How much is it worth to let us do it

[David Farber <farber () linc cis upenn edu>]

Date:          Wed Oct 27, 1993 9:17 pm GMT
From:          Forbes ASAP / MCI ID: 579-9624




TO:       Gordon Jacobson
Subject:  PLEASE UPLOAD TO INTERNET






     
     The following article, THE NEW RULE OF THE WIRELESS, was
first published in Forbes ASAP, March 29th, 1993.  It is a
portion of George Gilder's book, Telecosm, which will be
published next year by Simon & Schuster, as a sequel to
Microcosm, published in 1989 and Life After Television published
by Norton in 1992.  Subsequent chapters of Telecosm will be
serialized in Forbes ASAP.






     
     Please post The New Rule of The Wireless to any Usenet
newsgroups deemed suitable.










                  THE NEW RULE OF THE WIRELESS










                                
                               BY
                                
                                
                          GEORGE GILDER
     
     At first glance, Vahak Hovnanian, a homebuilding tycoon in
New Jersey, would seem an unlikely sort to be chasing rainbows.
Yet in the converging realms of computers and communications that
we call the telecosm, rainbows are less a matter of hue and
weather than they are a metaphor for electromagnetism: the
spectrum of wavelengths and frequencies used to build businesses
in the Information Age.
     
     An Armenian Christian from Iraq, Hovnanian ran a business
building high-quality "affordable" housing.  His first coup came
on Labor Day in 1958 when, together with his three older
brothers, he bought an apparently undesirable property near the
waterfront in Tom's River for $20,000.  From this modest
beginning has arisen not only one of the nation's largest
homebuilding enterprises (divided among the four immigrant
brothers), but also a shattering breakthrough on some seemingly
bleak frontiers of the electromagnetic spectrum.  Together with
maverick inventor Bernard Bossard, Hovnanian has launched a
wireless cellular TV business in frequencies once thought usable
only in outer space.
     
     Perhaps the reason Hovnanian feels comfortable today
pioneering on the shores of the telecosm is that some 35 years
ago he was an engineer at Philco Semiconductor following in the
theoretical steps of AT&T Bell Laboratories titan William
Shockley.  Shockley led the team that plunged into the microcosm
of solid-state physics and invented the transistor.  At the heart
of all-digital electronics, this invention still reverberates
through the world economy and imposes its centrifugal rules of
enterprise.
     
     This law of the microcosm dictates exponential rises in
computer efficiency as transistors become smaller.  It is this
law that drives the bulk of the world's computations to ever-
cheaper machines and pushes intelligence from the center to the
fringes of all networks.  Today the microcosm is converging with
the telecosm and igniting a new series of industrial shocks and
surprises.
     
     The convergence of microcosm and telecosm in an array of
multimedia industries - from personal intelligent communicators
to video teleputers to digital films and publishing - is now the
driving force of world economic growth.  John Sculley, chairman
and CEO of Apple Computer, has projected that by 2002 there will
be a global business in multimedia totaling some $3.5 trillion -
close to the size of the entire U.S. economy in the early 1980s.
     
     This new world of computer communications will break down
into two domains - the fibersphere and the atmosphere.  The
fibersphere is the domain of all-optical networks, with both
communications power - bandwidth - and error rate improving by
factors in the millions.  In "Into the Fibersphere" (Forbes ASAP,
December 7, 1992), we saw that the potential capacity for
communications in the fibersphere is 1,000 times greater than all
the currently used frequencies in the air - and so radically
error-free that it mandates an entirely new model of wired
telecommunications.  Now we will discover that the atmosphere
will offer links as mobile and ubiquitous as human beings are.
It thus will force the creation of an entirely new model of
wireless networks.
     
