From Bang to Net

How Arno Penzias, who won the Nobel Prize for confirming the universe started with a Big Bang, turned his back on pure science and became an investment banker for Silicon Valley

It was the fall of 1963, and two newly minted physics Ph.D.s, Arno Penzias and Bob Wilson, had been given a dream assignment. Bell Telephone Laboratories Inc. -- the most prestigious industrial laboratory in the world -- hired them to do research on AT&T's 20-foot, horn-shaped radio antenna.

Although not large by standards of the time, the horn reflector could be finely tuned, making it ideal for certain types of astronomy. AT&T's next-generation Telstar satellites were designed to take over the signal-amplification work that the horn reflector had been designed to perform, thus freeing the antenna for astronomy. Bell Labs supervisors were aware that the projects Penzias and Wilson proposed for the telescope -- searching for gasses in space and exploring the halo of the Milky Way -- might never contribute to the company's bottom line. But Bell Labs had a distinguished history of making pure scientific research into important, commercially valuable technology.

Hadn't Charles Hard Townes' fundamental work in the field of quantum electronics led to Bell Labs' invention of the laser, and the maser provided the foundation for Bell System oscillators and amplifiers? Hadn't William Shockley's Ph.D. research on sodium chloride contributed to the 1947 invention of the transistor, which allowed the Bell telephone system to spawn the information age?

In this tradition, it wasn't a startling leap for Bell Labs, with an idle, state-of-the-art radio telescope on its hands, to hire a pair of astrophysicists to study the cosmos.

But the scientists had a problem.
Penzias and Wilson needed an extremely quiet antenna to detect the microwave radio perturbations emanating from the far reaches of the galaxy. But, contrary to their expectations, the antenna produced a maddening buzz.

It would have been possible to do many of the observations they had planned by working around the buzz. But Penzias and Wilson chose to remove the static from their receiver. First, they cleaned droppings from a pair of pigeons who had made a home in the horn. Then, they set about getting rid of the birds themselves.

"There was a wonderful old-time hardware store nearby, and we bought this Have-a-Heart trap -- it's a standard way of catching critters in your backyard without killing them. So we got this trap, set it up, baited it with something that attracts pigeons, and sure enough, we trapped them," Wilson recalls. "We heard about somebody in Whippany -- that was the most distant place the company's in-house mail went -- so we mailed them to a pigeon fancier who worked for AT&T in Whippany. He looked at them, said they were junk pigeons, and he let them go. A day or so later they were back at Crawford Hill [one of 21 Bell Labs facilities]. So a technician who worked there at the time brought in his shotgun and got rid of them."

The buzz continued. The astronomers continued to tinker.
"There were joints in the horn reflector between the aluminum pieces, so we taped those over with aluminum tape whose adhesive was conductive, and we tested the tape's conductive properties in the lab," Wilson recalls. "We thought hard about it and tried to think of every possible source and went around squirreling them all out. We still believed in the laws of physics, and we knew that what was coming out had to come from somewhere."

They pointed the antenna toward New York City, with its myriad radiation sources; toward a high-altitude nuclear weapons test near Hawaii; and across the various potential weak radio sources in the Milky Way. None of these proved to be the radio wave source they were seeking. The maddening signal was exactly the same, no matter where they pointed the horn reflector. They flew a helicopter carrying a signal generator over the antenna, and it seemed to work perfectly -- except for the small, background buzz.

As Penzias and Wilson toiled to tune their antenna, Princeton physicists Robert Dicke and Jim Peebles were struggling to refine the Big Bang. According to that theory, the universe began in a massively hot explosion that has continued surging outward ever since. The resulting gas and dust eventually cooled, drifted together, and compacted under the force of gravity into stars and galaxies. This dynamic, rather than static, theory of cosmology was not as widely accepted then as it is today. A group of prominent British scientists had attracted a following to what was called the Steady State theory, which described an eternally unchanging universe.

If, Dicke and Peebles surmised, astronomers could detect the faint afterglow of that original explosion -- if they could perceive the remains of the universe's first light -- then they would have "seen," and thereby proven, the Big Bang theory. Such radiation would necessarily be faint; the universe had cooled dramatically since the explosion.

