Metcalfe v Reed

Evolve Cellular finds inspiration in the economic principle of the network effect. This concept states that all users of a service benefit when another user joins. The typical example of the network effect is the telephone industry itself. The more people who own telephones, the more valuable the telephone is to each owner.

Theorized in 1980, and formulated in 1993, Metcalfe’s law states that utility can be quantified by the number of possible connections between nodes on the network. Since each additional node brings a connection with each existing node, the potential utility can be expressed as n nodes squared. (The actual math of Metcalfe’s Law is n(n − 1)/2 which is asymptotically n squared.)

This theoretical limit to the network effect stood for 20 years until it was challenged in 2001 when David Reed said that Metcalfe's law understates the value created by a group-forming network [GFN] as it grows. Let's say you have a GFN with n members. If you add up all the potential two-person groups, three-person groups, and so on that those members could form, the number of possible groups equals 2n. So, the value of a GFN increases exponentially in proportion to 2n.

As we see it, maximizing the “Network Effect” requires three things:

Devices must have access to the network. Whether they be phones, tablets, TVs, wearables, etc., the network must be flexible and permissive to the devices seeking access, not just to the select few devices which the network operator has sanctioned.

Network selection must be determined by the user or the device. Use of a network should not be constrained by the network either by policy, technology or price.

Applications and content of each device should be shared with all other devices based upon the “Intelligence” inherent at the device edge, and should not be controlled by “the Network.”

Our goal at Evolve is to break the bounds of Metcalfe’s Law and make it possible for innovators to realize the benefits postulated by Reed.