Open Internet Infrastructure
The citations below are all from Brett M. Frischmann in her article by First Monday Infrastructure Commons in Economic Perspective
Definition
Defining Infrastructure
Brett M. Frischmann:
"Infrastructure resources are resources that satisfy the following demand–side criteria:
1. The resource may be consumed nonrivalrously;
2. Social demand for the resource is driven primarily by downstream productive activity that requires the resource as an input; and,
3. The resource is used as an input into a wide range of goods and services, including private goods, public goods and/or non–market goods.
The term “infrastructure” generally conjures up the notion of physical resource systems made by humans for public consumption. A list of familiar examples includes: (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. I refer to these resources as “traditional infrastructure.”
Two generalizations about traditional infrastructure are worth noting at the outset. First, the government has played and continues to play a significant and widely–accepted role in ensuring the provision of many traditional infrastructures. While private parties and markets play an increasingly important role in providing many types of traditional infrastructure (due to a wave of privatization as well as cooperative ventures between industry and government), the government’s position as provider, coordinator, or regulator of traditional infrastructure remains intact in most communities.
Second, traditional infrastructures are generally managed in an openly accessible manner. That is, they are managed such that the resources are openly accessible to members of a community who wish to use the resources. 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." (http://www.firstmonday.org/issues/issue12_6/frischmann/index.html)
Typology
From http://www.firstmonday.org/issues/issue12_6/frischmann/index.html:
Commercial Infrastructure = Nonrival or partially (non)rival input into the production of a wide variance of private goods
Examples: Basic manufacturing processes / Cable television / The Internet / Road systems
Public Infrastructure = Nonrival or partially (non)rival input into the production of a wide variance of public goods
Examples: Basic research / Abstract ideas / The Internet
Social Infrastructure = Nonrival or partially (non)rival input into the production of a wide variance of nonmarket goods
Examples: The Internet / Road systems
Discussion
Why the Internet should be considered a Commons
"The general value of commons as a resource management principle is that it maintains openness, does not discriminate among users or uses of the resource, and eliminates the need to obtain approval or a license to use the resource. As a general matter, managing infrastructure resources in an openly accessible manner eliminates the need to rely on either market actors or the government to “pick winners” downstream. In theory, at least, this facilitates innovation in the creation of and experimentation with new uses. More generally, it facilitates the generation of positive externalities through the downstream production of public goods and non-market goods that might be stifled under a regime where access is allocated on the basis of individuals’ willingness to pay."
"For commercial infrastructure, antitrust principles provide a sufficient basis for determining whether open access is desirable because competitive markets (for both inputs and outputs) should work well. Downstream producers of private goods can accurately manifest demand for infrastructure because consumers realize the full value of the goods (i.e., there are no externalities) and are willing to pay for such benefits. Accordingly, from the demand–side, there is less reason to believe that government intervention into markets is necessary, absent anticompetitive behavior.
For public or social infrastructure, the case for commons management becomes stronger for a few reasons. First, output producers are less likely to accurately manifest demand due to information/appropriation problems. It is difficult for these producers to measure the value created by the public good or non-market good outputs; producers of such outputs are not able to appropriate the full value because consumers are not willing to pay for the full value (due to positive externalities); and such producers’ willingness to pay for access to the input likely will be less than the amount that would maximize social welfare.
Social surplus (i.e., the amount by which the social value exceeds the private value) may result from a “killer app,” such as e–mail or the World Wide Web, that generates significant positive externalities or from a large number of outputs that generate positive externalities on a smaller scale. That is, in some situations, there may be a particularly valuable public (or non–market) good output that generates a large social surplus, and in others, there may be a large number of such outputs that generate small social surpluses. Both types of situations are present in the Internet context. While the “killer app” phenomenon appears to be well understood, the small–scale but widespread production of public and non–market goods by end–users that obtain access to the infrastructure appears to be underappreciated (and undervalued) by most analysts. Yet in both cases, there may be a strong argument for managing the infrastructure resource in an openly accessible manner to facilitate these productive activities.
The social costs of restricting access to public or social infrastructure can be significant and yet evade observation or consideration within conventional economic transactions. Initially, we may analyze the issue as one of high transaction costs and imperfect information. Yet, even with perfect information and low/no transaction costs with respect to input suppliers and input buyers, input buyers would still not accurately represent social demand because it is the benefits generated by the relevant outputs that escape observation and appropriation.
To the extent that infrastructure resources can be optimized for particular applications, which is often the case, there is a risk that infrastructure suppliers will favor existing or expected applications. If we rely on the market as the provisional mechanism, there is a related risk that infrastructure suppliers will favor applications that generate appropriable benefits at the expense of applications that generate positive externalities. Even putting aside the generation and processing of demand signals, it remains unclear whether markets will operate efficiently with respect to the supply of public and social infrastructure. There may be significant transactions cost problems that may hamper markets. For example, transaction costs associated with price setting, licensing, and enforcement (may) increase as the variance of public good and non-market good outputs increases.
