I was honored to participate in a panel in DC on "An FCC for the Internet Age: Reform and Standard-Setting" organized by Silicon Flatirons, ITIF and Public Knowledge on March 5th, 2010. My introductory comments tried to summary the "resilience principles" in five minutes: the video is available on the Public Knowledge event page, starting at time code 02:04:45. The panel starts at around 01:57:00.
The earlier, fifteen minute pitch I gave on a panel on "The Governance Challenges of Cooperation in the Internet Ecosystem" at the Silicon Flatirons annual conference in Boulder on February 1st, 2010 can be found here at time code 01:36:00. My slides are up on Slideshare.net, and a paper is in preparation for JTHTL.
This work is an outgrowth of my TPRC 2008 paper “Internet Governance as Forestry” (SSRN).
Showing posts with label ICT. Show all posts
Showing posts with label ICT. Show all posts
Friday, March 26, 2010
Friday, February 26, 2010
Engineers, Commissars and Regulators: Layered self-regulation of network neutrality
My post Ostrom and Network Neutrality suggested that a nested set of self- or co- regulatory enterprises (Ostrom 1990:90) could be useful when designing regulatory approaches to network neutrality, but I didn’t give any concrete suggestions. Here’s a first step: create separate arenas for discussing engineering vs. business.
One’s immediate instinct when devising a shared regulatory regime (see the list of examples at the end) might be to involve all the key players; at least, that’s what I pointed to in When Gorillas Make Nice. However, I suspect that successful self-regulatory initiatives have to start with a relatively narrow membership and scope: typically, a single industry, rather than a whole value chain. That’s the only way to have a decent shot at creating and enforcing basic norms. Legitimacy will require broadening the list of stakeholder, but too many cooks at the beginning will lead to kitchen gridlock.
Let’s stipulate for now that the key problem is defining what “acceptable network management practices” amount to. Most participants in the network neutrality debate agree that ISPs should be able to manage their networks for security and efficiency, even if there is disagreement about whether specific practices are just good housekeeping or evil rent-seeking.
The engineering culture and operating constraints of different networks are quite distinct: phone companies vs. cable guys; more or less symmetrical last mile pipes; terminating fiber in the home vs. at cabinet; and not least, available capacity in wireline vs. wireless networks. Reconciling these differences and creating common best practices within the network access industry will be hard; that’s the lowest layer of self-regulation. The “Engineers” should be tasked with determining the basic mechanisms of service provision, monitoring compliance with norms, and enforcing penalties against members who break the rules.
The core participants are the telcos (e.g. Verizon, AT&T) and cable companies (e.g. Comcast, Time Warner Cable), in both their wireline and wireless incarnations. Only within a circumscribed group like this is there is any hope of detailed agreement about best practices, let alone the monitoring and enforcement that is essential for a well-functioning self-regulatory organization. Many important network parameters are considered secret sauce; while engineers inside the industry circle can probably devise ways monitor each other’s compliance without giving the MBAs fits, there’s no chance that they’ll be allowed to let Google or Disney look inside their network operating centers.
The next layer of the onion adds the companies who use these networks to deliver their products: web service providers like Google, and content creators like Disney. Let’s call this group the “Commissars”. This is where questions of political economy are addressed. The Commissars shape the framework within which the network engineers decide technical best practices. It’s the business negotiation group, the place where everybody fights over dividing up the rents; it needs to find political solutions that reconcile the very different interests at stake:
The Engineers can work in parallel to the Commissars, and don’t need to wait for the political economists to fight out questions about rents; in any case, it will be helpful for the Commissars to have concrete network management proposals to argue about. There will be a loop, with the conclusions of one group influencing the other. The Commissars inform the Engineers about the constraints on what would constitute acceptable network management, and the Engineers inform the Commissars about what is practical.
Finally, government actors – call them the “Regulators” – set the rules of the game and provide a backstop if the Engineers and Commissars fail to come up with a socially acceptable solution, or fail to discipline bad behavior. Since the internet and the web are critical infrastructure, governments speaking for citizens are entitled to frame the overall goals that these industries should serve, even though they are not well qualified to define the means for achieving them. Final adjudication of unresolved disputes rests with the Regulators.
References
Ofcom, Initial assessments of when to adopt self- or co-regulation, December 10, 2008,
http://www.ofcom.org.uk/consult/condocs/coregulation/condoc.pdf
Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press, 1990
Philip J. Weiser, Exploring Self Regulatory Strategies for Network Management: A Flatirons Summit on Information Policy, August 25, 2008,
http://www.silicon-flatirons.org/documents/publications/summits/WeiserNetworkManagement.pdf
Examples of self- and co-regulatory bodies
The Internet Watch Foundation (IWF) in the UK works to standardize procedures for the reporting and taking-down of abusive images of children. It was established in 1996 by the internet industry to allow the public and IT professionals to report criminal online content in a secure and confidential way. (Ofcom 2008:9, and IWF)
The UK “Classification Framework” for content on mobile phones is provided by the Independent Mobile Classification Body (IMCB) with the aim of restricting young people’s access to inappropriate content. It is the responsibility of content providers to self-classify their own content as “18” where appropriate; access to such content will be restricted by the mobile operators until customers have verified their age as 18 or over with their operator. (Ofcom 2008:9, and IMCB)
The Dutch organization NICAM (Nederlands Instituut voor de Classificatie van Audiovisuele Media) administers a scheme for audiovisual media classification. It includes representatives of representatives of public and commercial broadcasters, film distributors and cinema operators, distributors, videotheques and retailers. (Ofcom 2008:9, and NICAM)
Amateur radio service and frequency coordinators provide examples of self-regulation in spectrum policy. The American Radio Relay League (ARRL) has an understanding with the FCC that it manages the relevant enforcement activities related to the use of ham radio. Only in the most egregious cases will ARRL report misbehavior to the FCC Enforcement Bureau. (Weiser 2008:23)
The Better Business Bureau’s National Advertising Division (NAD) enforces US rules governing false advertising, using threats of referrals to the FTC to encourage compliance with its rules. (Weiser 2008:24, and NAD)
US movie ratings are provided by a voluntary system operated by the MPAA and the National Association of Theater Owners.
One’s immediate instinct when devising a shared regulatory regime (see the list of examples at the end) might be to involve all the key players; at least, that’s what I pointed to in When Gorillas Make Nice. However, I suspect that successful self-regulatory initiatives have to start with a relatively narrow membership and scope: typically, a single industry, rather than a whole value chain. That’s the only way to have a decent shot at creating and enforcing basic norms. Legitimacy will require broadening the list of stakeholder, but too many cooks at the beginning will lead to kitchen gridlock.
Let’s stipulate for now that the key problem is defining what “acceptable network management practices” amount to. Most participants in the network neutrality debate agree that ISPs should be able to manage their networks for security and efficiency, even if there is disagreement about whether specific practices are just good housekeeping or evil rent-seeking.
The engineering culture and operating constraints of different networks are quite distinct: phone companies vs. cable guys; more or less symmetrical last mile pipes; terminating fiber in the home vs. at cabinet; and not least, available capacity in wireline vs. wireless networks. Reconciling these differences and creating common best practices within the network access industry will be hard; that’s the lowest layer of self-regulation. The “Engineers” should be tasked with determining the basic mechanisms of service provision, monitoring compliance with norms, and enforcing penalties against members who break the rules.
The core participants are the telcos (e.g. Verizon, AT&T) and cable companies (e.g. Comcast, Time Warner Cable), in both their wireline and wireless incarnations. Only within a circumscribed group like this is there is any hope of detailed agreement about best practices, let alone the monitoring and enforcement that is essential for a well-functioning self-regulatory organization. Many important network parameters are considered secret sauce; while engineers inside the industry circle can probably devise ways monitor each other’s compliance without giving the MBAs fits, there’s no chance that they’ll be allowed to let Google or Disney look inside their network operating centers.
The next layer of the onion adds the companies who use these networks to deliver their products: web service providers like Google, and content creators like Disney. Let’s call this group the “Commissars”. This is where questions of political economy are addressed. The Commissars shape the framework within which the network engineers decide technical best practices. It’s the business negotiation group, the place where everybody fights over dividing up the rents; it needs to find political solutions that reconcile the very different interests at stake:
- The ISPs want to prevent regulation, and be able to monetize their infrastructure by putting their hand in Google’s wallet, and squeezing content creators.
- Google wants to keep their wallet firmly shut, and funnel small content creators’ surplus to Mountain View, not the ISPs.
- Large content creators want to get everybody else to protect their IPR for them.
- New content aggregators (e.g. Miro) want a shot at competing in the video business with the network facility owners.
The Engineers can work in parallel to the Commissars, and don’t need to wait for the political economists to fight out questions about rents; in any case, it will be helpful for the Commissars to have concrete network management proposals to argue about. There will be a loop, with the conclusions of one group influencing the other. The Commissars inform the Engineers about the constraints on what would constitute acceptable network management, and the Engineers inform the Commissars about what is practical.
Finally, government actors – call them the “Regulators” – set the rules of the game and provide a backstop if the Engineers and Commissars fail to come up with a socially acceptable solution, or fail to discipline bad behavior. Since the internet and the web are critical infrastructure, governments speaking for citizens are entitled to frame the overall goals that these industries should serve, even though they are not well qualified to define the means for achieving them. Final adjudication of unresolved disputes rests with the Regulators.
References
Ofcom, Initial assessments of when to adopt self- or co-regulation, December 10, 2008,
http://www.ofcom.org.uk/consult/condocs/coregulation/condoc.pdf
Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press, 1990
Philip J. Weiser, Exploring Self Regulatory Strategies for Network Management: A Flatirons Summit on Information Policy, August 25, 2008,
http://www.silicon-flatirons.org/documents/publications/summits/WeiserNetworkManagement.pdf
Examples of self- and co-regulatory bodies
The Internet Watch Foundation (IWF) in the UK works to standardize procedures for the reporting and taking-down of abusive images of children. It was established in 1996 by the internet industry to allow the public and IT professionals to report criminal online content in a secure and confidential way. (Ofcom 2008:9, and IWF)
The UK “Classification Framework” for content on mobile phones is provided by the Independent Mobile Classification Body (IMCB) with the aim of restricting young people’s access to inappropriate content. It is the responsibility of content providers to self-classify their own content as “18” where appropriate; access to such content will be restricted by the mobile operators until customers have verified their age as 18 or over with their operator. (Ofcom 2008:9, and IMCB)
The Dutch organization NICAM (Nederlands Instituut voor de Classificatie van Audiovisuele Media) administers a scheme for audiovisual media classification. It includes representatives of representatives of public and commercial broadcasters, film distributors and cinema operators, distributors, videotheques and retailers. (Ofcom 2008:9, and NICAM)
Amateur radio service and frequency coordinators provide examples of self-regulation in spectrum policy. The American Radio Relay League (ARRL) has an understanding with the FCC that it manages the relevant enforcement activities related to the use of ham radio. Only in the most egregious cases will ARRL report misbehavior to the FCC Enforcement Bureau. (Weiser 2008:23)
The Better Business Bureau’s National Advertising Division (NAD) enforces US rules governing false advertising, using threats of referrals to the FTC to encourage compliance with its rules. (Weiser 2008:24, and NAD)
US movie ratings are provided by a voluntary system operated by the MPAA and the National Association of Theater Owners.
Friday, February 12, 2010
Ostrom and Network Neutrality
My previous post scratched the surface of a self-regulatory solution to network neutrality concerns. While this isn’t exactly a common pool resource (CPR) problem, I find Elinor Ostrom’s eight principles for managing CPRs are helpful here (Governing the Commons: The evolution of institutions for collective action, 1990).
Jonathan Sallet boils them down to norms, monitoring and enforcement, and that’s a good aide memoire. It’s useful, though, to look at all of them (Ostrom 1990:90, Table 3.1):
In addition to the lack of sanctions, two other key issues are not addressed. Principle #1 addresses a key requisite for a successful co-regulatory approach: that industry is able to establish clear objectives. Given the vagueness of the principles in the filing, it’s still an open question whether the parties can draw a bright line around the problem.
I believe #8 can help: create a nested set of (self- or co-) regulatory enterprises. While I don’t yet have concrete suggestions, I’m emboldened by the fact that nested hierarchy is also a hallmark of complex adaptive systems, which I contend are a usable model for the internet governance problem. Ostrom’s three levels of analysis and processes offer a framework for nesting (1990:53):
Jonathan Sallet boils them down to norms, monitoring and enforcement, and that’s a good aide memoire. It’s useful, though, to look at all of them (Ostrom 1990:90, Table 3.1):
1. Clearly defined boundaries: Individuals of households who have rights to withdraw resource units from the CPR must be clearly defined, as must the boundaries of the CPR itself.Many but not all of these considerations are addressed in the filing and my comments: The headline of section B that “self-governance has been the hallmark of the growth and success of the Internet” reflects #2. My point about involving consumers speaks to #3. The TAGs mooted in the letter address #4 and #6, but not #5. The purpose of the letter is to achieve #7.
2. Congruence between appropriation and provision rules and local conditions: Appropriation rules restricting time, place, technology, and/or quantity of resource units are related to local conditions and to provision rules requiring labor, material, and/or money.
3. Collective-choice arrangements: Most individuals affected by the operational rules can participate in modifying the operational rules.
4. Monitoring: Monitors, who actively audit CPR conditions and appropriator behavior, are accountable to the appropriators or are the appropriators.
5. Graduated sanctions: Appropriators who violate operational rules are likely to be assessed graduated sanctions (depending on the seriousness and context of the offense) by other appropriators, by officials accountable to these appropriators, or by both.
6. Conflict-resolution mechanisms: Appropriators and their officials have rapid access to low-cost local arenas to resolve conflicts among appropriators or between appropriators and officials.
7. Minimal recognition of rights to organize: The rights of appropriators to devise their own institutions are not challenged by external governmental authorities.
8. (For CPRs that are parts of larger systems) Nested enterprises: Appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises.
In addition to the lack of sanctions, two other key issues are not addressed. Principle #1 addresses a key requisite for a successful co-regulatory approach: that industry is able to establish clear objectives. Given the vagueness of the principles in the filing, it’s still an open question whether the parties can draw a bright line around the problem.
I believe #8 can help: create a nested set of (self- or co-) regulatory enterprises. While I don’t yet have concrete suggestions, I’m emboldened by the fact that nested hierarchy is also a hallmark of complex adaptive systems, which I contend are a usable model for the internet governance problem. Ostrom’s three levels of analysis and processes offer a framework for nesting (1990:53):
- Constitutional choice: Formulation, Governance, Adjudication, Modification
- Collective choice: Policy-making, Management, Adjudication
- Operational choice: Appropriation, Provision, Monitoring, Enforcement
When Gorillas Make Nice
Verizon and Google’s recent joint FCC filing about the values and governance of the internet largely echoes the conclusions of a Silicon Flatirons summit in August 2008 (PDF): that self-governing institutions are the best way to manage day-to-day questions of network neutrality, with the government acting as a backstop when market forces and self-regulation fail.
The filing seems to come in two parts: a statement of principles, and a sketch of how self-governance might work. I’ll largely ignore the first part, since clearly Google and Verizon found little to agree on. The three key principles are motherhood (consumer transparency and control), Google’s non-negotiable (openness) and Verizon’s (encouraging investment), respectively; it’s hard to argue with any of this, except to observe that the hard work lies in achieving them simultaneously.
