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 <NIC.MERIT.EDU>                                             12 March 1992
      /internet/legislative.actions/hearing.12mar92/vanhouweling.testimony


  Hearing on the National Science Foundation Network
  U. S. House of Representatives
  Subcommittee on Science
  March 12, 1992

  Testimony of Douglas E. Van Houweling
  Merit Network, Inc.


     Mr. Chairman, members of the Committee, I am pleased to appear on
  behalf of Merit Network, Incorporated, a not-for-profit organization
  of nine Michigan universities.  Those universities include: University
  of Michigan, Saginaw Valley State University, Michigan State
  University, Wayne State University, Eastern Michigan University,
  Oakland University, Western Michigan University, Michigan
  Technological University, and Central Michigan University.

         As you know, Merit is responsible for the management of the
  NSFNET backbone service under a cooperative agreement with the
  National Science Foundation (NSF).

          You have requested that I address the following in my
  testimony:

          -- The current arrangement for operation of NSFNET;
          -- The NSF's plan for recompetition of the award for operation
             of the NSFNET backbone; and
          -- The key issues Congress needs to consider to help ensure a
             successful evolution of the current Internet to the NREN.

          Before I address these specific points, let me make a few
  comments on the history behind the current cooperative agreement
  between Merit and the NSF.


  A Brief History

          Merit has been involved in data communications networking
  since the very beginning of the technology's development in the United
  States.  Established in 1966, Merit began operating an
  inter-university packet switching data network in 1972.  Today Merit
  provides the State of Michigan with Michnet, a state-wide data
  communications network.  We are proud to have been pioneers in the
  development of this critical technology for the future.

          The current management and operation of the NSFNET backbone
  service is based on Merit's cooperative agreement with the National
  Science Foundation (NSF).

          In 1985, the NSF established five national supercomputing
  centers, and in 1986 linked those centers together at 56 kbps, thus
  establishing the original NSFNET.  That original network proved so
  useful that it quickly became overloaded, and applications such as
  remote computing were increasingly difficult to perform.  In addition,
  a number of regional networks wished to connect to the supercomputing
  centers and to each other.

          As a result, in 1987 NSF solicited ~ proposals from
  organizations "to manage, operate, and continue development of a
  national ... network."  A key point in that solicitation was that "the
  managing organization shall apply its expertise and creativity in
  devising innovative approaches.... proposers are encouraged to suggest
  alternate architectures and approaches that may be more appropriate,
  more cost effective, or offer better service."

          The solicitation also stated:

          "The purpose of the NSFNET program is to provide scientists
  and engineers with a national computer communications network that
  will evolve to a national internetwork system for improving
  communication, collaboration, and resource sharing.... NSFNET is
  dynamic.  It will change with evolving network affiliations, improved
  technologies, competing communications costs, varying traffic load,
  and other similar factors."


  The solicitation went on to describe NSFNET's overall architecture to
  be a "three-level hierarchy:

          (1) A transcontinental 'backbone' network, interconnecting
          (2) a number of autonomously administered 'second-level'
              networks.... each of which interconnects
          (3) as many as 30 academic, industrial, and/or government
              research campus networks."

          Merit believed that higher education participation would be
  critical to the success and to the community's use of the backbone.
  Further, Merit's analysis of the needed capabilities, its
  understanding of the available funding from NSF, and the resulting
  required level of effort led to the conclusion that successful service
  would require a partnership with the computing industry and the
  telecommunications industry.

          On August 14, Merit submitted a proposal in partnership with
  IBM and MCI.  Two key aspects of that Merit proposal were:

          1) The design and deployment of a 1.5 million-bit-per-second
  (T-1) network from the beginning, with a option for providing 45
  million-bit-per-second (T-3) service after 1990 if NSF so desired;

          2) Significant cost sharing, including hardware and software
  from IBM, connectivity from MCI, and funding from the State of
  Michigan's Strategic Fund.

          In total, this cost sharing was more than double the proposed
  five-year NSF budget of $14 million.

          It is important to underscore that the NSF process was a
  highly competitive one.  We understand that a number of companies in
  the telecommunications and computing industries as well as other
  universities submitted proposals.

          On November 19, 1987, NSF announced a five-year cooperative
  agreement with Merit for the design, engineering, construction, and
  operation of a national backbone network service.  NSF had the
  capacity to extend and modify the agreement, develop additional
  agreements and subcontracts, and provide additional funding as needed
  over the life of the agreement.


  ~ Project Solicitation for Management and Operation of the NSFNET
  Backbone Network, National Science Foundation, OMB 3145-0058.

