In a small hearing room in the House Rayburn
Office Building, I met with a group of Capitol Hill staffers
to discuss the issue of "open access" in broadband
cable. "Broadband" is what policy makers call the
next generation of Internet access--faster and always on.
Cable is now the dominant mode for serving broadband. And
the open-access debate is about whether customers get to choose
the Internet service provider (ISP) that serves them broadband
cable or must take the ISP of their cable company's choice.
There were maybe 10 staffers in the hearing
room, and though kind people call me young, only one was my
age (38) or older. They were kids, though they were said to
be the ears of the House on this and other issues of cyberspace
and its future.
The session started as any law school seminar
would. I played the professor--I am a professor--and I laid
out an argument about how to understand the present open-access
debate. Open access, I argued, has been the rule for narrowband
Internet (across telephone lines). Innovation on the Internet
is in part due to this rule. We should hesitate before we
change that rule, for change may well threaten this innovation.
About five minutes into the session, two staffers
came in late. And after about a minute more of my presentation,
one of the latecomers had heard enough. Here I was, he objected,
arguing that the government should "begin regulating
the Internet." Where was the limit? Where would I draw
the line? Today I was calling for the regulation of broadband
cable; should we also regulate broadband wireless? And if
wireless, then satellite too? Was there any stopping this
"new" regulation of cyberspace? Was I proposing
that we regulate Linux (or "Line-Ucks," as he mispronounced
it) because it might become as popular as Windows?
There is deep confusion about the idea of
"regulation" within our political culture and about
its relationship to innovation and the Internet. The fashion
is to say that regulation harms innovation; that government-backed
rules undermine creativity; that the best or most effective
policy for regulators is, as Federal Communications Commission
(FCC) Chairman William Kennard put it, to allow the "marketplace
to find business solutions ... as an alternative to intervention
by government." Any talk about "regulating"
cyberspace invites the breathless reply of the impatient young
Capitol Hill staffer: Cyberspace was born in the absence of
regulation. Don't kill it with regulation now.
This attitude is profoundly mistaken. It betrays
an extraordinary ignorance about the history of the Internet,
and this ignorance threatens to undermine the innovation that
the Internet has made possible. Innovation has always depended
upon a certain kind of regulation; the greatest examples of
innovation in our recent past evince this reliance. And unless
we begin to see the relationship between this type of rule
and the innovation it promotes, we are likely to kill the
promise of the Internet.
Innovation and Monopoly Power
In 1964 RAND researcher Paul Baran proposed
to the Defense Department a plan for a telecommunications
network that was very much like the Internet today. It wasn't
quite the Internet of today, and it probably wasn't the first
such plan. (Baran and Leonard Kleinrock of MIT independently
developed this set of ideas in 1961.) But it was, nonetheless,
an important and radical change from the existing architecture
of telecommunication networks. And the Defense Department
took it seriously enough to raise the design with its network
AT&T didn't like the plan. At first they
claimed the network wouldn't work, but in the end their resistance
was about something else. As author John Naughton describes
in an extraordinary book, A Brief History of the Future,
their resistance was about competition. As AT&T executive
Jack Osterman put it, "Damned if we are going to allow
the creation of a competitor to ourselves."
The AT&T network gave AT&T the power
to decide how its network would be used. If an innovator had
a different idea about how a telecommunications network should
be run, that idea would run on the AT&T network only if
AT&T wanted it. AT&T had the power to choose which
ideas ran and which ideas did not. It architected this power
into its network, and this power was backed up by the force
of law. Even if you could, it was illegal to connect devices
to the AT&T network that AT&T itself did not approve.
The government made sure that AT&T kept control.
This was regulation. It was a power vested
in AT&T, both by the architecture of the original network
and by government regulations that confirmed the power in
that architecture. It was a regime that centralized decisions
about how telecommunications should develop. It gave the telephone
monopoly the power to protect itself and the opportunity to
behave strategically--to decide, for example, not to "allow
the creation of a competitor to ourselves."