The most useful resource on self-regulation in communications I’ve seen is Ofcom’s 2008 statement on “Identifying appropriate regulatory solutions: principles for analysing self- and co-regulation” (PDF). It concluded that self-regulation is most likely to work when “industry collectively has an interest in solving the issue; industry is able to establish clear objectives for a potential scheme; and the likely industry solution matches the legitimate needs of citizens and consumers.”
If their effort is to succeed, the companies will have to build an institution that represents all interests. Let's stipulate that the three main stakeholder groups are content players, network operators and consumers; Google and Verizon fall in the first two groups. On the network side, they’ll need to add the cable industry (always much more leery of network neutrality than the long-regulated telcos), and on the content side, the studios. The trickiest part will be finding a “consumer voice” with some legitimacy; everybody, not least these companies, claims to have the consumer’s best interest at heart.
The filing is predictably vague about the basis on which government would become involved, and is silent about how its proposed institution would enforce its own norms. That’s a mistake. It’s in the companies’ best interest to declare which sword they want hanging over their heads. If they don’t, there won’t be sufficient incentive to Do the Right Thing in the short term (the CEO will ask, “If I’m not breaking a law, why should I go the extra mile?”), which means that eventually a mountain of punctilious rules will be imposed on them. (It’s my understanding that this is what happened over the last decade with accessibility to the internet for those with disabilities: tech companies promised a decade ago they’d solve the problem, didn’t do all that much, and now Rep. Markey is writing detailed rules.)
It’s not clear to me whether the filing is proposing self- or co-regulation, defined by Ofcom (2008) as follows:
The filing seems to come in two parts: a statement of principles, and a sketch of how self-governance might work. I’ll largely ignore the first part, since clearly Google and Verizon found little to agree on. The three key principles are motherhood (consumer transparency and control), Google’s non-negotiable (openness) and Verizon’s (encouraging investment), respectively; it’s hard to argue with any of this, except to observe that the hard work lies in achieving them simultaneously.
The most useful resource on self-regulation in communications I’ve seen is Ofcom’s 2008 statement on “Identifying appropriate regulatory solutions: principles for analysing self- and co-regulation” (PDF). It concluded that self-regulation is most likely to work when “industry collectively has an interest in solving the issue; industry is able to establish clear objectives for a potential scheme; and the likely industry solution matches the legitimate needs of citizens and consumers.”
If their effort is to succeed, the companies will have to build an institution that represents all interests. Let's stipulate that the three main stakeholder groups are content players, network operators and consumers; Google and Verizon fall in the first two groups. On the network side, they’ll need to add the cable industry (always much more leery of network neutrality than the long-regulated telcos), and on the content side, the studios. The trickiest part will be finding a “consumer voice” with some legitimacy; everybody, not least these companies, claims to have the consumer’s best interest at heart.
The filing is predictably vague about the basis on which government would become involved, and is silent about how its proposed institution would enforce its own norms. That’s a mistake. It’s in the companies’ best interest to declare which sword they want hanging over their heads. If they don’t, there won’t be sufficient incentive to Do the Right Thing in the short term (the CEO will ask, “If I’m not breaking a law, why should I go the extra mile?”), which means that eventually a mountain of punctilious rules will be imposed on them. (It’s my understanding that this is what happened over the last decade with accessibility to the internet for those with disabilities: tech companies promised a decade ago they’d solve the problem, didn’t do all that much, and now Rep. Markey is writing detailed rules.)
It’s not clear to me whether the filing is proposing self- or co-regulation, defined by Ofcom (2008) as follows:
Self-regulation: Industry collectively administers a solution to address citizen or consumer issues, or other regulatory objectives, without formal oversight from government or regulator. There are no explicit ex ante legal backstops in relation to rules agreed by the scheme (although general obligations may still apply to providers in this area).I think co-regulation is indicated here. Without a backstop there will not be sufficient incentive for good behavior. Politically, too, the term “self-regulation” has become anathema in Washington DC because the financial melt-down is deemed to have been due to a failure in the same. (Not that it matters, but I think this assessment is incorrect on two counts: self-regulation is only part of a much larger problem in the financial crisis; and even if it weren’t, the lessons learned are not easily transposable to communications policy. Still, it’s probably best to use another term, like shared regulation, supervised delegation or bounded autonomy.)
Co-regulation: Schemes that involve elements of self- and statutory regulation, with public authorities and industry collectively administering a solution to an identified issue. The split of responsibilities may vary, but typically government or regulators have legal backstop powers to secure desired objectives.
Wednesday, February 10, 2010
The internet is not an ecosystem, but…
The “internet ecosystem” metaphor is ubiquitous; I’ve used it myself, though with some trepidation. I think I can now reconcile why it’s both wrong and useful.
It’s wrong, strictly speaking, since many aspects of the ecosystem-internet mapping are questionable. As I blogged in 2007 about the “business ecosystem” terminology, the validity of the metaphor is undermined by quite a large number of mapping mismatches:
It’s wrong, strictly speaking, since many aspects of the ecosystem-internet mapping are questionable. As I blogged in 2007 about the “business ecosystem” terminology, the validity of the metaphor is undermined by quite a large number of mapping mismatches:
Number: a food web consists of billions of interactions among animals and plants; a business web comprises a relatively small number of companies
Metrics: Biomass a typical rough measure of an ecosystem; does that map to total revenue, profitability, return on investment, or something else?
Topology: An ecosystem is a lossy, one-way energy flow; as each organism is eaten by the next, energy is lost. Business relationships are reciprocal, and generate value.
Time scales: Species change slowly, but companies can change their role in a system overnight through merger, acquisition or divestiture.
Choice: Interactions between firms can be changed by contract, whereas that between species is not negotiable except perhaps over very long time scales by evolution of defensive strategies.
Foresight: Humans are pre-eminent among animals in their ability to anticipate the behavior of other actors, explore counter-factuals, think through What If scenarios, etc. The response of a system containing humans to some change is therefore much more complex than that of a human-free ecosystem. “Dumb” agents in an adaptive system respond to the change; humans respond to how they think other humans will respond to their response to those people’s responses etc.
Goals: Biological systems don’t have goals, but human ones do. There are no regulatory systems external to ecosystems in a state of nature (if such things still exist on this planet), but there are many, such as rule of law and anti-trust, in human markets. Natural processes don’t care about equity or justice, but societies do, and impose them on business systems. If ecosystems were a good model for business networks, there would be no need for anti-trust regulation.
The connotations of the metaphor are also misleading. Ecosystems are often used to connote stability and vibrant self-regulation; in fact, they often suffer catastrophic collapses. Companies are exhorted to invest in their ecosystem with the goal of becoming a keystone species. It’s not clear why they should do so, from the ecosystem perspective: keystone species don’t typically represent a lot of biomass. Their “bottleneck position”, however, is attractive from the perspective of a company that wants to extract rents through market power.
However, the ecosystem concept has gained traction because there is a deeper truth: both the internet and ecosystems are both examples of complex adaptive systems. (A complex adaptive system may be defined as a collection of interacting, adaptive agents; other examples include the immune system, the human body, stock markets, and economies. Note that adaptive systems are often nested.)
Thus, the internet is to an ecosystem as a whale is to an elephant. It could be useful to think in terms of elephants if one has to manage oceans but doesn’t know much about whales, since both are large, social mammals. However, one can just as well explain whales in terms of elephants – and the differences, e.g. living on land vs. in water – can be decisive in some cases.
With this realization, the utility and limitations of using an ecosystem metaphor when thinking about the internet, as I did in my Internet Governance as Forestry paper, have become much clearer to me. Lessons from managed ecosystems can illuminate the dynamics and pitfalls of managing the internet, and principles (such as the Resilience Principles I outlined in my recent talk at Silicon Flatirons; my presentation starts around time code 01:36:00 of the video) derived from one can be applied to the other.
However, the ecosystem concept has gained traction because there is a deeper truth: both the internet and ecosystems are both examples of complex adaptive systems. (A complex adaptive system may be defined as a collection of interacting, adaptive agents; other examples include the immune system, the human body, stock markets, and economies. Note that adaptive systems are often nested.)
Thus, the internet is to an ecosystem as a whale is to an elephant. It could be useful to think in terms of elephants if one has to manage oceans but doesn’t know much about whales, since both are large, social mammals. However, one can just as well explain whales in terms of elephants – and the differences, e.g. living on land vs. in water – can be decisive in some cases.
With this realization, the utility and limitations of using an ecosystem metaphor when thinking about the internet, as I did in my Internet Governance as Forestry paper, have become much clearer to me. Lessons from managed ecosystems can illuminate the dynamics and pitfalls of managing the internet, and principles (such as the Resilience Principles I outlined in my recent talk at Silicon Flatirons; my presentation starts around time code 01:36:00 of the video) derived from one can be applied to the other.
Saturday, December 26, 2009
A skeptic’s approach to regulation
I don’t know.
You don’t know either, even if you’re a lawyer or scholar who’s written confident diagnoses of, and persuasive curative prescriptions for, various policy problems.
If you’re a regulator, you know you don’t know.
Decision makers have always operated in a world of complexity, contradiction and confusion: you never have all the information you’d like to make a decision, and the data you do have are often inconsistent. It is not clear what is happening, and it is not clear what to do about it. What’s most striking about the last century is that policy makers seem to have been persuaded by economists that they have more control, and more insight, than they used to.
We have less control over the world than we’d like. We are either confronted by unwanted situations we cannot prevent, or desired situations are precluded. We would like to prevent unwanted situations, but can’t; or we would like favorable circumstances to continue, but they don’t.
There is a small part of the world where the will has effective control; for the rest, one has to deal with necessity, i.e. circumstances that arise whether you will or no. Science and technology since the Enlightenment has dramatically widened our scope of control; economics has piggy-backed on the success of classical physics to make large claims about its ability to explain and manage society. However, this has had the unfortunate consequence that we no longer feel comfortable accepting necessity. If a situation is avoidable – say, postponing the moment of death through a medical intervention – then it becomes tempting to think that when it comes, someone or something can be held responsible.
As Genevieve Lloyd tells it (and I understand it) in Providence Lost (2009), our culture opted to follow Descartes in his framing of free will: we should do the best we can, and leave the rest to divine Providence, which provides a comforting bound to our responsibilities. In the absence of providence, however, we have no guidance on how to deal with what lies beyond our control. As Lloyd puts it, “the fate of the Cartesian will has been to outlive the model of providence that made it emotionally viable.” She argues that Spinoza’s alternative account of free will, built on the acceptance of necessity, is better suited to our time; there is freedom in how we shape our lives in the face of necessity, and a providential deity is not required.
Our Cartesian heritage can be seen in the response to the financial collapse of recent years: someone or something had to be responsible. If only X had done Y rather than Z… but an equally plausible account is that crises and collapse are inevitable; it was only a matter of time.
I submit that the best response to an uncertain and ever-changing world is to accept it and aim at resilience rather than efficiency. Any diagnosis and prescription should always be provisional; it should be made in the knowledge that it will have to be changed. Using efficiency as the measure of a solution, as neoclassical economics might, is the mark of the neo-Cartesian mind: it assumes that we have enough knowledge of the entire system to find an optimum solution, and that we have enough control to effectuate it. In fact, an optimum probably doesn’t exist; if it does exist, it’s probably unstable; and even if a stable solution exists, we have so little control over the system that we can’t implement it.
The best conceptual framework I’ve found for analyzing problems in this way is the complex systems view, and the most helpful instantiation is the approach to managing ecosystems encapsulated in C. S. Holling’s “adaptive cycle” thinking. (See e.g. Ten Conclusions from the Resilience Project). The adaptive cycle consists of four stages: (1) exploitation of new opportunities following a disturbance; (2) conservation, the slow accumulation of capital and system richness; (3) release of accumulation through a crisis event – cf. Shumpeter’s creative destruction; and (4) reorganization, in which the groundwork for the next round is laid.
Two techniques seem to be particularly helpful in applying this approach to governance: simulation and common law. Simulation and modeling exploit the computing power we now have to explore the kinds of outcomes that may be possible given a starting point and alternative strategies; it gives one a feel for how resilient or fragile different proposed solutions may be. Simulation may also help understand outcomes; for example, Ofcom uses modeling of radio signal propagation rather than measurement to determine whether licensees in it Spectrum Usage Rights regime are guilty of harmful interference with other licensees. (See e.g. William Webb (2009), “Licensing Spectrum: A discussion of the different approaches to setting spectrum licensing terms”.)
A common law approach helps at the other end of the process: Jonathan Sallet has argued persuasively that common-law reasoning is advantageous because it is a good way of creating innovative public policies, and is a sensible method of adapting government oversight to changing technological and economic conditions.
But I could be wrong…
Update 12/28/2009: See the fascinating comments from Rich Thanki, below. He takes two salient lessons from complexity theory: avoid monoculture, and develop rules of thumb. He also provides more of the usual quick Keynes quote about "slaves of some defunct economist."
You don’t know either, even if you’re a lawyer or scholar who’s written confident diagnoses of, and persuasive curative prescriptions for, various policy problems.
If you’re a regulator, you know you don’t know.
Decision makers have always operated in a world of complexity, contradiction and confusion: you never have all the information you’d like to make a decision, and the data you do have are often inconsistent. It is not clear what is happening, and it is not clear what to do about it. What’s most striking about the last century is that policy makers seem to have been persuaded by economists that they have more control, and more insight, than they used to.
We have less control over the world than we’d like. We are either confronted by unwanted situations we cannot prevent, or desired situations are precluded. We would like to prevent unwanted situations, but can’t; or we would like favorable circumstances to continue, but they don’t.
There is a small part of the world where the will has effective control; for the rest, one has to deal with necessity, i.e. circumstances that arise whether you will or no. Science and technology since the Enlightenment has dramatically widened our scope of control; economics has piggy-backed on the success of classical physics to make large claims about its ability to explain and manage society. However, this has had the unfortunate consequence that we no longer feel comfortable accepting necessity. If a situation is avoidable – say, postponing the moment of death through a medical intervention – then it becomes tempting to think that when it comes, someone or something can be held responsible.
As Genevieve Lloyd tells it (and I understand it) in Providence Lost (2009), our culture opted to follow Descartes in his framing of free will: we should do the best we can, and leave the rest to divine Providence, which provides a comforting bound to our responsibilities. In the absence of providence, however, we have no guidance on how to deal with what lies beyond our control. As Lloyd puts it, “the fate of the Cartesian will has been to outlive the model of providence that made it emotionally viable.” She argues that Spinoza’s alternative account of free will, built on the acceptance of necessity, is better suited to our time; there is freedom in how we shape our lives in the face of necessity, and a providential deity is not required.
Our Cartesian heritage can be seen in the response to the financial collapse of recent years: someone or something had to be responsible. If only X had done Y rather than Z… but an equally plausible account is that crises and collapse are inevitable; it was only a matter of time.
I submit that the best response to an uncertain and ever-changing world is to accept it and aim at resilience rather than efficiency. Any diagnosis and prescription should always be provisional; it should be made in the knowledge that it will have to be changed. Using efficiency as the measure of a solution, as neoclassical economics might, is the mark of the neo-Cartesian mind: it assumes that we have enough knowledge of the entire system to find an optimum solution, and that we have enough control to effectuate it. In fact, an optimum probably doesn’t exist; if it does exist, it’s probably unstable; and even if a stable solution exists, we have so little control over the system that we can’t implement it.
