BigHook2007 Learnings 15Nov07

External, but directly attributable, spin-offs from BigHook2007:

• Scott Bradner's Network World Column, Forgetting the Next Application
• KC Claffy's Blog Posting, Internet Infrastructure: Top Ten Things I Have Learned So Far
• David Isenberg's talk on Network Neutrality at NATOA Annual Conference

[Are there other external BigHook2007-participant authored docs that should be in this list?]

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Internal submissions, blog style (most recent on top), as they've been sent to me or posted to the bighook2007 list. So far there are 24 submissions from Vint Cerf, Steve Kamman, Leslie Nulty, Douglas Frosst, Jorge Ortiz, Tim Nulty, Chad Jones, David Isenberg, Steve Crandall, Elliot Noss, Frank Paynter, Rick Whitt, Robin Chase, Chuck Gritton, Sara Wedeman, Jean Russell, Adam Peake, Brett Frischmann, David Reed, Casey Lide, Barbara Cherry, kc claffy, Desiree Miloshevic and Roxane Googin.

[If your submission isn't here -- either because I screwed up, email screwed up, or because, uh, better late than never -- or if you'd like to change what's here, please let me know.]

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From: rgoogin@comcast.net
Subject: [BigHook2007] Re: Homework due!
Date: November 6, 2007 1:48:01 PM EST (CA)

Perhaps it is good to let lessons fester. The Q3-F07 earnings season shed some light on the paradoxes spawned by what we reviewed at Big Hook. Bottom line, I am not optimistic about funding the Internet looking forward.

Lesson One: The idea that true wealth comes from non-rivalrous goods is clearly borne out in logic and experience. Logic says that if you make money by keeping a piece of the action of everything you sell, then selling something that is infinitely replicatable sure beats making money on something that runs out. Meanwhile, experience shows that the richest men in the world are not the J. R. Ewings (spell checked with a quick GOOG that included nice photos from universal search), or even oil sheiks, but the Bill Gates and Warren Buffets, who have never made a thing. For maximum long-term economic growth, the Internet should remain open so the most ideas can be spawned. This is a challenge.

Lesson Two: Our economic policies and (lack of) legal structures foster a closed Internet by not providing a commons. Given Lesson One, this is not a good thing. The basic economic rules of a commons, that governments provide it and they generate spill-over, are being violated. Our telecomm infrastrcuture has effectively been privatized, in the name of a broadband build-out. To fund this build-out, an expensive proposition that will generate low returns at best (capacity is rivalrous after all), NO spill-over is allowed.

This was highlighted at the Q (Qwest Communications International) conference call, as the stock hit a 52-week low. The new CEO was being berated for having the nerve to spend $300M on a fiber-to-the-node build-out to 1.5M homes, rather than return all the cash to shareholders. The questions went like this:

Questioner: "How do you think about getting a return of this invested capital that you guys are pouring into broadband? (Ed: the NERVE of this management team to POUR money into BROADBAND). "If you are not doing video, where does the - what are you getting incrementally for all that spend? ... the outgoing management team hinted fairly strongly that a dividend was on the way. And we obviously didn't get a dividend at the last Board announcement, and then we hear today that the cap-ex is going to be potentially higher next year. ... Is part of what's driving your decision not to pay a dividend your outlook that capital spending has to go up next year?"

Questioner: "One of the hallmarks of the Dick Notebaert era that I think investors really liked was his insistence that if an incremental dollar of cap-ex is going to go into the ground, he would have to be able to demonstrate to investors in a very clear way exactly how the return on that investment was going to be realized. So it definitely makes me a little nervous that there is an expectation that there will be just in a very general sense, new products and services that will help generate a return on this invested capital, as opposed to a very clear and precise perspective on exactly how that return is going to be realized." (Ed: NO spillover allowed, just give the money back to ME, do you HEAR?).

The problem here is that low-return Qwest trades on the same exchange as GOOG, and therefore must compete with them for each capital dollar. Unfortunately, their business is a low-return commodity one. If they allow even one dime of spillover, they are hosed. I personally own GOOG stock and no Qwest stock. Where is Qwest getting the money for their infrastructure build? Good question. Everyone is selling their stock. How much spillover can they afford as they compete with GOOG for capital? None.

Lesson Three: If property rights and rule of law are critical for capital formation, we are not getting them for information properties either. We don't even have a national discourse on what happens to copyright in a digital age. Instead, we get a writers walk-out in LA, constant threats against GOOG,and a Dickensonian RIAA that sues single mothers $220k for "stealing" 75 songs worth at most $0.99 each. In addition to addressing how to encourage hard capital formation in the ground, we need to learn how to foster information capital in a digital age. Instead, we are in an ape-like stone-throwing stage.

Lesson Four: If lack of economic motivation and lack of clarity on information property rights were not enough, the FCC has effectively thrown out 500 years of common carrier law as Barbara Cherry so aptly explained. Perhaps they just want to make sure we are really hosed.

Lesson Five: Don't fly anywhere after knee surgery.

Lesson Six: An even better idea is to retire before getting knee surgery, since the amount of physical therapy you have to undergo means you will lose your job anyway.

Summary: Ever the bear on useful infrastructure spend, I am more bearish now. Knowing that capital formation requires rule of law and property rights, knowing that economic growth comes most from ideas and knowing that a commons needs government spending support and spill-over, while knowing we have no policies either for a commons-like capital build nor for information capital (copyright law in a digital age) and knowing that the beggars looking to invest one non-dividend DIME in broadband will have their heads ripped off by investors if they even hint of SPILLOVER or any cent of return that is not contained, while also knowing that without spill-over, the most important wealth generator of all, ideas, will by stymied, is a long-sentence bummer. I see no way out. The Paradox remains intact. Q cannot hope to compete with GOOG for capital. So, where does the money come for them to "pour" in the ground and allow things like spillover?

Any takers?

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From: Desiree Miloshevic <dmiloshevic@afilias.info>
Date: October 7, 2007 6:08:35 PM EDT (CA)
To: bighook2007@isen.com
Subject: [BigHook2007] Re: Homework

Briefly - lessons I learned at BigHook in exactly 10 sentences, no less no more...

* Unlike so many of the resources we struggle to manage in a globally
sensitive way, the Internet is precious, but not exhaustible. The more
we use it, the more powerful it becomes for all of us.

Neither are the topics of discussions arising from it exhaustible
so we will have many more Bighooks, hurray!

* The concept of Internet spillovers is a proof of the pudding.
Existing economic models are not adequate in knowing how to determine
or attach value to the "bits of ideas" and "bits of objects" generated out
of spillovers - reason being - "the invisible hand" model
cannot assess newly created social and political values.

* Therefore, economic models we have today do not match one of
the Internet and we do not know how to value public goods.
Socio-economic complexities are still to be debunked.

* Private markets infrastructure will not leave us with the
infrastructure that we want.

* There is a case for subsidizing non-market and public goods producers
by governments with a lot of skepticism that gvmnts would be able to
identify the needs of public goods and non-market goods.

* Managing infrastructure as a commons avoids relaying on the market to
pick winners or losers.

* The FCC's 2003 broadband legislations does not protect
users from non-reasonable discrimination.

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From: k claffy <kc@caida.org>
Date: October 2, 2007 2:35:28 AM EDT (CA)
To: bighook2007@isen.com
Subject: [BigHook2007] kc homework

top ten things i learned at bighook 07 "infrastructure economics"

(1) there is dismal progress on the topic of network economics for same
reason there is dismal progress on network science: measurement.
lack of empirically grounded provisioning models is also what
killed the first round of munis ("whew.")

(2) the biggest reason we don't have support for understanding the
internet's ominous structural problems is that we don't yet have
a sustainable business model for internet transport itself,
so no money to study it much less invest in solutions.
in other universes this is pronounced 'public utility', but
neither the netizens nor the network architecture seem prepared
for the implications of the phrase. (the tubes are agnostic.
alas, their owners are not.) [see (5) below]

(3) edge vs core economics:
(a) in 1984 att ceo decided to break off the edges and keep long
distance (core) because at the time it looked liked 1/3 of cost
and 2/3 revenue were in long distance. ("oops.")

(b) in 1994 when the U.S. govt got out of the business of providing
a core ip infrastructure [nsfnet], the first thing the academic
edge (universities) did was get together and buy a core [internet2].
out in the 'real world', it took another decade for the edge to buy
the core (sbc << att, verizon << mci), accompanied by an Economist
cover story "how the Internet killed the phone business"
[still considered premium content by economist.com. the irony pierces.]

(c) by 2004 anyedge who could afford it built/bought a core because
when you have enough edge, the core starts to look significant.
and affordable.

