Courvoisier and Diet Pepsi.  Avi is worried that we still don't get his
point about the polynomials.
     He wants to correct me:  Strictly speaking it is not exponential
(that's when the exponent rises), it is polynomial (the variable
n rises).  In this case, the complexity of the network rises by
n nodes times n-1, which is not even quite the square
of n.  I got it.  The growth of Internet complexity is
polynomial.  But the growth curve still rises toward the sky, okay?
     Avi ignores my comment and cruises on.  Cisco is selling 60,000
routers a month.  It's the low end of the Net that is exploding.
Hierarchical segmentation through routers is the answer, reducing the
n squared factor to the logarithm of n.  "Log n is
wonderful," Avi says.  "It shears off complexity." The curves are
relatively flat.  But what about Metcalfe's prediction of a whopping
Internet crash in 1996?  Avi will get to that.  And what is the role of
ATMnet's ATM switches?
     Indeed.  Apparently joining Avi in ignoring these tantalizing
questions, the girl across the table raises her legs and hooks them
sinuously around the body of the sleek young man.  The waitress leans
forward to deliver the drinks, suffusing the table with exotic perfumes.
The two ATMnet promoters insist that the router problem can be overcome
through the interposition of ATM switches.
     Avi dismisses the ATM argument.  The complexity curve is still
polynomial, he says.  Whether routed or switched, the messages have to
follow the same physical routes.  The complexity is the same.  Moreover,
Avi's cell phone is on the blink and he has been out of reach for three
hours.  Gordon offers a show-off Audiovox the size of a pack of cards,
only lighter.  Avi manages to put through a call.
     The girl across the table shudders with pleasure as the man reaches
out and cups her breasts in his hands.  "The FIX is down," Avi sighs.
"What does that mean?" I ask.  That means, so I learn, a 45-megabit line
is out of service and the Federal Internet Exchange, a Washington NAP,
cannot trade routes or data with MAE East, Metropolitan Fiber Systems'
Fiber Distributed Data Interface exchange point in Vienna, Virginia.
This glitch ramifies, creating certain problems for some of Avi's new
customers in Washington.  The young man whispers something in the ear of
the girl.  She balks.  "No, I'm getting embarrassed," she says.  "Let's
leave." "I'll call back in 10 minutes," says Avi.  The pair unwrap their
entangled limbs and staggers up from the table.  Avi and the rest of us
get up to go.
     Thus ends the visit to the palmy domain of Le Colonial.  Before I
can pry in a question about Metcalfe, Avi is on the road back home to
his wife and an Internet crisis at 11 p.m., enjoying life as a Diet
Pepsi bon vivant polynomial ISP.  Anyway, it was time for fresh air.
John Mevi of ATMnet needs a break.  "Avi talks so fast it makes my ears
ring," he explains.  "You've got to understand.  I'm from a telco
     So it was that on a steamy evening in New York, on June 17, I
returned to consult Avi again on Metcalfe's predictions of a network
crash.  We met with Gordon Jacobson at Martini's, an Italian restaurant
near the Sheraton Hotel on the west side of Manhattan.  While Avi and
Gordon consume a lox pizza and several orders of pasta, I question these
men who live on the Net from minute to minute, day to day, who live in a
world of routing tables, TCP/IP address resolutions, and BGP (Border
Gateway Protocol) and Gate Daemons, about what they make of the doom
     Avi believes that Metcalfe has ascended to an elevation in the
industry that takes him out of the loop.  He really doesn't get it.  The
Merit data is mostly irrelevant.  Pings from the Routing Arbiter are
weighted as lowest-priority packets.  It is predictable and unimportant
that many are dropped and re-sent.  "That's the way the Internet works.
Like Ethernet, it is tolerant of failure.  Undelivered packets are re-
sent; they show up as a few milliseconds of delay."
     Metcalfe makes much of Merit's index of router instability,
measured by the number of routes announced and withdrawn.  In the
extreme, instability brings "route flaps," in which waves of
announcements and withdrawals spread across the Net in positive feedback
loops that congest the system.  Avi dismisses this effect.  "There have
been no significant route flaps in the last six months or more."
     A large portion of the instability problems is attributable to a
bug in Cisco router software that is in the process of being fixed.  He
confirms the findings of Ken Ehrhart of Gilder Technology Group that
shows little correlation between the router instability number and
performance of the Net measured by throughput at NAP switches.  While
all this "wild statistical behavior" went on, the Net continued to
perform stably by using other routes, circumventing the congested paths.
"That's how the Internet works."
     Avi sums it up:  "Metcalfe has become an elder statesman and now he
is doing more harm than good, spreading fear and doubt while the rest of
us solve the problems." As Ehrhart puts it, "These Merit numbers bear
bad names like 'instability,' 'packet loss' and 'delay.' Metcalfe says
these bad things are growing wildly.  But in back of these numbers what
is really growing wildly is the Internet and that is a good thing."
Richard Shaffer's ComputerLetter, for example, reports that
MCI's backbone traffic has risen fivefold in the last year.  MCI reports
that its traffic has grown a total of 5,000% since it opened the
backbone in 1994.
     Like Howard Anderson, Bill Gates, Andy Grove and other bandwidth
skeptics, Metcalfe seems to find the explosive growth of his
intellectual progeny--Ethernets and Internets--too good to be true.  All
the sages and titans seem to seek obsessively the worms in the Giant
Peach as it hurtles through the air.  The message from Avi, Gordon and
the ATMnet crew is "Let them eat worms.  We'll feast on the peach."
