Internet Commons

= is the internet a commons? (and if so, what kind of commons?)

Answer: the nature of the internet cannot be adequately explained by Common Pool Resources theory (CPR Theory).

Source

Excerpts from:

Essay: Hofmokl, Justyna. 2008. "Towards an Eclectic Theory of the Internet Commons." Presented at "Governing Shared Resources: Connecting Local Experience to Global Challenges," 12th Biennial Conference of the International Association for the Study of Commons, Cheltenham, England, July 14-18, 2008.

Full text available as: http://dlc.dlib.indiana.edu/archive/00003831/00/Hofmokl_213801.pdf

Summary

Justyna Hofmoki:

"In order to determine whether the term commons is applicable to Internet goods, I shall conduct first an analysis of their key biophysical attributes: excludability and substractability, in line with the methodology adopted in the mainstream theory of commons. Additionally, I shall identify some other characteristics which differentiate Internet commons from traditional common goods. While embarking on such a task, I shall indicate some potential difficulties, as the particular attributes largely are dependent upon certain technical features of a given good. Analyzing the technical aspects of the Internet is beyond the scope of the present paper, so I will restrict references to technical aspects to a minimum." (http://dlc.dlib.indiana.edu/archive/00003831/00/Hofmokl_213801.pdf)

The Three Layers

The physical layer

"The physical layer consists of all the physical tools and equipment that enable the process of communication. These include computers (the equipment to produce and send information), and tools that enable communication between computers – routers, wires, cables and wireless networks. Recently, a wide range of mobile devices - such as mobile phones, handhelds and mp3 players - have been added, which also facilitate communication. Following the terminology adopted in the mainstream theory of commons, the key hardware components basically are purely private goods (excludability combined with rivalry consumption). However, a closer look points to a somewhat diversified picture.

a) Telephone cables

In order to connect to the Internet, the user needs a computer connected to a telephone network, cable line or some other device that can receive a wireless signal (like a router). Cables that transmit the signal to the end user belong to telecoms or cable operators. These are private goods, which are extremely expensive due to the high costs of building and maintaining the cable infrastructure. Therefore, ownership of the cables usually belongs to big telecommunication companies, who generate profits by leasing the cables to smaller operators. The dominant and often monopolistic position of the telecoms results in very strict policies related to sharing access to cables. These relations also are monitored and controlled by specified governmental agencies. Therefore, the cable infrastructure falls into the category of regulated private goods.

b) Wireless networks

Wireless networks are an alternative source of internet connection. These networks have distinctive features, making them an interesting object of analysis. Until recently, due to the high level of radio wave interference, consumption of the radio spectrum was steeped in rivalry, thereby falling within the CPR category. This spectrum was considered to be a scarce resource that needed to be regulated by the authorities. Moreover, alternative governance structures were based either on restricted access to specialized government agencies (collective goods) or the privatization of specific frequencies through concession systems (private goods).

Recent technological developments have enabled smart receivers to distinguish signals from different sources, thereby allowing the sharing of certain frequencies (Benkler, 2006:88). Consequently, multiple users can use the same frequency with very little or no decline in the quality of service. For that reason, modern wireless networks are becoming an open alternative to closed broadband networks.

In terms of key characteristics in common, I must differentiate between three broad categories of wireless network:

• Commercial networks owned by telecommunication companies or private corporations, to which access is granted to subscribers or designated members. These networks fall into the club goods category;

• Municipal networks built by local governments, to be freely used by citizens or visitors. Municipal networks can be classified as public goods – the costs of providing the good are covered by the local government, and access usually is free to all citizens or users in range of the network;

• The most interesting category of wireless networks is comprised of open, bottom-up networks, usually set up by individuals who allow anyone to connect to their transmitters. These so called social WiFi networks or mesh networks, and they generally fall within the public goods category.

Technological developments in wireless communications also have given rise to the widely spreading concept of an ‘open spectrum’. Open spectrum proponents call for decision makers to deregulate and free up the radio spectrum (Benkler, 1998). They claim that, as a result of recent technological developments, radio waves have become public goods. Consequently, they appeal to regulators to create a friendly, institutional environment, facilitating and encouraging bottom-up civic initiatives.