The best conceptual framework I’ve found for analyzing problems in this way is the complex systems view, and the most helpful instantiation is the approach to managing ecosystems encapsulated in C. S. Holling’s “adaptive cycle” thinking. (See e.g. Ten Conclusions from the Resilience Project). The adaptive cycle consists of four stages: (1) exploitation of new opportunities following a disturbance; (2) conservation, the slow accumulation of capital and system richness; (3) release of accumulation through a crisis event – cf. Shumpeter’s creative destruction; and (4) reorganization, in which the groundwork for the next round is laid.
Two techniques seem to be particularly helpful in applying this approach to governance: simulation and common law. Simulation and modeling exploit the computing power we now have to explore the kinds of outcomes that may be possible given a starting point and alternative strategies; it gives one a feel for how resilient or fragile different proposed solutions may be. Simulation may also help understand outcomes; for example, Ofcom uses modeling of radio signal propagation rather than measurement to determine whether licensees in it Spectrum Usage Rights regime are guilty of harmful interference with other licensees. (See e.g. William Webb (2009), “Licensing Spectrum: A discussion of the different approaches to setting spectrum licensing terms”.)
A common law approach helps at the other end of the process: Jonathan Sallet has argued persuasively that common-law reasoning is advantageous because it is a good way of creating innovative public policies, and is a sensible method of adapting government oversight to changing technological and economic conditions.
But I could be wrong…
Update 12/28/2009: See the fascinating comments from Rich Thanki, below. He takes two salient lessons from complexity theory: avoid monoculture, and develop rules of thumb. He also provides more of the usual quick Keynes quote about "slaves of some defunct economist."
Thursday, December 24, 2009
Hard consequences of the soft revolution
What characteristics (if any) of 21st century communications justify a change in methods of governance?
Any change in policy has unintended consequences; some of them will be adverse. One has to think carefully before advocating radical change: the benefits of change or the costs of doing nothing should be substantial. One way of beginning a cost/benefit analysis is to understand the underlying forces.
Many arguments have been given for new internet regulation. Cowhey and Aronson (Transforming Global Information and Communication Markets 2009:17) cite three factors that will force change: the modular mixing and matching of technology building blocks; the need to span traditional policy and jurisdictional divides (aka Convergence); and the need to rely more on non-governmental institutions to coordinate and implement global policy. In my paper “Internet Governance as Forestry”, I cite three characteristics of the internet that require new responses: modularity, decentralized self-organization, and rapid change.
Let’s consider, then, the following candidates for radical, unprecedented and transformational change in the internet economy taken from these two lists: modularity, convergence, the “third sector”, decentralization, and rate of change.
Modularity
I doubt modularity will persist as a characteristic of the internet business. While it is clearly a hallmark of our current stage, it has a long history: the standardization of interchangeable parts is dated back to Eli Whitney’s process for manufacturing muskets for the US government in 1798, but there is evidence for standardization of arrowheads and uniform manufacturing techniques in the bronze age, and some anthropologists claim there was standardization of stone age tools. However, modular technology does not lead inescapably to a modular industry structure. Standard parts have not rendered pre-internet industries immune to anti-trust problems, and it is likely they will do so now. The role of modularity in the relationships between companies waxes and wanes, depending on rather than driving industry consolidation and market power.
Convergence
The good old convergence argument is a true enough, but tired. The mixing of broadcasting, telecom and intellectual property regulation brought about by common digital formats will undoubtedly require a huge amount of creative reform of regulation, but I no longer think that the result will be the abolition of regulatory categories based on the commercial and technological status quo.
I would very much like to see such an abolition; I proposed a re-organizing the FCC by policy imperatives rather than industry categories in my FCC Reform paper, but I don’t think it’s going to be practical. The human rage to classify [1] will reassert itself. Classifying by policy concern probably won’t work, sad to say, because of how regulation tends to work: take a new problem, fit it into an existing category, and apply the rules of that category. Even if this mechanism yields weird results in times of transition, it’s usually efficient and is likely to persist, even as categories change. We don’t yet have the new categories, but they may well emerge based more on how industry self-organizes than by logic. Judging by today’s behemoths, they might perhaps be networks, cloud services, devices and content (i.e. AT&T, Google/Microsoft, Apple/Dell and Hollywood) replacing broadcasting, telecom, cable and intellectual property (ABC/CBS/NBC, the old AT&T, Comcast and Hollywood).
Decentralization
The internet is no doubt much more decentralized than its forebears, e.g. the telephone network; it is by definition an affiliation of many networks, and a lot of processing is done “at the edges” rather than “in the middle”. There is a linkage between a decentralized architecture and modularity. Modularity allows decentralization, and is amplified by it. If or when either regresses to the mean, the other will tend to do so as well. Since I don’t believe that a high and increasing amount of modularity is an persistent attribute of the 21st century communications industry, I don’t believe that high and increasing decentralization is either. However, the current degree of modularity and decentralization in has probably put us into a qualitatively different regime; there has phase change, so to speak. The polity has just begun to work through the implications, and this will take a decade or more.
The “third sector”: Non-Governmental Institutions (NGOs), non-profits and civil society
Cowhey and Aronson’s interest in NGOs is based in trade, and the organizations they have in mind (ICANN, W3C, IETF) meet the four-part definition offered by Lester Salamon, a political scientist and scholar of US non-profits at Johns Hopkins: they are organizations, i.e., they have an institutional presence and structure; they are private, i.e., they are institutionally separate from the state; they are fundamentally in control of their own affairs; and membership/support is voluntary. Salamon argues that the prominence of NGOs represent an “associational revolution”. I cannot judge whether this phenomenon is transient or not; however, the large organizations clearly provide an alternative venue for governance. For example, Cowhey and Aronson argue that the IETF’s central role in internet standards came about because the US Government decided to delegate authority to it.
If one relaxes the requirement for formal institutional structure, the rise of private, voluntary engagement in politics facilitated by Web 2.0 represent an impetus and perhaps even a venue for new governance. Currently fashionable examples include http://transparencycorps.org/, http://opengov.ideascale.com/ and http://watchdog.net/; tools that facilitate engagement include http://www.opencongress.org/, http://www.opensecrets.org/lobbyists/ and http://www.govtrack.us/. The citizen’s ability to know about the activities of their legislators and petition has never been greater; tools for organizing into ad hoc coalitions (most famously the role of http://www.meetup.com/ in the 2004 and 2008 US campaigns) lead to a ferment of groups that may grow into more recognizable institutions. Policy makers will have to invent new ways to track and mollify these groups, at the very least; the Obama Administration appears to be using them to support policy making.
While the decentralized architecture of the internet and the rise of NGOs are different phenomena with different causes, Web 2.0 technologies are beginning to draw them together.
Rate of change
As to whether the rapidity of change is transformative and permanent, I think the answer is No and Yes. The rate of technical and commercial innovation on internet over the last two decades has been stunning. It has been abetted by modularity, and even more so by the ability of software to morph without having to retool a factory. (Retooling a code base is a non-trivial exercise, though.) However, the internet is growing up and it’s reasonable to expect that the industry and technology will settle into a phase of relative maturity. [2]
On the other hand, while the rate of change may not continue to accelerate, or even continue at its current pace, the political system has to adjust to the stresses that the increase to date has already imposed. William Scheuerman, for example, argues that the “social acceleration of time” has created a profound imbalance between the branches of government in liberal democratic systems like the US. [3] Even if the rate of techno-commercial innovation slows down, the rate at which global markets generate and propagate news will be a challenge for political systems whose time cycles are set in constitutions that change only very slowly, and human physiology which changes hardly at all. [4]
Back to Hard Intangibles
A change in context that forces a change in governance doesn’t need to be irreversible for the consequences to be profound. Since history is cumulative, a “phase change” in policy making is a change that never really reverts to its prior form, since the context changes with it. However, some changes are more portentous than others. I’ve argued above that the modularity, convergence and decentralization of the internet are temporary, and part of the regular cycle flow in industry structure. Changes in tempo and the rise of the third sector seem to me to be more momentous. I think both are rooted in the growing intangibility of our societies, which has been accelerated by ICT: complex software running on powerful processors linked by very fast networks.
I think there is a link back to my 2006/2007 obsession with “hard intangibles” (DeepFreeze9 thread). The ability to compose more components than the mind can manage makes programming/debugging very hard, particularly when those components are so easily mutable: it’s easier to change a line of code than to retool an assembly line. The “soft products” of these technologies, themselves complex, composable and mutable become the inputs for culture and thus policy making: it’s easier to change web artifacts and social networks than to manage a movement using letters and sailing ships.
Footnotes
[1] I first heard the term used by Rohan Bastin, Associate Professor of Anthropology at Deakin University, in a Philosopher’s Zone interview about Claude Levi-Strauss. “The human rage to classify” is also a chapter title in F. Allan Hanson, The Trouble With Culture : How Computers Are Calming The Culture Wars, SUNY Press 2007
[2] This prediction contradicts Ray Kurzweil’s contention that technological change accelerates at an exponential rate, and will continue to do so: his “Law of Accelerating Returns” [link, critique]
[3] William E. Scheuerman, Liberal Democracy and the Social Acceleration of Time (2004). Scheuerman defines social acceleration of time as “a long term yet relatively recent historical process consisting of three central elements: technological acceleration (e.g. the heightening of the rate of technological innovation), the acceleration of social change (referring to accelerated patterns of basic change in the workplace, e.g.), and the acceleration of everyday life (e.g., via new means of high-speed communication or transportation).” I’m indebted to Barb Cherry for introducing me to Scheuerman’s ideas; see e.g. her “Institutional Governance for Essential Industries Under Complexity: Providing Resilience Within the Rule of Law” CommLaw Conspectus 17.1
[4] Human thinking won’t speed up much, if at all – though tools can make it look as if it does. See for example the Edwin Hutchins’ wonderful Cognition in the Wild (1996). Hutchins contends that we need to think in terms of “socially distributed cognition” in a system that comprises people and the tools that were made for them by other people.
Any change in policy has unintended consequences; some of them will be adverse. One has to think carefully before advocating radical change: the benefits of change or the costs of doing nothing should be substantial. One way of beginning a cost/benefit analysis is to understand the underlying forces.
Many arguments have been given for new internet regulation. Cowhey and Aronson (Transforming Global Information and Communication Markets 2009:17) cite three factors that will force change: the modular mixing and matching of technology building blocks; the need to span traditional policy and jurisdictional divides (aka Convergence); and the need to rely more on non-governmental institutions to coordinate and implement global policy. In my paper “Internet Governance as Forestry”, I cite three characteristics of the internet that require new responses: modularity, decentralized self-organization, and rapid change.
Let’s consider, then, the following candidates for radical, unprecedented and transformational change in the internet economy taken from these two lists: modularity, convergence, the “third sector”, decentralization, and rate of change.
Modularity
I doubt modularity will persist as a characteristic of the internet business. While it is clearly a hallmark of our current stage, it has a long history: the standardization of interchangeable parts is dated back to Eli Whitney’s process for manufacturing muskets for the US government in 1798, but there is evidence for standardization of arrowheads and uniform manufacturing techniques in the bronze age, and some anthropologists claim there was standardization of stone age tools. However, modular technology does not lead inescapably to a modular industry structure. Standard parts have not rendered pre-internet industries immune to anti-trust problems, and it is likely they will do so now. The role of modularity in the relationships between companies waxes and wanes, depending on rather than driving industry consolidation and market power.
Convergence
The good old convergence argument is a true enough, but tired. The mixing of broadcasting, telecom and intellectual property regulation brought about by common digital formats will undoubtedly require a huge amount of creative reform of regulation, but I no longer think that the result will be the abolition of regulatory categories based on the commercial and technological status quo.
I would very much like to see such an abolition; I proposed a re-organizing the FCC by policy imperatives rather than industry categories in my FCC Reform paper, but I don’t think it’s going to be practical. The human rage to classify [1] will reassert itself. Classifying by policy concern probably won’t work, sad to say, because of how regulation tends to work: take a new problem, fit it into an existing category, and apply the rules of that category. Even if this mechanism yields weird results in times of transition, it’s usually efficient and is likely to persist, even as categories change. We don’t yet have the new categories, but they may well emerge based more on how industry self-organizes than by logic. Judging by today’s behemoths, they might perhaps be networks, cloud services, devices and content (i.e. AT&T, Google/Microsoft, Apple/Dell and Hollywood) replacing broadcasting, telecom, cable and intellectual property (ABC/CBS/NBC, the old AT&T, Comcast and Hollywood).
Decentralization
The internet is no doubt much more decentralized than its forebears, e.g. the telephone network; it is by definition an affiliation of many networks, and a lot of processing is done “at the edges” rather than “in the middle”. There is a linkage between a decentralized architecture and modularity. Modularity allows decentralization, and is amplified by it. If or when either regresses to the mean, the other will tend to do so as well. Since I don’t believe that a high and increasing amount of modularity is an persistent attribute of the 21st century communications industry, I don’t believe that high and increasing decentralization is either. However, the current degree of modularity and decentralization in has probably put us into a qualitatively different regime; there has phase change, so to speak. The polity has just begun to work through the implications, and this will take a decade or more.
The “third sector”: Non-Governmental Institutions (NGOs), non-profits and civil society
Cowhey and Aronson’s interest in NGOs is based in trade, and the organizations they have in mind (ICANN, W3C, IETF) meet the four-part definition offered by Lester Salamon, a political scientist and scholar of US non-profits at Johns Hopkins: they are organizations, i.e., they have an institutional presence and structure; they are private, i.e., they are institutionally separate from the state; they are fundamentally in control of their own affairs; and membership/support is voluntary. Salamon argues that the prominence of NGOs represent an “associational revolution”. I cannot judge whether this phenomenon is transient or not; however, the large organizations clearly provide an alternative venue for governance. For example, Cowhey and Aronson argue that the IETF’s central role in internet standards came about because the US Government decided to delegate authority to it.
If one relaxes the requirement for formal institutional structure, the rise of private, voluntary engagement in politics facilitated by Web 2.0 represent an impetus and perhaps even a venue for new governance. Currently fashionable examples include http://transparencycorps.org/, http://opengov.ideascale.com/ and http://watchdog.net/; tools that facilitate engagement include http://www.opencongress.org/, http://www.opensecrets.org/lobbyists/ and http://www.govtrack.us/. The citizen’s ability to know about the activities of their legislators and petition has never been greater; tools for organizing into ad hoc coalitions (most famously the role of http://www.meetup.com/ in the 2004 and 2008 US campaigns) lead to a ferment of groups that may grow into more recognizable institutions. Policy makers will have to invent new ways to track and mollify these groups, at the very least; the Obama Administration appears to be using them to support policy making.
While the decentralized architecture of the internet and the rise of NGOs are different phenomena with different causes, Web 2.0 technologies are beginning to draw them together.
