THE OPEN ARCHITECTURE OF THE DIGITAL COMMUNICATION PLATFORM: ECONOMIC AND LEGAL PRINCIPLES FOR SUSTAINING THE DIGITAL REVOLUTION MARK COOPER FELLOW, STANFORD.

THE OPEN ARCHITECTURE OF THE DIGITAL COMMUNICATION PLATFORM:

ECONOMIC AND LEGAL PRINCIPLES FOR SUSTAINING THE DIGITAL REVOLUTION

MARK COOPERFELLOW, STANFORD LAW SCHOOL CENTER FOR

INTERNET AND SOCIETY

APRIL 25, 2005

Open transportation and communications networks are deeply embedded in the DNA of capitalism and are the lifeblood of democracy.

The Internet is the purest form of an open communications network we have ever experienced.

But, there are constant threats to its openness at every layer.

As a full-time activist and part-time academic I insist that this is not simply a debate about the law of property, but the political economy of property and about creating the institutions under which we want to live.

INTERNET AS A BEARER SERVICE Source: National Research Council, Realizing the Information Future (Washington: National Academy Press, 1994), p. 43.

Open to users. It does not force users into closed groups or deny access to any sectors of society, but permits universal connectivity, as does the telephone network.Open to providers. It provides an open and accessible environment for competing commercial and intellectual interests. For example, it does not preclude competitive access for information providers.Open to network providers. It makes it possible for any network provider to meet the necessary requirements to attach and become a part of the aggregate of interconnected networks.Open to change. It permits the introduction of new applications and services over time. It is not limited to only one application, such as TV distribution. It also permits the introduction of new transmission, switching, and control technologies to become available in the future

FREE SOFTWARE DEVELOPMENT PRINCIPLES

FREEDOM TO RUN THE PROGRAM FOR ANY PURPOSE

FREEDOM TO STUDY AND MODIFY PROGRAMS

FREEDOM TO REDISTRIBUTE

FREEDOM TO CHANGE AND IMPROVE

COURT CASES DETERMINE THE FUTURE OF

THE DIGITAL COMMUNICATIONS PLATFORM

CONTENT/INFORMATION

GROKSTER

BRAND X

MICROSOFT

LAYERS OF THE COMMUNICATIONS PLATFORMS AND CHARACTERISTICS THAT RAISE SPECIAL MARKET POWER OR ANTITRUST CONCERNS

PLATFORM LAYERS MARKET POWER

CONCERNS

TIPPING & LOCK-IN

Network Effects Extreme Economies of scale and scope

APPLICATIONS BARRIER TO ENTRY

Installed base Switching costs

VERTICAL LEVERAGE Incompatibilities Impairment Desupporting

VERTICAL LEVERAGE Foreclosure Refusal to Interconnect Refusal to Interoperate

CONTENT/INFORMATION

APPLICATIONS

CODE Interconnection standards, Communications protocols, Operating systems

PHYSICAL Display Devices, Switch Transmission medium

PLATFORM DESTROYING ELEMENTS OF THE CABLE ARCHITECTURE Control of Functionality

Streaming Uploading Bit stripping

Cable Modem Closed

DOCSIS, discrimination

Policy-based Routing

Exclusionary/ Discriminatory Carriage -- QOS

Preference for Affiliated Applications

CONTENT/INFORMATION

APPLICATIONS

CODE

PHYSICAL

FINGERPRINT EVERY FILE

TRACK EVERY TRANSACTION

TAG EVERY USER

COPYRIGHT HOLDERS ASSAULT ON PEER-TO-PEER COMMUNICATIONS NETWORKS

IS AN ATTACK AT THE MIDDLEWARE LAYER

Wait a darn minute!

This is intellectual property and telecommunications plant.

It is private property.

What right does Cooper have to claim access to it?

Here at the Stanford Law School Center for Internet and Society we might respond

LARRY (FREE CULTURE) LESSIG v.

THE HOOVER TOWER

These forms of property have always been subject to rules of public governance.

Intellectual property is born free under the constitution, but everywhere enchained by legislation.

Communications and transportation property are affected with the public interest from the beginning.

