METCALFE’S LAW: UBIQUITOUS GLOBAL NETWORK

Robert Metcalfe was the inventor of the Ethernet protocol, an early and successful
method for joining computers into a network. He was also a founder of 3Com. He
made the observation, now known as Metcalfe’s Law, that
the connections of a network increase in proportion to the square of the number of nodes.

Since there is great value in being connected, Metcalfe’s
Law has been commonly modified as: The value of a network increases in proportion
to the square of the number of users.

Certainly, AT&T (American Telephone and Telegraph) prior to deregulation
would have concurred with Metcalf’s Law. For nearly 100 years, each new customer
installation made their telephone line utility both more valuable and a greater barrier
to competitive entry. Deregulation of the industry and the emergence of the wireless
network removed the protection of their proprietary network.

Over the past decade, choices of telephone carriers and methods have proliferated,
and the value of the AT&T network has been significantly diminished. When
we use the Internet to send email or search for information, we are generally not
even aware of whose network we are accessing, though we may know the portal
through which we entered.

Given these observations about the diminishing value of the network as open
systems compete, what is the techonomic perspective on Metcalfe’s Law? The
essential question is: what is the economic impact of the obvious technological
creation of a global network? Near perfect access to information.
The cost of reaching anyone or finding anything on the network diminishes exponentially
with the number of users.

One can now reach or find most anything, or anyone, from almost anywhere, almost instantly.

The combination of Metcalfe’s Law and Moore’s Law has accelerated the spread
of the global network to warp speed. Kurzweil’s “Law of Accelerating Returns”
(incremental additions result in increasing returns) is the twenty-first-century inverse
of the traditional “Law of Diminishing Returns” (incremental additions result in
diminishing returns). Unlike the valuable telephone network that allowed for linear
conversations among a few captive parties, digital information is accessible via the
network in real time as well as massively storable and searchable via intelligent
methods. With over eight billion pages cataloged by Google, you do not even have
to know where to look. No more linear searches through microfilm libraries, no
more mass mailings to incorrect addresses, no more dead-end telephone calls following
leads.

In less than a decade, the world has virtually shrunk to a desktop; virtual access
to the world’s information is at your fingertips. And the cost of this access —
measured in the savings of time, postage, false dead ends, telecommunications cost,
access cost, etc. — has plummeted as technology has moved transactions from the
tangible and time-bound world (travel, postal mail, linear telephone calls) to the
virtual world (Internet, search engines, ubiquitous computing, chat rooms, nonlinear
information retrieval, virtual conferencing). Truly, if knowledge is power, we are
the most powerful people ever to inhabit the Earth.