     In one sense, Sculley's $3 5 trillion dream can be seen as
the pot of gold at the end of Maxwell's rainbow.  In 1865, in a
visionary coup that the late Richard Feynman said would leave the
American Civil War of the same decade as a mere "parochial
footnote" by comparison, Scottish physicist James Clerk Maxwell
discovered the electromagnetic spectrum.  Encompassing nearly all
the technologies imagined by Sculley, Maxwell's rainbow reaches
from the extremely low frequencies (and gigantic wavelengths)
used to communicate with submarines all the way through the
frequencies used in radio, television and cellular phones, on up
to the frequencies of infrared used in TV remotes and fiber
optics, and beyond that to visible and ultraviolet light and X-
rays.  In a fabulous feat of unification, Maxwell reduced the
entire spectrum to just four equations in vector calculus.  He
showed that all such radiations move at the speed of light - in
other words, the wavelength times the frequency equals the speed
of light.  These equations pulse at the heart of the information
economy today.
     
     Virtually all electromagnetic radiation can bear
information, and the higher the frequencies, the more room they
provide for bearing information.  As a practical matter, however,
communications engineers have aimed low, thronging the
frequencies at the bottom of the spectrum, comprising far less
than one percent of the total span.
     
     The vast expansion of wireless communications forecast by
Sculley, however, will require the use of higher frequencies far
up Maxwell's rainbow.  This means a return to the insights of
another great man who walked the halls of Bell Labs in the late
1940s at the same time as future Nobel laureate William Shockley,
and who left the world transformed in his wake.
     
     In 1948, the same year that Shockley invented the
transistor, Claude Shannon invented the information theory that
underlies all modern communications.  At first encounter,
information theory is difficult for nonmathematicians, but
computer and telecom executives need focus on only a few key
themes.  In defining how much information can be sent down a
noisy channel, Shannon showed that engineers can choose between
narrowband high-powered solutions and broadband low-powered
solutions.






> From Long & Strong to Wide & Weak


     
     Assuming that usable bandwidth is scarce and expensive, most
wireless engineers have strived to economize on it.  Just as you
can get your message through in a crowded room by talking louder,
you can overcome a noisy channel with more powerful signals.
Engineers therefore have pursued a strategy of long and strong:
long wavelengths and powerful transmissions with the scarce radio
frequencies at the bottom of the spectrum.
     
     Economizing on spectrum, scientists created mostly analog
systems such as AM radios and televisions.  Using every point on
the wave to convey information and using high power to overcome
noise and extend the range of signals, the long and strong
approach seemed hugely more efficient than digital systems
requiring complex manipulation of long strings of on-off bits.
     
     Ironically, however, the long and strong policy of
economizing on spectrum led to using it all up.  When everyone
talks louder, no one can hear very well.  Today, the favored
regions at the bottom of the spectrum are so full of spectrum-
hogging radios, pagers, phones, television, long-distance, point-
to-point, aerospace and other uses that heavy-breathing experts
speak of running out of "air."
     
     Shannon's theories reveal the way out of this problem.  In a
counterintuitive and initially baffling redefinition of the
nature of noise in a communications channel, Shannon showed that
a flow of signals conveys information only to the extent that it
provides unexpected data - only to the extent that it adds to
what you already know.  Another name for a stream of unexpected
bits is noise.  Termed Gaussian, or white, noise, such a
transmission resembles random "white" light, which cloaks the
entire rainbow of colors in a bright blur.  Shannon showed that
the more a transmission resembles this form of noise, the more
information it can hold.
     
     Shannon's alternative to long and strong is wide and weak:
not fighting noise with electrical power but joining it with
noiselike information, not talking louder but talking softer in
more elaborate codes using more bandwidth.  For example, in
transmitting 40 megabits per second - the requirement for truly
high-resolution images and sounds - Shannon showed some 45 years
ago that using more bandwidth can lower the needed signal-to-
noise ratio from a level of one million to one to a ratio of 30.6
to one.  This huge gain comes merely from increasing the
bandwidth of the signal from two megahertz (millions of cycles
per second) to eight megahertz.  That means a 33,000-fold
increase in communications efficiency in exchange for just a
fourfold increase in bandwidth.
     
