Metcalfe's law states that the value of a network is proportional to the square of the number of connected users of the system (n**2).
Metcalfe's law characterizes many of the network effects of communication technologies and networks such as the Internet, social networking, and the World Wide Web. It is related to the fact that the number of unique connections in a network of a number of nodes (n) can be expressed mathematically as the number n(n − 1)/2, which is proportional to n**2 asymptotically.
The law has often been illustrated using the example of fax machines: a single fax machine is useless, but the value of every fax machine increases with the total number of fax machines in the network, because the total number of people with whom each user may send and receive documents increases.
Metcalfe's law is more of a heuristic or metaphor than an iron-clad empirical rule. In addition to the difficulty of quantifying the "value" of a network, the mathematical justification measures only the potential number of contacts, i.e., the technological side of a network. However the social utility of a network depends upon the number of nodes in contact. For instance, if Chinese and non-Chinese users don't understand each other, the utility of a network of users that speak the other language is near zero, and the law has to be calculated for the two sub-networks separately.
When considering electronic health record (EHR) interoperability, two nodes are in contact in a meaningful way if the nodes themselves, not just human beings sitting at those nodes, can understand the content of a message from the other node in an unambiguous way. In other words, semantic interoperability is what counts.
Apropos of EHR, Rod Beckstrom, the recently appointed president of the Internet Corporation for Assigned Names and Numbers (Icann), has used his address to the Black Hat USA 2009 conference to propose a new economic model for valuing computer networks and the internet.
"Who cares how many nodes there are?" Beckstrom said. "If you look at a value of the network, focus on the transactions. The value of the network equals the net value added to each user's transactions, summed for all users."
For example, some networks grow the number of users but become less valuable since the value of their transactions is so small.
Microsoft chairman Bill Gates dropping his Facebook account in July was a case in point, Beckstrom said. The number of 'friends' became so great that the network lost its value.
