Economic Development: The Race for Bandwidth

A few years ago, no one could have imagined that high-tech firms would account for 40 percent of America's annual growth in gross domestic product; or that an upstart called Intel, run by a Hungarian immigrant, would be about as profitable as General Electric; or that more than a quarter of Americans would
be using the Internet; or that Silicon Valley and Seattle would be as vital to our economy as Detroit or New York.


U.S. Department of Commerce Secretary William M. Daley, speaking at the Economic Strategy Institute recently said, "Our economy is the strongest in the world, and no country is better positioned to thrive in the growing global economy. We are challenged -- but not threatened -- by competitors, and the only way we can falter in the global economy is if we keep ourselves out of the game."

Yet that is not quite the picture that emerged recently at the Progress & Freedom Foundation's fourth annual "Cyberspace and the American Dream" conference in Aspen, Colo. Executives from the computer and telecommunications industries met to discuss what many see as the major impediment to America's effective competition in the new information-driven, global economy.

Looming Crisis

According to the White House, world trade -- involving computer software, entertainment products, information services (such as databases and online newspapers), technical information, product licenses, and professional services -- has been growing rapidly over the past decade and now accounts for well over $40 billion of U.S. exports.

Most people in the high-tech industry now believe that computer networking is the future of computing -- for not only direct commerce over the Internet, but also because of a growing reliance on networks by businesses determined to maintain a competitive edge in global markets. Many in the high-tech and economic-policy analysis fields worry that America is not keeping up with a vital element of network computing -- bandwidth.



"We need bandwidth now, we need it instantly and we are not going to wait around," John Gage, director of the science office at Sun Microsystems Inc., stated emphatically. "We've got six terabits chunking along fiber these days, with nice dispersion characteristics, so the signal carries a long way. The implication of that is that, as a big company, we can stick our equipment over in Malaysia, where there are minimal regulatory problems and where we can save a lot of money, and all that means to our operation is a quarter of a second delay."

Gage says the growing need for bandwidth will be unrelenting in the years ahead and his company simply can't wait around for America to get its act together. "I'll go buy the gigabit spread spectrum military radios; I'll go buy the Cisco gigabit switch, which is a chip; I'll put them together and give gigabit backbone connectivity. Catch up, US West. Then I'll take these megabit wireless modems that let me start doing commerce or locational base computing and install them in the 15 million new cars made each year, which will be embedded in the network.

"Our world is not the small world of Intel," Gage continued. "Forty or 50 million chips a year, who cares? Let's go talk to Mitsubishi, let's go talk to Samsung -- 30 million chips a month embedded in every vehicle, every sensor, every air-conditioning unit, everything that is going to be on the Net, requiring this bandwidth. That is why bandwidth is going to be inexorable."

To bring the point home, Tim Regan, vice president and director of Federal Government Affairs for Corning Inc., the world's leading provider of fiber-optic cable, tossed a piece of 100-strand cable on the table. His company has a contract with the largest phone company in the world to install this capacity cable overseas. "We are talking about 1.28 pedabits