Economists recognize that there is a case for subsidizing public and non-market goods producers because such goods are undersupplied by the market. The effectiveness of directly subsidizing such producers will vary, however, based on the capacity for subsidy mechanisms to identify and direct funds to worthy recipients.
In some cases, open access to the infrastructure may be a more effective, albeit blunt, means for supporting such activities than targeted subsidies. Open access eliminates the need to rely on either the market or the government to “pick winners” (or uses worthy of access). On one hand, the market picks winners according to the amount of appropriable value generated by outputs and consequently output producers’ willingness to pay for access to the infrastructure. On the other hand, to subsidize production of public goods or non–market goods downstream, the government needs to pick winners by assessing social demand for such goods (based on the social value they create). The inefficiencies, information problems, and transaction costs associated with picking winners under either system may justify managing public and social infrastructure resources in an openly accessible manner." ((http://www.firstmonday.org/issues/issue12_6/frischmann/index.html))
Justification of the Internet as an Open Infrastructure
"The Internet consists of many infrastructure resources. Scholars have delineated two macro–level infrastructure resources. The physical infrastructure consists of a wide variety of physical networks interconnected with each other, while the logical infrastructure consists of the standards and protocols that facilitate seamless transmission of data across different types of physical networks [8]. The physical and logical infrastructure both act as essential inputs into downstream production of applications and content. Thus, the physical and logical infrastructures are the foundational layers upon which the Internet environment we experience has been built.
The Internet meets all three demand–side criteria for infrastructure. The Internet infrastructure is a partially (non)rival good; it is consumed both nonrivalrously and rivalrously, depending upon available capacity [9]. The benefits of the Internet are realized at the ends. Like a road system, a lake, and basic research, the Internet is socially valuable primarily because of the productive activity it facilitates downstream. End–users create demand for Internet infrastructure and generate value through their activities.
The Internet is a mixed commercial, public, and social infrastructure. The public and social aspects of the Internet infrastructure are largely undervalued in current debates. Bringing these aspects of the Internet into focus strengthens the case for preserving the end–to–end architecture of the Internet." ((http://www.firstmonday.org/issues/issue12_6/frischmann/index.html))
Positive Externalities and Social Value of the Internet
"The Internet environment is quickly becoming integral to the lives, affairs and relationships of individuals, companies, universities, organizations, and governments worldwide. It is having significant effects on fundamental social processes and resource systems that generate value for society. Commerce, community, culture, education, government, health, politics, and science are all information- and communications–intensive systems that the Internet is transforming. The transformation is taking place at the ends, where people are empowered to participate and are engaged in socially valuable, productive activities. As Jack Balkin has observed, the “digital revolution makes possible widespread cultural participation and interaction that previously could not have existed on the same scale” [11].
The Internet opens the door widely for users, and, most importantly, it opens the door to many different activities that are productive. End–users actively engage in innovation and creation; speak about anything and everything; maintain family connections and friendships; debate, comment, and engage in political and non–political discourse; meet new people; search, research, learn, and educate; and build and sustain communities.
These are the types of productive activities that generate substantial social value, value that evades observation or consideration within conventional economic transactions. When engaged in these activities, end–users are not passively consuming content delivered to them, nor are they producing content solely for controlled distribution on a pay–to–consume basis. Instead, end–users interact with each other to build, develop, produce and distribute public and non–market goods. Public participation in such activities results in external benefits that accrue to society as a whole (online and offline) that are not captured or necessarily even appreciated by the participants.
Further, active participation in these activities by some portion of society benefits even those who do not participate. In other words, the social benefits of Internet–based innovation, creativity, cultural production, education, political discourse and so on are not confined to the Internet; the social benefits spill over. For example, when bloggers engage in a heated discussion about the merits of proposed legislation or the Iraq war, citizens that never use the Internet benefit because others have deliberated. With respect to weblogs, in particular, political scientists, journalists, economists, and lawyers, among others, are beginning to appreciate and more carefully study the dynamic relationships between this new medium of communication and traditional, offline modes of communication and social interaction (whether economic, political, social, or otherwise).
Consider the fact that a significant portion of the content traveling on the Internet is non–commercial, speech–oriented information — whether personal e–mail and Web pages, blog postings, instant messaging, or government documentation — and the economic fact that such information is a pure public good generally available for both consumption and productive use by recipients. The productive use and reuse of such information creates benefits for the user, the downstream recipients, and even people that never consume or use the information. These benefits are positive externalities that are not fully appropriated or even appreciated by the initial output producer.
It is worth noting that welfare can be ratcheted up in incredibly small increments and still lead to significant social surplus. As participants educate themselves, interact, and socialize, for example, the magnitude of positive externalities may be quite small. Diffusion of small–scale positive externalities, however, can lead to a significant social surplus when the externality–producing activity is widespread, as it is on the Internet. Widespread, interactive participation in the creation, molding, distribution, and preservation of culture, in its many different forms and contexts, may be an ideal worth pursuing from an economic perspective because of the aggregate social welfare gains that accrue to society when its members are actively and productively engaged." ((http://www.firstmonday.org/issues/issue12_6/frischmann/index.html))