Networking the Nation

By Philip Elmer-DeWitt

Don Miller gets a kick out of paying for his groceries at the local Lucky Store in San Mateo, Calif. Even before Lucky's computerized check-out system has finished scanning the bar codes on his coffee, beer and bread, Miller has run his bank card through the system's magnetic strip reader, punched in his personal identification number and poised his finger above a button marked AMOUNT OK.

Wanda Jaworski cannot imagine life without the IBM PC in her Hartford office. The Travelers Corp. underwriter now gets done in one day what used to take half a week, thanks to a new office information system that lets her gather research, analyze figures, exchange mail and edit drafts without leaving her keyboard.

William Capobianco's one-man financial consulting firm in Eastchester, N.Y., would not exist without services such as CompuServe, Dow Jones and the Source. By plugging into these far-flung communication systems, Capobianco can advertise his company across the U.S., chat with clients, make travel plans and keep up with current affairs. Says he: "I couldn't survive without the networks."

Capobianco is not talking about ABC, CBS and NBC. The networks changing his life--and the lives of millions of Americans--are the ones connecting the nation's 30 million computers in a vast maze of interlocking grids. America's infatuation with the electronic computer, a machine born and nurtured on these shores, is blossoming into a network love affair. Says Louise Herndon Wells, an analyst with the California research firm Dataquest: "We have more desktops wired together with information devices than any other country in the world."

By next year the computer network that links Miller's bank card to his grocery register will connect four California banks to 300 Lucky Stores. Wanda Jaworski's computer system is one of 300 LANs (local area networks) that already crisscross every large Travelers' office. Capobianco's networks branch from giant mainframe computers that tie hundreds of thousands of personal computer owners in an electronic community that stretches from coast to coast.

A separate computer system links florists in New York with Candy-Gram shops in Oregon. Another yokes travel agents to airlines and hotels around the world. Others bind together bank tellers, brokers, car rental chains, defense contractors, factory robots, police departments, university labs, intelligence agencies and the vast U.S. military machine. Says Robert Metcalfe, inventor of the networking system called Ethernet: "It's like one big nervous system."

Brian Daly, public relations manager for Rockwell International, experiences that synergy nearly every working day. When a reporter calls with a question that he cannot immediately answer, Daly plugs into a network that reaches from the company's Pittsburgh headquarters to its El Segundo, Calif., aerospace facility, linking 10,000 terminals, 7,000 personal computers, 60 high-performance minicomputers and one Cray X-MP supercomputer. Tapping that electronic brain trust, he can quickly get answers on anything from the status of Rockwell's satellites to the prospects for more B-1 bombers. "The value of networking is that you can share data and information," says James Sutter, Rockwell's general manager of information systems. "But the biggest advantage--increased productivity--can't be easily quantified."

Joseph Brophy, Travelers' data processing chief, has found one measure: paper. "I hate forms," he says. "I hate clutter. My goal is nothing short of eliminating all paper." Like hundreds of U.S. corporations, Travelers has gone on an office automation binge, spending $300 million in each of the past two years to bring its 30,000 employees and 10,000 independent agents under the umbrella of an IBM systems network. Today the company has 35,000 terminals and PCs connected to 18 mainframe computers. Every day 3.7 million messages pass through Travelers' 2 million feet of coaxial and fiber optic cable. Net yearly savings: 32 railroad boxcars of paper.

Thanks to the networks, some 240,000 Americans are now computing, rather than commuting, to work. Hewlett-Packard and Continental Illinois allow selected employees to do their work at home. Hedi Hesse, a computer programmer for Pacific Bell, visits her office just once a week. The rest of the time she spends at the computer terminal set up near her cat's bowl of Friskies and the ironing board in the kitchen of her Alameda, Calif., home. "A desk is a desk," says Hesse. "As long as I have a phone and a modem, I can do this anywhere."

Money networks now hand out $20 bills to anyone with a thin plastic card and access to one of the country's 45,000 cash machines. In larger cities, banks are pooling their ATM (automated teller machine) networks to create such regional systems as NYCE, Money Exchange and Avail, or national networks like Cirrus and Plus. Today a traveler can draw ready cash from a Miami ATM while automatically reducing the balance of his checking account in his Boston bank.

