Telecosm: How Infinite Bandwith Will Revolutionize Our World
by George Gilder
Free Press. 368 pp. $26.00

The Industrial Revolution of the 19th century was not perceived as a distinct period of human history until a generation or two after it had taken place. Its greatest contemporary observer, Karl Marx, was positively hostile to the society then being born. By contrast, today’s information revolution has been one of the most self-conscious—and self-gratulatory—social transformations in history, producing an extraordinary number of prophets, gurus, and heralds ready to explain and celebrate its nature and its profundity before it has played itself out.

Already in 1980, Alvin Toffler, in The Third Wave, announced that the transition we were undergoing was as momentous as the one that took humanity from the hunter-gatherer stage to agriculture. Nicholas Negroponte, Helen Cairncross, Ray Kurzweil, Manuel Castels, Kevin Kelly, Arno Penzias, even politicians like Newt Gingrich and Al Gore have cast themselves as vicars of the new age, and not one of them has adopted Marx’s bilious perspective. Instead, depending on the author, it is uniformly seen as good for the economy, good for democracy, and/or good for American values.

The guru of all optimistic gurus is George Gilder, who from the beginning has described the march of information technology in terms both lyrical and apocalyptic. The following characteristic passage occurs toward the end of Telecosm:

Imagine gazing at the Web from far in space. To you, through your spectroscope, mapping the mazes of electromagnetism in its path, the Web appears as a global efflorescence, a resonant sphere of light. It is the physical expression of the converging telecosm, the radiant chrysalis from which will spring a new global economy.

This, to put it mildly, represents a rather rosy view of the typical Internet user’s experience of computer crashes and busy signals at AOL.

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Much of Telecosm will be familiar to the legions of Gilder’s fans who have followed his writings over the years in Forbes ASAP or in his private newsletter. His basic premise is that the era of the personal computer (PC) is long dead, the victim of its own success. The PC age has been replaced by the bandwidth era (bandwidth being the signal-carrying capacity of a network) exemplified by the Internet.

This is hardly new news. But Gilder is seized by a further technological insight, having to do with the difference between “smart” networks and “dumb” ones. A smart network, one in which circuits pass through switches, is represented by Lucent Technology’s massively complex (and hugely expensive) device, the ESS-5, which makes sure that your telephone call is routed along a single physical circuit all the way between you and your Aunt Sarah in Toledo. By contrast, the archetype of the dumb network is the ether-net, the local-area-network (LAN) technology, invented by Robert Metcalfe at Xerox, that is used to connect most office computers today. Ethernet is dumb in the sense that, containing no switches, it broadcasts everything to every computer on the network, relying on the intelligence of the receiving computer to pick up only those packets of information intended for it.

According to Gilder’s gospel, smart technology is as doomed as the dinosaurs because it is premised on the mistaken view that bandwidth is scarce and needs to be conserved through intelligent networks. To the contrary, he argues: bandwidth, fertilized by new fiber-optic technologies like wave-division multiplexing, is on its way to becoming so plentiful as to be virtually a free good.

All this may seem somewhat abstruse, but there is a lot of money riding on it. Until now, much Internet traffic has been carried by traditional phone companies (like AT&T or Verizon) on their voice networks. If Gilder is right, not just data but voice calls will soon be carried by newly minted Internet service providers (ISP’s) on their new, dumb, but enormously capacious fiber-optic networks. You will no longer be metered by minute and distance (and, in the process, absurdly overcharged) for your calls but will be able to dial anywhere in the U.S. and receive, via the same device, voice calls, Internet access, and, some day, high-bandwidth video.

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There is, needless to say, a financial side to all this: from Gilder’s analysis of the relative merits of smart and dumb networks there flows a series of policy recommendations—and stock picks—that have been key to his status. Indeed, so respected a sniffer of technological trends has Gilder become that a positive forecast by him can cause the stock of an individual company to soar on the day his newsletter comes out—the so-called Gilder effect. And he has been extraordinarily prescient in many of his forecasts, the most famous of which has to do with Qualcomm, the San Diego cell-phone company that developed a technology called code-division multiple access (CDMA).

For Gilder, CDMA is the wireless equivalent of the ether-net: a way of massively expanding the amount of “spectrum” (the radio version of bandwidth) available for cellular voice-and-data transmission. Gilder has been promoting CDMA and Qualcomm relentlessly since the early 1990’s; in 1999, Qualcomm stock increased nearly 2,800 percent when the Europeans accepted CDMA as their next wireless standard. It was the best-performing stock on the NASDAQ in a year in which the hi-tech index broke all records for growth.

