FIBER KEEPS ITS PROMISEBYGEORGE GILDER"Today, I await the death of television, telephony, VCRs,and analog cameras with utter confidence as Moore's lawunfolds." Rupert Murdoch, Ted Turner, John Malone, areyou listening?"Get ready. Bandwidth will triple each year forthe next 25, creating trillions in new wealth.Editor's note: Four years ago, Forbes ASAP published its first issue witha stunning prophecy by contributing editor George Gilder. Fiber optics,said George, had the potential to carry 25 trillion bits per second downa single strand. This represented a ten-thousandfold leap in carryingcapacity over the 2.5 billion bits "barrier" long assumed by most expertsin the field. What did George see that others had missed? One, alittle-recognized (at the time) breakthrough called an erbium-dopedamplifier, which keeps optical signals pure and strong over long distances.The other was a deep technical shift, with roots in the 1940s-era work ofinformation theory pioneer Claude Shannon. If you believed Shannon, hislogic dictated a new messaging scheme called wave division multiplexing.Though scorned by the experts four years ago, WDM now is emerging as thewinner George had prophesied.The real winners will be all of us, as the coming world of cheap,unlimited bandwidth unfolds and at last fulfills the true potentialof the information age. Here is George with an update. IMAGINE THAT IN 1975 YOU KNEW that Moore's law--the Intel chairman'sprojection of the doubling of the number of transistors on a microchipevery 18 months--would hold for the rest of your lifetime. What if youknew that these transistors would run cooler, faster, better, and cheaperas they got smaller and were crammed more closely together? Suppose youknew the law of the microcosm: that the cost-effectiveness of anynumber of "n" transistors on a single silicon sliver would rise by thesquare of the increase in "n." As an investor knowing this Moore's law trajectory, you would havebeen able to predict and exploit a long series of developments: theemergence of the PC; its dominance over all other computer form factors;the success of companies making chips, disk drives, peripherals, andsoftware for this machine. With a slight effort of intellect, youcould have extended the insight and prophesied the digitization ofwatches, records (CDs), cellular phones, cameras, TVs, broadcastsatellites, and other devices that can use miniaturized computer power.If you did not know precisely when each of these benisons would flourish,you would have known that each one was essentially inevitable. Tocalculate approximate dates, you had only to guess the product's optimalprice of popularization and then match its need for mips (millions ofinstructions per second) of computer power with the cost of those mipsas defined by Moore's law. Merely by using this technique of Moore's law matching--and holdingto it with unshakable conviction for nearly 20 years--I became known asa "futurist." Today I await the death of television, telephony, VCRs,and analog cameras with utter confidence as Moore's law unfolds. Youcan tell me about the 98% penetration of TVs in American homes, thecontinuing popularity of couch-potato entertainments, the effectivenessof broadcast advertising, and the profound and unbridgeable chasmbetween the office appliance and the living-room tube. But I will payno attention. Just you wait--Jack Welch, Ted Turner, Rupert Murdoch,John Malone, and David Jennings--the TV will die and you may be too latefor the Net. It is now 1997, and a stream of dramatic events certifies thatanother law, as powerful and fateful and inexorable as Moore's, isgaining a similar sway over the future of technology. It is what I havetermed the law of the telecosm. Its physical base lies in the same quantum realm of eigenstatesand band gaps that governs the performance of transistors and also makesphotons leap and lase. But the telecosm reaches beyond components tosystems, combining the science of the electromagnetic spectrum with ClaudeShannon's information theory. In essence, as frequencies rise andwavelengths drop, digital performance improves exponentially. Bandwidthrises, power usage sinks, antenna size shrinks, interference collapses,error rates plummet. The law of the telecosm ordains that the total bandwidth ofcommunications systems will triple every year for the next 25 years. Ascommunicators move up-spectrum, they can use bandwidth as a substitutefor power, memory, and switching. This results in far cheaper and moreefficient systems. In 1996, the new fiber paradigm emerged in full force.Parallel communications in all-optical networks became the dominant sourceof new bandwidth in telecom. Like Moore's law, the law of the telecosmwill reshape the entire world of information technology. It defines thedirection of technological advance, the vectors of growth, the sweet spotsfor finance.AMERICA'S DARK SECRET FOR MORE THAN A DECADE, American companies have been laying opticalfiber strands at a pace of some 4,000 miles a day, for a total of morethan 25 million strand miles. Five years ago, the top 10% of U.S. homesand businesses were, on average, a thousand households away from a fibernode; now they are a hundred households away. However, the imperial advance of this technology conceals a darksecret, which has led to a pervasive underestimation of the