I’ve written before how the end-to-end principle is as much as political statement as a network architecture blueprint. But I don’t think I ever let that argument really run to its full conclusion.
Lemma: Assume for a minute that running a stupid network in a competetive market is inherently unprofitable. I don’t believe this is completely true (another article, another midnight.) But it’s a good approximation.
Hypothesis #1: Any supernormal profit for a commercial operator can only arise if politically mandated to exist.
That political mandate can take many forms: universal subsidy, sorry, service funds; artificial spectrum shortage; funny rules around rights-of-way; exclusive franchises; abrogation of normal competition law; etc.
Hence the core competence of all telcos over time becomes lobbying.
Hypothesis #2: As politics overtakes product, all telecom systems increasingly resemble political systems rather than businesses.
Anarchism, communism, fascism, theocracy, capitalism, cronyism, despotism, autarchy, oligarchy, democracy, you name it, someone’s caught it. Neither an exhaustive not mutually exclusive list. But you might recognise some of them. Community Wi-Fi? Collectivism. Vodafone? Totalitarianism. And so on.
As soon as profit and prices are decided by means other than the open market, the only stand-in is politics: who you know, what you have, where you can influence.
Smart networks are like living under the La Cosa Nostra — the Mafiosi need a legit economy to feed off, and ensure a well-regulated environment, even if land and building materials appear suspiciously expensive. But as your network becomes stupider, it may radically change in political appearance. The tame and docile incumbent carrier could turn into anything. It is quite possible for things to get worse instead of better (viz. Iran, Saudi, etc., etc., ad nauseam), both in terms of price and user power. Stupidity creates instability and uncertainty, and the mafia start to sound like a good deal to some people who value stability over freedom.
Hypothesis #3: Over time, the architecture of the telecom system will resemble the political system around it.
Here things get a bit less certain. But I suspect the agovernmental situation in Somalia doesn’t lend itself to a rigorous line sharing regime. The supposed strength of the US political system is its bipartisan nature, where no small third party can capture the balance of power to push extremist policies. The result is that the “third party” vacuum is filled with corporate cash instead, and the political lobby is far stronger than elsewhere. France? “Paris says we will do Minitel!” “Paris says we will do unbundling!” Whatever the centre says, the edges to in bucket loads. But if it turns out you should have built World Wide Webs or fiber links, you’re stuffed.
If I was braver I’d not list these as hypotheses, and would have created Geddes’s 3 universal laws of telecom. But I think I’d rather gather the evidence first than the credit.
UPDATE:
Corollary #1: If you want a benign and stupid network, you need to get involved. Build one, or lobby for one.
Corollary #2: Stupid networks don’t just happen, they are carefully planned. They need friends.
Corollary #3: You’ll get the network you deserve.
Posted by Martin Geddes at 12:04 AMTrackBack URL for this entry:
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Telecoms Political Economy from Business Organization Management
What Martin is suggesting here is that the social forces (namely political games) can be stronger than the economic forces. The shape of technology (the stupid network in this case) may be largely determined by these social forces.
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"Hypothesis #1: Any supernormal profit for a commercial operator can only arise if politically mandated to exist."
The inverse of this is also true. "The absence of supernormal profit for a commercial operator can only arise if politically mandated."
That's why we Microsoft does so well. That's why utilities argue for "reduced" regulation.
If an industry has strong network effects; and vendors can control interop. with their competitors, then market leaders can control how much of the total available network they take control of.
At some level all competitive advantage rests on politically protection of the vendor's niche. Consider the tension between street vendors and shop owners.
That said I absolutely agree that the core competency of any utility tends to become lobbying; much the same way that the core competency of any CEO tends to toward golf.
Posted by: at December 7, 2004 01:57 PM