competition policy is not enough

Below, Mike posted On Designing the Network, which referred favorably to Susan Crawford’s post, Network neutrality v. platform competition. I want to respond, mainly to Susan’s post and I am not sure a comment would suffice.

On this issue, I disagree with Susan’s analysis. Well, sort of. I agree that competition among “pipe providers” is an important component of the debate, and I agree that “rights of way and platform competition” are integral components of the policy debate. That said, I think she is wrong to think that shifting the debate to “rights of way and platform competition” is the way to elevate the debate or reach higher ground. Reducing the debate to one about competition policy – as many beside Susan have argued should be the case – effectively cedes way too much ground, and if anything, is not a step up to higher ground but rather is a step down to the playing field shaped and molded by neoclassical economics and faith in competitive markets as the assessors and suppliers of all that we need. (Please don’t misunderstand. I love competition and think competitive markets work very well in many respects, but keep in mind that even competitive markets fail. And yes, I understand that governments are not perfect and also fail. But I do not subscribe to the view that presumes either government failure or market success.)

Susan states: “To talk in response about the glories of the end-to-end principle and the importance of facilitating end-user choice sounds weak. All we’re saying is that we like the norms of our network better then the norms of their network. They have invested $1.1 billion over the last few years in lobbying designed to support their network.”

Why does it sound weak? (and who cares how much they have spent lobbying?) OK, so maybe, at times, the end-to-end / end-user choice arguments seem weak, but the question we should then be asking is why do they seem weak. We know that we derive value from end-to-end and “our network”, but it must be more than just end-user choice that matters. Competitive markets should bring a variety of choices. Maybe it is the menu of choices that we expect to have that matters; maybe it is the structure of the network and the relationships it fosters that matters; etc. As Mike notes, maybe it has to do with who decides what the network looks like and what norms govern our participation on the network. Those who care about “our network” need to develop better explantions and arguments to explain why “our network” is worth sustaining, and in my opinion, part of the case to be developed needs to explain why even competitive markets will fail in this context.

My recent article on infrastructure talks at length about why end-to-end matters and why competition policy is not enough, so I will not reiterate all of the points here. To adopt Mike’s things-type approach, what type of thing do we want the Internet to be? what type will competitive markets provide?; there are important differences between the Internet as a Commercial Infrastructure and the Internet as a Mixed (Commercial, Public and Social) Infrastructure. We have the latter, but are facing increased pressure for the former — pressure reflected in the lobbying efforts Susan notes.

(Perhaps I should retitle this post, “The Demsetzian Trend in Communications Law.” I say this because I am currently writing a paper titled “The Demsetzian Trend in Copyright Law,” and there are incredible parallels between both the debates and paths of copyright and communications law. Mike was absolutely correct that the issues permeate communications and information policy. For now, I will squelch my temptation to go on about that…perhaps more later.)

Near the end of her post, Susan states: “Competition in the market for pipes has to be the issue to focus on, not the neutrality of those pipes once they have been installed. We’ll always lose when our argument sounds like asking a regulator to shape the business model of particular companies.”

It only sounds like that because you’ve listened to and apparently been convinced by their hype! (I mean, the same argument is easily reshaped to say we ought to abandon fair use in copyright as well because it asks courts to shape companies’ business models . Even competition policy shapes business models.) Seriously though, I disagree with the notion that we should not focus on the neutrality of the pipes. The Internet’s neutrality is what makes it a commons and while there are hints of tragedy, I’d say comedy prevails. (For those not versed in “commons” literature, this last sentence alludes to the “tragedy of the commons” and the “comedy of the commons.” The former is a story of how common access to a resource (say, a pasture) leads to a situation where social costs exceed social benefits because of overuse, and thus we need to constrain access/use. The latter is a story of how common access to a resource (say, a roadsystem) leads to a situation where social benefits exceed social costs because of increasing returns to use, and thus we encourage use–the more, the merrier, as Carol Rose put it.) And perhaps that is the crux of it — is there more tragedy or comedy? I tend to think that network owners would go one step further and say there could be even more comedy, an even better Internet if only they could do as they wish. Either way, we are left asking, in Madisonian fashion: what is the thing we want the Internet to be?

More to come on all of this…

Update: Ed Felton has two posts on network neutrality that are worth reading – here and here. I think he is right that most reasonable net neutrality advocates would not object to pricing based on bandwidth consumption, which is a reasonable way to deal with congestion.

Update #2: Rereading my post this morning jogged my memory of an old, unpublished op-ed that I wrote about Market Infatuation, in which I similarly expressed my love of competitive markets but frustration with placing too much faith in privatization, deregulation and commercialization.