(4) opex has become completely uncorrelated to capex (as percentage of
total cost of provisioning infrastructure), which is bad news for
sustainable economic modeling. "playing the last century's game"
doesn't work any better than "fighting the last century's war".
[unless the game is capturing regulators.. -k]

(5) [susan] the way the conversation is framed determines which goals
get respect: (1) engineers: protocols/architecture
(2) telcos: tubes (3) netizens: conversation/relationships.
to effect change, need to learn to understand the issues that
the people you need to move care about. e.g., try to help isps
with their problems.

(6) (a) people are afraid of governments getting involved in internet
provisioning because 'the technology is changing so fast'. despite
that neither the network nor transport layer [the "internet" layers]
have changed in the last 25 years. fact: the last time the
internet's network layer 'innovated', it was not only under
government control, it was under U.S. military (DOD) control.
http://en.wikipedia.org/wiki/Network_Control_Program

(b) steve kaman is not worried now because 'the big boys are getting
involved.' <blink> [i'm worried. bigboys' incentive.structure is
deeply misaligned, they even admit it themselves in quiet hours. -k]

(7) even given the demonstrated low correlation between funding
levels for schools and student performance, many believe that
investing more in our failing educational system is a better use of
tax dollars than making sure every child is connected to all the
world's knowledge with an affordable, reliable, secure open
source platform they can read, modify, and share. confusing.

(8) [tnx to vint] had some sense knocked into my head regarding the
danger of using the technical meaning of "hierarchical" when the
world predominantly hears the political meaning. the technical
reality is that scalability of the current internet routing system
does rely on aggegration, currently implemented via hierarchical
allocation and controlling announcement of address space into the
global routing system. [link]
but, i should be more careful w loaded words, since (5) above.
[not the first time vint has set me straight.]

(9) (a) [barbara] policies are outputs and inputs to co-evolving
complex systems. the "invisible hand" effect of market is an
emergent property that depends on legal infrastructure to
support it. e.g, sustainable property rights, contract law,
reasonable/non-discrimatory access to infrastructure.
[related reading]

(b) historically common carriage had nothing to do with monopoly
or public utility. (public utility law is a derivative of
common carriage law).

(10) in the coming decade we face ominous problems under the hood
of the internet architecture (running out of ipv4 addresses; the only
purported technology solution will create an even worse problem if
it manages to deploy; no serious r&d attention to the issue; no
security in the most fundamental layers of the infrastructure
(naming and routing); tens of millions of compromised windows systems
supporting unknown billions of dollars of criminal or shady activities
with no incentive framework to support their recovery; massive amounts
of legacy address space with no known ownership and no way to regulate
or execute reclamation/reuse; a "government" (icann) that can't call
itself that so it struggles to apply principles of good governance);
and it turns out that in the last 5 years the United States -- home
of the creativity, inspiration and enlightened government forces
that gave rise to the Internet in the first place -- has thoroughly
jettisoned 8 centuries of common carriage law that we critically
relied on to guide public policy in equitably provisioning this
kind of good in society, including jurisprudence and experience
wrt how to interpret 'unreasonable discrimination'.

and our justification for this abandonment of eight centuries
of common law is that our "government" -- and it turns out most
of our underinformed population (see (1) above) -- believes
that market forces will create an open network on their own.
which is a particularly suspicious prediction given how the
Internet got to where it is today:

in the 1960s the US government funded people like vint and steve
to build an open network architected around the 'end to end principle',
the primary intended use of which was CPU and file sharing among
government funded researchers. [yes, the goal was a file-sharing
network!]

it was not until 1994 when the USG threw the architecture over
the fence to the free market to commercialize it that we saw what
market forces would do to this open network. within ten years of
this famous policy decision that the rest of the world followed,
amidst much irrational exhuberance, misled capital markets, and
outright fraud clouding reality, but still, within the short span
of ten years it became clear that, even if you were completely honest,
there was no economically sustainable way to provide open end-to-end
IP connectivity in a competitive free market. So, now, ten years
later, agog with market forces, we see the open network architecture
going away.

and in response we have chosen to completely deregulate the
network so that "market forces will create an open network".
[-- john kneuer, director of ntia.gov, at supernova 2007]

the power of myths is astounding. it's as if chips have been
implanted in our heads to prevent us from seeing facts right in
front of us.

What We Believe about the world Matters to how we pursue political,
economic, social, and science goals, so it really is worth investing
energy to make sure that we believe things that are, according to
the best available data, true. which is why i care so much about
measurement.

// measurement accuracy is the only fail-safe means of
distinguishing what is true from what one imagines, and even
of defining what true means.

..this simple idea captures the essence of the physicist's mind
and explains why they are always so obsessed with mathematics
and numbers: through precision, one exposes falsehood.

a subtle but inevitable consequence of this attitude is that
truth and measurement technology are inextricably linked.
-- robert b laughlin, a different universe
//
===============================================
other outcomes of bighook for me:

(1) submitted proposal to build bandwidth measurement tool
netpulse.caida.org to vint/google (per his request during a
bighook session)

(2) re-established contact with nist.gov on vint.suggestion,
presented update of caida activities.

(3) had great conversation with steve crocker that gave me ideas
for how to push caida's dns research agenda forward, followed
his suggestion to ask to meet with dept of commerce about data
access issues wrt root servers. meeting hasn't happened yet.

(4) attended tprc.org in dc in sept (not nearly so fun as bighook)
where sascha did great presentation on commons project,
an idea i got from bighook 05-06.

(5) i learned the week after bighook07 that cenic (california's
R&E backbone) wants to support the commons project with their
spare bandwidth, so long as it doesn't cost them anything...
[so, project still needs capital, especially in california.
but i haven't yet given up on this biggest hook i've ever cast.]

(6) wrote relevant blog entry: Renewing U.S. Telecommunications
Research

===============================================
book recommendations received at bighook, added to reading list:

(1) crisis in telecommunications carrier liability: historical
regulatory flaws and recommended reform [barbara cherry's thesis]

(2) shaping american telecommunications: a history of technology,
policy, and economics

(3) telecommunications law in the internet age, sharon black

(4) knowledge and the wealth of nations

(5) greater good: how philanthropy drives the economy and can
save capitalism by claire gaudiani

(6) you say you want a revolution, reed hundt

(7) [paper] the telecommunications economy and regulation as coevolving
complex adaptive systems: implications for federalism (barbara)

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From: Barbara Cherry <cherryb@indiana.edu>
Date: October 1, 2007 6:49:58 PM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>
Cc: <bighook2007@isen.com>
Subject: [BigHook2007] BigHook 2007 Homework Assignment

To BigHookers of 2007,

Below is a overview that highlights important points and concepts that I
learned at BigHook 2007.

Barb
-------

Regarding corporate gain

- Need to understand organizations without leaders (e.g. movement of slime
mold example, where there are no pacemaker cells)

- Need to be conscious of metaphors, as they shape how we think about
things; metaphors usually convey limits.

- Is the Internet like tubes, or more like (the English) language?
Language has protocols that developed without a central creator. Note that
languages do die - what may that tell us about the Internet?

- Nature doesn't move toward goals but around obstacles. Need to think
about phase transitions. Internet melted communications from a solid to a
liquid, where latter lacks rigidity of the former (Bell system is a rigid
structure, which Internet changed). Liquid phase is emergent and thereby
adaptable. There is a science of liquid engineering that we don't yet fully
understand. How can systems be designed that are in liquid phase without
making become solid?

- There is emerging sense about what communications is. Two new models are
emerging:

- You-centered network: of relationships, sensing, architecture is to
inform you about rest of world

- Us-centered market: build collections of things in relation to each
other

Regarding infrastructure

- Neither providers' nor users' valuations are sufficient to capture total
social value. Price signals are insufficient

=> undersupply of infrastructure

=> incentive to optimize infrastructure for specific users/uses

=> failure to appreciate benefits of next generation

- What is the value of the Internet, where does it come from? Brett
emphasizes that the Internet has a spillover rich environment, many in the
social realm.

Regarding economic growth

- Economics of ideas is critical and different from the world of objects.
Can the world of objects lead to sustained (exponential) growth? Robert
Solow won the Nobel prize for research where the answer is no. Exponential
economic growth is the result of the growth of ideas

- Prices allocate objects => invisible hand effect; but for ideas, prices
not only play an allocative role but also incentives to create new ideas =>
dual role of prices that markets can't solve simultaneously.

- Need institutions to create incentives to invest in ideas. E.g. patents,
copyright, govt funding of research

- The Internet is both objects and ideas.


Regarding the Internet as infrastructure

- Framing of the Internet influences policy development. There are 3
traditional frames for the Internet:

- Engineering view: Internet = its architecture, even if routers,
servers, . . . are eliminated; the protocols may change

- Tel co's view: Internet = different types of pipes (last mile,
competitive middle distribution/transmission infrastructure, backbone),
privately owned

- Netheads' view: Internet = human conversation, relationships (tends
to ignore costs)

- All 3 views are combined in policy debate, but each standing alone omits
aspects of the others

- A 4th lens is suggested: communications among humans, dynamic, graphic;
there has been too much emphasis on applications as opposed to transmission
layer.