          In July 1988, only seven months after the award, Merit and its
  partners deployed the backbone on schedule and within budget.  Since
  that initial deployment, the NSFNET services have enjoyed phenomenal
  success due to NSF's leadership and the hard work and investment of a
  number of industry participants.  The traffic on the backbone has
  grown almost 7,000 percent, an average of 11 percent compounded every
  month, and new applications and uses are constantly emerging.  This
  has been a challenge to manage, but even more of a challenge has been
  the growth in the number of networks that are now reachable via the
  NSFNET service.  This number has doubled every year and is now
  approaching 5,000 networks worldwide.

          In fact, the growth of the network and its use was so great
  that it posed significant technical challenges.  Recall that, at the
  time, NSF and the Merit partnership were working on the leading edge
  of a new internetworking technology.  Some of the technical hurdles
  were very difficult to overcome.

          To accommodate this extraordinary growth, the backbone service
  was continuously upgraded -- new connections were added, speeds
  increased, and routing and network management technology enhanced.
  Both NSF and the partners added new resources.  NSF's additional
  funding commitment was augmented by continued major cost sharing by
  IBM and MCI.

          The option to upgrade the network to T-3 speeds was exercised
  by NSF for four reasons:

          1) Many of the emerging applications, such as graphic user
  interfaces that facilitated visualization of medical images and other
  applications,~ such as ozone depletion, air pollution and fuel
  combustion studies, as well as the emerging distributed file systems,
  required broader bandwidth.

          2) Many federal studies, including the September 1989 FCCSET
  report as well as the OSTP program, proposed the need to upgrade the
  speed of the network over time to T-3.

          3) The projections of the extraordinary growth clearly
  indicated that the T-1 network would be congested unless additional
  capacity (e.g. by an upgrade to higher speeds) was deployed.

          4) Finally, one of the overriding goals of all parties
  involved in the NSFNET backbone service has been to continue to push
  the limits of communications technology and maintain the U.S.
  competitive advantage in this field.

          Leading-edge technology has been required all along the way.
  The challenge of incorporating such developmental technology in a
  production network has presented all of us with many problems, but it
  has also stimulated United States' research, industrial and commercial
  leadership in fast-packet switching data networking.



  Organizational Change

          As the backbone network service grew in complexity, and was
  re-engineered, the underlying organization also had to evolve.
  Increased focus and resources were needed to keep pace with the
  increasingly complex technical, business and policy environment.



  ~ Grand Challenges: 1993 High Performance Computing and
  Communications, FY 1993 U.S. Research and Development Program,
  Supplement to the President's FY 1993 Budget.

          Therefore, with the agreement of NSF, on September 14, 1990,
  Merit, IBM, and MCI announced the formation of a new, not-for-profit
  corporation, Advanced Network & Services, Inc. (ANS).

          The certificate of incorporation states that ANS:

          1) "is ... dedicated to the advancement of education and
  research in the interest of improving the ability of the United States
  to compete in the global economic environment";

          2) "will concentrate on computer networking and related
  services,";

          3) "shall help establish a high-speed computer network which
  will be maintained at the leading edge of technology,";

          4) "will ... help to expand the access to and interchange of
  information technology resources among academic, government and
  industry users,"; and

          5) "will engage in research and development work which will
  ...contribute to United States preeminence in high speed
  networking...."

          ANS' board, of which I serve as Chairman, is broadly
  representative, its members drawn from industry and higher education
  across the nation.  Both IBM and MCI made major contributions in the
  form of grants to ANS' establishment.  In addition, both IBM and MCI
  bear substantial cost in providing equipment and services to ANS.

          With the approval of the National Science Foundation, Merit
  contracted with ANS for backbone network service.  The goals were:

          1) To provide a stable nationally representative
  organizational and financial platform for the future of the NSFNET
  backbone service and its successors.

          2) To begin the process of privatizing the network.

          3) To provide a foundation for interconnecting commercial
  service providers with higher education and research enterprises.

          It is important to note that there were no government asset
  transferred to ANS at the time of its establishment.  The network
  hardware itself is owned by ANS, and the communications facilities are
  leased by ANS from MCI and others.  Federal agencies, regional and
  state networks, other commercial networks, universities and private
  industry pay for their attachments to the ANS network.

          The formation of ANS brought to the network's development an
  increased amount of private sector participation -- a goal which
  Congress recognized in passing the High Performance Computing Act of
  1991.  The formation of ANS also was heralded by Senator Al Gore
  (D-TN), who stated that "Just as private contractors helped build the
  interstate highway system, this new corporation will help build the
  national information superhighway today's information age demands."

          This increased participation of the private sector, spurred by
  ANS's entry into the field, also broadened the funding base and
  increased competition in the network's development.  For example, ANS
  has also submitted proposals to provide services to emerging state
  networks with other interexchange carriers.  In addition, new test
  equipment vendors have been integrated into the network to improve
  network management for all users at very high speeds.