In this, the regulation of the old AT&T
was not very much different from the regulations that still
govern cable or broadcasting. There too the law has granted
network owners a great deal of power--the power both over
the conduit and over the content. Innovation in cable proceeds
as cable companies allow just as innovation in broadcasting
proceeds as broadcasters allow. The regulation in all three
cases buttresses a certain monopoly power over an important
part of a communications network.
But at least in the context of telephones,
this regulation had an effect on innovation. It stifled innovation.
No doubt AT&T spent millions to improve its version of
the telephone system. But its version wasn't the only possible
one. So long as AT&T kept the keys to the infrastructure,
there was little return from thinking differently. Innovators
looked elsewhere for projects to develop.
At the core of the open-source and free software
movements lies a kernel of regulation as well. But this regulation
is quite different from the regulation that governed AT&T.
At its root, open code rests upon a license--upon a kind of
law or regulation that controls how this "open code"
can be used. Despite the monikers "free" and "open,"
this license is not forgiving. It is a fairly strict requirement
about the uses to which free or open-source software can be
put. One does not take open code in the sense one might take
a free leaflet from a vendor on the street. A free leaflet
one can burn, or box up, or keep from others in a million
possible ways. Open code gives the recipient no such power.
One takes open code on the condition that one keeps it open--that
one distributes it with its source intact, as open as one
received it. The open-code movement thus uses law to keep
code open. It grants people access to code on the condition
that they pass the code along as unencumbered as they received
it. (Actually, the licenses are many, and their details different,
but this summary will suffice for my purposes here.)
This regulation, like the regulation of the
old AT&T, has a consequence for innovation too. But its
consequence is quite different. The law in open code means
that no actor can gain ultimate control over open-source code.
Even the kings can't get ultimate control over the code. For
example, if Linus Torvalds, father of the Linux kernel, tried
to steer GNU/Linux in a way that others in the community rejected,
then others in the community could always have removed the
offending part and gone on in a different way. This threat
constrains the kings; they can only lead where they know the
people will follow. The resource--the source code--is always
out there to fuel a revolution, protected by a license from
capture by any single person or corporation.
consequence in turn has an effect on innovators. It assures
developers on an open-code platform that the platform cannot
behave strategically, that it can't turn against them. If
a developer writes a browser for an open-code operating system,
there is no way the operating system can force a competing
browser off the platform. Even if the browser is bundled inside
the operating system, the bundle can always be undone. As
the source code is always available, competitors can never
be stopped from bundling the operating system differently.
This effect marks an important difference between open- and
closed-code systems: Whether or not you believe that Microsoft
tied its browser to its operating system by linking the code
of its browser to the code of the operating system so it could
not be removed by competitors, it is clear that an open-source
operating system could never be accused of the same charge.
There is no way for an open-source operating system to tie
itself to any particular path of development. That power is
removed by an architecture that ensures that the source is
always available. And that architecture, supported by the
force of law, guarantees that consumers have jurisdiction
over the innovations that will prevail. Thus, unlike the regulation
supporting the old AT&T, the regulation in open code operates
to decentralize control and to ensure that many have the opportunity
to innovate; it guarantees that no single vision of a product
gets the power to capture that product. Only the market gets
The Case for Competitive Neutrality
The Internet is the fastest-growing computer
network in history. It is not, however, the first computer
network. There were many before it, many of which were extremely
well-funded. Something, however, was different about the Internet,
something in its design.
In the view of many, the critical difference
is a design principle that network architects Jerome Saltzer,
David P. Reed, and David Clark call "end-to-end."
This model regulates where "intelligence" in a network
is placed. It counsels that intelligence be placed in the
applications. As described by Saltzer, "end-to-end"
says: "Don't force any service, feature, or restriction
on the customer; his application knows best what features
it needs and whether or not to provide those features itself."
