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.