To summarize, wireless networks are in the midst of major changes. New institutional arrangements that allow for the transformation of classic private goods into club or public goods are particularly interesting. The informal networks serve as a primary example of the impact major technological developments in the ICT field have had on the common character of specific goods that comprise the physical layer of the Internet structure.

c) Computer hardware

These goods should be classified as classic private goods, owned by individuals or organizations. What is interesting, however, is that they can change their purely private character once the equipment is connected to the Internet. This is because personal computers hooked to the network can share excessive processing power or disk storage. Since this involves practically no additional costs to the owner, this paves the way to providing excessive processing power free of charge to perform certain socially valuable initiatives. There are numerous examples of sharing private resources for the benefit of the community, just to mention distributed computing projects like SEITI@home and peer-to-peer networks. It should be underlined that individuals share their resources with a community of strangers, having often little or no knowledge about the way the resources will be used. One, therefore, may note certain duality with respect to private versus common character, which becomes an essential characteristic of some Internet goods.

Moreover, private goods that are jointly used within a network can become valuable resources for commercial activities. One of the most profound examples is Skype, the company that offers free VoIP calls. Skype uses the power of computers connected to the network to establish VoIP connections. When the user installs and runs Skype on his computer, he joins the community of users that form a peer-to-peer network. The network enables free internet calls (benefitting users) but also brings revenue to the private company. In the context of the analysis of Internet commons, this example points to the apparent diversity in existing patterns. Here, the private goods (computers) shared for free are being commercialized by a private company while benefitting a community of users. What is worth noting, due to the high complexity of the system, is that users often are very unaware that their computer is taking part in such an exchange."

The logical layer

"The goods that constitute the middle, or logical, layer are internet protocols, technical standards and software that enable the process of communication.

a) Technical standards

Technical standards (technical specifications and protocols) define the rules of communication between computers, and are the core element of the logical layer. The choice of a technical standard not only influences the basic operations of the computer system, it also has vital implications for the hardware industry, internet providers and end-users. Abbate stresses that standards are a form of control not only over technology, but also over the user (Abbate, 1999:147). Technical standards can be either open or closed, as far as ownership and availability are concerned.

The Internet has been built on open, non-proprietary protocols, such as the TCP/IP suite of protocols, which were defined as common property of the whole internet user community (Solum, Chung, 2003:23). Tim Berners-Lee, the inventor of the World Wide Web, has deliberately kept the HTTP protocol and HTML programming language open, in order to maintain the innovative character of the network for as long as possible (Berners-Lee, 1999: 36). Such open standards are non-rival resources, open for everyone to use without access restrictions. Therefore, they should be classified as public goods, becoming the common property of Internet user community.

While the network technical standards responsible for the seamless cooperation of different networks and devices are, to the great extent, open, many technical specifications and file formats are proprietary and closed – protected by copyright or patent law. These formats are designed by companies who want to have exclusive rights to produce specific software. Among the examples of proprietary formats are the following types of files: .doc (text files), .pdf (text files), .gif (images), flash (animation), and .mp3 (music). Proprietary standards, owned by private entities fall into the category of private goods or club goods. One is not allowed to tinker with the formats without the copyright holder’s consent, and access to specific tools is granted only to licensees.

b) Domain name system

Among the most important resources within the logical layer are IP addresses and domain names. These are private goods governed by the dedicated organization called the Internet Corporation for Assigned Names and Numbers (ICANN). The right to use a certain Internet domain name is granted to a person or organization who rents the domain for a limited period of time (with priority to extend that time, if wanted). The first-come, first-served rule is applicable to new and previously-unknown domain names. Otherwise, a person or organization must prove that it should be granted exclusive rights to use a certain domain.

c) Applications and software

Applications and software comprise the largest group of resources within the logical layer. Software enables computers to perform productive tasks for users – it translates content and commands from machine language into human language and vice-versa. Among software, we can list operating systems, programming tools, and applications (word processors, email applications, video software, games, etc.). Although computers can work perfectly well without an Internet connection, more and more software is designed to work within the network. Therefore, I do not make a distinction between Internet and non-Internet software.

