My argument is based on a simple but crucially important technical fact: the useful economic value in a communications system architecture does not inhere in some abstract “ether” that can be allocated by dividing it into disjoint frequency bands and coverage areas. Instead it is created largely by the system design choices – the choice of data switching architecture, information coding scheme, modulation scheme, antenna placement, etc.

The most important observation about the impact of systems architecture on economic value is this: there exist networked architectures whose utility increases with the density of independent terminals (terminals are end-points, such as cellular telephones, TV sets, wireless mobile PDAs, consumer electronic devices in the home, etc.) Network architectures provide tremendous gain in communications efficiency on a systems basis – I call this cooperation gain, because it arises out of cooperative strategies among the various terminals and other elements in a networked system.