- Complex systems perspective is very helpful, although it sometimes has a
negative connotation (too bad)

- Phase changes go on all the time, emerging from use of internet

- Think about membranes -- e.g. impossibly thin membranes between cells,
that create boundaries for cells and allow communication among cells

- KC Claffy: there is a crisis in need for internet data for the academic
community

- (1) Volunteer effort appears unworkable

- (2) Commons approach: provide $ or bandwidth in exchange for data

- (3) Regulate data: her PHD dissertation is based on data required to
be made available by NSF

- => choices 2 and 3 require lawyers

Tim Nulty comments

- Discussion re myth of long distance to local service subsidization
disseminated during the DOJ antitrust case against AT&T. A lot of the costs
incurred by local service facilities were to enable the system to be able to
do long distance traffic. Bell system believed the myth. In DOJ case
against AT&T, this affected terms of settlement that AT&T sought when it
became apparent that trial would likely be adversely decided and to avoid a
judicially imposed settlement. CEO C. Brown sought divestiture with AT&T
retaining long distance business because he thought he would be getting that
portion of business with 1/3 of the costs but a greater % of the revenues.
The fallacy of the myth became apparent over time, with the subsequent rise
and dominance of the local exchange business.

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From: "Casey Lide" <casey@baller.com>
Date: October 1, 2007 4:21:14 PM EDT (CA)
To: <isen@isen.com>
Subject: RE: [BigHook2007] homework

my homework assigment:
___

"What did I learn at Big Hook"? First, to attempt only with great care to
fish late on a night with a new moon and slippery rocks and several glasses
of wine.

Infrastructure is supportive and complex, much like big hook. Is
infrastructure necessarily paid for by every person? One can (and we did)
debate whether it should be paid for by every person in the area (who
benefit by externalities/intangibles), or only by persons who directly use
it. Franchise vs tax? Tax vs. toll road? Something that may not have
been apparent in terms of something that people would be willing to pay for
individually, but that ultimately becomes irreplaceable and absolutely
essential. Infrastructure is something you need in order to
enable/provide something else. Infrastructure itself isn't the product.
Even broadband connectivity itself isn't the beneficial product, ultimately.
The infrastructure facilitates the exchange of information, not just access
to information.

Secondly, that there is a really interesting relationship between slime
molds, fractals, and common carriage. And I'm not entirely sure what the
relationship is, yet. Sensitive dependence on initial conditions = a wholly
different fractal, with very minor changes.
Is it automatically most efficient if we allow infrastructure to grow
organically? Or do we attempt to install a pacemaker? Is a national
broadband strategy an attempt to be a pacemaker cell? If we do nothing
(e.g, "hands off regulatory environment), does that place too much faith in
the belief that the principles behind slime mold organization are inherent
and transferable, at various levels of abstraction? Might slime mold do
better, evolutionarily, with a pacemaker cell? If evolutionary success =
long-term persistence in current form, slime mold is doing pretty damn well.
If evolutionary success means that an entity progressively acquires and uses
more resources - substantively changing over time -- then slime mold is
remarkably unsuccessful.

Common carrier status involves an exchange. Provide service to everyone,
to the extent you do provide service, and in exchange you receive certain
liability protections and competitive protections. Common carriage concept
related to the public good, the public commons, and ultimately led to public
utilities. Is common carriage dead? Is the need for the quid pro quo still
there? I don't know the answer to this, but I lean toward the belief that
common carriage is alive and well, and that public ownership of
*infrastructure* is a good thing. Public ownership of the forest floor -
the infrastructure that allows the slime molds and other tiny little
organisms and plants to take off.

If we attempt to proactively make slime molds more successful, in terms of
coverage, utility, neutrality, etc., would that kill it? Apparently there's
only one way to find out, and that is to watch what happens when you
introduce certain additional variables at the outset.

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From: "David P. Reed" <dpreed@reed.com>
Date: October 1, 2007 3:45:42 PM EDT (CA)
To: Sara Wedeman <sara@behavioraleconomics.net>
Cc: "David S. Isenberg (Netidentity)" <isen@isen.com>, bighook2007@isen.com
Subject: homework

As always, I came away with many, many insights. Not least of which were:

- I want to hire Vint to write summaries of all the conferences I attend. He has an amazing listening skill.

- It's great that Milton Friedman is dead. He singlehandedly set back economics' interaction with society 100 years, and now the thoughtful ones are able to speak without that religious crap he spouted. (thank you to the economists who participated for showing that we are slowly crawling out of the Dark Ages).

- Biology gives us a model for understanding complex systems that still is underappreciated. The idea that oxygen circulation time is a core parameter for mammals suggests that we should look holistically more, and reductionistically less. And those who do will not get published easily - but why should that be the criterion of clear thinking?

- Never underestimate how many jokes a reference to slime molds as a model for desirable properties will engender. our brains are wired to treat symbols and metaphors at all levels - good and bad - it's amazing that collective thought works, given the propensity for misunderstanding and the limits of images and metaphors.

- One man's phase transition is another man's gradual and unsurprising process. Complex systems are complex except when they are trivial and simple. Perspective really shapes our reality, and the likelihood that a group of people will agree even on events that are historically documented and the subject of shared experience is lower than one would expect.

- In Mexico and Burlington, VT and Japan, it was possible to build quite flexible (IP-based) infrastructures very cheap. But in the US it's claimed that special handouts are needed to make even small steps. I suspect this is just another problem of perspective shaping reality. If you believe it can be done, suddenly you see that the accounting of costs is just a set of distortions that lock you into seeing the world just one way. So the problem is to take off your blinders, or to get a group of citizens to do so. Perhaps the problem is that we need hypnotists, not scientists.

Anyway, thank you all for a very stimulating time.

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From: "Brett Frischmann" <bfrischmann@gmail.com>
Date: October 1, 2007 10:32:39 AM EDT (CA)
Cc: bighook2007@isen.com
Subject: [BigHook2007] Re: Homework due!

David and friends,

Thank you for an amazing get-together! I had a wonderful time and learned a lot. I'll avoid recapping lessons that have already been summarized. One of the primary lessons I learned was that I need to continue to engage in discussions with many of you and others like you. As an academic, I do my best to be "interdisciplinary," in part because I like to do so--it is the way I think, but also in part because I believe it is essential to making progress. But doing interdisciplinary academic work may not be enough. BigHook taught me--reminded me really--that making real progress also requires bridging academic theory and practice and that I could do a better job (as an interdisciplinary academic) if I remain engaged with really smart folks who are deeply engaged in policy, practice, business, technology, etc. I learned a lot during conversations I had with many of you and look forward to continuing them. While this was a personal lesson/reminder, I should say that it reflects a broader theme of BigHook, I think, and so it is a takeaway for all of us.

Take care,

Brett

P.S.: I also learned that I need to add complexity theory and macroeconomics to my toolbox.

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From: Adam Peake <ajp@glocom.ac.jp>
Date: October 1, 2007 6:47:53 AM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>, bighook2007@isen.com
Subject: Re: [BigHook2007] Homework due!

Homework... rescued from dog.

What learnt:

* 3 minutes when slightly drunk goes by much faster than 3 minutes when sober.
* wines at BigHook are good.

And an awful lot more.

But I would like to rant about something....

I said I was surprised you weren't more angry at the idea of the US (apologies Elliot) being in such poor shape for broadband: limited competition (and the mess of network neutrality), high prices, slower speeds (generally), 15th or lower in country tables comparing broadband penetration, etc.

I think I suggested that after years of bull from the FCC and others on broadband policy, you were too grateful in accepting the opportunities of the 700MHz auctions -- when what you should be is pissed that this is all that's left of earlier promises.

There are people on this list who know far more about this than me (Pepper, Barbara, Dewayne and this bunch) so I hope I'm not wrong (or very wrong), but my take on history and why you should get angry:

FCC's Spectrum Policy Task Force began studying the reform of US spectrum policy in 2002, one outcome was a Notice of Proposed Rulemaking titled "Unlicensed Operation in the TV Broadcast Bands" issued in May 2004 which made recommendations for utilization of white space, see FCC Docket 04-186, "Unlicensed Operation in the TV Broadcast Bands" [.pdf]. This is the really good spectrum. Low frequency means it has very good propagation characteristics: it goes through walls and other objects, trees and wet leaves, and is not adversely affected by bad weather. Powell was FCC Chair.

The Docket proposed a notice and comment process on a proposal to allow unlicensed radio services to operate in vacant TV channels below channel 52 or 698 MHz, for two types of certified devices: Lower power "personal/portable" devices such as Wi-Fi cards in laptop computers; and higher power "fixed/access" devices which are generally operated from a fixed location, and might be used to provide a commercial service such as broadband wireless access.

