Claims

Factual · Economics and markets

“the general bandwidth is increasing in price performance or dropping in price faster even than microprocessors are. It's by a factor of four or so every year.”

Marc Andreessen, Netscape COO, interviewee · June 1995 · Smithsonian Oral and Video Histories: Marc Andreessen (Smithsonian)

Leaving aside access into the home, general bandwidth is improving in price-performance, or dropping in price, faster than microprocessors, by a factor of about four each year.

Mostly false False in substance, right in a detail.

What would count as true or false

Judged as of June 1995. The claim, given with some hedging, is that general network (backbone or long-haul) bandwidth was improving in price-performance faster than microprocessors, by about a factor of four a year. True: contemporary data or analyses show backbone or long-haul bandwidth price-performance improving faster than microprocessor price-performance (about 1.5–2x a year under Moore's law), at roughly 3–5x a year around 1995. Mostly true: bandwidth was clearly improving faster than microprocessors, but the yearly rate was somewhat off (for example about 2–3x a year). Mixed: bandwidth improved about as fast as microprocessors, or faster only in some segments. Mostly false: bandwidth improved more slowly than microprocessors in that period, with fast improvement only in narrow or later cases. False: bandwidth price-performance was flat or improving far more slowly than microprocessors.

Evidence

1. Growth in the "New Economy": Bandwidth Prices and Demand in the 1990s Douglas A. Galbi, Senior Economist, Competitive Pricing Division, Common Carrier Bureau, FCC · 9 July 2000

   “Prices decreased significantly from 1990-1994 but only slightly from 1995-2000.”

2. Growth in the "New Economy": Bandwidth Prices and Demand in the 1990s Douglas A. Galbi, Senior Economist, Competitive Pricing Division, Common Carrier Bureau, FCC · 9 July 2000

   “The investment cost per Mbps of capacity fell by about a factor of 10 from 1989-1995 and from 1995-2000.”

3. Growth in the "New Economy": Bandwidth Prices and Demand in the 1990s Douglas A. Galbi, Senior Economist, Competitive Pricing Division, Common Carrier Bureau, FCC · 9 July 2000

   “This improvement is contrasted with a 60-fold improvement in the price-performance ratio for microprocessors over the same period.”

4. relatively slow reduction in bandwidth prices – purple motes purple motes (blog of Douglas Galbi) · 19 September 2010

   “I found that average wholesale local bandwidth prices fell about 20% from 1990 to 1995, and remained roughly constant from 1995 to 2000.”

Reasoning

An FCC economist's analysis found that the investment cost per Mbps of capacity fell by about a factor of 10 from 1989 to 1995 [E2]. That is roughly 1.5x a year, far below the claimed fourfold yearly rate. The same paper contrasts this improvement with a 60-fold improvement in microprocessor price-performance over what it calls the same period [E3]. The quoted text does not say which period is meant, but the contrast suggests bandwidth did not improve faster than microprocessors. Galbi reports that average wholesale local bandwidth prices fell only about 20% from 1990 to 1995 [E4]. His 2000 paper says prices decreased significantly from 1990 to 1994 but only slightly from 1995 to 2000 [E1]. Because this evidence covers local inter-office circuits rather than long-haul backbone specifically, the verdict is mostly false rather than false.

Cite this claim

Marc Andreessen, “Leaving aside access into the home, general bandwidth is improving in price-performance, or dropping in price, faster than microprocessors, by a factor of about four each year.” (said June 1995). Verdict: mostly false. Reliability API, claim c_f36c88f67326, method 0.1.0+c876030c. https://epistacklabs.com/claims/c_f36c88f67326