long-termimpact of photonics. Sixty percent of the fiber remains "dark" (unusedfor communications) and even the leading-edge "lit" fiber is being usedat less than one ten-thousandth of its intrinsic capacity. This problemhas prompted leaders in the industry, from Bill Gates and Andy Grove toBob Metcalfe and Mitch Kapor, to underrate drastically the impact of fiberoptics. Restricting the speed and cost-effectiveness of fiber has been anelectronic bottleneck and a regulatory noose. In order for the signalto be amplified, regenerated, or switched, the light pulses had to betransformed into electronic pulses by optoelectronic converters. Forall the talk of the speed of light, fiber-optic systems therefore couldpass bits no faster than the switching speed of transistors, which topsout at a cycle time of between 2.5 and 10 gigahertz. Meanwhile, telecomcompanies could not deploy new low-cost fiber products any faster thanthe switching speed of politicians and regulators, which tops out roughlyat a cycle time of between 2.5 years and a rate of evolution measurableonly by means of carbon 14. Nonetheless, the intrinsic capacity of every fiber line is not 2.5gigahertz. Nor is it even 25 gigahertz, which is roughly the capacityof all the frequencies commonly used in the air, from AM radio to kAband satellite. The intrinsic capacity of every fiber thread, as thinas a human hair, is at the least one thousand times the capacity of whatwe call the "air." One thread could carry all the calls in America onthe peak moment of Mother's Day. One fiber thread could carry 25 timesmore bits than last year's average traffic load of all the world'scommunications networks put together: an estimated terabit (trillionbits) a second. Over the last five years, technological breakthroughs andlegislative loopholes have begun to open up this immense capacity topossible use. Following concepts pioneered and patented by David Payneat the University of Southampton in England, a Bell Laboratories groupled by Emmanuel Desurvire and Randy Giles developed a workableall-optical device. They showed that a short stretch of fiber dopedwith erbium, a rare earth mineral, and excited by a cheap laser diodecan function as a powerful amplifier over fully 4,500 gigahertz of the25,000 gigahertz span. Introduced by Pirelli of Italy and popularizedby Ciena Corporation of Savage, Maryland, and by Lucent and Alcatel,today such photonic amplifiers are a practical reality. Put in packagesbetween two and three cubic inches in size, the erbium-doped fiberamplifiers (EDFAs) fit anywhere in an optical network for enhancingsignals without electronics. This invention overcame the most fundamental disadvantage ofoptical networks compared to electronic networks. You can tap into anelectronic network as often as desired without eroding the voltagesignal. Although resistance and capacitance will leach away thecurrent, there are no splitting losses in a voltage divider. Photonicsignals, by contrast, suffer splitting losses every time they aretapped; they lose photons until eventually there are none left. Thecheap and compact all-optical amplifier solves this problem. It is aninvention comparable in importance to the integrated circuit. Just as the integrated circuit made it possible to put an entirecomputer system on a single sliver of silicon, the all-optical amplifiermakes it possible to put an entire system on a seamless seine ofsilica--glass. Unleashing the law of the telecosm, it makes possible anew global economy of bandwidth abundance. Five years ago when I first celebrated the radical implications oferbium-doped amplifiers, skepticism reigned. I was summoned to Bellcore,where the first optical networks had been built and then abandoned, tolearn the acute limits of the technology from Charles Brackett and histeam. I had offered the vision of a broadband fibersphere--a worldwideweb of glass and light--where computer users could tune into favoredfrequencies as readily as radios tune into frequencies in the atmospheretoday. But Brackett and other Bellcore experts told me that my basicassumption was false. It was no simpler, they said, to tune into one ofscores of frequencies on a fiber than to select time slots in atime-division-multiplexed (TDM) bitstream. Indeed, electronic switching technology was moving faster thanoptical technology. In the face of the momentum and installed base ofelectronic switching and multiplexing, the fibersphere with hundreds oftunable frequencies would remain a fantasy, like Ted Nelson's Xanadu. In 1997 the fantasy is coming true around the world. Xanadu hasbecome the World Wide Web. The erbium-doped fiber amplifier is anexplosively growing $250 million business. Electronic TDM seems tohave topped out at 2.5 gigabits a second. TDM gear has suffered aseries of delays and nagging defects and so far has failed in the market. Electronic TDM failed not only because it pushed the envelope ofelectronics but also because it violated the new paradigm. Insingle-mode fiber, the two key impediments are nonlinearities in theglass and chromatic dispersion (the blurring of bit pulses because evenin a single band different frequencies move at different speeds).Chromatic dispersion increases by the square of the bit rate, and theimpact of nonlinearities rises with the power of the signal.High-powered, high-bit-rate