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Goliath At Bay

Breaking Windows and Bottlenecks
Indeed, four of the five companies—Sun, Netscape, Macromind and Intuit—Doerr estimates, “have added more than $10 billion to their market cap in the last six months because of their Internet initiatives,” this new model of computing based on the Web, while Microsoft lost a similar total by briefly resisting it. Now @Home is on target to generate another multibillion market cap by exploding the current bandwidth bottlenecks of the Net.

At Intel, Doerr worked at a desk down a corridor from Bruce Ravenel. Then an architect of the 8086 and the 8087, Ravenel is now TCI Technology Ventures’ influential chief of technology. Igniting the fuse for @Home were words between Doerr and Ravenel as the two old grads from “Noyce- Moore U” wove their way through the Western Cable Show in the first week of December 1994. “I dare not call it an epiphany,” Doerr says, “but Bruce and I were at the Motorola booth where they were showing off a sleek little $300 box the size of a modem that would enable telephone calls over a cable line. “What would it cost,’ I asked, “to add an Ethernet port to the device, so you could link a computer to the Internet through it at up to 10 megabits per second?” When the Motorola guy guessed, “Maybe $30,” our eyes got as big as saucers.”

When Doerr sees a hole in the line, he hits it hard and fast. Two weeks later, four days before Christmas 1994, he was in John Malone’s office in Denver presenting a plan for a Silicon Valley startup to bring broadband Internet over cable. Likely IPO market value in two years.” $3 billion. Malone also hits hard and fast. After a three-hour meeting, the TCI chief signed off on the venture without a qualm. Doerr’s chief job was to “line up some unique Silicon Valley technical genius to make it work.”

Tapping Internet experts at Sun and around the Valley, Doerr found only one name popping up on every list. It was that hard-core Unix Christian libertarian netbender from outer space, Milo Medin. A 32-year- old wunderkind manager of the multiple networks converging at NASA Ames Research Center in Mountain View, Medin had spent the last 12 years making increasingly crucial contributions to the Internet’s growth. But uh-oh. For a week or more, Medin refused to answer any calls from Kleiner Perkins. He says, “I thought they were a bunch of lawyers.”

DOERR WAS ATTACKING the key problem of the Internet. With the number of host computers doubling every year since 1970 and the power of the computers doubling every 18 months, the Internet had mastered every challenge of capacity by multiplying cheap local routers and servers. The Net has already overtaken the U.S. Postal Service as a carrier of mail (by one estimate, a trillion e-mail messages compared with 180 billion postal deliveries). And the Net similarly has pushed the number of digital data bits ahead of the total of voice bits on the phone system.

Over the last two years, however, the traffic has taken a turn toward GIFs and graphics, doubling the number of bits every few months. As the Internet careens toward its destined collisions with television and telephony as the prime sources of information, entertainment and communication for the public, the prime obstacle is bandwidth. Many in the industry have begun to blink and bluster in the bright light of optical media and other broadband pipes.

Led by Bill Gates, they believe in middleband and ISDN. They dabble defensively in TV. As a shared medium, even cable, so Gates contends, will dwindle to ISDN rates as the number of customers on the system rises. But at 128-kilobit-per-second or even at 1.54megabit-per-second T1 rates, ISDN means picture quality inferior to NTSC television. A shared medium linked to slow routers means bottlenecks throughout the system if cable modems yield a thousandfold increase in bit traffic beyond existing modems (up from 28.8 kilobits to close to 30 megabits per second). Online services will bog down in slow access, sticky searches, jerky movement, blurred faces.

Such a middleband net will not be able to maintain its current momentum of growth and power. It will not be able to challenge television and telephony. Yet the valuations of Internet companies depend on a continued exponential ascent. Thus many people believe the Net is overhyped, overvalued, starved for “content.” They believe Doerr’s broadband revolution will fail.

Milo Medin is Doerr’s weapon to break the bottleneck. He has spent most of his adult life overcoming crises on the Net. Medin’s fast rise began in 1987 when he led the creation of NASA’s Internet and almost came to an end in 1993, when the swarthy Serb with the spruce mustache and the piping voice and broadband gush had barged into Washington to persuade the entire government to embrace the Internet protocols (TCP/IP). Fueled by this universal language, the Net had grown exponentially up a wall of worry.

The problems did not reach critical mass until 1994, however, when its traffic began doubling every couple of months. Andreessen’s Mosaic browser had spurred the World Wide Web into a multiterabyte cyclone of growth and expansion, concentrated in California.

Here the entire Internet converged in one room in one building at Ames. On one side of the room were the Cisco 7000 routers and Digital gigaswitches and Northern Telecom add-drop multiplexers of the FIX (the Federal Internet Exchange), the government peering-and-exchange point, managed mostly by Medin. On the other side was MAE West, the Internet access exchange point for most of the private Internet, including the pullulating college and university Nets, the regnant Internet service providers such as ANS and Sprint, and the budding local fiefdoms of Netcom and The Well.

Then in April 1994, the government ended its $25 million in annual Internet subsidies and arranged for a private takeover. Among the winning bidders were PacBell and Ameritech, assigned to run two key network access points (NAPs).

Long expecting the withdrawal of government subsidies to throw the Net into chaos, many observers would welcome the ensuing crash. The private sector would flub the job. There would be a tragedy of the commons. As in feudal Britain, when the commonly owned lands were overgrazed and ruined, the commonly owned Internet would suffer a glut of graphics “GIFraff” and traffic jams. Sure enough it was happening.

PacBell’s ATM switches from Newbridge Networks, with skimpy buffers designed like a PBX for voice-traffic patterns, choked. California, the source of two-fifths of Internet traffic, was down. The Western NAP jammed, and Ameritech’s Chicago NAP was also largely out of commission. Bay Area e-mail from a student on Netcom to a small business on BBN’s BARNet had to steer clear of the Ames hub and pinball through routers all the way across the country to Sprint’s NAPs in Pennsauken, N.J., or Reston, Va., and then all the way back again.

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