Information please - electronic superhighway

Reason, March, 1994 by Martin Morse Wooster

ANOTHER FEATURE IN THE SEPTEMBER Wired is an interview with George Gilder, who is working on a book on the future of the "telecosm." (Gilder's views, however, are better expressed in an article in a recent issue of Regulation, dated only 1993.

Gilder predicts that, by 1995, there will be chips with 100 million transistors; by 2000, chips with 1 billion transistors will be easily available. Tens of millions of cellular phones and personal communication devices will make the nation's existing telephone web a costly anachronism. Fiber-optic cables will be superseded by "all-optical networks" of silicon fibers that "will make communications power virtually free."

These changes, says Gilder, will make the U.S. Postal Service a technological anachronism. It already costs only 13 cents to send a one-page fax coast to coast, compared to 29 cents for a letter; falling fax prices will check the Postal Service's ability to raise prices. Ultimately, Gilder argues, the Federal Communications Commission and state telephone regulators will lose their justification, since their raison d'etre is that the electronic spectrum is scarce and therefore needs the firm hand of government to ration the finite airwaves and oversee such "natural monopolies" as the local cable-television franchise and the local telephone company.

The increasingly specious argument for such "natural monopolies," Gilder contends, will become even more dubious when silicon cables enable photon-based messages to travel around the world at virtually no cost. But government can block this bright future by denying telephone-company competitors access to "dark fiber"--the one-third of the nation's existing fiber-optic network currently unused by the phone companies. Phone companies make 10 times as much money transmitting data as they do transmitting voices, and they don't want to lease the dark fiber to competitors without loading it with expensive--and, in Gilder's view, unnecessary--electronic enhancements.

Gilder cheers a recent FCC ruling that allows such competitors to the telephone companies as Electronic Data Systems, Shell, and McDonnell Douglas to buy as much "dark fiber" as they want. He feels this will stimulate a continuing fall in communications charges, which will encourage entrepreneurial drive and initiative.

"In a regime of bondless bandwidths and computational abundance, the key scarce resource will be the human mind," Gilder concludes. "Contributing the bulk of the value added and gaining most of the profits, human creativity will become ever more valuable and more highly rewarded. Slipping inexorably away into the trackless realms of human minds, economic activity will become ever harder to regulate, tax, or control."

One need not agree with every point Gilder makes (particularly when he slips into techno-mysticism) to conclude that his basic ideas are sound. It's clear that computers have freed people rather than enslaved them, and that forthcoming changes in the information world will encourage decentralization rather than strengthen hierarchy. "Infopreneurs" may be scruffy bikers, but they'll be as free to live in Louisville or Bozeman as in Silicon Valley or Manhattan. Indeed, one consequence of the information superhighway may well be an increased pride in regional identity; if there's no need to move to a big city to do your work, you won't have to live like a rootless urban sophisticate.