So Whatever Happened to Metcalf’s Law?

So Whatever Happened to Metcalf’s Law? It’s alive and well and hiding in the airport.

A commentary by Leane Roffey Line, PhD

Metcalfe’s Law is Wrong By Bob Briscoe, Andrew Odlyzko, and Benjamin Tilly

First Published in July 2006, this initially scary sounding article has a subtle mathematical distinction described as follows which brings Metcalf’s law in line with actuality, and really does assign what I think is a reasonable value to “the Internet”:
“If there are n members on a network, Metcalfe said the value grows quadratically as the number of members grows. We propose, instead, that the value of a network of size n grows in proportion to n log(n). Note that these laws are growth laws, which means they cannot predict the value of a network from its size alone. But if we already know its valuation at one particular size, we can estimate its value at any future size, all other factors being equal.”
The authors continue with the sobering realization that no matter if the growth is quadratic or proportional to n log(n), the number to measure the “benefit of the network” is huge:

“Imagine a network of 100 000 members that we know brings in $1 million. We have to know this starting point in advance—none of the laws can help here, as they tell us only about growth. So if the network doubles its membership to 200 000, Metcalfe’s Law says its value grows by (200 0002/100 0002) times, quadrupling to $4 million, whereas the n log(n) law says its value grows by 200 000 log(200 000)/100 000 log(100 000) times to only $2.1 million. In both cases, the network’s growth in value more than doubles, still outpacing the growth in members, but the one is a much more modest growth than the other. In our view, much of the difference between the artificial values of the dot-com era and the genuine value created by the Internet can be explained by the difference between the Metcalfe-fueled optimism of n 2 and the more sober reality of n log(n).

This difference will be critical as network investors and managers plan better for growth.”
I’m not entirely sure in the two years since this article came out if the IEEE or related groups have done further work on Metcalf’s assumptions, but I can tell you this: genuine value created by the Internet has expressed itself in ways since that no one could imagine, from the dollars saved by making the reality of the 24/7 economy possible for business as mentioned above, to the advantages of supplying a precision available to the media that has been setting the world free of everything from old news, dumb telephones, analog TVs, to really bad comics, misrepresented politics, and outdated storage systems.
No one, I’m sure, anticipated YouTube, facebook, MySpace, SecondLife, or blogging and what effects they would have on the social structure of today’s society, although I definetly agree with Andrew Chen, who points out the flaws in the social networking aspect of the net (based on Metcalf’s quadratic assumption). It’s a two edged sword for sure.
Social implications notwithstanding, I do think the practical applications for business using the Internet far exceed even the social aspects which have surfaced. For example, why business leaders are not using virtual worlds as “places” in which to conduct business meetings, or at least teleconferencing to a greater degree, is a mystery to me. The fiscal advantages are huge, not to mention the time saving considerations.
Soon, I hope, thanks to coming developments, these features of the net will set us free from another, more environmental concern: countless business airline flights, in fact, all unnecessary airline flights as well. The more interconnected users, the greater the share of Internet material that will be readily available; with any luck my future prediction is that by 2015 the need for face2face business meetings will become a thing of the past.
So the message here is: Companies that can utilize video and audio conference capabilities would do us all a great service by doing so, and not contributing to air traffic any more than is absolutely necessary to get their business done. The bubble’s been pricked, it’s time to get real. If you can set your meetings up via telecon, do it. Perk “vacation trips” and boondoggles have no place in responsible business environments. Jet fuel is one cost nobody can afford, for a variety of reasons. Even a conservative institution like the US Military is in a rabid hunt for alternative jet fuel.
According to an article by Prachi Patel-Predd published in the Aug. 2007 issue of IEEE Spectrum:

“Flying takes its toll on the atmosphere. The United States burned 25 billion gallons (95 billion liters) of jet fuel in 2004, according to the U.S. Energy Information Administration. That translates to about 240 million metric tons of carbon dioxide emitted by military and commercial aircraft. If the military switched its jets to carbon-neutral biofuels, that would reduce carbon dioxide emissions more than 27 million metric tons. Carbon reduction is not the U.S. military’s real goal. Instead the defense department’s main motivation in pursuing biofuels is to reduce its dependence on foreign oil.”
The way I remember it is that we opted to import our oil rather than spending money to upgrade our own facilities. Clearly, how we got here is a complex and difficult thing to explain. In all likelihood there is an essay describing how it all happened somewhere on the net. In any event, we have an opportunity to use a new resource, the net, and new tech in telecon etc. to render part of the problem null and void.
If you’re in a business, even a small to medium size one that uses a great deal of travel, and see benefit to corralling costs in this manner, spend the money to get yourselves upgraded to hardware that will allow you to do it and start using virtual space to host conferences and meetings. Economically, it’s the smart thing to do in terms of time saved, and translates to dollar savings instantly. What might be standing in your way is sheer technophobia, but really the only thing you have to fear is fear itself. There will always be a “geek squad” as close as your phone to help you over the initial trauma. The tech now can be learned by anyone, things have simplified that much.
Some immediate benefits: the use of an instant messenger or intercom over an intranet can simplify life immensely. Video players on terminals can get out messages to your branches. Conferencing software or meeting in virtual space can save on everything from transportation costs to paper. Video the conference and you have a permanent record for later. Set your training up on your intranet/internet and let your employees do modularized practice and training sessions. But most of all, use your money to get your work done, not to waste hours standing in an airport. You’ll save the environment too.
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