The term of the copyright was limited and fair use was allowed, while many uses were simply unregulated by copyright.

Telecommunications plant was subject to rules of common carriage.

By law, interconnection with other networks and carriage of traffic were provided on non-discriminatory rates terms and conditions.Later rates were required to be just and reasonable.

LARRY (FREE CULTURE) LESSIG v. THE HOOVER TOWER PROPERTY RIGHTS, EXTERNALITIES AND PUBLIC GOVERNANCE RULES:

BALANCE MAXIMIZES SOCIAL WELFARE

SOCIAL BENEFITS/ EXTERNALITIES

Tragedy of Comedy of the anti-commons the Commons We do not get a lot of We get social benefits from open access private benefit from exclusion and do not lose private benefits and we lose lots of social benefits COMMON CARRIAGE 1910 MAXIMIZES SOCIAL WELFARE COPY RIGHT 1909 Efficiency Tragedy of of the Market the common We get private benefits from exclusion We do not get much social benefit from without losing social benefits open access and we lose private benefits PRIVATE BENEFITS

Excluson Exceptions Public Interest Obligations Open Access GOVERNANCE RULES

COMMUNICATIONS PROPERTY AFFECTED WITH THE PUBLIC INTEREST

SOCIAL BENEFITS/ EXTERNALITIES

Tragedy of Comedy of the anti-commons the Commons BRAND X 1900, 2000 1910-1990 Private Carriage Common Carriage prevents capture

of large externalities

Common Carrier Lite: (Cooper) When a small number of networks can replace a natural monopoly, common carriage is too onerous, but network neutrality is necessary all we asked for was a private right of action against discrimination.

Lessig/Wu 2000 Network Neutrality Common Carrier (Shelanski): Nondiscrimination leads to Underinvestment in infrastructure Efficiency Tragedy of of the Market the common PRIVATE BENEFITS

Exclusion Exceptions Public Interest Obligations Open Access GOVERNANCE RULES

The telephone has become as much a matter of public convenience and of public necessity as were the stagecoach and sailing vessel a hundred years ago, or as the steamboat, the railroad, and the telegraph have become in later years. It has already become an important instrument of commerce. No other known device can supply the extraordinary facilities which it affords. It may therefore be regarded, when relatively considered, as an indispensable instrument of commerce. The relations which it has assumed towards the public make it a common carrier of news – a common carrier in the sense in which the telegraph is a common carrier – and impose upon it certain well defined obligations of a public character. All the instruments and appliances used by the telephone company in the prosecution of its business are consequently, in legal contemplation, devoted to a public use. Hockett v. State Indiana, 1886,

INTELLECTUAL PROPERTY FROM FAIR AND PUBLIC USE RIGHTS TO EXCLUDABLE PROPERTY TO

PROPERTY AS A RIGHT TO DISTRIBUTE

SOCIAL BENEFITS EXTERNALITIES

Tragedy of Comedy of the anti-commons the Commons Open Source/Creative Commons: GROKSTER Property as right to distribute achieves Secondary Liability greater efficiency in the digital undermines technology age because it taps distributed intelligence with low communications and transaction cost Copyright 2005 Inhibits creativity

Copyright 1909

Efficiency Tragedy of of the Market the common PRIVATE BENEFITS

Exclusion Exceptions Public Interest Obligations Open Access GOVERNANCE RULES

If nature has made anyone thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been particularly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot in nature, be a subject of property. Thomas Jefferson, 1813

SPECTRUM: GOVERNANCE RULES ARE A FUNCTION OF TECHNOLOGIES AVAILABLE

SOCIAL BENEFITS/ EXTERNALITIES

Tragedy of Comedy of the anti-commons the Commons 2000 1905, 2005 Licensed spectrum Unlicensed Spectrum

Cooper: with smart technology available is a tragedy because unlicensed is possible. Unlicensed captures externalities without the tragedy because

Propertized Spectrum spectrum is “the ocean” and all investment needed to avoid interference inheres in appliances so there is no infrastructure

1927 1927 Licensed Spectrum Unlicensed Spectrum With dumb technology With dumb technology

Interference drowns out all voices Faulhaber:

Efficiency License restriction Tragedy of of the Market leads to inefficiency the common PRIVATE BENEFITS

Exclusion Exceptions Public Interest Obligations Open Access GOVERNANCE RULES

Dimension Modality Digital Communicationsof of Platform (Internet, Web Social Order Regulation Peer-to-Peer, Open Source,

Unlicensed Spectrum)

Technology Architecture Distributed Intelligence,Participatory, Intensive Open Communications

Economy Market Decentralized, Collaborative, Cooperative

Social Norms Voluntary, Transparent Institutions Non-hierarchical,

Non-DiscriminatoryPolity Law Deliberation, non-coercive,

Egalitarian, Responsive,Property as Distribution, not exclusion

WEB BROWSER AS KILLER APP FOR THE PC AND THE INTERNET

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1996 1997 1998 1999 2000 2001 2002

ISP

S P

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100,0

00 S

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DIAL-UP CABLE MODEM DSL-OTHER

DENSITY OF INTERNET SERVICE PROVIDERS BY YEAR

FALLING BEHIND ON BROADBAND AND INTERNATIONAL INNOVATION AND COMPETITIVENESS

Ahead on competitiveness/ innovation

Ireland is the only nation ranked ahead of the U.S. on Competitiveness/innovation that is not ahead in broadband. Sources: Broadband, ITU, February 2005, Competitiveness rankings, Richard Florida, “America’s Looming Creativity Crisis,” Harvard Business Review, October 2004.

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% O

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ANY BROADBAND

PENETRATION OF INTERNET AT HOME BY HOUSEHOLD INCOME REVEALS A GROWING DIVIDE

Sources: Nielsen/Netratings, “Affluent Americans Power Internet Growth,”April 19, 2004; Pew Internet and American Life Project, Database, February 2004.

1st Divide

2nd Divide

This is more than a debate about political economy, it is a life or death struggle to create a set of social institutions that are true to our progressive, capitalist, democratic traditions.

We live in interesting times as academics because we are redefining the terms of property.

We live in important times for activists because we have the opportunity to choose the kind of society in which we will live by writing new rules of public governance.

TWO ALTERNATIVE POLITICAL ECONOMIES FOR THE DIGITAL AGE SOCIAL BENEFITS/ EXTERNALITIES

Tragedy of Comedy of the anti-commons Commons Licensed spectrum Unlicensed Spectrum Open Source/Creative Commons Secondary Liability

Propertized Spectrum Private Carriage Common Carrier Lite

Network Neutrality Traditional Common Carriage Copyright 2005

Efficiency Tragedy of

of the Market the common PRIVATE BENEFIT Exclusion Exceptions Public Interest Obligations Open Access GOVERNANCE RULES

The excessively propertized, privatized world, without public governance and

obligations is a mistake, a radical break with our legal tradition, economic

experience and social history.

IT WILL CHILL INNOVATION (TECHNOLOGY)

SLOW GROWTH (ECONOMY)

INCREASE INEQUALITY & STIFFLE CREATIVITY (SOCIETY)

UNDERMINE FREE (CHEAP) SPEECH (POLITY)

We are enabling commerce in a way we did not before; we are contemplating the regulation of encryption; we are facilitating identity and content control. We are remaking the values of the Net, and the question is “Can we commit ourselves to neutrality in this reconstruction of the architecture of the Net?”I do not think we can. Or should. Or will. We can no more stand neutral on the question of whether the Net should enable centralized control of speech than Americans could stand neutral on the question of slavery in 1861. We should understand that we are part of a worldwide political battle; that we have views about what rights should be guaranteed to all humans, regardless of their nationality; and that we should be ready to press those views in this new political space opened up by the Net.Lawrence Lessig, Code

This quote from Lessig may sound a bit melodramatic, but it was actually prescient. It recognized the stakes long before they had become clear to other. And, it makes the point about property I have been making in the most forceful way. The decision about slavery was a redefinition about how society defined property. It took property rights away from some and gave them to others. It also makes the point about activism.

John Kennedy said it well

“The hottest places in hell are reserved for those who remain neutral during times of moral crisis.”