Rate of change
As to whether the rapidity of change is transformative and permanent, I think the answer is No and Yes. The rate of technical and commercial innovation on internet over the last two decades has been stunning. It has been abetted by modularity, and even more so by the ability of software to morph without having to retool a factory. (Retooling a code base is a non-trivial exercise, though.) However, the internet is growing up and it’s reasonable to expect that the industry and technology will settle into a phase of relative maturity. [2]
On the other hand, while the rate of change may not continue to accelerate, or even continue at its current pace, the political system has to adjust to the stresses that the increase to date has already imposed. William Scheuerman, for example, argues that the “social acceleration of time” has created a profound imbalance between the branches of government in liberal democratic systems like the US. [3] Even if the rate of techno-commercial innovation slows down, the rate at which global markets generate and propagate news will be a challenge for political systems whose time cycles are set in constitutions that change only very slowly, and human physiology which changes hardly at all. [4]
Back to Hard Intangibles
A change in context that forces a change in governance doesn’t need to be irreversible for the consequences to be profound. Since history is cumulative, a “phase change” in policy making is a change that never really reverts to its prior form, since the context changes with it. However, some changes are more portentous than others. I’ve argued above that the modularity, convergence and decentralization of the internet are temporary, and part of the regular cycle flow in industry structure. Changes in tempo and the rise of the third sector seem to me to be more momentous. I think both are rooted in the growing intangibility of our societies, which has been accelerated by ICT: complex software running on powerful processors linked by very fast networks.
I think there is a link back to my 2006/2007 obsession with “hard intangibles” (DeepFreeze9 thread). The ability to compose more components than the mind can manage makes programming/debugging very hard, particularly when those components are so easily mutable: it’s easier to change a line of code than to retool an assembly line. The “soft products” of these technologies, themselves complex, composable and mutable become the inputs for culture and thus policy making: it’s easier to change web artifacts and social networks than to manage a movement using letters and sailing ships.
Footnotes
[1] I first heard the term used by Rohan Bastin, Associate Professor of Anthropology at Deakin University, in a Philosopher’s Zone interview about Claude Levi-Strauss. “The human rage to classify” is also a chapter title in F. Allan Hanson, The Trouble With Culture : How Computers Are Calming The Culture Wars, SUNY Press 2007
[2] This prediction contradicts Ray Kurzweil’s contention that technological change accelerates at an exponential rate, and will continue to do so: his “Law of Accelerating Returns” [link, critique]
[3] William E. Scheuerman, Liberal Democracy and the Social Acceleration of Time (2004). Scheuerman defines social acceleration of time as “a long term yet relatively recent historical process consisting of three central elements: technological acceleration (e.g. the heightening of the rate of technological innovation), the acceleration of social change (referring to accelerated patterns of basic change in the workplace, e.g.), and the acceleration of everyday life (e.g., via new means of high-speed communication or transportation).” I’m indebted to Barb Cherry for introducing me to Scheuerman’s ideas; see e.g. her “Institutional Governance for Essential Industries Under Complexity: Providing Resilience Within the Rule of Law” CommLaw Conspectus 17.1
[4] Human thinking won’t speed up much, if at all – though tools can make it look as if it does. See for example the Edwin Hutchins’ wonderful Cognition in the Wild (1996). Hutchins contends that we need to think in terms of “socially distributed cognition” in a system that comprises people and the tools that were made for them by other people.
Monday, December 21, 2009
Objects of governance: From things to behaviors
In spite of our penchant for abstraction, we think best in concrete terms. That means we prefer to think about things rather than processes, including when it comes to communications regulation. The growing intangibility of our world is making this harder to do, however.
The legal scholar William Boyd introduced me the concept of an “object of governance”, i.e. the explicit focus or nominal topic of regulatory activity. [1] Boyd is concerned with deforestation as an object of climate governance [2]; a quick web search throws up examples like organized crime, “The East”, the Sahel, and risk. Objects of communications regulation include personally identifiable information (PII), spectrum, phone service, and the internet.
While most of these objects are intangible, they are at least to some extent thing-like; they’re nouns. It becomes more tricky when regulation addresses behavior – that is, verbs. I’ll work through a few examples in communications regulation where the object of governance started off as a thing/noun, and is becoming a behavior/verb:
Privacy: From PII to Use
The current approach to protecting privacy on the web is rooted in the notion of data security: information exists somewhere, and needs to be protected. However, an alternative conception based on appropriate use rather than access restrictions is emerging. [3] [4] The idea is that the tradition Notice & Choice regime is complemented by use-and-obligations model where organizations disclose the purposes to which they intend to put information, and undertake to limit themselves to those uses.
Wireless regulation: From spectrum to radio operation
Radio regulation has been framed in terms of government management of a “spectrum asset” for many decades. Even though in practice the regulations concerned themselves with the operating parameters of transmitters, the idea that some underlying asset existed has been a useful fiction, particularly as the detailed technology and service choices have been increasingly privatized through auctions of general-use licenses.
However, a new generation of radio technologies has been used to call this approach into question. “Open Spectrum” advocates have argued that dynamic wireless technologies obviate many underlying assumptions of current regulation, and prefer “commons” access over exclusive licenses. [5] Some in the RF engineering community recommend that regulation take into account dynamic adaptation at all layers in the network stack, not just at the radio layer. [6] I have argued that a static, spectrum-as-asset approach is not a given; a more dynamic radio-as-trademark interference metaphor is perfectly workable. [7]
Universal Service: From telephony to internet access
The Universal Service Fund in the US, and its equivalents in other countries, was conceived of as guaranteeing phone service to those who would not otherwise be able to afford it, particularly in rural communities. There is no a great deal of debate about extending the universal service concept to the internet. However, since internet access can come in an unlimited variety of flavors, it is unclear what the goal of the program should be. Phone service is the same everywhere; but what broadband speed is “good enough”? The regulatory debate is moving away from how to fund phone service to how to define baseline access.
Common carriage: From a neutral network to network management
The most recent of these debates concerns the 21st century equivalent of common carriage for the internet. The rallying cry of Network Neutrality had satisfyingly thing-like connotations: there was a network, and it had to have the attribute of neutrality (noun/adjective). Over time is has largely been agreed that network operators should have some discretion in managing the behavior of their network. The question has now become a behavioral one: what is degree of network management (verb) is appropriate?
Implications
A shift in the objects of governance from things to behaviors suggests a shift in regulation from ex ante to ex post action, that is, from making detailed rules up-front to stating general principles and enforcing breach after the fact. In Law’s Order [8], economist David M. Friedman compares speed limits (ex ante) with reckless driving (ex post), and observes that ex post punishments are most useful when the behavior is determined by private knowledge that the regulator cannot observe.
Footnotes
[1] Note that this is not the traditional meaning of the term, which used “object” as synonymous with “objective”, e.g. Edmund Burke: “To govern according to the sense and agreement of the interests of the people is a great and glorious object of governance. This object cannot be obtained but through the medium of popular election, and popular election is a mighty evil.”
[2] Boyd, William, “Ways of Seeing in Environmental Law: How Deforestation Became an Object of
Climate Governance”, to be published in Ecology Law Quarterly
[3] Daniel J. Weitzner, Harold Abelson, Tim Berners-Lee, Joan Feigenbaum, James Hendler, Gerald J. Sussman (2007) “Information Accountability”, Computer Science and Artificial Intelligence Laboratory Technical Report, MIT-CSAIL-TR-2007-034, June 13, 2007
[4] Business Forum for Consumer Privacy, “A New Approach to Protecting Privacy in the Evolving Digital Economy: A Concept for Discussion”, March 2009
[5] Kevin Werbach (2003), "Radio Revolution: The Coming of Age of Unlicensed Wireless," New America Foundation and Public Knowledge, no date on document, dated 15 Dec 2003 on NAF site
[6] Preston Marshall (2009) “Quantifying Aspects of Cognitive Radio and Dynamic Spectrum Access Performance” (see slides 15, 16)
[7] J Pierre de Vries, (2008) "De-situating spectrum: Rethinking radio policy using non-spatial metaphors" New Frontiers in Dynamic Spectrum Access Networks, 2008 (DySPAN 2008). http://ssrn.com/abstract=1241342
[8] David M. Friedman, Law's Order: What Economics Has to Do with Law and Why It Matters, Princeton University Press: 2001. See Chapter 7 for a discussion of ex ante/ex post.
The legal scholar William Boyd introduced me the concept of an “object of governance”, i.e. the explicit focus or nominal topic of regulatory activity. [1] Boyd is concerned with deforestation as an object of climate governance [2]; a quick web search throws up examples like organized crime, “The East”, the Sahel, and risk. Objects of communications regulation include personally identifiable information (PII), spectrum, phone service, and the internet.
While most of these objects are intangible, they are at least to some extent thing-like; they’re nouns. It becomes more tricky when regulation addresses behavior – that is, verbs. I’ll work through a few examples in communications regulation where the object of governance started off as a thing/noun, and is becoming a behavior/verb:
Privacy: From PII to Use
The current approach to protecting privacy on the web is rooted in the notion of data security: information exists somewhere, and needs to be protected. However, an alternative conception based on appropriate use rather than access restrictions is emerging. [3] [4] The idea is that the tradition Notice & Choice regime is complemented by use-and-obligations model where organizations disclose the purposes to which they intend to put information, and undertake to limit themselves to those uses.
Wireless regulation: From spectrum to radio operation
Radio regulation has been framed in terms of government management of a “spectrum asset” for many decades. Even though in practice the regulations concerned themselves with the operating parameters of transmitters, the idea that some underlying asset existed has been a useful fiction, particularly as the detailed technology and service choices have been increasingly privatized through auctions of general-use licenses.
However, a new generation of radio technologies has been used to call this approach into question. “Open Spectrum” advocates have argued that dynamic wireless technologies obviate many underlying assumptions of current regulation, and prefer “commons” access over exclusive licenses. [5] Some in the RF engineering community recommend that regulation take into account dynamic adaptation at all layers in the network stack, not just at the radio layer. [6] I have argued that a static, spectrum-as-asset approach is not a given; a more dynamic radio-as-trademark interference metaphor is perfectly workable. [7]
Universal Service: From telephony to internet access
The Universal Service Fund in the US, and its equivalents in other countries, was conceived of as guaranteeing phone service to those who would not otherwise be able to afford it, particularly in rural communities. There is no a great deal of debate about extending the universal service concept to the internet. However, since internet access can come in an unlimited variety of flavors, it is unclear what the goal of the program should be. Phone service is the same everywhere; but what broadband speed is “good enough”? The regulatory debate is moving away from how to fund phone service to how to define baseline access.
Common carriage: From a neutral network to network management
The most recent of these debates concerns the 21st century equivalent of common carriage for the internet. The rallying cry of Network Neutrality had satisfyingly thing-like connotations: there was a network, and it had to have the attribute of neutrality (noun/adjective). Over time is has largely been agreed that network operators should have some discretion in managing the behavior of their network. The question has now become a behavioral one: what is degree of network management (verb) is appropriate?
Implications
A shift in the objects of governance from things to behaviors suggests a shift in regulation from ex ante to ex post action, that is, from making detailed rules up-front to stating general principles and enforcing breach after the fact. In Law’s Order [8], economist David M. Friedman compares speed limits (ex ante) with reckless driving (ex post), and observes that ex post punishments are most useful when the behavior is determined by private knowledge that the regulator cannot observe.
"Ex ante punishments can be imposed only on behavior that a traffic cop can observe; so far, at least, that does not include what is going on inside my head. Ex post punishments can be imposed for outcomes that can be observed due to behavior that cannot—when what is going on inside my head results in my running a red light and colliding with another automobile."When an object of governance is thing-like, and changes in the attributes of those things are easily observed – a data breach occurs, some packets don’t cross the network – then ex ante rules are attractive. When governance concerns behavior, particularly behavior that is difficult to observe – the uses to which data is put by a company, whether a particular network management technique discriminates against a competitor – then the regulator has to fall back on ex post enforcement. The difficulties with ex post are well-known, though: from providing sufficient clarity up-front about what would constitute a breach, to the political difficulty of exacting very occasional but very large penalties from powerful players.
Footnotes
[1] Note that this is not the traditional meaning of the term, which used “object” as synonymous with “objective”, e.g. Edmund Burke: “To govern according to the sense and agreement of the interests of the people is a great and glorious object of governance. This object cannot be obtained but through the medium of popular election, and popular election is a mighty evil.”
[2] Boyd, William, “Ways of Seeing in Environmental Law: How Deforestation Became an Object of
Climate Governance”, to be published in Ecology Law Quarterly
[3] Daniel J. Weitzner, Harold Abelson, Tim Berners-Lee, Joan Feigenbaum, James Hendler, Gerald J. Sussman (2007) “Information Accountability”, Computer Science and Artificial Intelligence Laboratory Technical Report, MIT-CSAIL-TR-2007-034, June 13, 2007
[4] Business Forum for Consumer Privacy, “A New Approach to Protecting Privacy in the Evolving Digital Economy: A Concept for Discussion”, March 2009
[5] Kevin Werbach (2003), "Radio Revolution: The Coming of Age of Unlicensed Wireless," New America Foundation and Public Knowledge, no date on document, dated 15 Dec 2003 on NAF site
[6] Preston Marshall (2009) “Quantifying Aspects of Cognitive Radio and Dynamic Spectrum Access Performance” (see slides 15, 16)
[7] J Pierre de Vries, (2008) "De-situating spectrum: Rethinking radio policy using non-spatial metaphors" New Frontiers in Dynamic Spectrum Access Networks, 2008 (DySPAN 2008). http://ssrn.com/abstract=1241342
[8] David M. Friedman, Law's Order: What Economics Has to Do with Law and Why It Matters, Princeton University Press: 2001. See Chapter 7 for a discussion of ex ante/ex post.
Friday, December 18, 2009
Norms, mechanisms and policy imperatives
As I stumble towards a paper about changes in governance required by changing technology (part of the Silicon Flatirons New Models of Governance project) I’ve found Peter Cowhey and Jonathan Aronson’s magisterial new book on the political economy of global communications [1] very useful.
In the Summary and Conclusions, co-written with Don Abelson, they introduce four “principles” for market governance in the light of current conditions, and ten “norms” needed to implement the principles (see Appendix 1 below). They define market governance as “the mixture of formal and informal rules and the expectations about how markets should logically operate.”
When I look at their norms, I see a set of choices for the set-points of a small number of governance mechanisms:
My list of policy imperatives does not include subsidy, which is implied by Cowhey & Aronson’s Norm 2, “Invest in virtual common capabilities”. In the light of their work, I now realize that this is an omission; distributing government largesse is a permanent policy imperative.
The mechanisms of competition policy and property rights are means to the end of economic vitality, my fifth policy imperative. The mechanism of regulatory “touch” is a means that I address in my paper under the heading of Principles (see Appendix 2, below); as it happens, I concur with their recommendations for light touch regulation.
The difference in emphasis is perhaps most noticeable in the absence of norms/mechanism that speak to the “soft” policy imperatives. While Cowhey & Aronson’s Norm 7 addresses media content, and thus recognizes some value in “culture and values”, my third policy imperative, it is not implementable in the way the others are; it merely recommends a balance between encouraging trade and protecting cultural values. The “public safety” imperative is completely absent. While one may argue that Imperative 2, “consumer protection”, is to be achieved through competition policy (Norms 3 and 5), Cowhey & Aronson do not explicit mention of consumers.
Footnotes
[1] Cowhey, Peter F. and Jonathan D. Aronson, Transforming Global Information and Communication Markets: The Political Economy of Innovation, MIT Press (February 15, 2009). Softcopy available at http://globalinfoandtelecom.org/book/ (look for the “Download free under Creative Commons license” link)
[2] It is telling that Cowhey and Aronson seem to equate the public interest with consumer welfare, an economic construct. For example, on p. 17 they write: “The main challenge for governance is creating appropriate new spaces for market competition that allow the most important potential for innovation to play out in a manner that enhances consumer welfare (the public interest).”