As discussed in the previous section, in the early formation stage of the Internet, the prevailing approach was based on the principle that software should be open and non-proprietary. This all changed, due to Bill Gates’ initiative back in 1976, which resulted in the division of the software market into two segments: proprietary software and free/open source software. The owner of the rights to proprietary software imposes on users’ strict restrictions concerning its use, and the ability to copy and modification it. In the case of proprietary software, the source code is closed as well. Such software can be distributed either for free (Internet Explorer, Adobe Acrobat Reader) or licensed to the individual or multiple users (Microsoft Office).

On the other hand, free/open source software is characterized by free access to source codes and a wide range of freedom for the user. The majority of f/oss distributions are given away for free; but there also are versions of the software that are distributed on a commercial basis.

Computer software is an intangible good in digital form. Software code can be copied almost for free (the cost of a recordable CD is negligible) and without any loss of quality. Therefore, computer software, both non-proprietary and proprietary, belongs to the category of non-rival resources. In the case of proprietary software, the owner can limit the number of unauthorized users by selling licenses. Thus, the proprietary software falls into the category of club goods. On the other hand, open source/free software is both non-rival and difficult to exclude. Therefore free/open source software can be classified as a public good."

The content layer

"The resources in the content layer of the Internet are intangible. These are human intellect products in digital form – information, ideas, knowledge, music, text, videos and images. Information is a key resource that is a basis for all the other goods in the content layer.

CPR scholars have recognized that informational resources are of a different nature than tangible, material goods. Hess and Ostrom stressed that analyzing information is much more tenuous than natural resources, because “Information, on the other hand, often has complex tangible and intangible attributes: fuzzy boundaries, a diverse community of users on local, regional, national, and international levels, and multiple layers of rule-making institutions”(Hess & Ostrom, 2003:132). These authors distinguished three forms of informational resources: artefacts, facilities and ideas. “An artefact is a discreet, observable, nameable representation of an idea or set of ideas (for ex. articles, research notes, books, databases, maps, computer files, and web pages.[…] A facility stores artefacts and makes them available. […]The ideas contained in an artefact can be understood to mean the creative vision, the intangible content, innovative information, and knowledge. Ideas are the nonphysical flow units contained in an artefact” (Ibid.).

It should be noted that recent technological developments, especially digitization, has redefined the whole environment of informational goods. In the ‘analogue’ era, artefacts were physical and mostly private goods, and the infrastructure – like libraries and archives - that made these resources available to the public either were club goods or public goods. Ideas always were a common good and remained as such within the digitalized environment.

With regard to Internet goods, examples of informational goods include various resources in digital form. Although traditional artefacts in physical form belong to the category of classic private goods, digital artefacts have different attributes and therefore represent wider range of goods. One of the most distinguished features of digital artefacts is the possibility of copying without the loss of quality and at almost no cost. This makes digital artefacts non-rivalry goods, as one person’s use of a digital file does not subtract from another person’s capacity to use it. Free copying changes the whole process of distribution, enabling the immediate delivery of digital artefacts. Additionally, new technologies entering the market have facilitated the collective production of informational goods, so that they have become common property. Thanks to collaborative website creators, such as Wiki, the users can edit and share information easily with others. The authors also have gained new tools for managing their copyrights. These are special copyright licenses that enable copyright holders to grant some of their rights to users while retaining other rights. Examples of new licensing models include Creative Commons licenses or GNU Free Documentation Licenses. The digitization of artefacts and the whole electronic environment for producing information has fundamentally altered their basic attributes. On one hand, their consumption have become non-rival. As for access, the existing arrangements range from full exclusion of unauthorized users to granting free access with some intermediary solutions. Consequently, digital artefacts fall within various categories of common good, depending upon the degree of exclusion.

As far as the infrastructure is concerned, one also may note a visible shift to digital forms. Digital repositories and databases typically fall within the category of club goods (they are open only to authorized users), but there is a growing number of digital open access archives that gather informational resources which are free for anyone to use. Therefore, one may conclude that, within the realm of informational goods, one can observe very interesting changes corresponding to the radical innovations being developed in information technologies, which are shaping entirely new conditions for the production and exchange of such goods." (http://dlc.dlib.indiana.edu/archive/00003831/00/Hofmokl_213801.pdf)

Discussion

Is the Internet a Commons?

1). It should be stressed that the process of placing Internet goods on the map of common goods only can be indicative; we do not have the precise tools to measure the intensity of these two basic attributes (excludability and substractability).

