10 Million New Jobs from IPv6: The Case for US Government Investment
by Alex Lightman, Chairman, US IPv6 Summit 2004

President George W. Bush and his administration have turned their attention away from winning re-election to preparing for the next four years, and to the judgment of history. Of all the slings and arrows from John Kerry, the one that had to sting the most was Kerry’s “America cannot afford a President who’s the first to lose jobs since Herbert Hoover in the Great Depression.” As evidenced by the election returns on Nov. 3, most voters understood that there are down turns, especially after the boom in the ‘90s, and that 9/11’s trillion dollar loss cost jobs as well, but all eyes will be watching to see whether and how the Bush administration creates jobs – and especially how many.
 
John Kerry set the target for the next four years: to create ten million new jobs. Just like winning the popular vote in 2004 has ended the legitimacy debate, so, too, would generating 10 million jobs go a long way to resolving the economics doubts of over 55 million people, and serve as a powerful track record for the Republican controlled House and Senate, as well as the Republican case for yet another presidency in the 2008 election. The US government should publicly embrace Kerry’s 10 million job goal.
 
Since this is 6Sense, the newsletter for IPv6, it might come as no surprise that we believe that IPv6 is the single best place to invest, the highest leverage, the biggest bang for the federal buck, to create those 10 million new jobs. This article will argue the case from several angles, after some context. Currently, the US government has, to date, budgeted funds (roughly $10 million annually) for Dept. of Defense’s IPv6 Transition Office (DITO), with additional funds being ramped up by the individual branches of the services. The Dept. of Homeland Security is the only other US government (or state or local) agency to mandate IPv6, but does not have a specific budget for that, so DoD is the clear leader for IPv6, and increasingly sets the pace for the rest of the world, a pace that will accelerate after the DoD/DITO's ten presentations at the upcoming US IPv6 Summit in December. DITO sets the definitions and criteria for compliance, though, thereby directly impacting over $25 billion in IT purchases that must include support for IPv6, and thus it is vital for companies seeking to sell IT to the U.S. government to understand and communicate with DITO.
 
The federal government of the US will take in about $10 trillion over the course of the second G. W. Bush term, about $2.3 trillion in 2005, rising by about $100 billion each year, by my own estimates. I respectfully request that Congress proceed forward with hearings on IPv6, and, under the leadership of the Chief of the Dept. of Defense IPv6 Transition Office and the CIO of the Office of Management and Budget, with Congressional oversight and political “air support” consider
A. budgeting $10 billion over the next four years to accelerate the transition to IPv6; and,
B. mandating the transition to IPv6 for the entire federal government (not just DoD and DHS) by 2011, a date that has been discussed informally for the last several months.
 
$10 billion may sound like a great deal of money at a time that the US is experiencing almost $500 billion annual deficits. Why not leave things to industry, and keep the government out of it, so that the free market and brilliant industry will take care of things? The Dept. of Commerce engaged in a very slow process of getting comments…and ended up concluding that industry would simply take care of IPv6, thus obviating the need for the US federal government to get involved. What a bad idea: if we’d followed this logic for the last 150 years, and not had federal investments in IT, we’d have an economy about a tenth the size we do today, and that might possibly be as fragmented as East Asia or Europe.
 
Every nation that has been a world leader for the past five hundred years was a leader in information, communication, transportation, and navigation. The Spanish were the only ones in the late 1600s to know where to catch the winds to cross the Pacific, and their ships were financed by the Crown (government). The Dutch government underwrote and guided the inventions of the modern multinational through the VOC (Dutch East Indies Company) and the modern stock market, with futures, options and derivatives – both between 1620 and 1640! The British invented longitude with government funds as an incentive in the 1700s and paid for undersea cables that stretched around the world during the 1800s, as well as large systems like Imperial Chain and Chain Home, allowing Britain to read the entire world’s cable traffic (the book to read is Peter Hugill’s Global Communications since 1844).
 