[3] De Vries, Pierre, “Internet Governance as Forestry: Deriving Policy Principles from Managed Complex Adaptive Systems”, TPRC 2008. Available at SSRN: http://ssrn.com/abstract=1229482
Appendix 1: Four guiding principles and ten norms to help implement them
(Cowhey & Aronson (2009) Table S.1, p. 265
Principles
In the Summary and Conclusions, co-written with Don Abelson, they introduce four “principles” for market governance in the light of current conditions, and ten “norms” needed to implement the principles (see Appendix 1 below). They define market governance as “the mixture of formal and informal rules and the expectations about how markets should logically operate.”
When I look at their norms, I see a set of choices for the set-points of a small number of governance mechanisms:
- Subsidy (Norm 2)
- Competition policy (Norms 3, 5)
- Regulatory “touch” (Norms 1, 4, 6)
- Property rights (Norms 8, 9, 10)
- Public Safety. Protecting citizens is a primary responsibility of government.
- Consumer Protection. Policy makers take action when lawmakers conclude that commercial activity needs to be circumscribed in the public interest.
- Culture and Values. In order to protect and express a culture’s values, policy makers seek to limit some kinds of speech and promote others.
- Government Revenue. Money needs to be raised and redistributed by federal, state and local treasuries; this includes taxes, fees, levies, subsidies, and tax breaks.
- Economic Vitality. A healthy market produces goods and services that citizens value.
Now, these two lists are different in kind; Cowhey & Aronson’s norms and implied mechanisms are means, and my policy imperatives are ends. However, the mismatches are revealing.
The mechanisms of competition policy and property rights are means to the end of economic vitality, my fifth policy imperative. The mechanism of regulatory “touch” is a means that I address in my paper under the heading of Principles (see Appendix 2, below); as it happens, I concur with their recommendations for light touch regulation.
The difference in emphasis is perhaps most noticeable in the absence of norms/mechanism that speak to the “soft” policy imperatives. While Cowhey & Aronson’s Norm 7 addresses media content, and thus recognizes some value in “culture and values”, my third policy imperative, it is not implementable in the way the others are; it merely recommends a balance between encouraging trade and protecting cultural values. The “public safety” imperative is completely absent. While one may argue that Imperative 2, “consumer protection”, is to be achieved through competition policy (Norms 3 and 5), Cowhey & Aronson do not explicit mention of consumers.
[1] Cowhey, Peter F. and Jonathan D. Aronson, Transforming Global Information and Communication Markets: The Political Economy of Innovation, MIT Press (February 15, 2009). Softcopy available at http://globalinfoandtelecom.org/book/ (look for the “Download free under Creative Commons license” link)
[2] It is telling that Cowhey and Aronson seem to equate the public interest with consumer welfare, an economic construct. For example, on p. 17 they write: “The main challenge for governance is creating appropriate new spaces for market competition that allow the most important potential for innovation to play out in a manner that enhances consumer welfare (the public interest).”
[3] De Vries, Pierre, “Internet Governance as Forestry: Deriving Policy Principles from Managed Complex Adaptive Systems”, TPRC 2008. Available at SSRN: http://ssrn.com/abstract=1229482
Appendix 1: Four guiding principles and ten norms to help implement them
(Cowhey & Aronson (2009) Table S.1, p. 265
Principles
- Enable transactions among modular ICT building blocks.
- Facilitate interconnection of modular capabilities.
- Facilitate supply chain efficiency, reduce transaction costs.
- Reform domestically to help reorganize global governance.
- Delegate authority flexibly.
- Invest in virtual common capabilities; be competitively neutral.
- Use competition policy to reinforce competitive supply chains.
- Intervene lightly to promote broadband networks.
- Narrow and reset network competition policy. All networks must accept all traffic from other networks. Narrow scope of rules to assure network neutrality. Separate peering and interconnection for provision of VANs.
- Government should allow experiments with new applications.
- Create rules for globalization of multimedia audiovisual content services that encourage international trade and foster localism, pluralism, and diversity.
- Tip practices toward new markets for digital rights.
- Promote commercial exchanges that enhance property rights for personal data and mechanisms to do so.
- Users own their information and may freely transfer it.
Appendix 2: Four ecosystem management principles
De Vries (2008), Table 3, p. 26- Flexibility: Determine ends, not means.
- Delegation: Most problems should be solved by the market and civil society.
- Big Picture: Take a broad view of the problem and solution space.
- Diversity: Multiple solutions are possible and desirable.
Monday, May 04, 2009
A view on the policy making stream
BusinessWeek writes that IBM is pushing “stream computing”, which is processing incoming information on the fly rather than putting it in a database first, and then mining it.
I’ve been trying to mine information in the FCC’s Electronic Comment Filing System (ECFS), the repository for all interactions that petitioners have with the agency. The BW story got me thinking what one could do if updates to ECFS were easily accessible on the fly, along the lines of the proposal by Ed Felten and colleagues that government should expose underlying data rather than creating portals.
One could do a lot with just the metadata, that is, cover information on who submitted a document to ECFS. A little extra processing to, say, extract information from the filed documents on all the people present in a meeting, would add a great deal of value. One could also extract information about what topics are being discussed by doing semantic analysis of comments and reports of meetings between petitioners and the agency.
Some things researchers (not to mention commercial information providers) could do with this kind of intelligence:
I’ve been trying to mine information in the FCC’s Electronic Comment Filing System (ECFS), the repository for all interactions that petitioners have with the agency. The BW story got me thinking what one could do if updates to ECFS were easily accessible on the fly, along the lines of the proposal by Ed Felten and colleagues that government should expose underlying data rather than creating portals.
One could do a lot with just the metadata, that is, cover information on who submitted a document to ECFS. A little extra processing to, say, extract information from the filed documents on all the people present in a meeting, would add a great deal of value. One could also extract information about what topics are being discussed by doing semantic analysis of comments and reports of meetings between petitioners and the agency.
Some things researchers (not to mention commercial information providers) could do with this kind of intelligence:
Track the ebb and flow of meetings related to a particular proceedingOf course, the Garbage In, Garbage Out Rule applies; if petitioners file late, or misrepresent their interactions (i.e. lie), all the stream computing in the world will be for naught. We may need a suggestion I heard from Bob Pepper, a former FCC staffer now at Cisco: make petitioners warrant that their submissions are true, on penalty of perjury. Curiously, there is apparently no requirement for petitioners to tell the truth, and no penalties if they lie.
Be notified when a specific company, company in a coalition, etc. reports a meeting with the agency, and see it in the context of other meetings by opponents and allies
Put a watch on the meetings in a particular bureau of the agency
Track the personalities – who’s meeting with whom, who hasn’t been seen lately, who seems to be a rising star. I’ve been told that John de Figuieredo predicted the importance of William Kennard before he was tapped for the FCC by noticing that he was in a lot of key lobbying meetings. (Caveat: I may have misremembered the characters in this anecdote. Please correct me if you know better...)
Given time series information one could develop leading indicators for when a proceeding was heating up, or when something big was brewing.
Thursday, April 30, 2009
The “business ecosystem” subtext
A feature in the new Christian Science Monitor on restoring the Galápagos to their state before the invasives arrived – rats, dogs, lizards, and especially humans – suddenly revealed to me why the “business ecosystem” rhetoric makes me uneasy.
Here’s the key passage:
Catastrophe is as much a part of complex system behavior as continuity, but it's something we'd rather not think about too much. Radical change is bad news for incumbents - and it's bad for all of us when the "incumbents" are rare plant and animal species on the edge of extinction - but it is good news for newcomers trying to make their mark and change the world.
P.S. Here’s the quote in a little more context:
Here’s the key passage:
“If an ecosystem is a community of life forms that have evolved together and achieved equilibrium, then the restoration of that ecosystem begins with the removal of everything that upsets the balance.”Users of the “business ecosystem” metaphor perhaps aren't even conscious that their goal is equilibrium, but I’ve now realized that it’s a foundation of this world view. Everybody needs stability in their lives, even when they also crave novelty; this is particularly true for large technology companies.
Catastrophe is as much a part of complex system behavior as continuity, but it's something we'd rather not think about too much. Radical change is bad news for incumbents - and it's bad for all of us when the "incumbents" are rare plant and animal species on the edge of extinction - but it is good news for newcomers trying to make their mark and change the world.
P.S. Here’s the quote in a little more context:
Certainly, reconstructing nature is a prospect fraught with contradictions. Can it really be natural if it is created by human design?
Cruz and fellow conservationists operate on a simple formula: If an ecosystem is a community of life forms that have evolved together and achieved equilibrium, then the restoration of that ecosystem begins with the removal of everything that upsets the balance. And so, somewhat paradoxically, the conservation of Galápagan ecosystems inevitably starts with a meticulous campaign of eradication. Animals introduced by people must go. Once the slate is wiped clean, native species, some of which continue to exist only in captivity – like Lonesome George, the iconic giant tortoise who's the last of his breed – can be reintroduced. Then the community, a system of checks and balances honed to perfection over time – of grazing tortoises and plants, birds and seeds that need each other – can reestablish.
Wednesday, February 11, 2009
Ecosystems: sustainability or innovation, pick one (at a time)
Business folk, particularly those in IT, love the ecosystem metaphor (perhaps erroneously). One of the reasons, I realized listening to Pamela Passman on a panel at the Silicon Flatirons annual conference, is that it provides validation to both incumbents and challengers. Passman advocated creating a healthy internet ecosystem, and emphasized the importance of both sustainability and innovation. [*]
Both of these are characteristics of ecosystems, but not, as I understand it, at the same time. For example, mammals could only start rise after the extinction of the dinosaurs, prompted by a massive meteor strike or large-scale volcanism. The innovation that led to Homo Sapiens resulted from a catastrophic breakdown in ecosystem sustainability.
The adaptive cycle model developed by Buzz Holling and his collaborators has ecosystems constantly cycling through four stages: exploitation or growth, a mature conservation phase, a catastrophic release, and finally reorganization leading to new growth. To take the example of a forest: a fire, drought, or insect infestation triggers the breakdown (release) of the intricate and productive biological web that had been established during the preceding conservation phase. This sets the stage for reorganization, during which species that had been excluded in the prior conservation phase move in. As they become established, exploitation of open niches leads to growth. Eventually, we reach another conservation phase. Everything settles down; all the niches become filled, and the network of connections between biomass and nutrients becomes increasingly tight. This is a stable and very productive stage, from the point of view of resource utilization and biomass production. However, the tight linkages make it fragile to sudden release, starting the cycle again.
Ecosystems therefore oscillate between stability and innovation, swinging through repeated crises. By focusing on the appropriate phase, both incumbents and newcomers can see themselves in an ecosystem view. During an exploitation/growth phase, which we have with the Internet at the moment, newcomers are validated by looking back to the preceding reorganization phase which led to their rise, and (re-)emerging incumbents look forward to the impending conservation phase during which they will reap their reward.
What does sustainability mean in this context? Certainly not eternal stability, since that’s not possible. At best, it’s management the ecosystem to limit the severity of the release phases while still generating enough restructuring to allow innovation.
The moral of this story is that ecosystems talk hides but does not end the endless tussle between newcomers and incumbents. Wise governance needs to find a way to extract the social benefits of both, while recognizing that each represents the eclipse of the other.
Note
[*] Shane Greenstein had a great paper at the conference on what makes for "healthy" behavior in the internet industry; forthcoming in the Journal on Telecommunications and High Technology Law. For a brief summary, see Rocky Radar
Both of these are characteristics of ecosystems, but not, as I understand it, at the same time. For example, mammals could only start rise after the extinction of the dinosaurs, prompted by a massive meteor strike or large-scale volcanism. The innovation that led to Homo Sapiens resulted from a catastrophic breakdown in ecosystem sustainability.
The adaptive cycle model developed by Buzz Holling and his collaborators has ecosystems constantly cycling through four stages: exploitation or growth, a mature conservation phase, a catastrophic release, and finally reorganization leading to new growth. To take the example of a forest: a fire, drought, or insect infestation triggers the breakdown (release) of the intricate and productive biological web that had been established during the preceding conservation phase. This sets the stage for reorganization, during which species that had been excluded in the prior conservation phase move in. As they become established, exploitation of open niches leads to growth. Eventually, we reach another conservation phase. Everything settles down; all the niches become filled, and the network of connections between biomass and nutrients becomes increasingly tight. This is a stable and very productive stage, from the point of view of resource utilization and biomass production. However, the tight linkages make it fragile to sudden release, starting the cycle again.
Ecosystems therefore oscillate between stability and innovation, swinging through repeated crises. By focusing on the appropriate phase, both incumbents and newcomers can see themselves in an ecosystem view. During an exploitation/growth phase, which we have with the Internet at the moment, newcomers are validated by looking back to the preceding reorganization phase which led to their rise, and (re-)emerging incumbents look forward to the impending conservation phase during which they will reap their reward.
What does sustainability mean in this context? Certainly not eternal stability, since that’s not possible. At best, it’s management the ecosystem to limit the severity of the release phases while still generating enough restructuring to allow innovation.
The moral of this story is that ecosystems talk hides but does not end the endless tussle between newcomers and incumbents. Wise governance needs to find a way to extract the social benefits of both, while recognizing that each represents the eclipse of the other.
Note
[*] Shane Greenstein had a great paper at the conference on what makes for "healthy" behavior in the internet industry; forthcoming in the Journal on Telecommunications and High Technology Law. For a brief summary, see Rocky Radar
Wednesday, September 17, 2008
Rebooting the broadband debate
Rob Atkinson and his colleagues at ITIF have written an even-handed and insightful report on “Explaining International Broadband Leadership”.
They found that while the United States is behind other countries in broadband deployment, speed and price, it can’t all be blamed on the government – but that good policies can make a difference. It’s harder than many on the Left claim to find a silver bullet in the experience of some other country (France, South Korea, etc.), but despite claims from the Right, one can learn something from their best practices. Government leadership and competition matter, but so do market incentives on both the supply and demand side.
Atkinson, Correa and Hedlund’s headline policy recommendation is that we end the “either-or shouting matches”. However, the question is How? They call for a “pragmatic discussion”, but that’s the end result, not the means to the end. It’s true, as they say, that we should be able to agree that the United States can do better on broadband, but we can only move beyond a divisive and unproductive debate if the conversation is reframed – and if we can recruit new, less entrenched, participants to the table.
One could engage industry and society at large (rather than just companies and activists with narrow issue agendas) if broadband were tied to commercial and personal success.
Workforce development: “Telecommuting” is a very tired meme nowadays, but it had power back in the day. If the Fortune 500 came to believe that universal affordable broadband would make them more competitive, and if the AFL-CIO came to believe that it would make workers more employable, then the debate might shift.
More sales: The “information superhighway” is just as tired, but the notion that the interstates and local roads are good for business is as true now as it ever was. If US retailers of goods and services (including entertainment) came to believe that they’d generate more profitable sales if the network was faster and cheaper, and if populist protectionists came to believe that fast local broadband was a bulwark against losing business to them furriners, then the debate might shift.
Energy: If one could make an argument that the US could get to energy independence sooner by moving bits rather than atoms, then the debate might shift. Gas prices will fluctuate, but the trend will be up. If you’re moving atoms, the world isn’t flat. Broadband can enable gains from local specialization based on knowledge, rather than production costs of commodities.
