Just a trial baloon, want to see what you all think…
Owning a communications network is rather like being the in posession of Tolkien’s Ring. It slowly corrupts and drives mad the keeper. “I’ll capture your value, all my beautiful bits, preciousssss bits”.
The temptation to look inside the packets, to demand tribute from the greater force of user innovation — it always becomes too much in the end. Commercial insanity, or loss of all moral bearings in conduct of business all too often result.
Yet there’s a way to neutralize the wicked force, to douse the heart’s unclean desires. The pool of lava is the nature of the funding, ownership and pricing of the network. The different roles involved (rights of way, capital raising, capacity management, deployment, maintenance, support, retail, etc.) need to be slowly teased out, and allowed to evolve their own economics.
Now this may sound like the traditional “layered” approaches to regulation.
But there’s more. I think that layers are a necessary, but not sufficient, part of rethinking how we create our communications infrastructure. For example, spectrum management rules that favour particular applications are just as harmful (if not more so) than a telco’s transient price-discrimination efforts.
Capitalism normally does a good job of aligning the needs of buyers and sellers. Make a better widget and the world is yours. Capitalism is built from certain legal and financial building blocks. Contract law, tort, competition law. Property rights. Stable currencies to enable exchange of value over time as well as space. Freedom of expression is part too — the message “better widgets! over here!” is an essential part of “the market”.
But I feel we’re not there yet. We’ve created many new “ownership” and “transaction” technologies over time. Limited-liability corporations, partnerships, co-operatives; equities, debt and derivatives.
We just don’t have the mechanics to deal with a networked world and mass-participation in that network. Municipal networks are controversial because the only co-ordination mechanism is the force of government and the state. This is crude and dangerous; we contaminate the network with the power to tax, and the centuries of fighting we’ve undertaken to limit and mollify that urge.
What we’re lacking is new forms of organisational, ownership and financial technology. It’s how you align the interests of owners and users that counts. You’d complain quick enough about TV companies getting “free” spectrum if it affected your “spectrum dividend” cheque at the end of the year.
Once those interests of users and owners better align, the temptation to worship the Ring — the false power over the passage of other people’s information — vanishes forever.
Posted by Martin Geddes at 07:01 PMTrackBack URL for this entry:
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Rules for a new economy. from Clinton East- Diary
Martin Geddes has in his typically insightful way, has begun pulling apart the changing nature of our markets . It is interesting to think about what might motivate changes in the rules that govern those markets.
Rules, and the law in general, are ...
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Martin's mad manifesto from Skype Journal
Just a trial baloon, want to see what you all think… Owning a communications network is rather like being the in posession of Tolkien’s Ring. It slowly corrupts and drives mad the keeper. “I’ll capture your value, all my beautiful...
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Communications networks are the enabler of a complex, large networked society. Without them we would be living in small localized networks with high internal interaction and very, very few of the vital weak links to the external world (see one of my favorites, “Linked” by Barabasi).
Neo-classical economic theory is failing to give us adequate answers to govern this complex world, as the science of emergent behaviour of complex systems (see Santa Fe Institute) is showing us. Complexity is directly related to the number of nodes and the number of interaction/relations between nodes. Communication networks have been the enabler of an explosive growth of complexity.
With increased complexity old paradigms of command and control crumble under their own weight of overhead. This science tells us that the policy of decentralization and liberalization has been a necessary but tempory answer to rising complexity, by “letting go” (less energy dissipation by ineffective overhead) and reducing the size of the networks (reducing complexity, giving old control paradigms an extended lease of life).
However, complexity is still increasing so old problems are returning. And old solutions are no longer adequate. In a complex and networked society our concepts of the balance of powers in “markets” may be very wrong because complex networked systems show counter-intuitive behaviour.
The very emotional and heated debate on the ownership of acces networks, network neutrality, DRM and related subjects are the symptoms of a very deep concern in our society that something is wrong. We need new concepts on roles and governance in a broader sense. Communications networks are only the tip of the iceberg, but a wonderful example of the problem.
Posted by: at February 18, 2006 09:01 AMI am working on a community wireless project in Lawrence, KS (http://lawrencefreenet.org). We have not asked the city for any money; we only want access to their ROW. We have signed agreements for access to the water towers and the city hall building and are currently in the process of lighting things up. We should be offering service in March.
I am an attorney, and in setting up these agreements the same problem kept surfacing. Right now our main organization is a non-profit, but we also have a for profit company that is building out the network and providing billing, installation and tech support. It has been very tough to find a corporate model that allows us to do what we need to do to accomplish our goal of offering wireless broadband internet access to the entire community in the cheapest possible way.
I am reading a book about the history of energy regulation in the US (Power Struggle - Rudolph and Ridley). It seems that the non-profit cooperative model used for rural electrification would be a good one to follow for the community wireless movement. The main problem with this option is that it would require legislative action on the state or federal level. There would have to be statutes that allowed "communications co-ops" to form and provide service on a non-profit basis.
We offer service for free to any household below a certain income threshhold, and pretty cheap service to the folks that can afford it. Our goal is not to make a profit, but to make internet access ubiquitous. I haven't been able to find a corporate model that really suits these goals, but maybe I am missing something.
Posted by: at February 18, 2006 07:57 PMYou say that municipally-owned networks are a Bad Thing - that may be so. But how about this: the reason why municipal ownership is bad, in my mind, is that unlike electricity or water supply, telecoms keeps inconveniently changing, and needing new investment. Instead of municipally-owned networks, how about communally-owned ones, with options for granularity at any level?
My proposed model here is the new "commonhold" form of ownership in English law. Instead of leasing a flat (owning a leasehold) for a long period from a possibly-absent/careless landlord, flat-owners now can own their property, and the common areas, as a commonhold, so each genuinely has a new kind of property right in the common areas.
Under this model, the IP pipe into a homeowner's living room would not be governed by contract law as at present, but by a different relationship which includes some level of ownership of the telecombine™. One of the characteristics of the new law is that leaseholding flat-owners can, if the freeholder (ie landlord)'s conduct meets certain conditions, go to court and get an order giving them the freehold.
Posted by: at February 19, 2006 05:37 AM