The FCC's 2004 action was delayed by objections from the television broadcasters (Rural broadcasters? Hey, Google, buy them... :-) who believe they effectively own this spectrum (even if the guard bands aren't specifically allocated to them) and are concerned that unlicensed technologies would interfere with their television services and the transition to Digital TV. Broadcasters noted smart radio technologies able to detect spectrum availability and avoid interference had not been fully tested. The FCC Docket was ignored for the next two years.

Early in 2006 Senators Allen, Sununu, Kerry and Boxer (bipartisan members of the Senate Commerce Committee) introduced draft legislation that would order the FCC to complete the 2004 rulemaking on the unlicensed use of unused spectrum on television broadcast bands.

Senator Stevens then wrote this draft legislation into his omnibus telecoms legislation rumbling forward at the time (legislation also had all the bad network neutrality and video franchise stuff in it, so not suggesting it should have been allowed to pass) and Title VI of that bill was named the "Wireless Innovation Act of 2006" (or "WIN Act of 2006", cute how they do that...) and proposed opening a significant amount of high quality spectrum for broadband wireless use. The technical and device rules in the FCC Docket would have been adopted within 270 days of the enactment of the WIN Act. However, technology hasn't progressed so far that safeguards against interference are not required and the Act made clear that "a certified unlicensed device may use eligible broadcast television frequencies in a manner that protects licensees from harmful interference".

The Act required the FCC to develop rules and procedures that protect licensees from harmful interference from certified unlicensed devices. The Commission would establish testing procedures to ensure interference would not occur, and require that devices could be disabled remotely should the FCC determine that the device was causing harmful interference to a licensee. The FCC would act immediately on receiving complaint from the licensee about harmful interference, and be able to limit operation of the device to identified geographic areas. Broadcasters are also transitioning to digital TV broadcast and many of the old analog channels will be left unused once the transition is complete. These rules and procedures for white space could also be applied to any vacant spectrum that results from the move to DTV.

So the Win Act was part of a legislative package finding its way through the Senate and House, not all parts of the legislation were popular with everyone, clearly some good and some bad.

But the part that I think should really annoy you, and is why being happy at the 700Mhz auction and Google perhaps having to spend $4.7 billion is wrong, is what the FCC did next. While the draft legislation was still going forward, Stevens bill and the WIN Act very much on the table, on 12 October 2006 the FCC adopted a "First Report and Order and Further Notice of Proposed Rule Making" in a proceeding titled "Unlicensed Operation in the TV Broadcast Bands", essentially rereopening the May 2004 Docket. But the October 12 docket takes a number of steps back from the earlier policy.

The title of the proceeding refers to "unlicensed" use, long been understood the proceeding was about making more spectrum available on an unlicensed basis, but in the new docket the FCC made clear it was now considering whether this spectrum should be made available on a licensed basis, and if so, by what licensing regime, and whether it should be auctioned. Suddenly the whole issue of licensed/unlicensed was being questioned.

FCC also suggested that the spectrum should only be for fixed and not portable devices, the 2004 docket suggested both. It also introduced a considerable delay, the earlier docket and the WIN Act suggested that work to use unused spectrum (without interference, etc) should begin almost immediately; the FCC's October 2006 docket said that such work should only begin after the transition to digital television is complete, i.e. February 2009 (or probably later, 2011?)

I don't know how agencies normally operate, but with legislation still very much on the table, it seems unusual for the FCC to adopt an order that was pretty much contradictory to the intent of pending legislation.

How about taking the "Wireless Innovation Act of 2006" change 2006 to 2007. (How about the "BigHook Wireless Innovation Act of 2007")

This is important for the rest of us too. US policy has an enormous impact on the rest of the world. If you auction off white space, we probably will too. If you started a programme along the lines of the WIN Act, then the rest of us probably will too. So please!

(hope above is reasonably accurate!)

Great meeting you all, learnt and enjoyed.

Best,

Adam

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From: "jean russell" <jeanmrussell@gmail.com>
Date: October 1, 2007 2:07:08 AM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>
Cc: bighook2007@isen.com
Subject: [BigHook2007] Re: Homework due!

With immense gratitude, thank you, each and all, for sharing the space and time with me. I was inspired and engaged by many conversations and so much from the presentations! Thank you.

Some things I keep learning over and over again, thanks for the reminders:
+ There is no single absolute truth. Trust multiplicity.
+ Language is slippery. Metaphors are especially slippery because we take their frames with them.
+ Meeting people face to face brings great surprises and delights.
+ People who want to measure things and cut things up (science/scissors) have limited perspectives about the nature of those things.
+ It is hard to understand something without connecting it to what you already know and understand.
+ Multi-pronged approaches to change!!!
+ Myths influence us broadly and powerfully, even when proven false.

Some things I learned at Big Hook:
+ Economics traditionally favors scarcity perspectives.
+ The internet has mystical properties. It is "tubes" and "architecture" and "relationships" too. It might even be more than that. ;-)
+ The purpose of a corporation is to be a bigger corporation.
+ Unsavory people can be useful. And, before a bubble bursts, accountants get creative to obscure upcoming implosions.
+ Changing behavior can be hard, change the environment. Inspirational music and scrumptious music create an environment of gratitude and model excellence.
+ Karl Rove is actually a terrible people person (low EQ). We have to learn to communicate better than he does.
+ Communication policy is central to economic policy
+ Talking about field building makes people leave question marks on chat.
+ Emergence and complex adaptive systems are popular with Big Hook geeks too.
+ David Isenberg runs a very tight sophisticated ship with brilliant and fascinating mates creating a sumptuous stimulating sensate space.

Some things I am taking away/follow up:
+ Specialization is really cool when you see someone elucidate something that clearly has been perplexing and complicated, yet has wide ranging and massive impact.
+ Philanthropy and nonprofits view "spillover" in fundamentally different ways than traditional business.
+ Some delightful people sort for difference and multi-disciplinary translators.
+ Keep working on ideas around leadership in collaborative culture; be sure to incorporate emotional intelligence, complex adaptive systems, and emergence.
+ Learn more about behavioral economics and how it intersects with flow/meta-currencies.
+ Go deeper on thrivability and abundance to get some more rigor to that work.
+ Naming is important to making change.
+ Work on languaging for field-building.
+ Send message to philanthropic channels that net neutrality is a root issue. (Blogged, via Lucy Bernholz and GOOD Magazine). Check Tipping Point Network strategy for net neutrality. Recruit members to SavetheInternet on facebook. :-P
+ New friends and inspiration.

--
Jean Russell
309.262.6629
nurturegirl.net

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From: "Sara Wedeman" <sara@behavioraleconomics.net>
Date: October 1, 2007 1:08:35 AM EDT (CA)
To: bighook2007@isen.com
Subject: My homework/ take-aways & further thoughts from BigHook 2007

They include:
+ First, a delectable memory of the beauty of the place, the spectacular cuisine (which I barely picked at due to all the absorbing conversations in which I was engaged), and THE MUSIC. As David noted late on Thursday night when I was not attending my chosen BOF but instead standing on a chair jamming to the music, "this is your BOF."
+ The music actually made for a fabulous ’Äì if subtle - object lesson that underscored my major take-away from the debate(s). To wit, to advance beyond the tautological and entirely discouraging debate about who will pay for connectivity and what they, personally will 'get back,' we need to free ourselves from conventional economic thinking. To quote my favorite poet*: Do you remember how electrical currents and "unseen waves" were laughed at? The knowledge about man is still in its infancy.
+ The soaring tunes and the virtuosity of the musicians were intangible, but can anyone reasonably argue that their presence is justifiable only in terms of dollars and cents? Should musicians have to struggle to make a living simply because their music cannot be 'weighed?' There is something really wrong with a society where that which is difficult to monetize is viewed as lacking in value.
+ It appears to me that, in this conversation, the word 'externalities' actually means "intangibles." The difficulty of measuring intangibles notwithstanding, it should not be taken to mean that they are peripheral or lacking in value. Again, per the poet* Not everything that can be counted counts, and not everything that counts can be counted.
+ I believe in fiscal discipline. However, I ask: what is the appropriate unit of measurement? Are the individual and the corporation the only units that matter? Do return to society, or to humanity, not matter? If our ship goes down, do we not all perish?
+ Intangibles can be measured, given adequate resources and knowledge of psychometrics. Equally, one can measure the relationship between intangible inputs and tangible economic outcomes. I¬Ý know because I have done it. As David correctly notes, it is difficult. It is also worth the effort.
+ We would all do well, when we dive into this kind of dialogue, to decouple tangibles from intangibles and questions of what is practical from what is possible. When we glom all of these things together, we just end up tangled up in our (intellectual) shorts and in so doing, tie ourselves even tighter to the current, disturbing realities. If we can't use our imaginations and free ourselves from the bondage of our expertise, we will never get anywhere.
+ The common carriage discussion was very powerful. It made me think of Barry Schwartz's The Paradox of Choice, While I don't subscribe to all of Schwartz's conclusions, the gutting of common carriage provisions in the governance of the Internet makes a compelling case for the importance of default parameters - either in protecting us from or in causing us harm.¬Ý
* Albert Einstein

Many, many thanks to David and to my fellow attendees (ok, I can't resist the play on words-- BigHookers --yike) for a meaningful, memorable, multidimensional feast.