     Such an explosion of efficiency radically limits the need to
waste watts in order to overcome noise.  More communications
power comes from less electrical power.  Thus, Shannon shows the
way to fulfill Sculley's vision of universal low-powered wireless
communications.
     
     This vision of wide and weak is at the heart of the most
promising technologies of today, from the advanced digital
teleputer sets of American HDTV to ubiquitous mobile phones and
computers in so-called personal communications networks (PCNs).
Shannon's theories of the telecosm provide the basic science
behind both Sculley's dream and Hovnanian's video spectrum
breakthrough.
     
     Shannon's world, however, is not nirvana, and there is no
free lunch.  Compensating for the exponential rise in
communications power is an exponential rise in complexity.
Larger bandwidths mean larger, more complex codes and
exponentially rising burdens of computation for the decoding and
error-correcting of messages.  In previous decades, handling 40
megabits per second was simply out of the question with existing
computer technology.  For the last 30 years, this electronic
bottleneck has blocked the vistas of efficient communication
opened by Shannon's research.
     
     In the 1990s, however, the problem of soaring complexity has
met its match - and then some - in exponential gains of computer
efficiency.  Not only has the cost-effectiveness of microchip
technology been doubling every 18 months but the pace of advance
has been accelerating into the 1990s.  Moreover, the chips
central to digital communications - error correction,
compression, coding and decoding - are digital signal processors.
As we have seen, the cost-effectiveness of DSPs has been
increasing - in millions of computer instructions per second
(MIPS) per dollar - some tenfold every two years.
     
     This wild rush in DSPs will eventually converge with the
precipitous plunge in price-performance ratios of general-purpose
microprocessors.  Led by Silicon Graphics' impending new TFP Cray
supercomputer on a chip, Digital Equipment's Alpha AXP device and
Hewlett Packard's Precision Architecture 7100, micros are moving
beyond 100-megahertz clock rates.  They are shifting from a
regime of processing 32-bit words at a time to a regime of
processing 64-bit words.  This expands the total addressable
memory by a factor of four billion.  Together with increasing use
of massively parallel DSP architectures, these gains will keep
computers well ahead of the complexity problem in broadband
communications.
     
     What this means is that while complexity rises exponentially
with bandwidth, computer efficiencies are rising even faster.
The result is to open new vistas of spectrum in the atmosphere as
dramatic as the gains of spectrum so far achieved in the
fibersphere.






Attacking Through the Air


     
     Hovnanian's campaign into the spectrum began when a cable
company announced one day in 1985 that under the Cable Act of
1984 and franchise rights granted by local governments, it had
the right to wire one of his housing developments then under
construction.  Until that day, Hovnanian's own company could
package cable with his homes through what are called satellite
master antenna TV systems.  In essence, each Hovnanian
development had its own cable head end where programs are
collected and sent out to subscribers.
     
     When the cable company, now Monmouth Cable Vision, went to
court and its claim was upheld by a judge, Hovnanian sought
alternatives.  First he flirted with the idea of having the phone
company deliver compressed video to his homes.  In 1986, in the
era before FCC Commissioner Alfred Sikes, that was both illegal
and impractical.  Then he met Bernard Bossard and decided to
attack through the air.  An early pioneer in microchips who had
launched a semiconductor firm and eventually sold it to M/A COM,
Bossard was familiar with both the soaring power of computers and
the murky problems of broadband noise that have long restricted
the air to a small number of broadcast AM TV stations.
     
