RFC 1216 (rfc1216) - Page 1 of 4

Gigabit network economics and paradigm shifts

Network Working Group                                     Poorer Richard
Request for Comments: 1216                             Almanac Institute
                                                           Prof. Kynikos
                                                   Miskatonic University
                                                            1 April 1991


             Gigabit Network Economics and Paradigm Shifts

Status of this Memo

   This memo proposes a new standard paradigm for the Internet
   Activities Board (IAB) standardization track.  Distribution of this
   memo is unlimited.

1. Introduction

   The history of computer communication contains many examples of
   efforts to align the capabilities of processors to that of
   communication media.  Packet switching is the classic case of a
   careful tradeoff between the costs of memory, processing, and
   communications bandwidth.

   With all of the attention and publicity focused on gigabit networks,
   not much notice has been given to small and largely unfunded research
   efforts which are studying innovative approaches for dealing with
   technical issues within the constraints of economic science.  This
   memo defines one such paradigm.

2. Contemporary Network Economics

   Recent cost estimates predict a continuing decline in the cost for
   processing, memory, and communication.  One recent projection put the
   decline for $/bit and $/MIP at 99% per decade and put the decline for
   $/bps at 90% per decade.  Scalable parallel processor designs may
   accelerate the cost declines for CPU and memory, but no similar
   accelerated decline should be expected in the cost of communications.
   Such a decline would imply eventual declines in the cost of 56Kbps
   service used for voice, resulting in a negative rate of return for
   telecommunications carriers, an unlikely eventuality even if free-
   market forces are carried to their logical extreme.

   Increases in processing power create additional demand for
   communications bandwidth, but do nothing to pay for it.  While we
   will sell no paradigm before its time, the 9% difference,
   particularly after compounding is taken into account, will bankrupt
   the internet community unless a paradigm shift takes place.




Richard & Kynikos