TDM flunked both telecosm tests. Bycontrast, wavelength-division multiplexing (WDM) follows the laws ofthe telecosm; it succeeds by wasting bandwidth and stinting on power.WDM takes some 33% more bandwidth per bit than TDM, but it reduces powerto combat nonlinearity and divides the bitstream into multiplefrequencies in order to combat dispersion. Thus it can extend thedistance or increase capacity by a factor of four or more today and canlay the foundations for the fibersphere tomorrow. In 1996 the new fiber paradigm emerged in full force. Parallelcommunications in all-optical networks, long depicted as a broadbandpipe dream, crushed all competitors and became the dominant source ofnew bandwidth in the world telecom network. The year began with atrifold explosion at the Conference on Optical Fiber Communication inSan Jose when three companies--Lucent Technologies' Bell Labs, NTT Labs,and Fujitsu--all announced terabit-per-second WDM transmissions down asingle fiber. Sprint confirmed the significance of the laboratorybreakthroughs by announcing deployment of Ciena's MultiWave 1600 WDMsystem, so called because it can increase the capacity of a single fiberthread by 1,600%. The revolution continues in 1997. At the beginning of January,NEC declared that by increasing the number of bits per hertz from one tothree, it had raised the laboratory WDM record to three terabits persecond. During 1996, MCI had increased the speed of its Internetbackbone by a factor of 25, from 45 megabits a second to 1.2 gigabits.On January 6, Fred Briggs, chief engineering officer at MCI, announcedthat his company is in the process of installing new WDM equipment fromHitachi and Pirelli that increases the speed of its phone networkbackbone to 40 gigabits per second. Accelerating MCI's previous plansby some two years, the new system will use a more limited form ofwavelength-division multiplexing to put four 10-gigabit in-causeformation streams on a single fiber thread. The first deployment will use existing facilities on a 275-mileroute between Chicago and St. Louis, but the technology will be extendedto the entire network. This move will consummate a nearly thousandfoldupgrade of the MCI backbone, from 45 megabits per second to 40 gigabits,within some 36 months. Ciena, meanwhile, has announced technology thatallows transmission of 100 gigabits per second. Its February IPO was the most important since Netscape (marketcap at the end of the first trading day: $3.4 billion). Why? Ciena isthe industry leader in open standard WDM gear. During the first sixmonths the MultiWave 1600 was available, through October 1996, the firmachieved $54.8 million in sales and $15 million in net income. (Lucentis believed to be the overall leader with more than $100 million ofmostly proprietary AT&T systems.) At the same time, the trans-Pacificconsortium announced that it would deploy 100-gigabit-per-second fiberin its new link between the United States and Asia. A powerful new player in these markets will be Tellabs, currentlythe fastest-growing supplier of electronic digital cross-connect switchesand other optical switching gear. In a further coup, following itspurchase of broadband digital radio pioneer Steinbrecher, Tellabs hassigned up all 12 principals in IBM's all-optical team. Headed by PaulGreen, recent chairman of the IEEE Communications Society and author ofthe leading text on fiber networks, and by Rajiv Ramaswami, coauthor ofa new 1997 text on the subject, the IBM group built the world's firstfully functioning all-optical networks (AONs), the Rainbow series.Tellabs now owns the 11 AON patents and 100 listed technology disclosuresof the group. The implications of the WDM paradigm go beyond simple data pipes.The greatest impact of all-optical technology will likely come inconsumer markets. A portent is Artel Video Systems of Marlborough,Massachusetts, which recently introduced a fiber-based WDM system thatcan transmit 48 digital video channels, 288 CD-quality audio bitstreams,and 64 data channels on one fiber line. Aggregating contributions froma variety of content sources--each on different fiber wavelengths--anddelivering them to consumers who tune into favored frequencies onconventional cable, the Artel system represents a key step into thefibersphere. It can be used for new services by either cable TVcompanies or telcos. The deeper significance of the Artel product, however, is its useof bandwidth as a replacement for transistors and switches. The Artelsystem works on dark fiber without compression. The video uses200-megabit-per-second bitstreams (compare MPEG2 at 4 to 6 megabytesper second) that permit lossless transmissions suitable for medicalimaging, and obviate dedicated processing of compression codes at thetwo ends. A move to massively parallel communications analogous to the moveto parallel computers, all-optical networks promise nearly boundlessbandwidth in fiber. According to Ewart Lowe of British Telecom, whoselabs at Martlesham Heath in Ipswich have been a fount of all-opticaltechnology, the new paradigm will reduce the cost of transport by afactor of 10. For example, the optoelectronic amplifiers previouslyused in fiber networks entailed nine power-hungry bipolar microchipsfor each wavelength, rather than a simple loop of doped silica thatcovers scores of wavelengths. As these systems move