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Realizing the Information Future: The Internet and Beyond APPENDIX D State and Regional Networks State networks provide local connectivity and access to wider-area services for schools, higher education, and research institutions. State networks have been wholly oriented to operations; states have procured networks in much the way that large corporations have, rather than to demonstrate or advance technology, as the federal government has often sought. Given their strong links to and interests in many segments of the public interest domain—including a variety of groups relatively new to network-based services, such as hospitals and other components of health care delivery, public libraries, and state and local government entities—states have important roles to play in the current and future development of information infrastructure. Although virtually all states are at least planning networking strategies, implementation has been uneven, with some states manifesting more coordination and integration than others. States vary considerably in terms of size, resources to support networks, geography, and the economics of networking (e.g., networking is much more costly in Montana than in Massachusetts). States also differ in their approaches to adopting network architecture and technology, raising questions about prospects for interconnection. A major factor in developments and prospects at the state level is each state's Public Utilities Commission, which regulates intrastate telecommunications offerings and pricing. One state that has taken a lead in networking is North Carolina, which recently announced a new state networking program to which it plans to shift the $35 million per year it spends on networking services.1 Already, it has linked community colleges to an X.25 service and universities to the T3 CONCERT network.
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Realizing the Information Future: The Internet and Beyond In California the development of networking for the research, education, and library communities has evolved in a loosely coordinated fashion. Five major networks form the nucleus of a statewide education network. The two state university systems, the University of California (UC) and the California State University (CSU), each have networks. UCNET interconnects the nine UC campuses and CSUnet the 20 CSU campuses. In addition, there are three regional networks, BARRnet serving northern California, CERFnet serving southern California, and LosNettos serving the Los Angeles basin. These three regional networks were initially designed to serve the research community but have branched out. All five networks are connected to the Internet and also to each other. A majority of the 107 community colleges have connected to the Internet via one of these five networks. Only a fraction of the several thousand K-12 schools have been connected to the Internet, most through CSUnet. The State Library system has called for a statewide network to support multitype library cooperation and coordinated planning studies. Efforts are now under way to bring that planning endeavor into an overall strategy to develop the Golden State Education Network as a "network of networks." In mid-1993, Pacific Bell announced plans for advanced communications networks linking up to 80 educational, medical, and high-technology industrial organizations each in the San Francisco and Los Angeles areas. Known as CalREN, the program involves development and pilot-testing of innovative applications over at least a two-year period.2 Regional (or mid-level) networks are one response to variations in support for networking among states, although they are not necessarily a substitute for state networking. They provide economies of scale for users across a relatively wide area. Most of these organizations purchase basic connectivity from existing telecommunications providers and provide the packet switched overlay as well as user support. Regional networks, especially those catalyzed by National Science Foundation investments, service the research and library communities and increasingly the education community (K-12 and higher education); some have a considerable base of commercial clients as well. Anecdotal evidence compiled informally by FARNET and NSF suggest that about 80 percent of network traffic is intraregional and about 20 percent is between regions. Each regional network serves about 100 to 200 client sites (i.e., research and education institutions).3 As a group, their financial health and viability vary.4 With the shift toward commercial packet-switched networks plus diminishing federal support, these regional providers will have to evolve to fill new roles—it remains to be seen whether regional providers as they are currently known are a temporary phenomenon. In some instances, they may become competitive providers of network service. To-
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Realizing the Information Future: The Internet and Beyond ward that end, eight regional networks, organized as the Corporation for Regional and Enterprise Networking (CoREN), to provide voice, data, and video services, including TCP/IP networking, between regions and nationwide.5 Alternatively, regional networks may evolve into or effectively reappear as collective purchasing groups, which attempt to control cost and unify service through coordinated procurement of service. This could be a means for indirect subsidy of deployment, although some hard-to-serve research and education entities might still be unable to afford to participate. A third potential role is as a user service support organization. Training is a key issue, especially for less-sophisticated potential users. Finally, another possibility is that commercial providers might buy up today's regionals if they continue to grow. Regional networks, as currently cast (i.e., as dominant providers of regional data networking serving the research and educational communities within their regions and providing access to federal backbones), raise questions about the ease with which other networks can interconnect and thereby gain access to the regional network clientele, notably the university community. The combination of the current sheltered status of the regional networks and the formation of CoREN raises the prospect of the regionals achieving a three-to four-year head start over other, commercial providers on developing relationships with universities for which they could provide both intra-and inter-regional connectivity. Such a head start could result in substantial barriers to the entry of new commercial providers after federal support has been phased out, unless some form of broader interconnection is required now. This observation assumes that institutions have high costs for switching among network and service providers, that they lack motivation for seeking diversity in providers, and that the telecommunications companies that provide the underlying facilities for regionals do not themselves become major players, exploiting their existing relationships with universities. The rapid growth of commercial Internet access providers suggests that these problems will not be significant. To promote regional networking infrastructure that is of value to academic and other users and that supports competition, there is a choice: (1) Establish regional regulated monopolies that cross-subsidize within the region (charging higher prices to commercial users, and lower prices to academic users), or (2) encourage competition, such as that provided by Sprint and MCI for AT&T in long-haul telephony, with only the government providing subsidies to research, education, and other public interest communities (e.g., hospitals). Competition will lead to reductions in commercial rates; noncommercial rates will fall if there is an injection (subsidy) of government money. Which approach is best de-
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Realizing the Information Future: The Internet and Beyond pends on an assessment of the extent to which the market may fail to meet the needs of noncommercial users and thus compromise societal interests—a central concern with respect to the future of research and education networking. Given the overall movement toward less regulation in communications, it may be desirable to try the competitive approach for a specified period, say, five years, and to carefully monitor impacts on the research and education communities. NOTES 1. McFadden, Kay. 1993. "High-tech Communications 'Highway' in Works," The News & Observer, May 4, p. 1A, 6A. The article notes that, "Under the proposal, North Carolina's information highway will be built, maintained and owned by the three participating phone companies. Although the government will set priorities on the uses of the highway, it is clear that the companies will reap two benefits. They would get the state as a client, and they would be able to link up to each other without undergoing as many arduous regulatory-clearing procedures .... As for the state's costs, those will come at the "user end"—that is, the classrooms, hospitals, jails and other facilities that have to buy television, computer, and telephone equipment. In all likelihood, such spending will fall under individual departmental budgets" (p. 6A). 2. Pacific Bell press release, April 2, 1993, excerpts distributed electronically. 3. Information presented to the committee by Stephen Wolff, NSF, and Laura Breeden, then executive director, FARNET. 4. Mandelbaum, Richard, and Paulette A. Mandelbaum. 1992. "The Strategic Future of the Mid-level Networks." Pp. 59-118 in Building Information Infrastructure. Harvard University Press, Cambridge, Mass. 5. CICnet. 1993. "CoREN Selects MCI to Join Forces on National Information Infrastructure Initiatives," press release from CICnet distributed via electronic mail.
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