Sara
--
Sara Wedeman
BECG.llc
www.behavioraleconomics.net

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From: "Chuck Gritton" <Chuck@hillcrestlabs.com>
Date: September 30, 2007 6:29:00 PM EDT (CA)
To: <bighook2007@isen.com>
Subject: [BigHook2007] Learnings off the Hook...my homework assignment

So that I don't duplicate the great summaries that have already been sent out, I'll just list the key derivative learning I took away.

* Metaphors are a trap if unconsciously used and, in that context, the term "infrastructure" itself may be problematic. The most troubling part is "structure" which doesn't mandate, but does imply, a solid. Since we were toying with the Internet as being closer to an idea or at least a liquid than a solid, this is perhaps a mismatch. Even the term "infra" may be troubling since it confers a particular spatial relationship. Since we decided that a lot of the value of the Internet is external to it, that's perhaps a problem. Unfortunately, I have no insightful alternative term to suggest so this is just an observation.

* The Internet is designed for the next application by preserving options at the endpoints. Since we learned that New Growth theory posits ideas as the true economic driver for growth, it seems clear to me that the same principle must also apply to the Internet itself. Since the Internet has minimal arthritis around which applications are supported, it provides a rich fertile environment for subsequent ideas (and apps) to flourish. As they do, the value of the Internet continues to grow exponentially.

* The above is cool enough but it doesn't stop there. The prime value of the Internet is outside of it. In other words, the value of the Internet not only flows by enabling an almost unlimited number of applications to be deployed but it also grows by facilitating an almost unlimited number of external effects. In that sense, the inter-network aspect of the Internet may go much richer than it appears at first glance. Typically, when we think of the Internet we stop when we get to the endpoint device and go "off-net" as we refer to it. Perhaps we don't really go "off-net" in the broad sense after all. Maybe those externalities are just over other networks that just don't happen to run the IP protocol. But since the Internet is fundamental to the end-to-end flow, it is part of that value creation. We thought of education and politics as two great examples but there are many more.

* Slime mold adapts itself cooperatively to solve mazes and efficiently get at food sources. In Adam Smith's world, money flow adapts itself "cooperatively" to allocate resources efficiently amongst the various "food" sources. So the economy and the Internet both behave (in some respects) like slime mold - a very comforting thought. J But the lesson I take from this is that very simple rules of behavior at a microscopic level can have great implications - either good or bad - for overall performance and value creation. I think this is both guidance in design (design to simplicity since any attempt at locking in a vision of the future is likely to be limiting) AND guidance to public policy. Barbara's talk in this regard was very enlightening. The underlying principles of common carriage were very simple as she explained it. Adhering to those simple principles allows for positive economic benefits to all the various players in the economy. However, adjusting them (as Barbara noted the FCC did a few years back) is dangerous. So it's not mere simplicity that is the goal but rather a simplicity that preserves innovation on the part of all the players. I suspect that what gets damaged as we deviate from this basic policy is the "cooperation gain" that slime mold naturally achieves. I further suspect that the loss of that cooperation gain, to use David Reed's metaphor, pushes the network closer to the solid phase.

* We all witnessed a feeding frenzy in the waters outside of the house. It was an amazing sight. It's amazing what happens when large fish trap a set of food in close quarters. Well, I think we had a similar event in that room over several days. A set of wonderfully intelligent passionate people learning and discussing lots of interesting ideas in close succession all in a wonderful atmosphere socially, visually and acoustically (great music!). It was an intellectual feeding frenzy. Thanks David for organizing a wonderful session!

. . . chuck


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From: "Robin Chase" <rmchase@gmail.com>
Date: September 30, 2007 4:14:51 PM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>
Cc: bighook2007@isen.com
Subject: [BigHook2007] Re: Homework due!

I learned many many things and love being reminded of other people's incredible depth of knowledge in beautiful realms I rarely explore. So while I learned more than this, here is what related to my work:

Definition of Infrastructure

Infrastructure generates value by providing a generic platform that is an input into a wide variety of activities. Most infrastructure is managed as a commons:¬Ý accessible to all (not necessarily free), regardless of identity or intended use.

Persistent incentive to take what is general purpose (the infrastructure) and make it single purpose. We want to optimize the infrastructure for a specific set of users (current largest set of users, i.e. cars on streets; or those most profitable, i.e. voice, or video, or’Ķ). We need to understand this tendency and fight against it.

• We don't know the future;
• we can't predict which use will be the innovative paradigm-shifting transformation;
• we also aren't measuring all the intangibles/spiillovers ’Äì good and bad

When we manage infrastructure as a commons, with non-discriminatory access, we don't¬Ý pick downstream winners and losers. We should preserve, prefer, prioritize infrastructure decisions that favor "late-binding" designs, that protect real options.

Comments about the internet's merits that resonate with the above description of a commons, and management:

• The Internet is NEA: Nobody owns it, Everybody can use it, Anybody can improve it.
• We want to make money because of the net, not with of the net. The net wants to be free, at zero cost.
• Internet is like slime mold. Pacemaker cells don't exist! Organization happens by itself because the structure is as basic as possible, but lends itself to self-organization.
• Internet as liquid communications (flexible, adaptable to the space and shape required)

Intriguing ideas I don't know what to do with: Infrastructure are complex systems. Failures cause big problems, and have phase chase transitions. There is discontinuity. These systems don't have common distributions, they don't compose well into parts, they have emergent properties.

My most important take-homes that bolster my holy grail of an open source ad hoc peer to peer network (aka real mesh where end user devices build and contribute to the internet infrastructure)

• Seek lowest common denominator ’Äì a general, general purpose platform, that protects as much flexibility as possible (late-binding)
• Congestion issues can be managed by their opposite. Mesh networks are the architecture of abundance. In a world of abundance, we don't have to do perfect accounting.
• Ideas are a terrific tool for economic abundance, which we need in this world of increasingly scarce physical resources. We need to build/protect a world platform for facilitates idea creation, idea dissemination, and importantly, idea meritocracy (let the best ones rise to the top and the worst ones sink).

Robin

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From: "Richard Whitt" <whitt@google.com>
Date: September 28, 2007 6:13:47 PM EDT (CA)
Subject: [BigHook2007] Re: Homework due!

Here is my attempt at a concise synthesis, in under 100 words:

• The Internet's chief value may lie in its economic externalities, or spillovers.
• Common carriage is widely misunderstood, especially among the courts and policymakers.
• Metaphors are inevitable to map our world, but we can still change them deliberately.¬Ý The challenge is to find a set of metaphors that matches well to the Internet.
• The Net is not a thing, but an emergent process of human activity.
• Per Romer, the "invisible hand" of the marketplace only works well for atoms (physical stuff), and not for bits (ideas).
• We don't really know what's happening on the Internet, including the data flows and the market structure.
• David Isenberg puts on one helluva cerebrum party, and knows some awesome musicians and artists.

Rick

Richard S. Whitt
Washington Telecom and Media Counsel
Google Inc.
1001 Pennsylvania Avenue, NW
Suite 600 South
Washington, D.C.¬Ý¬Ý20004

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From: "Frank Paynter" <fpaynter@sandhilltech.com>
Date: September 28, 2007 1:58:28 PM EDT (CA)
To: <bighook2007@isen.com>, "David S. Isenberg \(Netidentity\)" <isen@isen.com>
Subject: Re: [BigHook2007] Homework due!

What I learned at Bighook2007

Each Big Hook participant's forehead deserves a sticker that reads "Externalities Inside."

I learned that data regarding traffic is not generally available for research, (this according to kc claffy whose interest is research and who is constantly seeking and analyzing data). kc also maintains that there's a growing gap between operations knowledge and science. This is an area where my interest is piqued. Bighook plays to the theoretical. Vint reminded us that the Internet was not designed to require backbone trunking. While true, that observation begs the question of topography as well as the ownership, management, and control of the global data network as implemented.

I learned a little about slime molds in the context of "cooperation gain." I learned that free broadband and free wifi aren't as simple to deploy, manage, and operate as I would wish. Burlington, Vermont's broadband experience bears watching.

The economists gave me much food for thought, including corn and bagels...

Much infrastructure throughout the world is managed as a commons (the recent US travesty of regression to robber baronage under the influence of the notorious University of Chicago econ-bandits notwithstanding). This includes all public systems and services: (1) transportation systems, such as highway and road systems, railways, airline systems, and ports; (2) communication systems, such as telephone networks and postal services; (3) governance systems, such as court systems; and, (4) basic public services and facilities, such as schools, sewers, and water systems. "Managing infrastructure resources in an openly accessible manner eliminates the need to rely on either market actors or the government to pick winners downstream."