The US government string of successes from active investment, rather than ‘leaving things to industry,” is even stronger. Samuel Morse built the first 27 miles of telegraph lines between Washington, DC and Baltimore with funds allocated by Congress. The US government was the biggest customer for ATT’s telephony and IBM’s business machines, and subsidized (along with the UK government) ENIAC, MANIAC and the other early computers, as well the first satellites (inspired by Sputnik) and the rockets and guidance that launched them (over $1 trillion spent on launch facilities alone in the US!) Radar was invented at MIT during WW II with federal funds, and hundreds of billions in federal funds have been spent on infrastructure like highways, when we could have left this to the states, or even to companies building toll roads. The universal access fee, and rural electrification programs, both mandated by the federal government, has assured that telephony and electricity have both reached to every tiny town in the US – just look at a map of the world at night, to see how truly unique the US is, globally, in its success at illuminating every inhabitation.
 
When we turn to the Internet, we seek in vain for the free market creating something without US government funding. The original idea for packet switching came from Paul Baran at RAND in 1964, underwritten by Project Air Force. The original funding for the Internet, back when it was called the ARPANET, was from the DoD’s Advanced Research Projects Agency. (For more information see http://alexlightman.com/docs_essay/011003EssayDarpa2of3.doc). I heard Dr. Larry Roberts, the original director, say that he would tell universities and researchers he would not pay for their computers unless they would agree to be nodes of the Internet – no company would have tried to create a non-private resource without patent protection. Thank goodness the Dept. of Commerce didn’t ask people if the US government should be involved in the Internet -- they would have said that private industry could do it!
 
The NSF took over the ARPANET when the DoD made a detour for OSI over TCP/IP, and NSF made the net primarily a tool for science. NSF was the original funder for the National Center for Supercomputer Applications at the University of Illinois, where my friend, then-director Larry Smarr, used government funds in part to have his brilliant $6.25/hour student part-timers code Collage, which became Mosaic, which became Mozilla, Netscape Navigator, and, via Spyglass, Microsoft’s Internet Explorer. NCSA’s Smarr also caused the Apache webserver software to be created, and, most importantly, to get Mosaic and Apache released as open source, unleashing an Internet boom. (Think Tim Berners-Lee, inventor of the World-Wide Web is a lone genius? His work at CERN – a multibillion government built facility - was also paid for by government research grants for atomic physics.) Wireless telephony and the Internet have boomed since 1980. The core technology for wireless data is CDMA, and the core technology for CDMA, spread spectrum, was developed with Navy funds starting in the 1940s for torpedoes to resist jamming.
 
I could go on, but the point should be clear: government funds (almost entirely US federal government funds) have been part of virtually all the computer and communications breakthroughs. And the Return on Investment has been spectacular: economists estimate that 1/3rd to 1ž2 of US GDP growth during the ‘90s boom could be credited to the Internet. Since the US went from about $1.1 trillion to $2.2 trillion in tax collections during the decade between 1992 and 2002, that growth was worth an extra trillion a year. If we give the Internet half the credit, this amounts to an extra $500 BILLION A YEAR from a few billions in early government investments, to make a market where there wasn’t one – the situation with IPv6 now. And this revenue keeps on coming in.
 
If the federal government will do what it has done so often and so well, and make the early, massive investment in the newest information and communication technology, it will reap ever more massive financial returns. Why stop doing what has worked so well?
 
With respect to returns from its IPv6 investment, I will seek to support a bold claim:
By investing $10 billion in IPv6 during 1/2005 to 12/2008 (the 2nd Bush term), the US will generate an extra $10 trillion in GDP, and, since the US federal government gets about 20 cents out of every extra dollar in GDP, an extra $2 trillion in federal tax revenues…and it will create those now legendary extra ten million jobs.
 
With $10 billion in funding and a federal mandate to move to IPv6 by 2011, US industry will indeed sit up and take notice. If the DoD requirement to use IPv6 is emulated by the rest of government, then over $100 billion a year worth of IT will need to incorporate IPv6, and tens of thousands of applications can and will be developed, and once a few hundred applications are out there in open source, thousands more will be developed.
 
