It is shown that the Maxwell-Heaviside theory is incomplete and limited, fo
r example, it is unable to describe the Sagnac effect, either with platform
at rest or in motion. An electrodynamical theory based on a physical inter
nal O(3) gauge space is shown to provide the correct explanation in classic
al electrodynamics for the Sagnac effect, and for interferometry in general
, for example Sagnac and Michelson interferometry. The U(1) sector of unifi
ed field theory must therefore be replaced by an SU(2) sector broken to O(3
). This has numerous consequences for unified field theory.