Among Internet goods, many fall within the pure public goods category. This is especially visible in the case of the logical layer (open standards and free/open software) and the content layer (open informational resources). A large group of Internet goods can be categorized as club goods (non-rival consumption and excludability). Examples of this are broadband internet access, proprietary software, and closed databases.

The most striking evidence of ‘novelty’ in the context of the mainstream CPR theory is the virtually empty ‘CPR quadrant’? With the exception of traditional radio waves, it is difficult to identify any other Internet good which would fall within the CPR category. This is a very important conclusion, with regard to the explanatory power of the CPR theory, as applied to Internet goods. The analytical focus of the CPR theory was confined to a particular set of biophysical attributes: non-excludability combined with rivalrous consumption. This combination of the key biophysical attributes is almost non-existent in the case of Internet goods, so that the major concepts and theoretical underpinnings of mainstream CPR theory simply do not apply to the Internet commons.

Until recently, problems associated with network congestion have been perceived as similar to the excessive exploitation of natural resources, the main field of study by CPR scholars (Bernbom, 2002). However, technological advancements and growing bandwidth capacity have led to more efficient Internet connections and bigger file transmissions. Such revolutionary changes in the physical conditions are hardly to be expected in the case of natural resources.

Hence, there is an obvious need for extension of the existing theoretical analysis of commons, so as to encompass particular features of Internet goods. This will not be an easy task, particularly due to their diversified but, at the same time, interrelated structure. We need to develop new methodological tools to investigate how the key biophysical attributes used in CPR theory interact at the level of individual Internet goods and affect the functioning of the Internet as a composite structure.

An additional important feature of Internet goods is their duality. The same goods can, according to different institutional arrangements, fall into either the public, private or club goods category. Duality can be observed in cases of open or closed computer software or open and proprietary information resources. Another manifestation of duality is the previously mentioned personal computers that change their attributes when they work within a network. A piece of hardware, like a portable computer, when it is standalone represents a classic private good; but,, once it is connected to a network, it can reflect certain features of a club or semi-public good. The rise of the Internet gives a new impulse for incorporation of other than CPR common goods, categorized with the use of non-excludability and joint consumption criteria; namely, the (pure) public goods and club goods. The former category meets both the non-excludability and non-rival consumption criteria – e.g. watching the sunset or benefitting from national defence protection was very narrow and, therefore, attracted limited attention from the research community. This needs to change once Internet goods are investigated, as many of them can be categorized as pure or semi-pure public goods, just to mention open standards and open access software, electronic repositories of freely available information and knowledge, etc. As discussed earlier, free access to information in the electronic format by millions of Internet users, combined with the active involvement in the generation of said information and knowledge, already have affected human civilization in all important spheres: economic, socio-cultural, political, etc. We need to study these new Internet goods, which calls for revisiting the concept of public goods in various disciplines within the social sciences.

The Internet commons also have opened new perspectives with respect to another category of broadly-defined common goods; namely, the club goods. Again, during the pre-Internet era, club goods (easy exclusion combined with non-rivalry consumption) were quite rare and predominantly local (country clubs, subscribed theatre services).This has changed radically due to the rise of the Internet.

Contemporary ‘clubs’, which gather users of proprietary software and subscription-based proprietary databases, can have millions of members all over the world.

Classic club goods used to be treated in academic analysis as impure private goods, whereas the key characteristics of Internet club goods render them closer to pure public goods. Let us take the example of the electronic repositories of scientific journal articles, which are accessible to scholars on the basis of subscriptions paid by their university. From the individual scholar perspective, such service can be viewed as a pure public good, as she/he is not confronted directly with restrictions in their use (except that the access code needs to be provided).

The above considerations reinforce the key argument that the rise of the Internet requires a major extension of the mainstream theory of commons. Some of the new elements discussed above can be incorporated within the existing neoinstitutional framework. However, there are other features and characteristics of the Internet commons which call for a more fundamental change in the overall conceptual framework of the mainstream CPR theory of commons. First, in the analysis, one needs to incorporate the impact of the radical changes in the history of civilization that have been brought about by the widespread application of the Internet and of information and communication technologies (ICT) in general.