down through the network hierarchy, thegrowth of network bandwidth and cost-effectiveness will not onlyoutpace Moore's law, it will also excel the rise in bandwidth withincomputers--their internal "buses" connecting their microprocessorsto memory and input-output. While MCI and Sprint move to deploy technology that functions at40 gigabits a second, current computers and workstations command busesthat run at a rate of close to 1 gigabit a second. This change in therelationship between the bandwidth of networks and the bandwidth ofcomputers will transform the architecture of information technology.As Robert Lucky of Bellcore puts it, "Perhaps we should transmit signalsthousands of miles to avoid even the simplest processing function." Lucky implies that the law of the telecosm eclipses the law of themicrocosm. Actually, the law of the microcosm makes distributedcomputers (smart terminals) more efficient regardless of the cost oflinking them together. The law of the telecosm makes broadband networksmore efficient regardless of how numerous and smart are the terminals.Working together, however, these two laws of wires and switches impelever more widely distributed information systems, with processing andmemory in the optimal locations.WHAT SHOULD THE MAJOR PLAYERS DO NOW? FOR THE TELEPHONE COMPANIES, the age of ever smarter terminalsmandates the emergence of ever dumber networks. Telephone companiesmay complain of the large costs of the transformation of their system,but they command capital budgets as large as the total revenues of thecable industry. Telcos may recoil in horror at the idea of dark fiber,but they command webs of the stuff 10 times larger than any otherindustry. Dumb and dark networks may not fit the phone companyself-image or advertising posture. But they promise larger marketsthan the current phone company plan to choke off their own future in thelabyrinthine nets of an "intelligent switching fabric" always behindschedule and full of software bugs. Telephone switches (now 80% software) are already too complex tokeep pace with the efflorescence of the Internet. While computers becomeever more lean and mean, turning to reduced instruction-set processorsand Java stations, networks need to adopt reduced instruction-setarchitectures. The ultimate in dumb and dark is the fibersphere nowincubating in their magnificent laboratories. The entrepreneurial folk in the computer industry may view thiswrenching phone company adjustment with some satisfaction. But computerfirms must also adjust. Now addicted to the use of transistors to solvethe problems of limited bandwidth, the computer industry must usetransistors to exploit the nearly unlimited bandwidth. When home-basedmachines are optimized for manipulating high-resolution digital video athigh speeds, they will necessarily command what are now calledsupercomputer powers. This will mean that the dominant computertechnology will first emerge not in the office market but in theconsumer market. The major challenge for the computer industry is tochange its focus from a few hundred million offices already full ofcomputer technology to a billion living rooms now nearly devoid of it. Cable companies possess the advantage of already owning dumbnetworks based on the essentials of the all-optical model of broadcastand select--of customers seeking wavelengths or frequencies rather thanswitching circuits. Cable companies already provide all the programsto all the terminals and allow them to tune in to the desired messages.But the cable industry cannot become a full-service supplier oftelecommunications unless the regulators give up their ridiculoustwo-wire dream in which everyone competes with cable and no one makesany money. Cash-poor and bandwidth-rich, cable companies need tocollaborate with telcos--which are cash-rich and bandwidth-poor--in ajoint effort to create broadband systems in their own regions. In all eras, companies tend to prevail by maximizing the use ofthe cheapest resources. In the age of the fibersphere, they will usethe huge intrinsic bandwidth of fiber, all 25,000 gigahertz or more, tosimplify everything else. This means replacing nearly all the hundredsof billions of dollars' worth of switches, bridges, routers, converters,codecs, compressors, error correctors, and other devices, together withthe trillions of lines of software code, that pervade the intelligentswitching fabric of both telephone and computer networks. The makers of all this equipment will resist mightily. But thereis no chance that the old regime can prevail by fighting cheap andsimple optics with costly and complex electronics and software. The all-optical network will triumph for the same reason that theintegrated circuit triumphed: It is incomparably cheaper than thecompetition. Today, measured by the admittedly rough metric of mips perdollar, a personal computer is more than 2,000 times more cost-effectivethan a mainframe. Within 10 years, the all-optical network will bethousands of times more cost-effective than electronic networks. Justas the electron rules in computers, the photon will rule the waves ofcommunication.I know people would not write it..But worth a try:)

um... i really doubt that people will write you a summary... just do it yourself

Nope, sorry, it's a lot to read and write, and I've got my own homework to do =(