          To accomplish the third goal, ANS on May 30, 1991 established
  a for-profit subsidiary, ANS CO+RE Systems, Inc., to serve commercial
  customers and link them to the research and education community.
  Discussions with representatives of the regional networks, FARNET, and
  the NSF were held to ensure that the cost of providing commercial
  services are completely reimbursed through non-governmental sources.
  Fees from commercial use of backbone services, minus operating
  expenses and taxes, are returned to ANS for reinvestment in the
  network infrastructure.

          The creation of ANS CO+RE and its work with regional networks
  blazed the trail for major segments of the Internet to carry
  commercial traffic, creating many new commercial Internet service
  providers and taking a major step forward in pursuing the vision of
  the original drafters of the program.



  The Results

          Less than four years later, it is instructive to assess the
  results of the NSF's visionary plan.

          First, access to the network has exceeded the most optimistic
  visions.  The solicitation said, "It is anticipated that over the next
  five years NSFNET will reach more than 10,000 mathematicians,
  scientists, and engineers at 200 or more campuses and other research
  centers."

          In fact, the NSFNET today provides access to millions of
  scholars and researchers in over 1000 institutions across the United
  States.  Over 650 colleges and universities are connected representing
  approximately 80 percent of the nation's student population and 90
  percent of the nation's federally sponsored research.

          Further, NSFNET now provides access to more than a thousand
  high schools and several hundred libraries through the joint efforts
  of the NSF and the regional networks.

          This data network is going to open up entire new vistas of
  information and learning techniques for America's students from
  kindergarten to post-graduate institutions.  I believe it will spark a
  revolutionary change in the way we prepare our children for the
  challenges of the future.

          This evolving network is clearly an example of where economies
  of scale make a difference in serving many diverse communities.

          Second, federal funds have been leveraged in an extraordinary
  fashion.  Every dollar spent by NSF on the backbone service is matched
  by more than four dollars from Merit and its partners.  Further, each
  of these dollars has yielded an investment at least ten times larger
  in regional and campus networks.

          Mr. Chairman, the bottom line is, every Federal dollar has
  stimulated at least a forty-dollar investment in an emerging
  technology critical to the nation's international competitiveness.
  With a small expenditure of federal funds, the government has spurred
  the development of an entirely new set of technologies and
  applications that will dramatically enhance our ability to compete in
  world markets.

          Third, a new industry has begun to develop in which the United
  States not only leads technologically, but in the market.  American
  companies lead the world in internet technology, and are growing
  rapidly.  Not only are large communications carriers like Sprint,
  AT&T, MCI, Ameritech, and Bell Atlantic working vigorously to
  establish their presence, but smaller companies and regional and state
  networking organizations are growing rapidly.  Merit and ANS are
  simply two of the many organizations in this rapidly growing
  marketplace.

          In keeping with the goals of the High Performance Computing
  and Communications Program, the NSF program has been an extraordinary
  success in stimulating the growth of a critical new technology.  The
  program grew from a federal government commitment to seed an infant
  technology, was helped and nurtured by a committed partnership of
  educational and research institutions, state government and private
  enterprises, and it is now demostrating its potential.  Already, the
  United States is the world leader in exporting this new communications
  technology and its many related applications.  Those increased exports
  are making a positive difference in our balance of payments.

          This network is envied worldwide.  It has allowed the U.S. to
  lead in building a high-speed data communications infrastructure.  We
  are pioneering technological applications that will be among the most
  critical for research, education, and business in the 21st Century.

          Fourth, and perhaps most important in the long term, is that
  government, higher education, and industry are working cooperatively
  to build a critical infrastructure for our nation.  No one argues with
  the proposition that knowledge and information are critical
  commodities for our nation's future.



  Key Issues For The Future

          The NSFNET example and experience is providing the United
  States with the tool it needs to succeed in that future.  NSF's vision
  and program have led us to this uniquely American approach to
  innovation.  With a modest investment, they have energized a nation.
  Their program plan and strategy for introducing future technology will
  sustain the momentum.  We believe NSF's program plan for recompetition
  of the cooperative agreement is appropriate, but entails substantial
  technical and management challenges.

          Congress should consider the following key issues to help
  ensure a successful evolution to the NREN.

          1) The successful triad of government, academic, and private
  industry should continue because it spawns innovation and technology
  transfer which makes this country stronger.

          2) Any future program should seek to stimulate investment from
  private industry as the current program has so successfully done.

          (3) Congress should create an environment in which the natural
  tendencies for fragmentation of federal efforts are overcome by a
  coordinated program led by the NSF.

          Merit and its partners have been pleased to have played their
  part in this extraordinary national program.