At the time of creation 15 billion years ago, the universe's temperature is estimated to have been around 100,000,000,000,000,000,000,000,000,000,273 degrees Celsius. Like a cup of boiling water dropped into a pond, this heat -- and the electromagnetic waves that naturally emerge from such a heated body -- have been dispersing into the cosmos ever since. Big Bang theorists at Princeton, other American theorists, and Soviet cosmologists had predicted that the universe had spread and cooled across the eons until it reached a temperature just slightly above a theoretical construct known as absolute zero -- that is, the temperature at which heat ceases to exists. (Absolute zero is -273.15 degrees on the Celsius temperature scale, or zero degrees on the Kelvin scale.)

Radiation from a heat source as faint as the remnants of the Big Bang would only be detectable somewhere in the microwave region, whose wavelengths range from one millimeter to a meter in length, and are invisible to the naked eye. So the Princeton scientists perched a small antenna atop a university building, and went about searching for the faint cosmic microwave background radiation that would confirm the Big Bang.

One colleague of Penzias and Wilson, aware of the Princeton Big Bang project, coyly suggested that Penzias contact Dicke and Peebles. Just as coy, Dicke, Peebles, and their co-researchers expressed muted interest, and promptly made the trip to Crawford Hill, New Jersey.

"We took them up on the hill, showed them our experiment, and they looked at all the things we had done. They looked at each other and said, 'It looks like they made the measurement,' " Wilson recalls. "Then they took us down to a conference room and explained the cosmology."

The explanation was as simple as it was staggering: Penzias and Wilson had seen the Big Bang, cooled to 2.73 degrees above absolute zero.

The cosmic background radiation discovered by Penzias and Wilson cemented the tenets of modern cosmology, proving for the vast majority of astrophysicists the dynamic nature of our universe. Everything science now asserts about the history and structure of the cosmos is, in one way or another, tied to the observation of Penzias and Wilson. While other technicians had detected the radiation, they had all assigned it to instrumental error. Only Penzias and Wilson had tenaciously struggled to eliminate the buzz, until the only logical explanation for it lay in the very creation of the cosmos.

As if to prove that their serendipitous background radiation discovery was no flash in the pan, in 1970 the pair made a series of observations at the Kitt Peak radio telescope in Arizona, revealing the presence of large amounts of interstellar carbon monoxide gas in the universe. This discovery, made with the help of another Bell Labs researcher, K.B. Jefferts, revolutionized science's understanding of the evolution of stars, the structure of the Milky Way galaxy, and the content and structure of other galaxies and the space between and within them. In doing so, they had founded an entire academic field, now known as millimeter-wave astronomy. In 1973, at Penzias' direction, these three scientists discovered the existence of deuterium (heavy hydrogen) in outer space, providing additional clues to the birth of the universe.

Less than a decade into his career, Arno Penzias had become a titan of basic scientific research. Two decades later, he would come to be seen by many as its scourge.

In 1982, just as AT&T was forced to break up its telephone monopoly, Arno Penzias, the company's newest Nobel Prize winner, was promoted to head Bell Labs. His mission: to preserve the company's crown jewel. But business realities later forced Bell Labs to purge the freewheeling and fanciful pure science that had given the organization its reputation.

Arno Penzias is a man of severe features and gracious manner, a man whose tightly worded conversation betrays a passionate and complex yet practical mind. He did not resign when he discovered he would have to tear down, rather than build on, Bell Labs' scientific reputation. Instead, he took to this new task with a nearly religious zeal. He argued with research directors in hours-long shouting matches over which divisions to abolish and which scientists to move from basic research to product development. Scientists were reassigned. Some were fired. The old ethic of science for science's sake was purged.

"He said, if we had another Nobel Prize, he would be embarrassed about it," recalls Wilson, the former research partner with whom Penzias shared the Nobel Prize in 1978. "He said we should be doing other sorts of work."

While seemingly subtle, the difference between basic and applied scientific research is fundamental. To the basic researcher, what science knows is less interesting than what it does not know. To the technologist, the point is to improve on what is already known. In Silicon Valley and elsewhere, the place discovery and invention once occupied in the public imagination has been replaced by an infatuation with technological complexity -- a reverence for faster, smaller, and more complicated devices that do essentially the same things as their predecessors, only better.