But, though he often implies that the best technology, like a force of nature, will ultimately win out, Gilder is a seer only with respect to technology, not politics. When Qualcomm, with the help of the Clinton administration, tried to get China to adopt CDMA, the Chinese balked and found an alternative technology. This caused Qualcomm’s stock to fall some 70 percent so far in 2000, making it one of the NASDAQ’s worst performers this year.

The Qualcomm story thus indirectly offers a good guide to Gilder’s strengths and weaknesses. For anyone interested in understanding contemporary trends, Telecosm presents a breezy and entertaining introduction to the technologies, companies, and personalities that constitute the information revolution. But Gilder invests both his analyses and his predictions with a peculiar moral passion: individuals and companies who have bet on switched networks are not just hapless investors but blinkered agents of reaction, enemies of the general progress of Western civilization. It is not altogether clear why anyone without a direct financial stake should care passionately about whether intelligence resides in the core or the periphery of an electronic network—and anyone with a direct financial stake had best exercise common sense.

Reading Gilder also raises the question of why information technology should have engendered such widespread messianic feelings. I myself am a technology enthusiast who believes that the information revolution has produced some fairly amazing results. But as in the case of many high-flying NASDAQ valuations, they cannot possibly be as amazing as their most enthusiastic cheerleaders believe. As for whether the bandwidth revolution will also lead to a wholesale social transformation comparable to industrialization, or will simply end up being a more effective way of delivering tasteless Hollywood movies to teenagers, that is a question whose answer will only come to us in the fullness of time.

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Why, then, do those convinced that the revolution is already triumphant shake their heads so sadly at those of us who “just don’t get it”? True, people want to feel good about themselves, and it helps to believe that one is contributing to some higher social purpose while pursuing self-enrichment. But it must also be conceded that the information-technology revolution really does have more going for it than previous advances in, say, steam or internal combustion (or, one suspects, than the coming revolution in biotechnology).

The mechanization of production in the 19th and early 20th centuries rewarded large-scale organization, routinization, uniformity, and centralization. Many of the great works of imagination that accompanied this process, from Charlie Chaplin’s Modern Times to Aldous Huxley’s Brave New World, depicted individuals subsumed by huge machines, often of a political nature. Not so the information revolution, which usually punishes excessively large scale, distributes information and hence power to much larger groups of people, and rewards intelligence, risk, creativity, and education rather than obedience and regimentation. Although one would not wish to push this too far, it is probably no accident that the Soviet Union and other totalitarian regimes did not survive the transition into the information age.

It is also hard to think of a technology with fewer downsides than the Internet: it neither pollutes the water nor threatens the mass destruction of human beings. Although it is possible that our dependence on sophisticated computer networks will leave us vulnerable to new forms of cyberterrorism far more devastating than the recent Melissa or “I love you” viruses, a plausible scenario remains to be demonstrated.

Gilder, instructively, goes farther. With his florid invocations of “radiant strands of silica” and his hype about the unlimited human future, he reminds us that information technology is, today, the closest thing we have to a sphere of heroic action. The best-known advocacy group for civil liberties in cyberspace is the Electronic Frontier Foundation—an appropriate moniker for what has become our equivalent of an uncharted territory full of explorers, gunslingers, desperados, and unmeasured opportunity.

Gilder’s specific virtue, and what sets him apart from other gurus, lies precisely in this ability to capture the human striving that lies behind the technology. He sees the process of technological innovation as an end in itself, an act based on creativity and risk-taking and therefore invested with large moral significance. He even convinces us that people may one day remember the stretch of California countryside along Highway 101 much as we today remember Renaissance Florence, a seedbed of something remarkable in the history of human intellect.

That one can also become fabulously wealthy hardly hurts. We live in a fortunate time: Bill Clinton’s America may not be one of utter bourgeois mediocrity, but our merits are decidedly commercial rather than republican. Our entrepreneurs need not risk their lives, only their net worth, and even failure, in Silicon Valley, is routinely regarded not as a blot on one’s honor but as a necessary rite of passage. If each age gets the prophets it deserves, we are lucky, all in all, that ours is the ardent and vibrantly intelligent George Gilder.

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