Counter-intuitive thinking often leads to success. That’s why we practice and practice so that at a critical moment we are not governed by intuition (chance) or emotion (fear). No better example of this than in skiing; an apt metaphor this time of year. Few self-locomoted sports provide for such high risk-reward requiring mental, physical and emotional control. To master skiing one has to master a) the fear of staying square (looking/pointing) downhill, b) keeping one’s center over (or keeping forward on) the skis, and c) keeping a majority of pressure on the downhill (or danger zone) ski/edge. Master these 3 things and you will become a marvelous skier. Unfortunately, all 3 run counter to our intuitions driven by fear and safety of the woods at the side of the trail, leaning back and climbing back up hill. Overcoming any one is tough.
What got me thinking about all this was a Vint Cerf (one of the godfathers of the Internet) Op-Ed in the NYT this morning which a) references major internet access policy reports and decisions, b) mildly supports the notion of the Internet as a civil not human right, and c) trumpets the need for engineers to put in place controls that protect people’s civil (information) rights. He is talking about policy and regulation from two perspectives, business/regulatory and technology/engineering, which is confusing. In the process he weighs in, at a high level, on current debates over net neutrality, SOPA, universal service and access reform, from his positions at Google and IEEE and addresses the rights and governance from an emotional and intuitive sense.
Just as with skiing, let’s look at the issues critically, unemotionally and counter-intuitively. We can’t do it all in this piece, so I will establish an outline and framework (just like the 3 main ways to master skiing) and we’ll use that as a basis in future pieces to expound on the above debates and understand corporate investment and strategy as 2012 unfolds.
First, everyone should agree that the value of networks goes up geometrically with each new participant. It’s called Metcalfe’s law, or Metcalfe’s virtue. Unfortunately people tend to focus on scale economies and cost of networks; rarely the value. It is hard to quantify that value because most have a hard time understanding elasticity and projecting unknown demand. Further few rarely distinguish marginal from average cost. The intuitive thing for most to focus on is supply, because people fear the unknown (demand).
Second, everyone needs to realize that there is a fundamental problem with policy making in that (social) democrats tend to support and be supported by free market competitors, just as (conservative) republicans have a similar relationship with socialist monopolies. Call it the telecom regulatory paradox. This policy paradox is a function of small business vs big business, not either sides’ political dogma; so counter-intuitive and likely to remain that way.
Third, the internet was never open and free. Web 1.0 resulted principally from a judicial action and a series of regulatory access frameworks/decisions in the mid to late 1980s that resulted in significant unintended consequences in terms of people's pricing perception. Markets and technology adapted to and worked around inefficient regulations. Policy makers did not create or herald the internet, wireless and broadband explosions of the past 25 years. But in trying to adjust or adapt past regulation they are creating more, not less, inefficiency, no matter how well intentioned their precepts. Accept it as the law of unintended consequences. People feel more comfortable explaining results from intended actions than something unintended or unexplainable.
So, just like skiing, we’ve identified 3 principles of telecoms and information networks that are counter-intuitive or run contrary to accepted notions and beliefs. When we discuss policy debates, such as net neutrality or SOPA, and corporate activity such as AT&T’s aborted merger with T-Mobile or Verizon’s spectrum and programming agreement with the cable companies, we will approach and explain them in the context of Metcalfe’s Virtue (demand vs supply), the Regulatory Paradox (vertical vs horizontal orientation; not big vs small), and the law of unintended consequences (particularly what payment systems stimulate network investment). Hopefully the various parties involved can utilize this approach to better understand all sides of the issue and come to more informed, balanced and productive decisions.
Vint supports the notion of a civil right (akin to universal service) for internet access. This is misguided and unachievable via regulatory edict/taxation. He also argues that there should be greater control over the network. This is disingenuous in that he wants to throttle the open-ness that resulted in his godchild’s growth. But consider his positions at Google and IEEE. A “counter-intuitive” combination of competition, horizontal orientation and balanced payments is the best approach for an enjoyable and rewarding experience on the slopes of the internet. The regulators should be like the ski patrol to ensure the safety of all. Ski school is now open.
A Perspective from Center for New American Security
Network Neutrality Squad (NNsquad) of which Cerf is a member
Sad State of Cyber-Politics from the Cato Institute