Some scientists see in the career of Arno Penzias the metaphor for this troubled time; a defining parable for an entire nation that has become less curious about the world.

"I feel that Bell Labs has produced perhaps the greatest advances in science that were achieved by any labs in the U.S. in the period up to the mid-1980s. And I think Arno did a great deal of damage to the laboratory from that perspective," says former Bell Labs researcher David Moncton, now director of the Advanced Photon Source at Argonne National Laboratory in Illinois. "The hatred he engendered from the staff is incomparable."

Although Bell formed its "Experimental Shop" in 1883 to test copper wires and decide which patents were worth buying, it was a telephone call between New York and San Francisco that convinced Bell System executives that it behooved them to fund a world-class scientific lab.

If San Franciscans remember the 1915 Panama-Pacific Exhibition by the faux Greco-Roman ruins left behind by the fair's Palace of Fine Arts, the real hubbub of that year's World's Fair was across the Golden Gate, at the fair's Palace of Liberal Arts in San Rafael. There, on Jan. 25, Thomas Watson, former research assistant to Alexander Graham Bell, answered his former boss' entreaty to "Come here. I want you!" with the ironic reply, "It will take me five days to get there now!" They had just conducted the first transcontinental telephone conversation, re-enacting the first-ever telephone conversation they had had 40 years earlier.

To make the call, Bell Telephone engineers had spent seven years seeking to build an amplifier that would magnify electronic telephone signals enough to allow the signal's oscillations to travel all the way across the country. The end result was the three-element vacuum tube amplifier -- and a research facility in New York City with 550 scientists and engineers on its staff. By 1924 the number had increased to 3,000. The next year, its name was changed to Bell Telephone Laboratories.

By the 1960s, the Labs' research culture had grown from the sort of end-result-oriented research that produced the vacuum tube, the laser, and the transistor, to a more freewheeling approach to science that allowed researchers to take risks.

The idea behind this strategy, former Bell Labs divisional directors recall, was that today's purely scientific discoveries just might turn into technological breakthroughs 20 years down the road.

The largest of the labs was in Murray Hill, New Jersey. The facility, which housed an upward of 4,000 scientists, was one of 21 laboratories in eight states. In 1981, the year before the forced divestiture of AT&T, the Labs employed more than 24,000 people. By recruiting the smartest Ph.D.s in the world, giving them a large degree of freedom in how they conducted their research, and packing them into hutchlike quarters, they created the sort of scientific ferment in which physicists accosted chemists daily to ask for help with materials science problems; physical chemists pestered mathematicians for help solving problems in artificial intelligence; and electrical engineers sat down to lunch with materials scientists and complained of their difficulties solving quantum mechanics problems.

To recruit the world's best scientists, Bell Labs staffers were assigned to maintain contacts with top university professors, ready at any moment to scoop up their most brilliant doctoral students, regardless of their area of scientific expertise. The idea was to create a critical mass of brain power, and let nature take care of the rest, former Bell Labs scientists recall.

Those scientists invented whole branches of science, including radio astronomy and solid-state physics. They gave the world the transistor, the laser, the Unix computer operating system, packet switching (without which there would be no Internet), fiber optics, cellular telephones, communications satellites, information theory, solar cells, and more than 25,000 patents.

The Bell Labs of the '60s is remembered as the scientific version of a workers' paradise. In the Labs' heyday, the speaker lists at international academic conferences would often be dominated by Bell Labs researchers. During the 1960s, '70s, and '80s, the great universities of the world would look to Bell Labs as they structured the focus of their research -- on the assumption that the Labs' main campus at Murray Hill was creating the cutting edge in physics, chemistry, materials science, mathematics, and other fields. Today, many of America's national laboratories and university science departments are led by Bell Labs alumni. Their mandate: to attempt to replicate the research conditions at Bell Labs.

"The 1960s and '70s of the Bell Labs research enterprise should probably be considered a peak example of how to do basic research in the most cost-effective manner," says Kumar Patel, vice chancellor for research at UCLA.

"When I went to the lab in 1969, it was the most wonderful place to do research that one could imagine," says Charles Vernon Shank, director of Lawrence Berkeley Labs. "There were brilliant people, incredible resources, and a wonderful atmosphere for doing research."