They found that while the United States is behind other countries in broadband deployment, speed and price, it can’t all be blamed on the government – but that good policies can make a difference. It’s harder than many on the Left claim to find a silver bullet in the experience of some other country (France, South Korea, etc.), but despite claims from the Right, one can learn something from their best practices. Government leadership and competition matter, but so do market incentives on both the supply and demand side.
Atkinson, Correa and Hedlund’s headline policy recommendation is that we end the “either-or shouting matches”. However, the question is How? They call for a “pragmatic discussion”, but that’s the end result, not the means to the end. It’s true, as they say, that we should be able to agree that the United States can do better on broadband, but we can only move beyond a divisive and unproductive debate if the conversation is reframed – and if we can recruit new, less entrenched, participants to the table.
One could engage industry and society at large (rather than just companies and activists with narrow issue agendas) if broadband were tied to commercial and personal success.
Workforce development: “Telecommuting” is a very tired meme nowadays, but it had power back in the day. If the Fortune 500 came to believe that universal affordable broadband would make them more competitive, and if the AFL-CIO came to believe that it would make workers more employable, then the debate might shift.
More sales: The “information superhighway” is just as tired, but the notion that the interstates and local roads are good for business is as true now as it ever was. If US retailers of goods and services (including entertainment) came to believe that they’d generate more profitable sales if the network was faster and cheaper, and if populist protectionists came to believe that fast local broadband was a bulwark against losing business to them furriners, then the debate might shift.
Energy: If one could make an argument that the US could get to energy independence sooner by moving bits rather than atoms, then the debate might shift. Gas prices will fluctuate, but the trend will be up. If you’re moving atoms, the world isn’t flat. Broadband can enable gains from local specialization based on knowledge, rather than production costs of commodities.
Tuesday, November 06, 2007
Gardening the Web
I believe that it’s productive to represent the internet/web as a complex human system, but that’s an abstract concept that’s hard to grasp. A metaphor that everyone’s familiar with can enliven this idea: The internet/web as a global collection of gardens, and making policy is like gardening.
Just like a garden, the internet/web has a life of its own, but can be shaped by human decisions. A garden is neither pure nature, nor pure culture; it’s nature put to the service of culture. The “nature” of the internet/web discourse is its technology and commerce, separate from the “culture” of politics and policy. Few would claim that the internet/web should be left entirely to a laissez faire markets; it is also a social good, and some intervention is needed to protect the public interest.
Before delving further into the analogy between gardening and making communications policy, here is a summary of the properties of complex systems which apply to both:
- Hierarchy: systems consist of nested subsystems with linked dynamics at different scales
- Holism: the whole has properties different from collection of separable parts
- Self-Organization: systems organize themselves, and their characteristic structural and behavioral patterns are mainly a result of interaction between the subsystems
- Surprise and Novelty: one cannot predict outcomes of interventions with any accuracy; ny given model under-represents the system
- Robust Yet Fragile: a system is stable in a large variety of situations, but can break down unexpectedly
Just like the internet/web, there a many kinds of gardens. They vary in scale from window-sill planters to national forests, in governance from personal to public and commercial. Some objectives of gardening are utilitarian, and others aesthetic; some see gardens as primarily productive and others cultivate them for pleasure. Likewise, some see the internet/web as tool, and others as a source of meaning.
While most of the work in a garden is done automatically by the plants and other providers of ecosystem services, humans impose their desires regarding outcomes; similarly, internet/web innovation is driven by entrepreneurs and technologists according to their own agendas, though governments try to impose their will on the outcomes.
Just like the internet/web, managing a garden is often a futile matter; one can never know precisely how things will turn out. Plants that thrive in the garden next door inexplicably languish in yours. Plagues of pests and disease appear unexpectedly. Unexpected consequences abound. For example, people using imidacloprid to control grubs in their lawns may be causing the collapse of bee hives across North America (more).
Just like the internet/web, one can’t stop things coming over the fence from the neighbor’s garden. Birds, squirrels, slugs, and seeds don’t respect boundaries. A garden is embedded in a larger regional system, and its borders are porous. While every gardener can and should shape the garden to their preferences, there is a limit to their independence. The openness brings both plant-friendly bees and bird-chasing cats. Tension with neighbors is inevitable, but can be managed. There is management at many scales, from a gardener’s decision about what variety of tomato to plant for next year, to state-wide prohibitions on planting noxious weeds.
The old silos of traditional communications regulation are like formal gardens or regimented farming. Everything is neat and in its place. There is relatively little variety in the composition and output of the cultivation, and the managers are few and well-defined. Today’s internet/web is more like a patchwork of allotments and wilderness. Control is decentralized, and there is much more variety.
This description of the internet/web as a garden is of course incomplete – like any complex system, different perspectives of the internet will each reveal truths regarding that system that are neither entirely independent nor entirely compatible. The garden metaphor, built on the analogy of the internet/web as a complex system, captures a lot of the key dynamics. It fits with other place-based metaphors for the web (as a building, market, library, or public venue). There is a resonance with tool metaphors, since gardens are as a means to an end, whether pleasure or production. The link to the “internet as communications infrastructure” metaphor is less direct, but they don’t contradict each other.
Sunday, July 15, 2007
Not that weird
Peter Pitsch’s The Innovation Age (1996) made me question something I’ve taken for granted: that complexity and uncertainty in the economy is growing, and doing so at an unprecedented rate. Pitsch’s book is based on this premise, and it made me wonder: what is the evidence?
The number of industry players who are inter-connected may be growing due to the Internet and cheap global travel, but an individual companies is not necessarily directly connected to more counterparts. It’s a bigger graph, but when one looks at individual nodes, the connectivity is much as it has always been.
Uncertainty isn’t new, either. Pitsch mentions the late Middle Ages as a tumultuous period that produced amazing innovation, and the Industrial Revolution was similar. The uncertainty in aggregate may be larger today, but so is the world population; has the normalized per-capita uncertainty grown? A reasonable measure might be stock market volatility. Schwert’s data for the 1859 – 1987 period doesn’t show any trends I can see with the naked eye (G.W. Schwert, “Why Does Stock Market Volatility Change Over Time," Journal of Finance, vol. 44, pp. 1115-1153, 1989). Market uncertainty, at least, is much the same.
I now believe that this is the Special Present Fallacy at play again. We’re always biased to see the present moment as exceptional; the odds are that it’s not.
The number of industry players who are inter-connected may be growing due to the Internet and cheap global travel, but an individual companies is not necessarily directly connected to more counterparts. It’s a bigger graph, but when one looks at individual nodes, the connectivity is much as it has always been.
Uncertainty isn’t new, either. Pitsch mentions the late Middle Ages as a tumultuous period that produced amazing innovation, and the Industrial Revolution was similar. The uncertainty in aggregate may be larger today, but so is the world population; has the normalized per-capita uncertainty grown? A reasonable measure might be stock market volatility. Schwert’s data for the 1859 – 1987 period doesn’t show any trends I can see with the naked eye (G.W. Schwert, “Why Does Stock Market Volatility Change Over Time," Journal of Finance, vol. 44, pp. 1115-1153, 1989). Market uncertainty, at least, is much the same.
I now believe that this is the Special Present Fallacy at play again. We’re always biased to see the present moment as exceptional; the odds are that it’s not.
Thursday, July 12, 2007
Factoid: A typical cellphone user spends 80% of his or her time communicating with just four other people
--- Source: Stefana Broadbent, an anthropologist who leads the User Adoption Lab at Swisscom, cited by the Economist in Tech Quaterly story on June 9, 2007: Home truths about telecoms.
They also quote her thus: "The most fascinating discovery I've made this year is a flattening in voice communication and an increase in written channels. . . . Users are showing a growing preference for semi-synchronous writing over synchronous voice." The Economist's gloss: "Her research in Switzerland and France found that even when people are given unlimited cheap or free calls, the number and length of calls does not increase significantly. This may be because there is only so much time you can spend talking; and when you are on the phone it is harder to do other things. Written channels such as e-mail, text-messaging and IM, by contrast, are discreet and allow contact to be continuous during the day."
It seems writing really is a useful alternative channel. I guess there's a reason why the Blackberry was so succesful.
They also quote her thus: "The most fascinating discovery I've made this year is a flattening in voice communication and an increase in written channels. . . . Users are showing a growing preference for semi-synchronous writing over synchronous voice." The Economist's gloss: "Her research in Switzerland and France found that even when people are given unlimited cheap or free calls, the number and length of calls does not increase significantly. This may be because there is only so much time you can spend talking; and when you are on the phone it is harder to do other things. Written channels such as e-mail, text-messaging and IM, by contrast, are discreet and allow contact to be continuous during the day."
It seems writing really is a useful alternative channel. I guess there's a reason why the Blackberry was so succesful.
Sunday, July 08, 2007
Ecosystem alert
When you see references to ecosystems in a business story, raise the shields. Someone is trying to mess with your mind.
The current Business Week has two good examples. An adulatory story about the "Apple ecosystem" (Welcome to Planet Apple, which ran as Welcome to Apple World in hard copy) describes how the company has built its network of partners. Implicit is Iansiti and Levien's notion that the most influential companies are "keystone species in an ecosystem." As I argued in Eco mumbo jumbo, the analogy is flawed in a long list of ways. For example: species don't choose to be keystones; companies interact vountarily, but one organism consumes another against its will; and biological systems have neither goals nor external regulators, whereas industries have both.
The ecosystem analogy is used unthinkingly in this story, judging by the hodgpodge of other metaphors that are used: "[the] ecosystem has morphed from a sad little high-tech shtetl into a global empire," "[its] new flock of partners," "a gated, elitist community," "the insular world of the Mac," "the Apple orchard . . . is still no Eden." Note, though, that most of them refer to places, with a nod to nature.
To get a sense of what's really going on when the ecosystem metaphor is used, let's look at another story, Look Who's Fighting Patent Reform. Computing companies have been pushing for patent reform on Capitol Hill, but "[t]he past few weeks have brought an unexpected surge of opposition from what one lobbyist calls the 'innovation ecosystem'—a sprawling network of entrepreneurs, venture capitalists, trade groups, drug and medical equipment manufacturers, engineering societies, and research universities." It's a term used by the special pleader. The only substantive resemblance to an ecosystem is that these groups connect to each other in network. The rhetorical benefit, though, is to invoke the commonplace Nature Is Good. Nature is unspoiled, bountiful, self-regulating: the antithesis of concrete-covered recklessly-regulating partisan politicking. Nature is a metaphor that appeals to both sides of the political divide: it's organic, but competitive; it's an inter-related, but dynamic; it's nurturing, but stern in its consequences. It's therefore ideal when trying to put a halo around an otherwise unsympathetic subject.
The current Business Week has two good examples. An adulatory story about the "Apple ecosystem" (Welcome to Planet Apple, which ran as Welcome to Apple World in hard copy) describes how the company has built its network of partners. Implicit is Iansiti and Levien's notion that the most influential companies are "keystone species in an ecosystem." As I argued in Eco mumbo jumbo, the analogy is flawed in a long list of ways. For example: species don't choose to be keystones; companies interact vountarily, but one organism consumes another against its will; and biological systems have neither goals nor external regulators, whereas industries have both.
The ecosystem analogy is used unthinkingly in this story, judging by the hodgpodge of other metaphors that are used: "[the] ecosystem has morphed from a sad little high-tech shtetl into a global empire," "[its] new flock of partners," "a gated, elitist community," "the insular world of the Mac," "the Apple orchard . . . is still no Eden." Note, though, that most of them refer to places, with a nod to nature.
To get a sense of what's really going on when the ecosystem metaphor is used, let's look at another story, Look Who's Fighting Patent Reform. Computing companies have been pushing for patent reform on Capitol Hill, but "[t]he past few weeks have brought an unexpected surge of opposition from what one lobbyist calls the 'innovation ecosystem'—a sprawling network of entrepreneurs, venture capitalists, trade groups, drug and medical equipment manufacturers, engineering societies, and research universities." It's a term used by the special pleader. The only substantive resemblance to an ecosystem is that these groups connect to each other in network. The rhetorical benefit, though, is to invoke the commonplace Nature Is Good. Nature is unspoiled, bountiful, self-regulating: the antithesis of concrete-covered recklessly-regulating partisan politicking. Nature is a metaphor that appeals to both sides of the political divide: it's organic, but competitive; it's an inter-related, but dynamic; it's nurturing, but stern in its consequences. It's therefore ideal when trying to put a halo around an otherwise unsympathetic subject.
Tuesday, July 03, 2007
Factoid: Americans spent only 0.2% of their money but 10% of their time on the internet
Source: Austan Goolsbee and Peter Klewnow, "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet," draft available at http://faculty.chicagogsb.edu/austan.goolsbee/research/timeuse.pdf. This result suggests that conventional consumer surplus calculations significantly understate the value of the internet.
Paper abstract:
Paper abstract:
For some goods, the main cost of buying the product is not the price but rather the time it takes to use them. Only about 0.2% of consumer spending in the U.S., for example, went for Internet access in 2004 yet time use data indicates that people spent around 10% of their entire leisure time going online. For goods like that, estimating price elasticities with expenditure data can be difficult and, therefore, estimated welfare gains highly uncertain. We show that for time-intensive goods like the Internet, a simple model in which both expenditure and time contribute to consumption can be used to estimate the consumer gains to a good using just the data on time use and the opportunity cost of people's time (i.e., the wage). The theory predicts that higher wage internet subscribers should spend less time online (for non-work reasons) and the degree to which that is true determines the elasticity of demand. Based on expenditure and time use data and our elasticity estimate, we calculate that consumer surplus from the Internet may be around 2% of full-income, or several thousand dollars. This is an order of magnitude larger than what one obtains from a back-of-the-envelope calculation using data from expenditures.
Wednesday, June 27, 2007
Eco mumbo jumbo
I’m coming to the conclusion that the “business ecosystem” metaphor is nonsense. That’s a pity, since I speculated in Tweaking the Web Metaphor that the food web might be a useful metaphor for the internet, conceived as a “module ecosystem.” [1] Bugs in the business ecosystem mapping would be even more unfortunate for people who’ve made strategic business decisions on the basis of this flawed metaphor.
“Business is an ecosystem” is an analogy, and like any argument from analogy it is valid to the extent that the essential similarities of the two concepts are greater than the essential differences. I will try to show (at too much length for a blog post, I know...) that the differences are much greater than the similarities.
This biological analogy is very popular. A Google search on "business ecosystem" yielded about 154,000 hits, "software ecosystem" gave 76,000 hits (Microsoft’s in 47,200 of them), and “computing ecosystem” 18,000 hits.
So where’s the problem?
Let me count the ways.
1. A biological ecosystem is analyzed in terms of species, each of which represents thousands or millions of organisms. Business ecosystems are described in terms of firms: just one of each. A food web of species summarizes billions of interactions among interactions; a business web of companies is simply the interaction among the firms studied.
2. Species are connected, primarily, by flows of energy and nutrients. A is eaten by B is eaten by C is eaten by D, etc. Energy is lost as heat at every step. In the business system, a link primarily represents company B buying something from company A. Goods flow from A to B, and money flows back. Both A and B gain, otherwise they wouldn’t’ve entered into the transaction. Therefore, the system isn’t lossy, as it is in a food web. In fact, gains from trade suggest that specialization leading to more interacting firms leads to more value. The links between companies could also stand for co-marketing ventures relationships, technology sharing and licensing agreements, collusion, cross shareholding, etc; however, these have the same non-zero sum characteristics as monetary exchange does.