The second argument calling for significant adjustments in the neoinstitutional theory of commons relates to important new attributes that can be identified in cases of Internet goods. True, additional characteristics of individual CPR goods typically have been included in analysis, particularly following the Institutional Analysis Development (IAD) framework. However, such characteristics have played only an auxiliary role relative to the two basic attributes, excludability and substractability (Ostrom, Hess 2007: 22-27). In the case of Internet goods, there are other distinct features which seem to be equally, if not more important than the two classic biophysical attributes.

In my view, the current mainstream theory of commons does not provide sufficient grounds for the comprehensive analysis of the new phenomena that have been brought about by the rise and rapid expansion of the Internet. At the same time, we have noted the development of new, interesting concepts, outside the mainstream theory of commons, which might be very useful in explaining the new dimensions of the Internet commons. The proposed scope and structure of the eclectic framework for the expanded theory of commons is depicted in Figure 2."

The Sharing Potential of Internet Goods

"In the preceding section, I identified an important attribute of the Internet commons – its ‘sharing potential’, which reflects the broadly-defined efficiency of joint consumption (use) of a given good, often by a very large and expanding number of users. Such joint use does not diminish a good’s value; but, quite often, such value increases with the number of consumers. The sharing potential stays, in contrast with the characteristics of classic CPR goods, where exceeding a certain number of users causes consumption to become competitive. The useful concepts which might be helpful for explaining the sharing potential of Internet goods are network effects, sharable goods, and positive free riding.

a) Network effects

The network effects concept was introduced to the economic literature in 1985 by M.L. Katz and C.Shapiro, who used the term ‘Network Externalities’. They noted that, in the case of many products, “the utility that a user derives from consumption of the good increases with the number of other agents consuming the good” (Katz, Shapiro, 1985:424). This concept was later refined by S. Liebowitz and S. Margolis, who argued that network effects, in their pure form, do not need to coincide with externalities; i.e. positive or negative effects on parties not involved in a given transaction (Liebowitz, Margolis, 1994). The added value of existing and new customers results from direct interactions between the users of a given good, as well as from the increased availability of complementary products and services.

Back in the 1980s and 1990s, when the network effects concept was introduced and refined, traditional telephone systems were viewed as the primary exemplification of these effects. Nowadays, with the rapid development of information technologies, the ICT sector is believed to demonstrate the most significant network effects, just to mention the development of the World Wide Web, where new essential functionalities were added once the number of Internet users increased. The same goes for websites facilitating exchanges via the Internet (eBay) or dedicated portals used for social networking. The developments taking place within the Internet spectrum clearly contrast with the classic CPR scenario. Specifically, the network effects increase radically once the number of users of a given Internet good reaches a certain threshold. For CPR goods, the increased number of users results in the excessive exploitation of a given resource.

While emphasizing the incidence and magnitude of positive network effects, particularly in the case of Internet commons, I shall point out negative implications, as well. These are reflected in the so called ‘locked-in situations’, profoundly exemplified in the market for professional software applications, presently dominated by Microsoft. The providers of alternative applications, often of superior quality, have faced major obstacles convincing potential clients to shift from Microsoft Office. The clients were reluctant to lose obvious benefits derived from the network effects: compatibility with the applications used by their business partners, standard installations on purchased hardware, access to auxiliary services, additional combatable applications, etc.

b) Positive Free Riding

The so-called ‘free-riding problem’ reflects the principal of social dilemma – a conflict between individual self-interest and the community. In a classic CPR scenario (costly exclusion and rivalrous consumption) the production of such goods normally would call for voluntary contributions from community members. However, this is in conflict with the maximization of individual benefits among community members who, following homo oeconomicus logic, are not be willing to pay for goods which are otherwise freely accessible.

Empirical studies on human behaviours in typical CPR scenarios have proven that homo oeconomicus logic may not be predominant (Stiglitz, 2004: 156). In the following section, I shall present additional concepts explaining diverse nonpecuniary motives among people involved in the consumption and production of Internet goods. In case of positive free riding, even while retaining the homo oeconomicus assumption, free riding behaviour can be beneficial for those users who are actively involved in the production of a given Internet good. “Internet reduces the cost of free riding… each free rider actually adds value to the final product. If the free rider is completely passive, she adds value by adding market share (and thus increasing the space for reputational returns to contributors). If she is just a little bit active, the free rider becomes a de facto tester and might just report a bug or request a new feature. The Internet reduces the communication costs of doing all that to just about zero” (Weber, 2000:36). P. Kollock calls Linux an ‘impossible public good’; i.e., having characteristics making it impossible to materialize, if the classic free riding social dilemma remains intact. (Kollock, 1999:3- 25).