The place buzzed with intellectual energy, scientists who worked there recall.

"It's hard for people outside to appreciate the intellectual environment. You could not go out into the hall without finding out something new. And if you were stuck on something, you could find someone who knew about the same thing. It was incredible. In those days you wrote a one- or two-page proposal of what you were going to do in that year. As long as you produced and were recognized by your peers, you were allowed to do what you wanted," says Denis McWhan, associate director for basic energy science at Brookhaven National Laboratory, a U.S. government laboratory in Long Island, N.Y., which has won four Nobel Prizes for particle physics. "It was an awful lot of fun being in the middle of such a vibrant group of scientists. You had to work like hell, that's for sure. We used to come home for dinner and go back and work until 10 or 11 at night."

Adds 1997 Nobel Prize in physics winner Steven Chu, also a Bell Labs alumnus: "To me, Bell Labs was an ivory tower. We felt like the chosen ones. This was the place to do science."

It was this ferment that drew Arno Penzias, a fresh graduate of Columbia University's physics Ph.D. program, to Bell Labs in 1961.

Penzias was born in 1933 in Germany. By the time he was six, Jews who knew his father, a leather broker, had heard about killings at Dachau. To emigrate from Germany to the United States, however, someone in America had to claim you as a relative and guarantee that you would not become a burden to the government. With an affidavit to this effect, one could apply for a visa for the United States; with the visa, one could obtain an exit permit from Germany.

"Affidavit was the first English word I ever learned," Jeremy Bernstein's 1984 book Three Degrees Above Zero quotes Penzias as saying. "I didn't even know then that it was an English word. Everybody was talking about an affidavit." After pleading with strangers for several months, Penzias' father found someone willing to provide the family with an affidavit. Soon after, the German government stopped allowing Jews to leave. Once in America, Penzias' father found odd jobs doing manual labor, because it was imperative that they not beg for assistance from the people who signed their affidavit; doing so would have been a tacit betrayal of the unspoken contract forged when he begged his benefactors to help save his family from the Nazi death camps. Penzias' father spoke poor English, but he was able to become a building superintendent in various apartment buildings in the Bronx, collecting garbage out of dumbwaiters and stoking coal for furnaces.

"I think the cathartic thing in my life was when the Nazis said they didn't want any Jews in the country," says Penzias, reflecting 59 years later as he sits on the couch of his Nob Hill condominium. "I think that was maybe the most important event in my life."

Penzias' choice of a career in science was not the result of the sort of lifelong, irresistible curiosity about the secrets of the universe that some scientists claim. Rather, it was an extension of his family's flight from the Nazis: It was a way of escaping the poverty caused by their forced abandonment of middle-class German life.

"Somebody once asked me, why did I become a scientist, and they expected some other reason. But what I said was, 'I didn't want to be poor.' Now, I didn't want to be rich -- that's very different. Unless you're poor, unless you've been poor, you don't know the difference. A lot of people live without money, but they have college educations and white skin, and anytime they want to go back to Morgan Stanley they can. That's not poor. But, on the other hand, when I came over from Germany, and my mother was a cleaning woman, and we lived in a basement, it was something I didn't want to do anymore. It really hurt. It's a terrible way of living, and to me science was a job. It always was a job. It was a way out. It was a way into the middle class.

"When I came to America, I couldn't speak English and I wasn't well connected. I didn't think of myself as having social skills, so I went into science," Penzias says.

"So I always had the economics in mind. I always felt I owed somebody something. I never felt that the world owed me something. The world didn't owe me a lab and a place to have fun for the rest of my life. I always felt I owed whoever gave me this thing some value back for the value I got. I think it's a personal attitude that had something to do with my upbringing. I don't think there was ever a time I didn't want to become a scientist. It was just the family thing. Coming to America, there was never a question. We talked about it. By fourth grade, or certainly by junior high school, there was never anything else that occurred to me. I knew I had to make a living, and I didn't know about anything else."

He took his practical verve with him to Columbia, where he studied under Nobel Prize physicist Charles Hard Townes, the legendary Bell Labs scientist who invented the maser, a device that magnifies microwaves and can be used as an amplifier or an oscillator. Penzias was not a perfect student. But he was an original thinker, and he was dogged, Townes recalls.

