America's stunning success in promoting the
Internet revolution owes a major debt to determined regulatory
action that encouraged all aspects of network openness and interconnection.
America Online and other Internet service providers, not the
Regional Bell Operating Companies, popularized mass subscriptions
to the Internet. Personal computers, the Netscape browser, and
Cisco, not AT&T, drove the architecture of data networking
and the Web. All these innovations were
possible because the Federal Communications Commission decided
in the 1960s that the emerging world of data networking should
not be treated like voice telecom services. Therefore, it exempted
all forms of computer networking from much of the regulatory
baggage--including fees to fund various cross-subsidies for voice
telecom services--involving the telecom network. Regulatory policy
forced open access to networks where the monopoly owners would
try to keep things closed. The resulting competition allowed
the FCC to free the service providers from detailed regulation
that would have kept them from using the full capabilities of
the network in the most open and free manner.
Thanks to the FCC policy of "openness"
and competition, specialized networks and their users could unleash
the Internet revolution. This assured the widest possible user
choice and the greatest opportunities for users to interact with
the myriad of emerging new entrants in all segments of the network.
To be sure the FCC strategy emerged haltingly, but it followed
a consistent direction. The Commission supported competition
and innovation by keeping the critical network infrastructure
open to new architectures and available to new services on cost
effective terms.
Open infrastructure policy fostered user-driven
innovation. Such user-centered innovation processes flourish
in an environment in which users are granted access to a wide
range of choices of facilities, services, and network elements.
The rejection of a monopoly over network architecture was critical
to these innovations. And, in a totally unexpected collateral
benefit, the virtuous circle of policy and market innovation
came to be recognized by the rest of the world as the right template
for network competition and the growth of the Internet. It thus
gave the US a voice in global policy that went far beyond its
political and market power.
As Cable moves from "broadcast"
to "broadband." the Cable infrastructure becomes a
key element in digital video, data, and voice communications
and all the issues about network openness return to the forefront.
Unfortunately, in a misreading of its own history the FCC may
abandon its successful policy just as a new generation of services,
including broadband Internet services, are defining the future
of networking and the electronic economy. The FCC is now starting
to confuse the instruments of its successful policy with the
logic of its strategy. That strategy, again, was to allow competition
and innovation by keeping the critical network infrastructure
open to new architectures and available to new services on cost
effective terms.
The policy stakes are much larger than the
competitive fates of particular groups of ISPs. The risk, if
competition is not maintained, is to the continuing evolution
of the Internet, to the core innovation in and the evolution
of electronic network-based business, and therefore to the competitive
development of the network economy as a whole. The consequence
would be that the dynamic of expansion and innovation driven
by the users, as much or more as by the network providers, will
be undercut.
The relevant form of open access is access
to the "last mile" to connect to the Internet for alternate
ISP providers and other network users. Open access must be provided
for each additional component of the communications and data
network system, as it has been required of the communications
system to date. The government should make clear the principle
that if market power exists, whatever becomes the natural channel
of Internet access will have to architect itself to allow competition.
Openness should depend on clear policy principle, not on corporate
discretion.
Professor
of Economics J. Bradford DeLong, 601 Evans Hall, #3880