Commons should be "managed such that the resources are openly accessible to members of a community who wish to use the resources [2]. This does not, however, mean that access is free. We pay tolls to access highways, we buy stamps to send letters, we pay telephone companies to have our calls routed across their lines, and so on. Users must pay for access to some (though not all) of these resources. Nor does it mean that access to the resource is unregulated. Transportation of hazardous substances by highway or mail, for example, is heavily regulated. The key point is that the resource is openly accessible to all within a community regardless of the identity of the end-user or the end-use [3]." thanx Peter Kaminski for the great notes in the chat session...

Paraphrasing David Isenberg on Paul Romer: "If stuff is valuable, and ideas about how to make better stuff are more valuable, and ideas about how to generate good ideas are even more valuable, then the material Chad Jones shared with us was priceless." The non-rivalrous nature of ideas came home to me in the discussion of a recipe as non-rivlarous but the ingredients as rivalrous goods needed to actualize from the recipe.

I learned that there is a lot of discussion about metaphoric description of the net. We are concerned that our "framing" in a specific metaphoric context of our understanding of the net itself and issues surrounding it such as "net neutrality" narrows rather than broadens our understanding. Doc says that "all metaphors are wrong," to which I add as a kind of slant-wise signifier, "including this one" (harkening back to the cliche "all generalizations are wrong, including this one"). People use metaphors (and other literary contrivances) to shape a common understanding of complex subject matter, and they use them to add a touch of beauty to an otherwise drab or mundane narrative. We should remain aware of the relationship of facts to frames but not impoverish our conversation by driving out metaphor. George Lakoff's 1980 book, http://norvig.com/mwlb.html "Metaphors We Live By" is a touchstone for understanding this concern. Peter Norvig pointed out that the accessibility of this idea is at once a weakness and a strength. A deeper understanding of cultural, anthropological, and cognitive linguistics is necessary to support a meaningful understanding of the issues surrounding metaphor. Lakoff and his colleagues at the http://www.rockridgeinstitute.org/ Rockridge Institute, a progressive think tank in the Bay Area, offer support to help social advocates reframe social and political issues through practical applications of cognitive linguistics. (Okay, I didn't learn all of that at Bighook, but Doc has been heavy into the Lakoff thing for the last couple years and I thought it would be nice to give him some feedback).

I reviewed Vint Cerf's emailed summary and got dizzy. I thought of David Reed's slime mold metaphor and smiled. I am very grateful for the privilege of sitting with the brilliant people David Isenberg assembled at Big Hook this year.

Frank Paynter
608 235-9546

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From: elliot noss <enoss@tucows.com>
Date: September 25, 2007 3:37:27 PM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>
Subject: Re: [BigHook2007] Homework due!

my big (hook) takeaways:

LEGAL SOLUTIONS WILL NEVER MATTER. I found myself feeling very strongly that the policy side of network issues, while important, would never be where the action is. the whole regulatorium will continuously try and either i) regulate yesterday's problem based upon yesterday's facts or ii) further the narrow self-interest of the parties most able to pay. there is real damage that can be done here (and has been done) and I admire and respect those fighting the good fight in those arenas, but it will not be me.

MUNI WIFI IS MISUNDERSTOOD. muni wifi has an image problem because of big companies and inefficient governments NOT because municipal networks are a bad idea. we should all live in burlington, vermont or some reasonable facsimile. I have been motivated to try and get dark fiber to my house and bathe my neighborhood with packets! 100 MB for everyone!

Lastly, I love blugrass :-)

Regards
Elliot Noss

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From: steve crandall <esc@mac.com>
Date: September 24, 2007 3:22:26 PM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>
Subject: Re: [BigHook2007] Homework due!

The biggest eye-opener for me was learning a bit of the history about common carriers and the associated legal roots. My concern that it may be too late was amplified by several private conversations. I hope not, and intend to be an optimist who is worried about new paths. I left with more questions I came with and perhaps a slightly different perspective. This is my highest praise. The last thing I want are answers.

The beauty of this type of conference are the private communications, potential collaborations and even new friends that seem to materialize out of nowhere. For me two potential friendships materialized, which ties my all time best. A few people share my passion for the narrative, something that is impacted by, and can impact, network design. I hope a few collaborations are the result.

The music. The fun of a dozen really bad voices trying to follow some really good musicians near midnight is almost beyond words. I haven't had so much fun at a conference since a bunch of us streaked Grenoble when I was in grad school. (noting the average age of a BigHooker, I'm not suggesting *anything* beyond music!)

But back to the conference itself. This is clearly one of the big questions and one where I have not formed anything resembling a final opinion. I was left with a feeling that the carriers are more delusional than I had suspected, but also that they are more likely to "win". This has fired some embers under me, but much more listening, reading and thinking needs to happen (at least for me). I think I agree with some of the participants that we need to begin by making measurements that can be used for serious arguments.

Steve Crandall

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From: isen@isen.com
Subject: [BigHook2007] Homework due!
Date: September 24, 2007 10:57:53 AM EDT (CA)
To: bighook2007@isen.com

Here's *my* homework:

Externality is the wrong word. If something has directly
attributable results, then calling these results
"externalities" minimizes their importance.
Economics should widen its purview to make "externalities"
internal. Even "spin-off" isn't quite the right word.
And "outputs" sounds too deterministic. Maybe "results" is
the right word.

As both Chad and Brett pointed out, "results" need not
be rigidly predictable -- just knowing that a process has
(as David Reed's says) "option value" is a good start.

This study purports to measure the
economic value of "Fair Use" to the US Economy at $4.5
Trillion. Per year. I have huge methodological questions
about this study that I'm not currently equipped to answer.
Also, Ed Black, the head of the CCIA, which commissioned
the study, is reputed to have taken millions in hush money
from Microsoft for the CCIA to go soft on anti-trust, so
I am skeptical about the "cui bono" of this work.

Nevertheless, a study that purports -- with a straight face --
to measure the value of the "externalities" (or "outputs" or
"results") of something as loosey-goosey as "Fair Use" is
an awesome statement. Its effect is to put the
externalities back inside! Now they should do this with
The Internet: What is the annual value of The Internet to
the US Economy? Anybody want to commission that study?
Cisco? Google? Time Warner?

And here's a spin-off -- or maybe the main result -- of my
writing the above: How about a sticker, following Intel's
idea, that says, "Externalities Inside." But what would we
stick it onto?

David I

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From: "Chad Jones" <chad@econ.berkeley.edu>
Date: September 14, 2007 7:53:22 PM EDT (CA)
To: "David S. Isenberg (Netidentity)" <isen@isen.com>
Subject: What I learned at Big Hook

Dear David,

Here are some things I learned at Big Hook:
1. Some great lessons about how to organize a fulfilling and satisfying conference: a nice pace, not too rushed; plenty of time to talk; excellent food and fantastic music.¬Ý I really appreciated the environment you created and the sense of respect that it engendered.
2. The use of the "chat" technology during a conference, and the advantage of having a talented individual summarize each session.¬Ý These innovations helped to expand on and reinforce the points that were being made by the speakers and were very helpful.
3. The broad range of people outside of the economics profession with interests that complement my own.
4. A range of mind-expanding perspectives on (a) the role of lawyers versus engineers in economic growth, (b) the difficult-to-answer question of whether or not our internet infrastructure is presently congested, (c) the possible benefits from open and/or free access to internet infrastructure.
5. That even if corn doesn't grow on trees, making a silly joke like that can help the speaker relax and help other people remember key points.¬Ý I'll definitely do it intentionally from now on :-).


Best regards,

Chad

--
Charles I. Jones
Department of Economics, UC Berkeley
http://www.econ.berkeley.edu/~chad

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From: "Tim Nulty" <tnulty@ci.Burlington.vt.us>
Date: September 12, 2007 12:39:44 PM EDT (CA)
To: "jean russell" <jeanmrussell@gmail.com>,<bighook2007@isen.com>
Subject: [BigHook2007] Re: Chad Jones's contribution

David:

I haven't enjoyed a conference this much in years (if ever)....as
evidenced by the fact that Leslie and I stayed to the very last minute!!
(and, I assure you, we NEVER do that!!)

That said, I have two concrete comments:

1) I found the discussion around the plenary presentations to be a
bit random and staccato--I guess it is very hard to get a continuous
rhythm of back-and-forth when there are so many highly articulate people
wanting to speak. Indeed, (possibly for this reason) I often found the
"three minute rants" to be the best part of the "plenary" discussions.
As with virtually all conferences, the best part was the conversation
which took place outside the plenary sessions--and that was truly
outstanding!! It ranged absolutely all over the map and was
superb.....which is a function of the quality of people you attract and
of the way you organize and set the tone. Full marks to you on both
counts.