3. One might sidestep these problems by claiming that species are mapped to firms, and individual animals are mapped to the products that a firm sells. That solves the multiplicity mismatch in #1, and, if one just considers the material content of products, the entropy problem in #2. However, two problems remain. First, the value of products is mostly in the knowledge they embody, not their matter; knowledge (aka value add) is created at every step, the inverse of what happens with the 2nd Law of Thermodynamics. Second, companies sell many diverse products. The fudge only works if a species is mapped to a product unit (in fact, to the part of a product unit that produces a single SKU), rather than to a firm.
4. Species change slowly, and their role in an ecosystem changes very slowly; on the other hand, companies can change their role in the blink of an eye through merger, acquisition or divestiture. Interactions between firms can be changed by contract, whereas that between species is not negotiable except perhaps over very long time scales by evolution of defensive strategies).
5. Biological systems are unstable; the driving force of ecological succession is catastrophe. [2] Businesses seek stability, and the biological metaphor is used as a source of techniques to increase resilience; see e.g. Iansiti and Levien’s claim that keystone species lead to increase stability in an ecosystem. [3], [4] If one seeks stability, biological systems are not a good place to look.
6. Biological systems don’t have goals, but human ones do. There are no regulatory systems external to ecosystems, but many, such as rule of law and anti-trust, in human markets. Natural processes don’t care about equity or justice, but societies do, and impose them on business systems. If ecosystems were a good model for business networks, there would be no need for anti-trust in markets.
7. End-consumers are not represented at all in the “business ecosystem” model. Von Hippel and others [5] who study collaborative innovation could be seen to be pointing to customers - or at least some of them - as a node in the business ecosystem, but the same problems about singularity/multiplicity noted above applies here.
8. Companies are exhorted to invest in their ecosystem if they want to keystone species. Keystone species don’t necessarily (or usually) represent a lot of biomass, so it’s not clear why a firm would want to be a keystone. (And of course, the metaphor leaves unstated whether biomass maps to total revenue, profitability, return on investment, or something else.) More generally: being a keystone species isn’t a matter of choice for the animal concerned; the keystone relationship arises from the interactions among species as a matter of course.
The business ecosystem metaphor in use
Iansiti and Levien are high profile proponents of business ecosystems. [3] [4] In The Keystone Advantage, they motivate the analogy between business networks and biological ecosystems by arguing that both are “formed by large, loosely connected networks of entities”, both “interact with each other in complex ways”, and that “[f]irms and species are therefore simultaneously influenced by their internal capabilities and by their complex interactions with the rest of the ecosystem.” They state that the key analogy they draw “is between the characteristic behavior of a species in an ecosystem and the operating strategy of a strategic business unit.” They declare the stakes when they continue: “To the extent that the comparison of business units to ecosystems [I presume they mean “to species”] is a valid one, it suggests that some of the lessons from biological networks can fruitfully be applied to business networks.”
To caricature their argument: Ecosystems are networks; business networks are networks; therefore business networks are ecosystems. Hmmm...
They were more circumspect in the papers that preceded the book, where they try to dodge the weakness of the analogy that underpins their argument by contending that they don’t mean it: “[W]e are not arguing here that industries are ecosystems or even that it makes sense to organize them as if they were, but that biological ecosystems serve both as a source of vivid and useful terminology as well as a providing some specific and powerful insights into the different roles played by firms” ([4], footnote 10). They want to have it both ways: get the rhetorical boost of a powerful biological metaphor, but avoid dealing with parts of the mapping that are inaccurate or misleading. As they noted in their book: If industries cannot be compared to ecosystems, then their insights cannot be validated by the analogy. However, they do attempt a mapping. For example, they attempt to answer the question “What makes a healthy business ecosystem?” by examining ecosystem phenomena like (1) hubs which are said to account for the fundamental robustness of nature’s webs, (2) robustness measured by survival rates in a given ecosystem, (3) productivity of an ecosystem analogized to total factor productivity analysis in economics, and (4) niche creation.
In most if not all cases, the appeal to ecosystem is very superficial; no substantive analogy is drawn. For example, Messerschmitt and Szyperski’s book [6], which made it into softcover, is entitled Software Ecosystem, but its remit seems to be simply to examine software “in the context of its users, its developers, its buyers and sellers, its operators, society and government, lawyers, and economics”; the word ecosystem doesn’t even appear in the index. (Disclaimer: I haven’t read the book.) The word ecosystem is simply meant to evoke a community of interdependent actors, with no reference beyond that to dynamics or behavior.
A more generic flaw with the business ecosystem metaphor is that most people are more familiar with businesses than with ecosystems. Successful metaphors usually explain complex or less-known things in terms of simpler, more familiar ones. Shall I compare thee to a Summer's day? The rhetorical appeal of the business ecosystem analogy must lie beyond its rather weak ability to make domesticate a strange idea.
Why do careful scholars resort to the ecosystem metaphor in spite of its obvious flaws? The image of nature is so powerful that it is a symbol too potent to pass up. Nature represents The Good (at least in our culture at this time), and therefore an appeal to a natural order is a compelling argument if one’s claims bear some resemblance to what’s happening in nature. However, if nothing else, this reminds me of Hegel’s historicist cop-out that what is real is rational, and what is rational is real. Just because nature is constructed in a certain way doesn’t mean that industries should be.
Perhaps my standards for metaphors are too high. To me, a conceptual metaphor is a mapping one set of ideas to another; one has to take the “bad” elements of the mapping with the “good”. If the good outweighs the bad, and if the metaphor produces insight and new ideas, then the analogy has value. Others just take the “good” and simply ignore the “bad”. For me, a metaphor is a take-it-all-or-leave-it set menu, not something to pick from a la carte.
Tentative conclusion
Does this all matter? Yes, but I still have to work out the details. For now I just claim that the weakness of the mapping between biological and business systems means that any argument that one might make about the goodness of “business ecosystems” in general and “keystone species” in particular is potentially misleading. It could delude firms into make unsound investments, e.g. in “building ecosystems,” and lead policy makers into dangerous judgments.
Notes
[1] The module ecosystem differs from the business ecosystem in that species, the nodes of the food web, are mapped to functional modules, rather than to individual companies. However, the glaring weaknesses of the business ecosystem metaphor undermine my confidence in the whole approach.
[2] John Harte, in “Business as a Living System: The Value of Industrial Ecology A Roundtable Discussion,” California Management Review (Spring 2001), argues that the ecological sustainability practices under the banner of “industrial ecology” are worthy and important, but that they do not mimic the way natural ecosystems work. His ideas are reflected in items #2, #5 and #6. He also notes that human processes are much more efficient in using waste heat than natural ones are – photosynthesis is only about a half a percent efficient, whereas power plants at 30% are sixty times more efficient. Note, however, that Industrial ecology, defined as the proposition that industrial systems should be seen as closed-loop ecosystems where wastes of one process become inputs for another process (wikipedia, ISIE) differs from the business ecosystem idea as I treat it here, i.e. that industry organization (regardless of ecological impact) can be understood as an ecosystem.
[3] Marco Iansiti and Roy Levien, “The New Operational Dynamics of Business Ecosystems: Implications for Policy, Operations and Technology Strategy,” Harvard Business School Working Paper 03-030 (2003)
[4] Marco Iansiti and Roy Levien, The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability, Harvard Business School Press, 2004
[5] Eric von Hippel, Democratizing Innovation (2005), and e.g. Charles Leadbeater
[6] David Messerschmitt and Clemens Szyperski, Software Ecosystem – Understanding an Indispensable Technology and Industry, MIT Press, 2003
“Business is an ecosystem” is an analogy, and like any argument from analogy it is valid to the extent that the essential similarities of the two concepts are greater than the essential differences. I will try to show (at too much length for a blog post, I know...) that the differences are much greater than the similarities.
This biological analogy is very popular. A Google search on "business ecosystem" yielded about 154,000 hits, "software ecosystem" gave 76,000 hits (Microsoft’s in 47,200 of them), and “computing ecosystem” 18,000 hits.
So where’s the problem?
Let me count the ways.
1. A biological ecosystem is analyzed in terms of species, each of which represents thousands or millions of organisms. Business ecosystems are described in terms of firms: just one of each. A food web of species summarizes billions of interactions among interactions; a business web of companies is simply the interaction among the firms studied.
2. Species are connected, primarily, by flows of energy and nutrients. A is eaten by B is eaten by C is eaten by D, etc. Energy is lost as heat at every step. In the business system, a link primarily represents company B buying something from company A. Goods flow from A to B, and money flows back. Both A and B gain, otherwise they wouldn’t’ve entered into the transaction. Therefore, the system isn’t lossy, as it is in a food web. In fact, gains from trade suggest that specialization leading to more interacting firms leads to more value. The links between companies could also stand for co-marketing ventures relationships, technology sharing and licensing agreements, collusion, cross shareholding, etc; however, these have the same non-zero sum characteristics as monetary exchange does.
3. One might sidestep these problems by claiming that species are mapped to firms, and individual animals are mapped to the products that a firm sells. That solves the multiplicity mismatch in #1, and, if one just considers the material content of products, the entropy problem in #2. However, two problems remain. First, the value of products is mostly in the knowledge they embody, not their matter; knowledge (aka value add) is created at every step, the inverse of what happens with the 2nd Law of Thermodynamics. Second, companies sell many diverse products. The fudge only works if a species is mapped to a product unit (in fact, to the part of a product unit that produces a single SKU), rather than to a firm.
4. Species change slowly, and their role in an ecosystem changes very slowly; on the other hand, companies can change their role in the blink of an eye through merger, acquisition or divestiture. Interactions between firms can be changed by contract, whereas that between species is not negotiable except perhaps over very long time scales by evolution of defensive strategies).
5. Biological systems are unstable; the driving force of ecological succession is catastrophe. [2] Businesses seek stability, and the biological metaphor is used as a source of techniques to increase resilience; see e.g. Iansiti and Levien’s claim that keystone species lead to increase stability in an ecosystem. [3], [4] If one seeks stability, biological systems are not a good place to look.
6. Biological systems don’t have goals, but human ones do. There are no regulatory systems external to ecosystems, but many, such as rule of law and anti-trust, in human markets. Natural processes don’t care about equity or justice, but societies do, and impose them on business systems. If ecosystems were a good model for business networks, there would be no need for anti-trust in markets.
7. End-consumers are not represented at all in the “business ecosystem” model. Von Hippel and others [5] who study collaborative innovation could be seen to be pointing to customers - or at least some of them - as a node in the business ecosystem, but the same problems about singularity/multiplicity noted above applies here.
8. Companies are exhorted to invest in their ecosystem if they want to keystone species. Keystone species don’t necessarily (or usually) represent a lot of biomass, so it’s not clear why a firm would want to be a keystone. (And of course, the metaphor leaves unstated whether biomass maps to total revenue, profitability, return on investment, or something else.) More generally: being a keystone species isn’t a matter of choice for the animal concerned; the keystone relationship arises from the interactions among species as a matter of course.
The business ecosystem metaphor in use
Iansiti and Levien are high profile proponents of business ecosystems. [3] [4] In The Keystone Advantage, they motivate the analogy between business networks and biological ecosystems by arguing that both are “formed by large, loosely connected networks of entities”, both “interact with each other in complex ways”, and that “[f]irms and species are therefore simultaneously influenced by their internal capabilities and by their complex interactions with the rest of the ecosystem.” They state that the key analogy they draw “is between the characteristic behavior of a species in an ecosystem and the operating strategy of a strategic business unit.” They declare the stakes when they continue: “To the extent that the comparison of business units to ecosystems [I presume they mean “to species”] is a valid one, it suggests that some of the lessons from biological networks can fruitfully be applied to business networks.”
To caricature their argument: Ecosystems are networks; business networks are networks; therefore business networks are ecosystems. Hmmm...
They were more circumspect in the papers that preceded the book, where they try to dodge the weakness of the analogy that underpins their argument by contending that they don’t mean it: “[W]e are not arguing here that industries are ecosystems or even that it makes sense to organize them as if they were, but that biological ecosystems serve both as a source of vivid and useful terminology as well as a providing some specific and powerful insights into the different roles played by firms” ([4], footnote 10). They want to have it both ways: get the rhetorical boost of a powerful biological metaphor, but avoid dealing with parts of the mapping that are inaccurate or misleading. As they noted in their book: If industries cannot be compared to ecosystems, then their insights cannot be validated by the analogy. However, they do attempt a mapping. For example, they attempt to answer the question “What makes a healthy business ecosystem?” by examining ecosystem phenomena like (1) hubs which are said to account for the fundamental robustness of nature’s webs, (2) robustness measured by survival rates in a given ecosystem, (3) productivity of an ecosystem analogized to total factor productivity analysis in economics, and (4) niche creation.
In most if not all cases, the appeal to ecosystem is very superficial; no substantive analogy is drawn. For example, Messerschmitt and Szyperski’s book [6], which made it into softcover, is entitled Software Ecosystem, but its remit seems to be simply to examine software “in the context of its users, its developers, its buyers and sellers, its operators, society and government, lawyers, and economics”; the word ecosystem doesn’t even appear in the index. (Disclaimer: I haven’t read the book.) The word ecosystem is simply meant to evoke a community of interdependent actors, with no reference beyond that to dynamics or behavior.
A more generic flaw with the business ecosystem metaphor is that most people are more familiar with businesses than with ecosystems. Successful metaphors usually explain complex or less-known things in terms of simpler, more familiar ones. Shall I compare thee to a Summer's day? The rhetorical appeal of the business ecosystem analogy must lie beyond its rather weak ability to make domesticate a strange idea.
Why do careful scholars resort to the ecosystem metaphor in spite of its obvious flaws? The image of nature is so powerful that it is a symbol too potent to pass up. Nature represents The Good (at least in our culture at this time), and therefore an appeal to a natural order is a compelling argument if one’s claims bear some resemblance to what’s happening in nature. However, if nothing else, this reminds me of Hegel’s historicist cop-out that what is real is rational, and what is rational is real. Just because nature is constructed in a certain way doesn’t mean that industries should be.
Perhaps my standards for metaphors are too high. To me, a conceptual metaphor is a mapping one set of ideas to another; one has to take the “bad” elements of the mapping with the “good”. If the good outweighs the bad, and if the metaphor produces insight and new ideas, then the analogy has value. Others just take the “good” and simply ignore the “bad”. For me, a metaphor is a take-it-all-or-leave-it set menu, not something to pick from a la carte.
Tentative conclusion
Does this all matter? Yes, but I still have to work out the details. For now I just claim that the weakness of the mapping between biological and business systems means that any argument that one might make about the goodness of “business ecosystems” in general and “keystone species” in particular is potentially misleading. It could delude firms into make unsound investments, e.g. in “building ecosystems,” and lead policy makers into dangerous judgments.
Notes
[1] The module ecosystem differs from the business ecosystem in that species, the nodes of the food web, are mapped to functional modules, rather than to individual companies. However, the glaring weaknesses of the business ecosystem metaphor undermine my confidence in the whole approach.