"Arno always had his own personality. He was a vigorous person. He knew what he wanted and what he thought. He was quite innovative. He was not initially an outstanding student in terms of marks -- in terms of grades and so on -- but he was a good student. It was clear he had his own approach to things, and he was a very interesting guy. I enjoyed him as a student. He was witty, and he had a lot of interesting opinions. He had his own way of doping things, which is good from the point of view of originality. The thesis he tackled was to build a special maser amplifier to detect hydrogen in intergalactic space. That was a chancy kind of a thesis in that, some people thought, they had detected hydrogen. It didn't seem highly likely, but it would be very important if it was true, and it was very important to see whether it was true or not," recalls Townes. "He made a good maser amplifier, and he took it down to Washington to the Naval Research laboratory. It was one of the best antennas around. He worked hard to see if he could detect hydrogen, and it turned out to be nothing there that could be detected.

"He turned out to show that it was much less abundant than other astronomers had claimed, because they had claimed that they thought they saw a signal. This was an improvement on the previous work and showed that, in fact, hydrogen was extremely rare there and not detected at all. He did the best job anyone had ever done and anyone has done since. In a sense that was a disappointment, because when you don't find something, that's not as exciting as when you find something, perhaps. On the other hand, it was a very important result, even though negative. He did a good job, finished a nice thesis, and Bell Labs hired him."

The year after Arno Penzias, Nobel laureate and scientific hero, was made AT&T vice president of research and director of Bell Labs, AT&T suddenly faced an ominous future.

On Aug. 24, 1982, U.S. District Judge Harold H. Greene approved the consent decree that split up AT&T, ending an antitrust action related to the company's monopoly on local and long-distance telephone service in the United States. Although it wasn't completely apparent at the time, Judge Greene's pen erased the economic logic that had allowed Bell Labs to thrive.

In this age of deregulation, it may be difficult for younger Americans to imagine how pervasive AT&T was just a decade-and-a-half ago. Since 1956, by which time AT&T had built its 80-year-old telephone business into a monopoly, AT&T had agreed with the government to stick to the telephone business, in exchange for a promise to stay out of businesses not specifically related to phones. As part of that regulated monopoly arrangement, the multibillion-dollar budget item that financed Bell Labs was routinely approved as part of the official pact with the government on telephone service. In effect, the financing for the Labs came from a government-sanctioned science tax, tacked on to every American's phone bill.

During AT&T's years as a monopoly, company executives and scientists alike assumed that the company would be responsible for all advances in communications technology for many decades to come, just as it had always been. As a result, much research was performed based on the idea that it might produce a tangible technological advance 20, or even 30 years down the road.

As this long, straight road descended into the twists and turns of de-monopolized competition, this rationale suddenly disappeared. To compound the danger this state of affairs posed to the Labs, the cultures of AT&T's business units and its research labs had evolved quite separately. It was typical for managers in the business units to be largely unaware of Bell Labs research that had the potential to improve the bottom line. Researchers, meanwhile, had been protected from gaining a useful understanding of the needs of the business units, thanks to the AT&T ethic that had been born by the economics of monopoly: If you build the world's best research institution and leave it alone, the inventions will come.

AT&T compounded these problems at first, pretending they did not exist. Statements by AT&T executives during the divestiture transition period include balmy proclamations about the importance of preserving AT&T's -- and science's -- crown jewel, about the essential nature of top-quality science to AT&T's success, and the central role the Labs played in the company's storied history.

In what hindsight now describes as a daredevil gambit, AT&T suggested it would win the wars of competition by beefing up, rather than paring down, its research. Without the fetters of government regulation, the optimistic corporate fable of the day went, AT&T would be allowed to fully exploit the inventions that had made the company famous. Others may have made billions off the transistor, but the profits from the next generations' inventions would be AT&T's. Or at least, that is what the company's leadership wanted the country to believe.

As if to prove the value it placed on pure science, AT&T fingered one of its newest Nobel Prize recipients, Arno Penzias, as the man who would lead Bell Labs' research during this brave new era.

Penzias characterized his new mandate during a swaggering interview for a magazine article published in 1984.