2) Though lots of excellent side conversation took place on many
topics, I don't think the actual topic of the conference:
"Infrastructure Economics (as it applies to internet/telecom in the 21st
century)" got very far. This is partly evidenced by the substantial
disucssion on these matters which has gone on in the "cookreport" after
the conference--much of which is deeper than we got to at Airplane
House. Maybe this always happens(.i.e. that the subsequent discussion
which is stimulated by the conference is deeper than what occurs at the
time)....and would be very understandable if it does. Nevertheless, it
seems to me that there is a lot more in this area to be explored,
articulated and disseminated.

Much of this wisdom, frankly, already exists as a well developed body
of thinking under the rubric of "public sector economics" , "public
enterprise economics" etc. This body of thought has its roots in the
field of "imperfect competition" etc which developed between the Wars
and in the ecomics that grew out of the creation of huge hydroelectric
projects in the USA (TVA, Bonneville Power etc). But the degree to
which this wisdom has been lost/atrophied/forgotten in the US quite
astonished me. Some bits of the old wisdom will, no doubt, need
modification to fit certain characteristics of modern telecom/internet
infrastructure. But I don't think very much is needed. What is CLEARLY
needed is to bring that wisdom back onto center stage and make it a
respectable topic again. I thought that a number of speakers made
credible (baby) steps in that direction.....but there is a long way to
go!! Without a much better grounding in this field of economics, much
of the conversation currently going on in the CookReport as well as
BigHook will remain pretty elementary and fuzzy. (see "rant" below)

3) What I took away: (at least) two valuable and concrete things:

a) a nascent plan to create and implement/experiment with a
voluntary regulatory framework for the next century. This plan would
build upon the (in my opinion) solid traditional concepts of common
carriage and public utility law but would update/adapt them to modern
circumstances. This (to me) is very exciting and could have huge
consequences if we actually manage to pull it off. As I am sure you
noticed, although an "intellectual" by training, what I really get off
on is figuring out to put serious intellectual conclusions into
successful practice. This is a good one--and the potential partners
that I met at BigHook are terrific.

b) contacts with a large number of very smart people who know a
lot and with whom I expect to communicate regularly in the future.

I am sure that I will have more to say, as other aspects of the
conference sink in and germinate.

cheers...and thanks again.

tim nulty

PS: I'd like to cash in a 3 minute rant chit herewith:

Consider the following quote: "Since the actual costs of connectivity
are zero (if we can model bandwidth
as infinite then the cost is the reciprocal) all we establish is that
we're far better than Vail's law and that Vail's law isn't sustainable
outside the Regulatorium."

This statement, and the underlying "thought picture" upon which it is
based, is seriously misguided on serveral levels:

a) the "actual costs" of connectivty are NOT zero. It is true that
the MARGINAL cost of the next bit transmitted, asymtotically approaches
zero when sufficient bits are transmitted. But this is VERY different
proposition from that stated in the quote. Until that difference is
understood, the conversation will be (mostly) nonsense. The ACTUAL
costs of connectivity are, in fact, very large--many $billions need to
be raised and expended in order to make any connectivity possible--and
to maintain it. The distinction between initial cost, average cost and
marginal cost is fundamental to any seriousl discussion--but seems not
to be widely appreciated. The fact that the capacity created by (very
large) investments in infrastructure is (or can be) nearly infinite,
does not change the fact that those sums have to be raised. How they
are raised is tightly connected to how the resulting assets are operated
and controlled--and must ALWAYS be so connected!! Competitive markets
do not and cannot work in such a world of very large entry/average costs
and dramatically declining marginal costs. What should take their place
is a very complex question with a great many nuances and many very
difficult tradeoffs. That is where our attention should be directed.

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From: Jorge E Ortiz S <jeortiz@interfibra.net>
Date: September 10, 2007 12:16:42 PM EDT (CA)
To: bighook2007@isen.com
Subject: [BigHook2007] Re: Chad Jones's contribution

Hi everyone:

I would like to thank Chad for his great talk and for being provocative.

The Internet is the road/highway for ideas, and as Chad thought us, ideas are behind growth and progress.
The rational for public roads is that roads facilitate the trade of physical goods, because good roads lower the cost of distribution and thus increase competition and lower the cost of goods. So roads have positive "externalities" thus creating wealth for all.
If the Internet has also positive externalities by facilitating ideas, communication, trade, education, etc. Why then not build public internet to facilitate communication, learning and the spread of ideas?
If ideas create growth and progress why roads for goods but not roads for ideas?

Just a thought

Jorge

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From: "Douglas Frosst" <dfrosst@southriverpartners.com>
Date: September 10, 2007 10:49:11 AM EDT (CA)
To: <bighook2007@isen.com>
Subject: [BigHook2007] What I learned from BigHook 2007

Economic growth comes from an overall (not per capita) increase in ideas, which are non-rival goods in their pure form.However, dissemination of ideas is not uniform and is constrained by various items, including bandwidth, storage, and human attention/capacity for adoption, all of which are rival goods.(Note the poor dissemination of corrections to the pacemaker theory of slime molds, Coase's lighthouse, etc.)

Spillover may be the most important product of infrastructure, and is not typically captured by economic models.People may benefit from spillover effects of the internet (or other infrastructure), even if they don't use it directly.

Historical economic theory of the firm states that firms organize to reduce transaction costs, typically around effective and efficient utilization of labour and capital.With many jobs automated and capital increasingly available and liquid (at least until recently), organizing around either capital or labour no longer provides sustainable advantage in many industries.As internet substantially reduces transaction costs for many activities, what impact does this have for a new theory of the firm?What will firms now organize around? Efficient interaction of knowledge?Software development needs to focus not on automating rules-based actions but on augmenting those human actions that cannot be automated.

Common carriage and discriminatory pricing: what is the impact on pricing (or other mechanism) when infrastructure demand pushes to (or past) the boundary of rival/non-rival usage? Some discrimination seems necessary at this stage (e.g. fire trucks that can turn stoplights red, laws that compel people to pull over for ambulances).

Humans need to move items from long term memory, to short term memory (capacity of 7, plus or minus 2), to focus of attention (capacity of 2 or so) in order to compare or act on them.Internet has greatly expanded human capacity for long term storage and increased the rate of long term to short term retrieval.What is still constrained is the transfer from short term to focus of attention.Attention is a very rivalrous good, which we may need the assistance of software to augment if we are to get the next great era of innovation and growth.


========================
Douglas Frosst
South River Partners
Voice: 613 688 7079
dfrosst@southriverpartners.com
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From: Leslie Nulty <leslie@focalpointvt.com>
Date: September 8, 2007 6:11:34 PM EDT (CA)
To: "" <isen@isen.com>
Subject: What I learned at BigHook2007

Dear David,

Herewith my homework assignment!

What I learned at BigHook 2007:

Although I did not contribute to the formal
discussion sessions, I got an enormous benefit from being a pure listener, and
I hope I made some useful contributions to the rich informal conversations
during breaks and meals.

The world that I move in is quite removed from the worlds many BH07 participants
seem to live in, so I hope I may be allowed to offer some observations,
questions actually, derived from my angle on what I heard. It is also the case
that I cannot think of another conference/retreat/etc., that I've been to that
is quite as free-wheeling as this was, and I haven't yet decided whether
that's all to the good or not. I did hear someone observe that BHs don't
necessarily carry over beyond the sessions themselves in a clearly identifiable
way, and that led to some thoughts about how that could happen, if that's
something folks want to see. So here are some provocative(?) questions:

• Is the internet or connectivity (I/C), etc., a means or an end?
• What are the desired goals/properties of I/C?
• What are the obstacles to realizing them?
• What are the opportunities to remove or circumvent those obstacles?
• What actions need to be taken to remove/circumvent, etc. and who is going to do the job?
• Since humankind has great capacity for both good and evil (and these are defined differently by different groups), what do we think about the I/C role in accelerating the proliferation of certain evils (eg., child prostitution, terrorist organizations, etc.)?

It may well be that previous sessions have already tangled with these, or if
not, that they may be of interest for future sessions. Just some food for even
more thought.

Again, thank you all so very much for this special opportunity to grow new
sections of my brain, and to encounter some amazing people (including the
musicians).

Best regards,

Leslie

Focal Point Advisory Services
P.O. Box 1121
Jericho Center, VT 05465
office: 802-899-4582
cell: 802-324-1496
fax: 802-899-1987 (please call 802-899-4582 before faxing)

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From: "Kamman, Steve" <Steve.Kamman@fmr.com>
Date: September 8, 2007 12:49:48 PM EDT (CA)
To: <bighook2007@isen.com>
Subject: [BigHook2007]

Susan Crawford's "the internet and the project of communication law" is a great read - especially for those of us who are less engaged in the day-to-day regulatory debate. Summarizes all the main arguments but has a point to it as well. And a good/well argued point at that.