Getting applications for IPv6 is more important that you might realize. To date, a small number of companies have IPv6-enabled their networking products (basically, the 43 who have said “Yes” to me when I’ve asked them to sponsor a US IPv6 Summit, plus a few dozen more, mainly software companies and Japanese consumer electronics companies). In Japan, the Japanese government has invested about $10 to $13 million a year into IPv6, and mandated that the entire country (not just the government) transition to IPv6. As a result, Japan gets the largest participation (by far) by business people and engineers at its IPv6 conferences, and there are dozens, soon hundreds, of IPv6 applications in Japan. In the US, there are almost no IPv6 applications to point to. I’ve chaired and organized more IPv6 summits than anyone else, and I think that the only consumer-related IPv6 applications demonstrated at a US Summit have been Microsoft’s threedegrees.com, a home medical monitoring application that won a Japanese contest, a wireless application, and the CharmBadges (which my company and I invented and which use IPv6 for identity). Since IPv6 has been around for about a decade, this microscopic showing demolishes the Dept. of Commerce argument for leaving IPv6 to the market place.
 
How, for instance, will the major automakers use IPv6? Not one auto company has sent a single person to a US IPv6 Summit in the last few years, if ever. They don’t know what they don’t know. If every new car had an IPv6 address, cars could communicate more easily with each other, repairs could be more easily determined, and improvements downloaded, including potential fuel improvements. With 800 million cars and trucks on the road, the backfill opportunity is huge. But no one is working on this.
 
If thousands of new applications start to roll out, many of them open source, and IPv6 becomes ubiquitous, new jobs can be created in ten major ways. First, though, let’s look at the big picture of jobs creation for college grads (half of all entrants to the work force), and note that 8 out 10 of the fastest growing occupations are STRONGLY HELPED BY IPv6.

10 Fastest Growing Occupations for College Grads

We can point to ten specific areas in which IPv6 can be useful and helpful:

1. Reduced transaction costs: in a conversation on Oct. 29 with Google’s CEO Eric Schmidt, this was one of the major benefits he expected to emerge from widespread IPv6 adoption, with vital contributions to the livelihood of the poorest.

2. Stateless autoconfiguration will enable more consumers to get their electronic devices working, and to get help automatically when they need it.

3. Increased network, e-commerce, and m-commerce security, and thus reduced computer fraud, identity theft, and white collar crime, saving potentially tens of billions, which funds can be used to hire more people and grow businesses.

4. Increased use of mobile phones, due to doubling of both battery life and spectral efficiency (see my Oct. 6Sense article)

5. US leadership in 4G wireless broadband, which I estimated in my book Brave New Unwired World as worth up to $2 trillion annually, of which the US could grab 1/4th to 1/2 if it pioneered this industry.

6. Potential to track medical microelectronic machines and eventually nanodocs, detecting cancer, blocked arteries and other maladies before they manifest, potentially saving tens of billions in a $1.5 trillion medical industry, through prevention and outpatient surgery vs. intensive care and its attendant lost productivity. NOTE that the winner of Japan’s IPv6 application contest was for medical monitoring, and that six of the ten fastest college-grad professions are related to health. Monitoring at home saves $4,000/person/day vs. hospital bed costs.

7. Increased potential for feedback loops throughout society, including video cameras, electric meters, and oil well flow gages, thus increasing productivity and profitability by perhaps 1% or more annually across the US.

8. Improved quality, as tens of millions of new ways to wirelessly monitor useful information pop up throughout society, and Total Quality Management principles become more seamlessly integrated into companies.

9. There will be a potential opportunity to double the amount of oil that can be obtained economically, from about one trillion to two trillion barrels, if the reservoirs can be visualized, and, using IPv6, engineers can engage in 24/7 monitoring, instead of just once a year. Once this practice became more widespread, oil prices would drop, as the perception of oil availability reduces its price.

10. Most important of all, IPv6 could be the basis for a broadband-enabled service export boom. Currently the US exports less than 1% of its $9 trillion service sector, but the potential exists to export 5 to 7% of US services, nearly eliminating the $600 billion trade deficit (especially digital-enabled medicine, distance learning, security camera observations, and professional consultation).