A parallel set of networks controls the nation's 800 million credit cards. In a typical month, Visa cardholders will initiate 50 million credit checks to 18,014 member banks through a high-speed authorization system that can okay payment in as little as 1.0 seconds (down from 1.3 seconds last year). "As a consumer," says Visa Vice President Roger Peirce proudly, "who would want to wait two minutes in a check-out line?"

The biggest network is the oldest: a national telephone grid, run almost entirely by computers, that connects 100 million homes and businesses through 1 billion circuit miles of wire, cable, microwaves and satellites. Even after the breakup of AT&T, the U.S. telephone system remains one of the technological marvels of the modern world, handling 1.97 billion telephone calls a day and also carrying the bulk of the country's data traffic. During its worst hour--the chaotic period following the 1984 court-ordered deregulation--the system still outperformed the best foreign telephone exchanges.

The payoff of networking is the same everywhere: more efficiency, productivity and control. The New York Stock Exchange credits the computerized stock trading network, which sends orders directly from member firms to the floor of the exchange, with an extraordinary 400% increase in productivity over the past 18 months. The 3,500 field auditors of Peat, Marwick, Mitchell & Co., outfitted with their own modems and Macintoshes, no longer lug around carloads of documents, reports and case histories. "It frees you from ordinary space and time constraints," says Michael Macdonald, a partner with the firm. "You can be in more than one place at the same time."

Networking has become big business in the Federal Government too. In the past, each government agency, from the Census Bureau to the IRS, maintained its own computer listings. Now, more and more, these computers are sharing records. To nab draft dodgers, the Selective Service has fed its machines a restaurant chain's 10-year-old computer list of boys eligible for free birthday sundaes. To ferret out welfare cheats, social service agencies compare their rolls with lists of federal employees. And the Reagan Administration is prodding state governments to begin linking the computers that hold state unemployment insurance records, social security wage data and certain IRS returns.

These matching programs send a Big Brotherly chill down more than a few spines. To keep the Government out of the electronic dossier and blacklist business, the Privacy Act of 1974 prohibited federal agencies from exchanging data about private citizens without their consent. Yet the Administration, despite the protests of the A.C.L.U. and other watchdog groups, is planning to expand further its computer matching efforts to include families applying for college loans, veterans using VA hospitals and rural families asking the Farmers Home Administration for low-interest housing loans.

There are other clouds hanging over the networks. Since a thousand computer messages can be as easily sent as one, electronic junk mail tends to proliferate, forcing users to scroll through useless verbiage to find the information they need. Some systems are impossibly hard to use, others are plagued by malicious hackers. Rockwell's Sutter reports that even defense contractors' employees can become so engrossed with on-line browsing that they neglect their legitimate work, squandering whatever productivity gains the technology might have brought.

Moreover, the competitive fervor that has made the U.S. computer industry the envy of the world has now become an impediment to the networking of the nation. Rather than agreeing on standards that would enable one computer network to share data with another, American firms are promoting their own proprietary communications systems, creating what has become a veritable skyscraper of Babel. The potential bugs involved in tying together incompatible systems, says Matthew Balkovic, director of AT&T Information System's Computer Networking Laboratory, are "enough to populate a swamp."

Nevertheless, the wiring of America proceeds apace. Some local phone companies are testing systems that will divide standard voice telephone lines into three digital channels, allowing telephone customers to plug terminals directly into their wall sockets, without benefit of modem, and to program their phones like computers. Networking firms, such as 3Com, Sytek, Ungermann- Bass and Network Systems Corp., are stringing up mile after mile of high- speed coaxial and optical fiber cables and offering communications rates in excess of 275 million bits of information a second.

What will tomorrow bring? Despite the overblown expectations of home computer makers, who predicted that Americans would by this time be ordering their groceries and setting their thermostats by computer, futurists are now envisioning a brave new world of one-stop networking. Commuters will set burglar alarms, start air conditioners and program their VCRs--all through the digital keypads of their mobile phones. When appliances break down, homeowners will plug them into diagnosis outlets, dial the manufacturers and be told in a flash precisely what has gone wrong. Television sets will interrupt broadcasts to announce that clothes dryers have completed their cycles. Viewers, with the press of a key, will tell those dryers to run the clothes through one more time.

This vision, too, may be a little far-fetched. Still, says Patrick Gordon, a communications expert at the Yankee Group, the Boston-based high-tech research firm, "the integrated services digital network is not a blue sky, Buck Rogers fantasy. It's already on its way."

With reporting by Thomas McCarroll/Hartford and Charles Pelton/San Francisco