Also approaches pure poetry in places. "these arguments [over whether telcos can charge a premium to content providers like you tube/google] presebt zero-sum games and are likely percieved by non-techies as abacus beads moving back and forth on a single wire of money-making zeal.".

Echoes of TS elliot's "silent claws scuttlling across silent seas"

IMHO, that was one of the best Bighook's on record. I am so thankful for everyone's willingness to contribute/participate. Went to bed last night with visions of slime molds and dolphins dancing in my head. Not necessarily dancing together I might add...



Steve Kamman - Analyst
Fidelity Management & Research
617 563-0103

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From: vint@google.com
Subject: [BigHook2007] notes from WoodsHole
Date: September 7, 2007 9:59:31 AM EDT (CA)
To: bighook2007@isen.com

Big Hook Lessons and Questions

Or, How I became a Big Hooker and learned to like Cape Cod!


1. It is still possible to make remarkable contributions to the Internet (Aaron Swartz RSS at age 14)
2. On Metaphors
a. These are very helpful in specific instances but very dangerous if used indiscriminately
b. Internet is a complex system. Abstraction can help to create models and metaphors but no one abstraction is sufficient to characterize all aspects of a complex system. Metaphors impose limits that may be artifacts of the metaphor, not of the thing modeled.
c. Do phase transitions help to explain aspects of the Internet? Gas, liquid, solid, other phases? At some scale, the notion of phase applies (e.g. condensed matter, liquids, gas, plasma).
d. Emergent properties are not usually predictable or explainable from lower level characteristics (but see chaos theory).
e. Is Internet like a language? Like an ecology? An economy?
f. BT has discovered that OPEX is not a fixed percentage of CAPEX so pricing and business models based on linkage don't work.
g. We have used too-simple models of infrastructure for too long (Lessig). Need to focus on demand side and not so much on supply side to understand infrastructure properties.
h. Internet is more than its architecture, its pipes (tubes) or its applications. It is about facilitating human communication.
3. On Law
a. Common carriage is 700 years old and evolved from Common Law
b. Common carriage and monopoly are entirely orthogonal
c. Common carriage does not confer right-of-way access
d. Public Utility law a derivative of common carriage
e. Carriers are trying to have their cake and eat it too (contracting out of common carriage obligations)
f. Cable companies are not common carriers!
g. Must have sustainable rules for conduct of business. Some form of property right; some form of contract or exchange; some form of reasonable and non-discriminatory access to infrastructure.

4. On Infrastructure
a. The Invisible Hand of Adam Smith works on the world of physical objects that cannot be shared concurrently or are consumed in use (apples, lumber).
b. Market failures generate a role for government (regulation, subsidy, investment)
c. Corn grows on trees.
d. Spillover may be the most important product of infrastructure and its value is not captured by traditional economic models and theories. Many people receive value from the Internet even if they are not on it or use it directly.
e. Strong property rights create top/down hierarchical models; weak property rights lead to more liquid/adaptive behaviors.
f. Open Source: nobody owns it, anyone can use it, anyone can improve it.
g. Optimizing infrastructure for specific uses can destroy its value as a general utility. Ambiguity is powerful.
h. I need to learn more about what it means to "manage as a commons" and I need to read Origin of Wealth.
i. If infrastructure is a complex system then its failure can have catastrophic consequences (think: Power outages, Bridge failures)

5. On Broadband
a. At what point does product differentiation and network management become anti- competitive?
b. How can the risk of anti-competitive actions by broadband providers be contained within a reasonable envelope? FTC and FCC potential to bound or respond to bad behavior? Legislation needed to clarify roles, rules, and responsibility?
c. Removal of Common Carriage rules for broadband Internet providers may have serious but unanalyzed consequences (700 year history erased by FCC).
d. The Japanese have cheap, super high speed, symmetric access to the Internet. Why can't we do that in the US? BT is making money on open broadband access. Why can't ATT and VZ?
e. WiFi and fiber are bringing broadband to communities not served well by large carriers. Works at modest scales (US, Canada and Mexican examples). But see the business models in Philadelphia WiFi ’Äì usage charging inhibits use.
f. The Burlington, VT broadband effort is worth watching to assess the viability of this approach.
g. There is a lot of interest in the potential of the US 700 MHz auction if acquired by parties with open networking philosophy. White Space is another target of opportunity.
h. Some are strongly persuaded that despite the potential hazards of limited broadband competition, too much momentum has been built up to stop Internet from expanding and even escaping unwanted government control.
i. I need to get on Baller's Group List
j. Could there be a slime-mold-like reaction to scarce Internet resources triggered by a social pace-maker phenomenon? How would it manifest itself? Make your own network?
k. Can we understand the notion of organization without leadership and what would that tell us about the establishment of network infrastructure? It's still an organization even if there is no leader that creates it.
6. On Internet
a. The Internet is more than its physical manifestation and technical protocols. We've moved backward from the Licklider perception of the use of networked computers.
b. Is the Internet better explained as a "YOU-centric" system? An "US-centric" system? A barn-raising system? (Peering is a bit like barn-raising; a cooperative phenomenon).
c. Some parts of the Internet are hard to change (things affecting the interfaces between the layers). Some things are easy (changing the implementation inside a layer; adding a new protocol or application).
d. Has Internet survived because some people have tried to kill it (like antibiotic resistant bacteria).
e. Is Internet a kind of "oneness" system? [Robin Williams joke about the Buddhist Monk who asks a hot dog vendor to "make me one with everything"] Communication is an attempt to establish common ground. Internet enables forms of communication that were heretofore impossible. The communication companies don't communicate for us, they only facilitate it.
f. The Internet is like Home Depot. It doesn't do anything.
g. People like hierarchies ’Äì new and exciting ones. Let people self-invest in them.
h. The Internet drops barriers to entry into new uses of the Internet [wikipedia?]. Zero cost produces infinite benefit if benefit is inversely proportionate to cost.
i. Internet service could be considered a rivalrous good but this misses its role as an idea generator. How to reconcile? Not all ideas are good ’Äì how to figure out which ones are?
j. Consider Internet as a technical architecture (physical assets, logical protocol and software structure) and as a complex of providers (who owns, operates and manages the technical components and what are their business models?) and a complex of users and their applications. What decomposition is useful? What portion of the Internet is subject to regulatory constraint? What fraction of the physical infrastructure benefits from public easements (public granting of resources without compensation on the grounds of the benefit to the public)?
k. Should the Internet be free and funded by the government? Like the road system? Overuse? Congestion? Fair access and allocation? Note HOV lanes and toll road phenomenon. Leads to privatizing roads. Note commercialization of Internet led to massive expansion of access.
7. On economics
a. Looking at the US in 1900 vs 2007 is very instructive (exponential gain in wealth). How to explain this?
b. Should we invite the Freakonomics guys to Big Hook?
c. All economic models are wrong (abstractions).
d. A world of objects does not lead to sustained (exponential) growth.
e. The world of ideas doesn't conform to the same model. Can use and re-use ideas without consuming them. Need new economic models for these.
f. World of ideas is infinitely scalable because you can't "use up" the idea (or recipe).
g. $100B development of drug to cure heart disease. Cost is $1000 to make. How many can pay that? What cost death of those who can't? How does government intervention play a role (research, subsidy for medicine, other?)
h. Need legal frameworks for commerce (and infrastructure). Note economist's mistake in China and Russia.
i. The use or lose aspect of Internet resources (transmission capacity, cpu cycles) could be modeled as perishable commodities for economic purposes.



8. On Business
a. The purpose of a corporation is to be a bigger corporation.
9. On Policy
a. Economic policy should focus on communications policy as a major lever for economic development
b. Open, broadband access to Internet is a key element
c. We have to learn to communicate better than Karl Rove
d. If we want to organize we need to talk to the people we want to organize, first.

10. How can the television industry stop worrying and learn to love the Net?
11. We need more data about Internet performance. If data is available, CAIDA (and others will analyze).
a. Fund development of client software to measure performance (use beacons)
b. Approach NIST about a possible role in capture of flow rate statistics among ISPs. Aggregate for confidentiality?
c. Taken as a whole, Internet is a complex system and should be analyzed that way.
12. Some stunning talent has been exposed in Woods Hole and deserves global attention:
a. Mike Marshal, Alex Hargreaves, Paul Kowert from around the US.
b. Science-centric stoneware ’Äì KT band artifacts ’Äì Joan Lederman. The Soft Earth.
c. Catering team of Chef Roland


SOME POINTS I'D LIKE TO MAKE

1. RESPECT is a critical element of Big Hook
2. Economics of everything digital is driving qualitative change (Terabyte disk cost story)
3. Transformation of television
a. Television is a business, video is a medium
b. Cost of transmission and storage of digital information is so low that it can affect how people watch videos
c. Internet and its interactive, user-in-control style will open new avenues for monetizing, delivering, and watching video.

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