Internet and the 1996 Act Impact of the Act on Internet evolution Internet as « inspiration »

NII prototype new network paradigm inspired NII political program industrial policy? –stimulate (neither regulate nor litigate... yet) –spin-offs from DARPA programs

Governance competition modalities (on what basis) tariffs and pricing interconnection universal service / cross-subsidies

User-driven Experimentation infrastructure technologies applications and services path dependence

Network size Willingness to pay Demand: p=n(N-n) Supply Three equilibria: 1) Failure 2) Critical Mass 3) Network size

Internet adoption in comparative perspective

History: 3 periods Defense Research mass-medium

Defense - ARPANET (1970s) –1969: BBN wins RFP –Protocol (TCP/IP) and Gateways –Three basic applications file transfer (FTP) remote login (Telnet)

Research - NSFNet (1980s) NSF backbone linking supercomputer centers –One backbone –Regionals: BARRnet, Merit, NYSernet –three dominant applications Acceptable Use Policy (AUP) and commercialization: expanding visions privatisation of NSFNet April 30, 1995

Mass Medium (1990s) New Structure –several nationwide backbones - National Service Providers (NSPs)backbones –Thousands of Internet Service Providers (ISPs)ISPs –Network Access Points (NAPs)NAPs

Emerging Industry Structure 2-3 Backbone providers ?? lots of ISPs for small customers direct connection to NSPs for big customers

Retail

Wholesale

New Governance, and its limits. Service and Pricing structure –Best-effort delivery –Sender keep all –Flat fee pricing (binary logic) –BUT congestion, different service level requirements.

New Governance (contd) Interconnection and peering –Decentralized governance - Difference with phone network Incentives for cooperation –Emerging tensions Standard setting –Cooperative / democratic –IETF, IAB, –emerging tensions

Four Key Success Factors Expanding Community of Users Users invent it Pricing: Networks binary logic Decentralized governance

Emerging Issues Congestion Peering Broadband Future of end-to-end

Congestion Local access and Backbone Pricing solutions Quality of Service

Interconnection: Peering From multilaterals to bilaterals Peering vs. Transit NAP Control FCC approach (Kende) –Decentralized, cooperative approach was good because didn't require regulation –Assess market competition –Antitrust remedies if there is a problem

How different from old issues? –industry structure (monopoly,...) –Natural Monopoly? –Tariffs, access charges and intl settlements –Cross-subsidies –Innovation at the end

Internet and Freedom: Jeffersonian myths Internet can't be regulated –Tech decentralized architecture no single control point cooperative governance "routes around censorship" –Government has no "moral right" over new space (cyberspace) and no credible means of enforcement (Barlow)

"Jeffersonian syndrome" Political: direct democracy Self-governing communities Economic: Perfect markets