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 predicts a general retreat to Intranets, shielded from the public system and unavailable to it.

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 challenge. 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 loops.

"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 depend."

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 abundance.

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 cliché. 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.
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