As part of the US government investigation into IPv6, leading experts should be engaged to estimate the number of jobs. If I am even roughly correct, and IPv6 investment could indeed lead to an extra ten million jobs (in addition to the 148 million existing employed in late 2004), are there any ball park approximations to support my other claim that there would be hundreds of billions in extra GDP, and thus a cumulative $10 trillion, over the next two decades? (The Internet is 35 years old and IPv4 is 31 years old, so a reasonable time period for the New Internet and IPv6 will likely be at least 20 years)

1. Per capita income in the US is about $31,000. Ten million jobs would indicate $310,000,000,000 a year in direct GDP, and this would lead to a 2x multiplier effect, resulting in nearly $1 trillion a year in extra economic activity.

2. As people increase their income, they have a much greater tendency to consume services. In 1950, with a per capita income of $1,500, the average person spent $203 on durable goods and $420 on services. In 2001, with income of $30,511 in personal income, the average person spent $3,002 on durable goods and $14,519 on services – a change in ratio from about 1:2 to almost 1:5.

3. Because IPv6 can help to deliver new and novel services, as well as increase employment and income, the increasing marginal propensity to consume services will have a self-reinforcing or positive feedback element that can feed on itself to create an ongoing service growth wave.

4. The average economic growth is about 2% a year, according to The Birth of Plenty, in good times, for most of the world. With information leadership, the US can grow at about 4% a year. With a $13 trillion economy, 4% growth means an additional $520 billion a year, with the extra 2% above baseline worth about $260 billion. Even with 8% growth, China adds only about $130 billion in dollar terms, and thus, with IPv6 investment, China will never catch up to the US, since China’s growth rate will shrink over time, leaving the US with greater growth in absolute terms for the next few decades.

If the potential for a flood of new applications for IPv6, which can lead to new industries, new jobs, new revenue, and massive increases in government revenue isn’t enough to make the case for US federal funding, then consider the murderer’s row (a baseball term): the nations with which the US already has hundreds of billions in trade deficits annually and which are focused on IPv6 leadership, fueled by government subsidies, who will eat our lunch with their own IPv6 programs if the US government doesn’t fund leadership.
 
Japan, Korea, China, and the European Union (via the European Commission) have all effectively mandated IPv6, and either the US will sell more IPv6-enabled products and services (mainly services) to them than they do to us because we get government funding and ramp up (as we did all the other times the US government primed the pump) OR they will sell more IPv6-enabled products and services to us than we do to them.
 
If Japan has 125 million people using IPv6 by 2007 (its goal) while the US has only the 3 million people in the Dept. of Defense using IPv6 (who are fighting wars and winning the peace rather than making products), it is fantastical thinking to imagine that we will be exporting IPv6-related products or services to Japan. In fact, the ratio may be 10 to 1 from Japan to the US, with similar ratios from Korea, China, and even Europe! If the US starts importing services from China, as well as cheap Chinese manufactured goods via Wal-Mart, the US will find itself seriously disadvantaged for decades to come, and the US share of global product will plummet. US government revenues may even fall in absolute terms, because, while manufacturing jobs replaced the loss of agricultural jobs, and service and information jobs replaced the losses of manufacturing jobs, there is no place to go if we start importing service jobs and accelerate the outsourcing of information jobs. With IPv6 leadership, the US can have it all. Without IPv6 leadership, the US will start to lose leadership in hundreds of other industries. As the Bible says, “To those that have, it shall be given. To those who have not it shall be taken away, even that which they have.”
 
As a parting thought, I offer for your consideration that the US government is the ultimate celebrity endorser: if the US government mandates IPv6, 200 other governments will do the same within a few years, just as over 150 countries have adopted, with edits, the US Constitution and most of our other innovations. I have calculated that the wealth of the world is about $360 trillion. With six billion people, and six hundred billion places, pets, livestock, and valuable things, connected to the Internet, we would add hundreds of trillions in wealth to the world, not only enriching the US (the primary beneficiary of rising global wealth) but also enriching what The Pentagon’s New Map called “The Non-functioning Gap” of poor countries. If the poorest five billion could access the Internet (public Wi-Fi enabled kiosks and flat screens or e-ink displays accessed by devices like the CharmBadge) then the US military would have fewer people to fight because there would be less fertile ground for fanatics and demagogues to recruit from.
 
I think $10 billion for IPv6 is the single best investment the US government can make. Your thoughts are welcome. Write me at alex@usipv6.com with your thoughts.