[2] John Harte, in “Business as a Living System: The Value of Industrial Ecology A Roundtable Discussion,” California Management Review (Spring 2001), argues that the ecological sustainability practices under the banner of “industrial ecology” are worthy and important, but that they do not mimic the way natural ecosystems work. His ideas are reflected in items #2, #5 and #6. He also notes that human processes are much more efficient in using waste heat than natural ones are – photosynthesis is only about a half a percent efficient, whereas power plants at 30% are sixty times more efficient. Note, however, that Industrial ecology, defined as the proposition that industrial systems should be seen as closed-loop ecosystems where wastes of one process become inputs for another process (wikipedia, ISIE) differs from the business ecosystem idea as I treat it here, i.e. that industry organization (regardless of ecological impact) can be understood as an ecosystem.
[3] Marco Iansiti and Roy Levien, “The New Operational Dynamics of Business Ecosystems: Implications for Policy, Operations and Technology Strategy,” Harvard Business School Working Paper 03-030 (2003)
[4] Marco Iansiti and Roy Levien, The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability, Harvard Business School Press, 2004
[5] Eric von Hippel, Democratizing Innovation (2005), and e.g. Charles Leadbeater
[6] David Messerschmitt and Clemens Szyperski, Software Ecosystem – Understanding an Indispensable Technology and Industry, MIT Press, 2003
Friday, June 08, 2007
Tweaking the Web Metaphor
Today’s modular Internet needs a metaphor make-over. The “silo” and “layer” frameworks that have guided are no longer adequate. It’s time to reinvent a well-worn metaphor: the Web as a web. [1], [2]
The silo model divided up the communications business by end-user experiences like telephony, cable and broadcast television, assuming that each experience has its own infrastructure. The distinct experiences with unique public policy aspects remain, but the silos are growing together at the infrastructure level since all media are now moved around as TCP/IP packet flows. The layer model reflects this integration of different media all using the same protocols. It’s relevant when one takes an infrastructure perspective, but doesn’t take into account the very real differences between, say, real-time voice chat, blogs, and digital video feeds. One might say that the silo model works best “at the top” and a layer model “at the bottom”; in the middle, it’s a mess.
Time to revive the web metaphor, with a twist. The “web” of the World Wide Web refers to the network of pointers from one web page to another. [3] The nodes are pages, and the connections between them are hyperlinks. The “info-web” model I’m exploring here proposes a different mapping: the connections in the web represent information flow, not hyperlinks, and the nodes where they connect are not individual pages but rather functional categories, like blogs, social networking sites, search portals, and individuals.
Food webs
It’s a web as in an ecosystem food web, where the nodes are species and the links are flows of energy and nutrients. The simplest view is that of a food chain: in a Swedish lake, say, ospreys eat pike, which eat perch, which eat bleak, which eat freshwater shrimp, which eat phytoplankton, which get their energy from the sun via photosynthesis. A chain is a very simple model which shows only a linear path for energy and material transfer. (The Layers model resembles a food chain, where network components at one layer pass down communications traffic to the layer below for processing.)
A food web extends the food chain concept to a complex network of interactions. It takes into account aspects ignored in a chain, such as consumers which eat, and are eaten by, multiple species; parasites, and organisms that decompose others; and very big animals that eat very small ones (e.g. whales and plankton). The nodes in a food web are species, and the links between them represent one organism consuming another. While the nodes are multiply connected, there is some degree of hierarchy, since in an ecosystem there’s always a foundation species that harvests energy directly from non-organic sources, usually a plant using sunlight. Each successive organism is at a higher trophic level; first the phytoplankton, then the shrimp, then the bleak, etc.
Info-webs
In an eco-based web model for the Internet, the species in a bio-web are mapped to functionality modules as described in my earlier post, A modular net. For example, a YouTube video clip plugged into a MySpace page running on a Firefox browser on a Windows PC might correspond to the osprey, fish, shrimp, plankton in the simple example above. In the same way that there might be other predators beyond ospreys feeding on fish, there might be many other plug-ins on the MySpace page for IM, audio, etc.. In a bio-web, a link between species A and B means “A eats B”. In the info-web model of the Internet, a link means “information flows from A to B.” Value is added to information value in the nodes through processing (e.g. playing a video) or combinations (e.g. a mash-up). For example, a movie recommender embedded in Facebook gets its information from a database hosted somewhere else, and integrates into a user’s page. Therefore, information transport is key. One can think of the links as being many-stranded if there are many alternative ways of getting the relevant information across, or single-stranded if there’s only one or two communications options (e.g. for web search one can use Wi-Fi, 3G data, DSL, cable modem etc, but for high def video on demand there’s many fewer choices.)
The analogy between the info-web and the food web diverges when one considers what flows across the links. In the Internet, information flows around the web; in the biological case, it’s energy and nutrients. Information can be created at any stage in an information web and increases with each step, whereas energy is conserved, and available energy decreases as one moves up the trophic levels of an ecological pyramid. There is a sequence of “infotrophic levels” where information value is added at each step. However, since the amount of information grows with each step, the “information pyramid” is therefore inverted relative to the ecological one: it grows wider from the bottom to the top, rather than narrower.
Implications for policy making
The Internet is complex web of interlocking service, and is approaching the richness of simple biological ecosystems. In the same way that humans can’t control ecosystems, regulators cannot understand, let alone supervise, all the detailed interactions of the Internet. One may be able to understand the interactions at a local level, e.g. how IP-based voice communications plug into web services, but the system is too big to wrap one’s head around all the dynamics at the same time. [4] This is why a market-based approach is advisable. Markets are the best available way to optimize social systems by distributing decision making among many participants. Markets aren’t perfect, of course, and there are social imperatives like public safety and justice that need government intervention. The info-web model suggests ways to find leverage points where regulators should focus their attention, and also provides salutary lessons about the limits of the effectiveness of human ecosystem management.
For example, a keystone species is one that has a disproportionate effect on its environment relative to its abundance. Black-tailed prairie dogs are a keystone species of the prairie ecosystem; more than 200 other wildlife species have been observed on or near prairie dog colonies. Such an organism plays a role in its ecosystem that is analogous to the role of a keystone in an arch. An ecosystem may experience a dramatic shift if a keystone species is removed, even though that species was a small part of the ecosystem by measures of biomass or productivity. Regulators could apply leverage on “keystone species” rather than searching for bottlenecks or abuse of market power. This would provide a basis for both supportive and punitive action. At the moment search engines are “keystone species” – they play a vital role not only in connecting consumers with information, but also in generating revenue that feeds many business models. One might say that Google is the phytoplankton of the Internet Ocean, converting the light of user attention into the energy of money. Local Internet Service Providers may also be keystone species. In earlier phase of the net, portals were keystone species. Keystone services provide a point of leverage for regulators; they can wield disproportionate influence by controlling behavior of these services.
The unintended side effects of intervention in ecosystems stand as a warning to regulators to tread carefully. For example, the Christian Science Monitor reported recently on efforts to eradicate buffelgrass from the Sonoran Desert. It was introduced by government officials after the Dust Bowl in an attempt to hold the soil and provide feed for cattle. It’s unfortunately turned out to be an invasive weed that threatens the desert ecology, choking out native plants like the iconic saguaro cactus. Another example of biological control gone wrong is the introduction of the cane toad into Australia in 1935 to control two insect pests of sugar cane: it did not control the insects and the Cane Toad itself became an invasive species. By contrast, the release of myxomatosis in 1950 was successful in controlling feral rabbits in that country.
The silo model divided up the communications business by end-user experiences like telephony, cable and broadcast television, assuming that each experience has its own infrastructure. The distinct experiences with unique public policy aspects remain, but the silos are growing together at the infrastructure level since all media are now moved around as TCP/IP packet flows. The layer model reflects this integration of different media all using the same protocols. It’s relevant when one takes an infrastructure perspective, but doesn’t take into account the very real differences between, say, real-time voice chat, blogs, and digital video feeds. One might say that the silo model works best “at the top” and a layer model “at the bottom”; in the middle, it’s a mess.
Time to revive the web metaphor, with a twist. The “web” of the World Wide Web refers to the network of pointers from one web page to another. [3] The nodes are pages, and the connections between them are hyperlinks. The “info-web” model I’m exploring here proposes a different mapping: the connections in the web represent information flow, not hyperlinks, and the nodes where they connect are not individual pages but rather functional categories, like blogs, social networking sites, search portals, and individuals.
Food webs
It’s a web as in an ecosystem food web, where the nodes are species and the links are flows of energy and nutrients. The simplest view is that of a food chain: in a Swedish lake, say, ospreys eat pike, which eat perch, which eat bleak, which eat freshwater shrimp, which eat phytoplankton, which get their energy from the sun via photosynthesis. A chain is a very simple model which shows only a linear path for energy and material transfer. (The Layers model resembles a food chain, where network components at one layer pass down communications traffic to the layer below for processing.)
A food web extends the food chain concept to a complex network of interactions. It takes into account aspects ignored in a chain, such as consumers which eat, and are eaten by, multiple species; parasites, and organisms that decompose others; and very big animals that eat very small ones (e.g. whales and plankton). The nodes in a food web are species, and the links between them represent one organism consuming another. While the nodes are multiply connected, there is some degree of hierarchy, since in an ecosystem there’s always a foundation species that harvests energy directly from non-organic sources, usually a plant using sunlight. Each successive organism is at a higher trophic level; first the phytoplankton, then the shrimp, then the bleak, etc.
Info-webs
In an eco-based web model for the Internet, the species in a bio-web are mapped to functionality modules as described in my earlier post, A modular net. For example, a YouTube video clip plugged into a MySpace page running on a Firefox browser on a Windows PC might correspond to the osprey, fish, shrimp, plankton in the simple example above. In the same way that there might be other predators beyond ospreys feeding on fish, there might be many other plug-ins on the MySpace page for IM, audio, etc.. In a bio-web, a link between species A and B means “A eats B”. In the info-web model of the Internet, a link means “information flows from A to B.” Value is added to information value in the nodes through processing (e.g. playing a video) or combinations (e.g. a mash-up). For example, a movie recommender embedded in Facebook gets its information from a database hosted somewhere else, and integrates into a user’s page. Therefore, information transport is key. One can think of the links as being many-stranded if there are many alternative ways of getting the relevant information across, or single-stranded if there’s only one or two communications options (e.g. for web search one can use Wi-Fi, 3G data, DSL, cable modem etc, but for high def video on demand there’s many fewer choices.)
The analogy between the info-web and the food web diverges when one considers what flows across the links. In the Internet, information flows around the web; in the biological case, it’s energy and nutrients. Information can be created at any stage in an information web and increases with each step, whereas energy is conserved, and available energy decreases as one moves up the trophic levels of an ecological pyramid. There is a sequence of “infotrophic levels” where information value is added at each step. However, since the amount of information grows with each step, the “information pyramid” is therefore inverted relative to the ecological one: it grows wider from the bottom to the top, rather than narrower.
Implications for policy making
The Internet is complex web of interlocking service, and is approaching the richness of simple biological ecosystems. In the same way that humans can’t control ecosystems, regulators cannot understand, let alone supervise, all the detailed interactions of the Internet. One may be able to understand the interactions at a local level, e.g. how IP-based voice communications plug into web services, but the system is too big to wrap one’s head around all the dynamics at the same time. [4] This is why a market-based approach is advisable. Markets are the best available way to optimize social systems by distributing decision making among many participants. Markets aren’t perfect, of course, and there are social imperatives like public safety and justice that need government intervention. The info-web model suggests ways to find leverage points where regulators should focus their attention, and also provides salutary lessons about the limits of the effectiveness of human ecosystem management.
For example, a keystone species is one that has a disproportionate effect on its environment relative to its abundance. Black-tailed prairie dogs are a keystone species of the prairie ecosystem; more than 200 other wildlife species have been observed on or near prairie dog colonies. Such an organism plays a role in its ecosystem that is analogous to the role of a keystone in an arch. An ecosystem may experience a dramatic shift if a keystone species is removed, even though that species was a small part of the ecosystem by measures of biomass or productivity. Regulators could apply leverage on “keystone species” rather than searching for bottlenecks or abuse of market power. This would provide a basis for both supportive and punitive action. At the moment search engines are “keystone species” – they play a vital role not only in connecting consumers with information, but also in generating revenue that feeds many business models. One might say that Google is the phytoplankton of the Internet Ocean, converting the light of user attention into the energy of money. Local Internet Service Providers may also be keystone species. In earlier phase of the net, portals were keystone species. Keystone services provide a point of leverage for regulators; they can wield disproportionate influence by controlling behavior of these services.
The unintended side effects of intervention in ecosystems stand as a warning to regulators to tread carefully. For example, the Christian Science Monitor reported recently on efforts to eradicate buffelgrass from the Sonoran Desert. It was introduced by government officials after the Dust Bowl in an attempt to hold the soil and provide feed for cattle. It’s unfortunately turned out to be an invasive weed that threatens the desert ecology, choking out native plants like the iconic saguaro cactus. Another example of biological control gone wrong is the introduction of the cane toad into Australia in 1935 to control two insect pests of sugar cane: it did not control the insects and the Cane Toad itself became an invasive species. By contrast, the release of myxomatosis in 1950 was successful in controlling feral rabbits in that country.
----- Notes -----
[1] Steven Johnson’s Discover essay, republished as “Why the web is like a rain forest” in The Best of Technology Writing, ed. Brendan Koerner, helped inspire this thinking.
[2] This is a rough first draft of ideas. There are still many gaps and ambiguities. The nature of the nodes is still vague: are they applications/services (LinkedIn is one node, Facebook is another), application categories (all kinds of social networking sites are one node), market segments, or something else? How and where does the end user fit in? How can one use this model to address questions of VOIP regulation, accessibility directives, culture quotas for video, and other hot topics in Internet policy? Much work remains to be done. The representation of transport services as links rather than nodes may change. The different in conservation laws needs to be worked out: sunlight, water and nutrients are limited and conserved in the web, rival resources, whereas information is non-rival and can be produced anywhere. Connections need to be made with prior work on metaphors for communications technologies, e.g. Susan Crawford’s Internet Think, Danny Hillis’s Knowledge Web, and Douglas Kellner’s “Metaphors and New Technologies: A Critical Analysis.”
[3] The word web derives from the Old Norse vefr, which is akin to weave. It thus refers to a fabric, or cloth. In many usages, e.g. food webs, there are assumed to be knots or nodes at the intersection of warp and weft, which occur in nets, but not in fabrics.
[4] This is a link to the Hard Intangibles problem more generally, via the limit (about four) on the number of independent variables that humans can process simultaneously.
[2] This is a rough first draft of ideas. There are still many gaps and ambiguities. The nature of the nodes is still vague: are they applications/services (LinkedIn is one node, Facebook is another), application categories (all kinds of social networking sites are one node), market segments, or something else? How and where does the end user fit in? How can one use this model to address questions of VOIP regulation, accessibility directives, culture quotas for video, and other hot topics in Internet policy? Much work remains to be done. The representation of transport services as links rather than nodes may change. The different in conservation laws needs to be worked out: sunlight, water and nutrients are limited and conserved in the web, rival resources, whereas information is non-rival and can be produced anywhere. Connections need to be made with prior work on metaphors for communications technologies, e.g. Susan Crawford’s Internet Think, Danny Hillis’s Knowledge Web, and Douglas Kellner’s “Metaphors and New Technologies: A Critical Analysis.”
[3] The word web derives from the Old Norse vefr, which is akin to weave. It thus refers to a fabric, or cloth. In many usages, e.g. food webs, there are assumed to be knots or nodes at the intersection of warp and weft, which occur in nets, but not in fabrics.
[4] This is a link to the Hard Intangibles problem more generally, via the limit (about four) on the number of independent variables that humans can process simultaneously.
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