There are obvious inter-linkages between positive free riding and the network effects discussed earlier. This is because network effects materialize with the increased number of users, including passive free riders (Weber, 2004:154).

c) Shareable Goods

In the preceding analysis, I concentrated primarily on the largely positive effects derived from interactions between the increased number of consumers of Internet goods. In turn, the shareable goods concept, introduced by Y. Benkler, refers to intrinsic characteristics of some private goods (computers, wireless transceivers, Internet connections) which facilitate sharing with other users (Benkler, 2004). The key argument behind this concept is that some goods available on the market are ‘lumpy’; i.e., they are produced in discrete sizes and represent varying capacities.

Typically, available capacity is fully utilized only in specific time intervals; otherwise, it remains partially underused. Such idle capacity of some Internet goods can be shared with other users at practically no additional cost to the owner. Notable examples of capacity sharing are distributed computing projects and peer-to-peer networks.

It should be noted that the issue of available excess capacity is not restricted to Internet goods, but common in other sectors as well. The difference is that, in the former case, sharing is much easier and more efficient. To share excess storage capacity in a warehouse located on the company premises would call for a set of additional logistic arrangements (controlled access to the warehouse, separate storage space, sharing additional costs of monitoring and insurance, etc.). Such problems are practically non-existent when sharing excess computer processing capacity via the Internet network.

Definitely, certain attributes of Internet goods make them more suitable for sharing than other goods. However, the simplicity, cost-efficiency and functionality of sharing are dependent upon the Internet network facilitating the whole process. The shareable goods theory can be extended easily to include the increased shareability of certain other private goods, once sharing is accomplished via the Internet. Here, I shall refer to the role of information and communication technologies as enablers of innovation processes, spread across various industrial sectors. Clearly, there are numerous examples of increased share-ability as a result of Internet connectivity, just to mention carpool (especially for long distance travel) and apartment-sharing systems. On the other hand, the simplified, practically cost-free sharing opportunities that exist on the Internet may provide additional powerful stimuli to accelerate the production of specific goods, as profoundly demonstrated by the most recent success of the YouTube exchange of short amateur movies." (http://dlc.dlib.indiana.edu/archive/00003831/00/Hofmokl_213801.pdf)

Conclusion

J. Hofmoki:

"In conclusion, I want to emphasize that the rise of the Internet poses a serious challenge for the research community studying the commons, calling for major revision of theoretical concepts, methodologies and analytical apparatus. However, at the same time, it creates a fascinating ground for a radical revitalization of the theory of commons. This is because the object of the study – the Internet commons - is expanding at an unprecedented pace. Simultaneously, its role in the global economy is increasing exponentially, affecting all key spheres of human interaction. As exemplified in the preceding analysis, the structure of the Internet commons is highly diversified, thus calling for scientific exploration of its modalities and dimensions.

The current author believes that, considering the state-of-the-art of the theory of commons and the challenges connected with the rise and expansion of the Internet, the development of a single theoretical framework encompassing the whole diversity of the Internet commons may not be feasible. The alternative eclectic route seems to be more promising, particularly as interesting new concepts with direct relevance to the Internet have emerged in various branches of the social sciences. The proposed format, which identifies both open questions and the sources of theoretical inspiration, is by no means exhaustive and serves merely as an initial platform, facilitating academic discussion and, thereby, leading to refinement of the eclectic model.

Finally, a word of caution shall be offered. Researchers of the Internet commons are confronted, on one hand, with the limited timeframe of the analysis which results from the very brief history of the Internet. On the other hand, expansion of the Internet brings fundamental changes that affect practically all spheres of human interaction. This expansion calls for immediate reaction from the academic community. However, the former points to the significant risks of concentrating research endeavours on issues of a transient, nature while neglecting other, significant, long-term tendencies." (http://dlc.dlib.indiana.edu/archive/00003831/00/Hofmokl_213801.pdf)