     Air delivery of cable television programming had long seemed
unpromising.  Not only was there too little spectrum available to
compete with cable, but what spectrum there was, was guarded by
the FCC and state public utilities commissions.  Nonetheless, in
the early 1990s "wireless cable" did become a niche market, led
by Microband Wireless Cable and rivals and imitators across the
land.  Using fragments of a frequency band between 2.5 and 2.7
gigahertz (billions of cycles per second), Microband, after some
financial turmoil, now profitably broadcasts some 16 channels to
35,000 New York City homes in line of sight from the top of the
Empire State Building.  As long as they are restricted to a
possible maximum of 200 megahertz and use AM, however, wireless
firms will not long be able to compete with the cable industry.
Cable companies offer an installed base of potential gigahertz
connections and near universal coverage.
     
     Having spent much of his life working with microwaves for
satellites and the military, Bossard had a better idea.  He
claimed he could move up the spectrum and pioneer on frontiers of
frequency between 27.5 and 29.5 gigahertz, previously used
chiefly in outer space.  That would mean he could command in the
air some half a million times the communications power, or
bandwidth, of typical copper telephone links, some ten times the
bandwidth of existing wireless cable, some four times the
bandwidth of the average cable industry coaxial connection, and
twice the bandwidth of the most advanced cable systems.
     
     The conventional wisdom was that these microwaves (above
about 12 gigahertz) are useless for anything but point-to-point
transmissions and are doubtful even for these.  For radio
communication, the prevailing folklore preferred frequencies that
are cheap to transmit long distances and that can penetrate
buildings and tunnels, bounce off the ionosphere or scuttle
across continents along the surface of the earth.  The higher the
frequency, the less it can perform these feats essential to all
broadcasting - and the less it can be sent long distances at all.
     
     Moreover, it was believed, these millimeter-sized microwaves
not only would fail to penetrate structures and other obstacles
but would reflect off them and off particles in the air in a way
that would cause hopeless mazes of multipath.  Multipath would be
translated into several images, i.e., ghosts, on the screen.
     
     Finally, there was the real show-stopper.  Everyone knew
that these frequencies are microwaves.  The key property of
microwaves, as demonstrated in the now ubiquitous ovens, is
absorption by water.  Microwaves cook by exciting water molecules
to a boil.  Microwave towers are said to kill birds by
irradiating their fluids.  Microwave radar systems won't work in
the rain.  Mention microwaves as a possible solution to the
spectrum shortage, and everyone - from editors at Forbes to gurus
at Microsoft, from cable executives to Bell Labs researchers -
laughs and tells you about the moisture problem.
     
     So it was no surprise that when in 1986 Bossard went to M/A
COM and other companies and financiers with his idea of TV
broadcasting at 28 gigahertz, he was turned down flat.  Amid much
talk of potential "violations of the laws of physics," jokes
about broiling pigeons and warnings of likely resistance from the
FCC, he was spurned by all.  In fairness to his detractors,
Bossard had no license, patent or prototype at the time.  But
these holes in his plan did not deter Vahak Hovnanian and his son
Shant from investing many millions of dollars in the project.  It
could be the best investment the Hovnanian tycoons ever made.






New Rule of Radio


     
     For 35 years, the wireless communications industry has been
inching up the spectrum, shifting slowly from long and strong
wavelengths toward wide and weak bands of shorter wavelengths.
Mobile phone services have moved from the 1950s radio systems
using low FM frequencies near 100 megahertz, to the 1960s
spectrum band of 450 megahertz, to the current cellular band of
900 megahertz accommodating more than 10 million cellular
subscribers in the U.S.
     
     During the 1990s, this trend will accelerate sharply.
Accommodating hundreds of millions of users around the world,
cellular communications will turn digital, leap up the spectrum
and even move into video.  Shannon's laws show that this will
impel vast increases in the cost-effectiveness of communications.
     
     In general, the new rule of radio is the shorter the
transmission path, the better the system.  Like transistors on
semiconductor chips, transmitters are more efficient the more
closely they are packed together.  As Peter Huber writes in his
masterly new book, The Geodesic Network 2, the new regime favors
"geodesic networks," with radios intimately linked in tiny
microcells.  As in the law of the microcosm, the less the space,
the more the room.