"These are not people who are going to make us better light bulbs or better word processors. [If] I hire the fifth-best theoretical-physics student in this country, I can get away with it, but if I hire the fifteenth best, I am wasting my time. We are looking for No. 2, or No. 3, and we want to compete with the best universities for No. 1. That is where we are.

"I am a high-pressure guy, and I didn't take this job to conduct a going-out-of-business sale."

But as Penzias was making such boldly optimistic statements, AT&T's management was making ill-conceived business decisions by the handful, many of which can be traced to the company's proud history of scientific discovery. In order to fend off encroaching regulators during the 1950s, AT&T had agreed to stay out of fields not directly related to its telecommunications business. As a result, it had to allow others to capitalize on its greatest inventions. With divestiture, that era had ended, AT&T's executives declared.

So AT&T bought a computer company, NCR. And it proceeded to lose $6.8 billion through NCR. AT&T bought makers of other technologies it had helped pioneer, then abandoned them. And AT&T turned those firms into money losers, too. In an effort to adapt to competition, AT&T hired market research firms to help it divine profitable areas of technology. One such firm convinced AT&T to abandon the development of the cellular telephone -- the potential market was too small, researchers said.

By 1989, it had become untenable to maintain Bell Labs as a lofty font of human knowledge. It had to become an integral part of the new AT&T, painful as it might be for the scientists who worked there. As director of research for Bell Labs, Arno Penzias realized that the days of the old Bell Labs had to come to an end. He had two choices: He could quit, and leave the job of tearing down pure science at the Labs to someone else. Or, he could do it himself.

Arno Penzias, now a Silicon Valley investment banker, sits on a couch in his spacious, yet simply appointed, San Francisco apartment, and endeavors to describe the moment he turned away from his former tribe. During the description, he is interrupted by a phone call -- his venture capitalist employers, perhaps -- and the caller urges him to join a conference call that had been previously scheduled for that morning.

But the caller can wait.
"Hello? Yeah, hi Vic. OK, I'm gonna, I'm gonna be back on the line in what, two, three minutes?" Penzias says, pacing toward the center of the living room. There's a pause, and in a quieter tone he adds: "OK. I'll get right down. I'll get right down there. OK. Bye."

Penzias will keep the conference call waiting another 10 or 15 minutes. First, he must explain -- possibly rationalize -- the moment when, a decade ago, he came to be seen by some of his contemporaries as Judas to the cause of science.

Since retiring from Bell Labs, Penzias has devoted his time to the role of investment adviser to New Enterprise Associates, a Menlo Park venture capital firm. Now, to the Silicon Valley crowd, he's a financial and technological wizard who peers into the future of electronic networks, and hence the future of the world. From his condominium in San Francisco he flies to technology conferences around the world, giving keynote addresses about the future of society and technology. He writes popular books on corporate management and technology.

Arno Penzias is at the center of the action. Again.
In the current research zeitgeist, the Right Stuff doesn't belong to the generation of scientists who put man in space: It belongs to the Bill Gateses of the world, who've turned those scientists' discoveries into gold.

This trend is certainly not the fault of the Bell Labs Penzias directed: America's post-Sputnik enthusiasm for scientific curiosity was bound to wane someday. But representing, as it does, the staining of America's premier research lab, the tale of Bell Labs and Arno Penzias is seen by many as the hallmark of an age.

At first reluctantly, then with the same kind of verve that made him a titan of science during the 1960s and 1970s, Penzias implemented during the '80s and '90s a systematic dismantling of the pure, long-term scientific research that Bell Labs had been famous for.

As Penzias tells it, this was the result of an anguished decision in which he sacrificed some pure science, so that the rest of research at Bell Labs might survive following the forced divestiture of the Bell Telephone system in 1982. He made a decision not unlike that of a general who cedes a division so that his army might prevail. Through the mid-1980s, Penzias explains, he struggled with top management at AT&T, hoping to promote the Labs to his superiors in other AT&T units as a source of useful, profitable inventions, while maintaining morale inside the Labs by preserving the ethic of pure scientific excellence.

The basic idea Penzias came up with was to forge greater connections between business and marketing personnel and the scientists and engineers at the Labs, while eliminating the more esoteric research -- that is, the research that won Nobel Prizes, but didn't make much money. Emphasis was switched from physical sciences to programming.

