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Wednesday, December 17, 2003

Against Open Net Ideology -- or any Net Ideology for that Matter
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A post today by Kevin Werbach on "the battle for open broadband" deserves a rejoinder. The point of Kevin's post is that the FCC is missing the need to ensure openness at the application layer of the Internet and he fears that physical-layer players will leverage supposed market power up into the applications layer of broadband. Kevin's post comes close to an endorsement of 'net neutrality.'

Kevin's broadband openness call is an instance of a larger movement for "openness" at all layers of the Internet -- physical, logical, applications, content. [This is a slightly crude simplification, but will do for present.] The godfather of this movement is the inimitable, he-of-fashionable-eyewear, Lawrence Lessig. (I reserve the right to be slightly punkish toward the Master because I am a former student -- before he was famous.) In any event, I regard Kevin's post on broadband openness a good example of the open Internet ideology. Unfortunately, as it becomes an ideology, the case for openness loses its empirical focus and lapses into attitudinalizing and complacency. [Note: any ideology, including a pro-market ideology can do this. A dose of Russell Kirk is always a good antidote.]

I find the answer to most of these calls for openness is a resounding "maybe." Openness is good sometimes, but is not without its countervailing costs. Furthermore, markets usually--but not always--reach an equilibrium to set a consumer-beneficial degree of openness better than regulators.

Any calls for 'openness' regulation to my mind must prove themselves as clearly enhancing consumer welfare. Just as important, regulatory proposals for openness must account for the tendency of regulation to: 1) be unable to adopt changed circumstances; 2) be products of and encourage rentseeking; 3) create unforeseen (and unfortunate) reliance interests. I thus approach the question with a presumption against regulatory intervention, but willing to be convinced that it is necessary.

In the broadband arena, the openness principle seems premature, at best; and justifiable only in the context of a monopoly broadband provider. Furthermore, there are manifest rentseeking incentives for the players higher up on the Internet layer--the apps and content guys--such that any current calls for prophylactic regulation should be regarded as suspect.

I end this post by noting that I try to pay close attention to what Kevin is saying, and usually agree with his take. I will also acknowledge that the momentum of this post may have gone beyond his more modest point. Again, I do not reject calls for 'openness' per se, but rather urge a more factually premised case to justify such calls.

posted by Ray Gifford @ 1:06 AM | General

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