     Metcalfe's economics arguments are largely true.  As Michael
Rothschild's Bionomics shows, growth in natural and economic
systems depends on running a surplus in every cell.  But the cells of
the Internet are thriving today.  From the creators of the backbone who
lease their facilities, to the ISPs who are madly multiplying their
points of presence, the leading companies are attracting so much
investment and support that laggard behemoths such as AT&T, TCI and the
RBOCs are rushing in.
     The law of the telecosm depends on the principle that new computers
and routers on the Net not only use its resources but also contribute
new resources to it.  If the recent upsurge in Intranets is parasitical
to some degree (because these newcomers use the resources of the Net
without contributing resources of their own), the ultimate parasite on
the scene may be AT&T, which commands perhaps the world's largest
     AT&T has attracted some 6 million orders from newcomers for Net
service, with plans to have 20 million by the end of the year, while
lagging far behind MCI and Sprint in contributing to the Internet
system.  Until recently, AT&T's vast fiber backbones carried just 2% of
Internet traffic.  AT&T preens as the largest and lowest-cost ISP, but
its traffic mostly travels the backbones of MCI, Sprint and other
national Internet carriers.  A key to clearing the current bogs and bit
pits of the Internet and preventing a Metcalfe collapse is the enlisting
of the full-fiber and switching resources of AT&T to relieve the
pressure on the existing NAPs and backbones and to accommodate the
Internet's growth.  AT&T is currently moving to supply such support.
     The Intranets criticized by Metcalfe are crucial to the Internet's
growth.  Like the corporate PCs that spearheaded the advance of PC
technology, Intranets spread Internet technology through business,
expand the market for high-powered gear, lower component prices, enlarge
bandwidth, and bring new users and buyers onto the Net.
     As for Metcalfe's prediction of Internet crashes from private
network overflows, the fact is that no computer memory system could work
without the principle of locality--the tendency of memory accesses to
focus on a contiguous region of addresses.  The Internet is similar.
Internal corporate e-mail, for example, is about 10 times as voluminous
as remote e-mail.  Metcalfe's private Net overflow cascade is mostly a
theoretical chimera.  Like Ethernets, "the Internet works in practice
but not in theory."
     A second key fact of the Internet is that nothing in modern
computer systems could survive the combinatorial explosions of
multimillion-line software programs and multimillion-node circuitry
without the magic of the microcosm.  Semiconductors sink the complexity
into silicon, where it gives way to the exponential boon of the power-
delay product.  The performance of the circuit--measured by its speed
and low power--improves roughly by the square of the number of
transistors on the chip.
     A microprocessor using separate components would be taller than the
Empire State Building and cover most of New York state.  Most of the
problems of Internet complexity must be solved the same way that the
microprocessor solves its complexity explosion, sucking the complexity
into semiconductors and taming it on the chip.  This means that Internet
nodes would ideally be single-chip systems.  Avi is correct; it makes
little difference whether these systems are routers or switches.  Today
the backbone is being renewed by ATM switches because these devices
integrate more of the process onto silicon than any other switches.  In
the future, broadband optics will likely prevail by integrating entire
communications systems onto seamless webs of glass.

     The Internet is a human contrivance requiring finance and physical
renewal.  In practice, this means capital from phone companies and other
large institutions.  In the real world, self-organizing systems rely on
market incentives rather than bio-analogies.  Metcalfe is right that
these incentives must be protected and extended in order for the law of
the telecosm to conquer the laws of entropy.
     The key remaining obstacle to the fulfillment of the promise of the
Internet is government regulation.  This obstacle is being overcome at
last by the brute force of bandwidth abundance, stemming from
breakthroughs in fiber optics, smart radios, satellites and cable
     In every industrial transformation, businesses prosper by using the
defining abundance of their era to alleviate the defining scarcity.
Today this challenge implies a commanding moral imperative:  to use
Internet bandwidth in order to stop wasting the customer's time.  Stop
the callous cost of queues, the insolence of cold calls, the wanton
eyeball pokes and splashes of billboards and unwanted ads, the constant
drag of lowest-common-denominator entertainments, the lethal tedium of
unneeded travel, the plangent buffeting of TV news and political
prattle, the endless temporal dissipation in classrooms, waiting rooms,
anterooms, traffic jams, toll booths and assembly lines, through the
impertinent tyranny of unneeded and afterwards ignored submission of
forms, audits, polls, waivers, warnings, legal pettifoggery.
     All these affronts once were tolerable in an age when the
customer's time seemed abundant--an available economic externality in an
economy of material scarcity.  All are intolerable in an age of
compounding abundance, pressing down on the span of life as the
irreducible scarcity.
     For all this abusive waste of the most precious resource, the
remedy is the Net.  Businesses must use its defining abundance--MIPS,
bits and gigahertz--to redress the residual scarcity of time.  A key way
to save time is to economize on space--geography.  In practical terms,
there is only one way to collapse time and space together.
     That is to relegate more and more of the routine functions of life
to microchips, where room expands as space contracts, and where
operations cycle in nanoseconds, and then to interconnect the chips
through the technologies of the speed of light.  This is the promise of
the Internet and it will keep the Giant Peach aloft and ascendant in the
new global economy of bandwidth abundance.