The problem was, the middle managers in the business divisions knew little about how the Labs worked. And, it seemed, the scientists knew even less about the business they were ostensibly in.

"What happened was, for the next six or seven years after I was hired in 1982, I used my body as a shock absorber between the forces of economics and this thing I was supposed to protect. People would describe me as 'Arno -- the guy who has saved research. He has kept it the same.'

"And then one day I finally had an epiphany. I went into some senior manager's office. He was not the most gifted of the AT&T executives, but he was, he was -- he's since left. But I went into his office, and I realized. I said, 'God,' " Penzias describes, the last word cracking into a whispered epithet. "The thing was, he was totally a marketing guy, and at this point, I felt it would snap, finally. His idea was, he could play with any part of the company because he was putting things together. He thought of this as a -- he was a deal guy. And I said, 'You know what?' And at that point, I actually almost got sick, and I said, 'What am I going to do? Am I going to quit?' I said, 'This is impossible. I can't protect things anymore. I can't protect things from this guy.' Not that he was evil or stupid, but he thought differently. And I ran out of cushion.

"I took a summer, and during that summer, I finally realized that everyone has more freedom than they think they do. And I always say that to people, and I realized that I had freedom to change, and to change myself, and also change the people around me. And so I decided in the late '80s that Bell Labs is better off not trying to be different on the inside and outside."

If downsizing Bell Labs was an anguished proposition for Penzias, it was not exactly pleasant for underlings, either. Penzias had the habit of coming to staff meetings and making a rash statement sure to offend the sensibilities of all present. The rest of the meeting, participants recall, would then be spent in loud arguments between Penzias and his directors.

In the trenches, the result of this dissonance was a sort of panicked drift, researchers recall.

Penzias' former research partner, Robert Wilson, who had become director of the 16-member radio physics research department, recalls searching for useful projects to keep his scientists busy under the new regime. For a time, they worked on a new type of price tag for stores, in which grocers could change shelf prices by using computer commands that would be transmitted through tiny radio antennas. Another project: increase the reach of AT&T's line of cordless phones.

By 1995, AT&T had sufficiently integrated Bell Telephone Laboratories into the rest of the company to calculate that it had lost the company $853 million (on $21.4 billion in revenue) during that year.

Layoffs at the Labs came in waves, culminating in widely publicized firings that gave the boot to 160 Bell Labs workers and severance packages to another 400 during 1996. That year, AT&T spun Bell Labs off into Lucent Technologies, an independent company dedicated to making switching and other equipment. The spinoff involved firing 70 of Bell Labs' remaining 590 physical scientists.

Executives now at Lucent credit Penzias with taking the steps necessary to prepare Bell Labs for its successful transformation into Lucent.

But business is business. As a prelude to the split, AT&T pushed aside Arno Penzias, replacing him with Arun Netravali, a 24-year Bell Labs veteran who is a specialist in video compression -- an eminently practical field.

Penzias was eased into the largely symbolic post of chief scientist of Bell Labs, speaking on behalf of Lucent at trade conferences and moving out to San Francisco with the expressed purpose of scouting Silicon Valley ventures for Lucent to finance.

This May, he retired from Lucent. After 37 years benefiting from, then building upon, then tearing down the tradition of basic research at Bell Labs, Arno Penzias has been cast aside. His eulogies at Lucent have been loud and numerous. The company's Web site features a nine-page profile of Penzias, a three-page chronicle of his scientific career, and a single-page commemorative marking Penzias' removal as the Labs' chief.

The greatest accomplishment of Penzias' career, the Lucent flackery says, was to "structure the realignment of Bell Labs Research from a vertically integrated structure based on classic academic disciplines to a structure that focuses on strategic emerging technologies."

Translation: Hail Arno Penzias, who turned Bell Labs from a temple of science into just another corporate R&D lab.

Without Penzias at its helm, Bell Labs has done rather well, despite the hand-wringing that accompanied its spinoff. Lucent makes advanced electronic equipment, and does not provide long-distance service. "Lucent is an equipment company, and that makes a huge difference," says Bill Brinkman, director of Lucent's Physical Sciences Research Division. "When we were part of AT&T, the hardware side of the house was the small side of the corporation. So people would say, 'Why are we using this money to support the small side of the company?' "

Basic research is growing now, which has been great for morale, Brinkman says.

