The Internet, warn some eminences grises, is staggering chaotically toward massive outages, perhaps even a total collapse. Nonsense, retort others: the future has never looked brighter for the global network. Both sides are correct. True, the explosive growth of the World Wide Web is pushing Internet standards and switches near their breaking points, while floods of information regularly back up the network plumbing.

But for more than a decade, congestion has hung over the Net like the sword over Damocles, poised to sever its connections. Last-minute additions of more and bigger pipes have always averted crisis. This time, however, the problems run deeper, and although technical solutions are in hand, they will exact a price--and not just in the figurative sense. The resulting economic tremors may well topple some of the Web's shakier business plans, but they should also reshape the Internet into a more efficient and reliable medium.

The source of doomsayers' angst is the Net's geometric growth: by most measurements, it doubles in size every nine months or so. Such rapid expansion creates three major threats to the system. The first jeopardizes its ability to connect any two computers on the network. The Internet does so in much the same way as an automated postal system: computers wrap data into packages, stamp the packets with addresses and hand them to automated postal clerks (called routers) to deliver.

But the Internet's numerical address system has nothing to do with location. The Net equivalent of 10 Main St. may be in Maine, whereas 11 Main St. is in Ohio. So each automated clerk has to look up delivery instructions in a table for every packet it handles. Because packets often pass through 10 or more routers before reaching their destination, the time spent poring over large tables can jam up traffic considerably. More alarming, routers' tables are growing twice as fast as their ability to search them. Within two years, that could leave the Net's postmasters with just two unpleasant options: either toss some packets into the trash or refuse to add new addresses (especially those for competing network companies) to their tables.

Two recent innovations will postpone that Faustian choice. The first was a stopgap measure: the agency that hands out Net addresses has been pressuring network managers to organize addresses into sensible groups--much like zip codes. That strategy bought enough time to start using the second improvement, a scheme called tag switching, which was introduced in September by Cisco, the company that built most of the routers on the Internet. Here the first clerk to examine a package writes down explicit instructions for all the other clerks that will handle it, saving them the time and trouble of consulting their tables.

The second threat to the Net is that it may run out of numerical addresses altogether, bringing its geometric growth to a crashing halt. Although the current addressing format theoretically supports about 4.3 billion computers, large swaths of the numbers have been given away but never used. By recycling old addresses and dipping into reserves, the existing supply can probably be stretched into the next decade--long enough to switch to new software, playfully named "Internet Protocol, the Next Generation." IPng will allow every human on the planet to have something like 100 network devices. That should suffice for a while.

The final danger to the stability of the burgeoning Internet is that congestion will slow data to a crawl, ruining plans for fancy interactive games, cheap long-distance calls and grainy video on demand. Because bottlenecks often occur at the switches deep inside the Internet cloud rather than at the periphery where workers and consumers connect, the problem will only grow worse as more people buy PCs and fast modems. Slick routing tricks such as tag switching will help for a time. And many of the companies who own parts of the Internet's backbone are scrambling to expand it; MCI tripled the capacity of its segment this past summer. But demand will outstrip supply as long as Internet access remains so inexpensive; MCI has also seen the flow over its network swell 56-fold in less than two years.

As Microsoft Network, America Online and Prodigy get ready to join companies offering unbeatable, all-you-can-surf pricing, some schools and corporations with high hopes for the Internet are preparing to jump ship. In October a group of universities announced plans to build Internet II, a high-speed national network linking perhaps 50 research institutions.

The private network would connect to the Internet at "GigaPOPs" scattered throughout the country. (A POP, or point of presence, is the Internet equivalent of a post office.) But it would close its gates to outside users in order to preserve enough bandwidth to work on high-tech projects--such as telemedicine, distance learning, scientific visualization and broadcast video of undergrads' dorm parties--without the hassle of Internet congestion. Companies such as Chrysler are rumored to be toying with similar options to link factories with dealers and material suppliers. (Private "intranets" exist, but they generally link their far-flung locations using the Internet and are thus at the mercy of Net-wide congestion.)

Internet II will not ease the pressure on Internet I directly by more than a few percent, but it may have a lasting indirect influence. University officials involved say they want to try out new pricing policies and special delivery software designed to help guarantee rapid responses and clear channels to those willing to pay for them.

These good ideas have been around for years. One, called resource reservation protocol, or RSVP, is even scheduled to appear this fall in Cisco routers and Intel videoconferencing software. The hang-up has been billing: if the urgent data are delivered partly by MCI, partly by Sprint and partly by Pacific Bell, all three need to agree on systems to split the fees. Internet II, because it would have just one backbone and one bill to pay, could test whether RSVP and other priority schemes work at large scales, while punting on the billing issue.

In the meantime, some networking companies, chafing at the thin margins of their commodity business, will soon start offering higher-quality Internet access for higher prices. No one knows how the market will react when, inevitably, basic services slow as premium customers are ushered to the head of the queue. If, as some insiders predict, the companies that run the Internet's backbone soon begin charging those on its limbs according to the amount of data they send or receive, they will have little choice but to pass the costs along. Forced to decide what is worth paying for, many customers will first tune out images--thus destroying the fledging Internet advertising business--and will then search more, browse less. Although this may rob the Net of much of its charm, it would almost certainly prod it toward greater utility.