Bob Wilson, Penzias' research partner, is doing well, after a frustrating end to his career at Bell Labs. Distraught by a supervisor with a penchant for micromanagement, Wilson quit Bell Labs two years ago to become a researcher at the Harvard Smithsonian Center for Astrophysics. He is helping supervise the construction of an array of telescopes able to detect radio waves with a wavelength smaller than 1 millimeter -- a sensitivity that could be key to solving some of the remaining riddles about how stars and planets form.

Penzias announced his retirement two months ago, but he really isn't retired. In June he was the keynote speaker at the Supercom networking conference in Atlanta. His latest book, Digital Harmony, "explores how emerging technologies will change the way people work and live," as books with that sort of title tend to.

His new job as an adviser to New Enterprise Associates, the Menlo Park venture capital firm, has helped him shape his ideas for a new role as futurist to the techno set, he said during a recent interview.

"I work through a public speaking agency -- they're the same people that have Art Buchwald, military generals you've heard of, futurists, that sort of thing. I'm on this panel of technology speakers," Penzias explains.

Lately, he's been driving out to Petaluma to spend time with the people at Fibex Systems, a 70-employee startup where he sits on the board of directors at the behest of New Enterprise Associates. "What the future of networking is going to be comes in part from the association I have with companies like Fibex," Penzias says. "I have a new view of the world."

Apparently, this view mostly has to do with the future of communications transmission and switching systems. Fibex is a single-story cubicle hutch in a single-story office park near a gas station in Petaluma. Petaluma chamber of commerce types have given this area the name "Telecom Valley."

As is the case with most such firms, Fibex's founders are electrical engineers who graduated from top schools, then worked at several technology companies before deciding to strike out on their own with the help of venture capital. Fibex makes a digital loop carrier -- a phone switch -- that is a bit smaller, and does a few more things, than the previous generation of digital loop carriers, explains Ken Buckland, one of Fibex's founding engineers.

Buckland and the company's CEO, Richard Hejmanowski, like having Arno Penzias on their board of directors because he adds star power to their small startup. They know he's the man who discovered the cosmic background radiation that essentially confirmed the Big Bang. They know he used to head the world's greatest industrial lab. And they know that he's now frequently invited to speak at large technology conferences. Hejmanowski has photocopied slide transparencies that Penzias prepared for a talk he gave at Supercom, titled "Beyond Internet Protocol."

"He has such a broad exposure and understanding of the overall communications market -- primarily voice, but also inclusive of data -- that he sees paradigm shifts coming long before they happen," Hejmanowski explains.

But when pressed, they acknowledge that Penzias hasn't spoken to them much about his time at Bell Labs, when he was able to make discoveries that helped humankind understand the nature of existence. He hasn't described to the people at Fibex how he was made Bell Labs' director of research, with the mandate to preserve AT&T's scientific crown jewel -- and then went on to tear down the Bell Telephone Laboratories' hallowed tradition of pure science.

But he left them a hint.
Pinned to a cubicle wall across the hall from Fibex's engineering room is a red T-shirt, one of several that Arno Penzias gave to Fibex executives to celebrate a recent infusion of capital. Across the front of the shirt is a silk-screen of dozens of "3K" symbols scattered in a field. That 3K symbol is the simplest representation of the 3-degrees-above-zero-Kelvin background radiation Arno Penzias and Robert Wilson detected 33 years ago, when they confirmed the theory of the Big Bang. Amid the 3K symbols is a poem:

This is the way the world began
Not with a whimper but with a bang.

On a sheet of watermarked paper, tacked on the cubicle next to the T-shirt, Arno Penzias explains that this poem -- a celebration of the excitement that accompanied Bell Labs' age of discovery -- is derived from "The Hollow Men," written by a fellow Nobel Prize winner, T.S. Eliot.

While not as optimistic, Eliot's poem may be the more eloquent. It was written to express the barrenness of modern life. But it also describes a nation that has left the wonder of pure scientific curiosity for more practical concerns.

This is the way the world ends
Not with a bang but with a whimper.

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