Build the network to give the application or users control
over the service; don't allow the network any such control.
The network is to remain stupid, and intelligence is to reside
at the ends.
End-to-end was initially chosen as a technical
principle. But it didn't take long before another aspect of
end-to-end became obvious: It enforced a kind of competitive
neutrality. The network did not discriminate against new applications
or content because it was incapable of doing so. The network
can't tell the difference between a packet carrying Republican
speech and a packet carrying Democratic speech; it doesn't
notice the difference between a packet sent from a Windows
operating system and one sent by Linux; it can't filter out
the streaming of video from the streaming of audio. The network
is designed not to know these differences, but simply to take
the packet offered and route it as it is addressed. This doesn't
mean that users can't discriminate. The point of end-to-end
is not that everything goes; it is to locate the power to
discriminate in the users--they choose--and to remove that
power from the network. The principle thus regulates the power
to discriminate. It requires that the network have none.
This regulation too affects innovation. Just
like the license governing open code, endto-end means that
the network owner can't pick and choose which applications
or content will run. As the network can't discriminate, the
test of whether new content or applications run is thus not
whether the network owner likes it, but whether the content
or application can be coded in an IP protocol. If it can,
it will run; and if it is desired, then it will become dominant.
Like open code, the principle of end-to-end vests control
over the evolution of the Internet in (the many) developers
and consumers, and not in (the few) network owners. Like open
code, it is a regulation designed to enable innovation.
The consequence of this principle has been
profound. By keeping itself open to evolution, the network
has developed in ways that no one would have imagined at the
start. At each stage, there have been pressures to optimize
on the present model, and the commitment to end-to-end has
avoided such calcification. As Saltzer, Clark, and Reed note,
had the network been optimized in the 1980s for telephony,
as many thought it should, the World Wide Web would not have
been possible. A commitment to simple and stupid networks
has produced an opportunity for surprising and radical innovation.
End-to-end differs from open code, however,
in an increasingly important way. Unlike the restrictions
that govern open code, the principle of end-to-end is not
enforced by law. It is perfectly possible, and in the main,
completely legal, to build technologies that violate end-to-end,
and then to integrate those technologies into the Internet.
Many companies have, and among the technologies being proposed
for the future, many more will. Thus, rather than a rule,
end-to-end is a norm among network architects. And like many
norms, it is increasingly becoming displaced as other players
move onto the field.
But there is one part of the Internet where
end-to-end is more than just a norm. Here the principle has
the force of law, and the network owner cannot favor one kind
of content over another or prefer one form of service over
another. Instead the network owner must keep its network open
for any application or use the customers might demand. Competitors
must be allowed to interconnect; consumers must be allowed
to try new uses. In this part of the Internet, "open
access" is the rule.
This part of the Internet is--ironically enough--the
telephone network, where because of increasing regulation
imposed by the D.C. Circuit Court of Appeals in the 1970s--leading
to a breakup of AT&T by the Justice Department in 1984
and culminating with the Telecommunications Act of 1996--the
old telephone network has been replaced with a new one over
which the owner has very little control. Instead, the FCC
spends an extraordinary amount of effort making sure the telephone
lines remain open to innovators and consumers on terms analogous
to the terms required by an end-to-end principle: nondiscrimination
and a right to access.
The FCC is convinced that this regulatory
burden is severe and costly to maintain. And no doubt it is
costly. But the question is not simply how much the regulation
costs; it is also about its benefit. What is the benefit of
effectively enforcing end-to-end on the telephone system?
In my view, the benefit has been the Internet.
Though the Internet proper was initially a network among universities,
had it not been for the ability of ordinary consumers to connect
to the Internet, that network would have gone nowhere. (Universities
are fun, but they aren't enough to fuel commercial revolutions.)
Ordinary consumers connected to the Net across phone lines.
And had it not been for the open-access rules that the government
imposed upon telephones, the telephone companies would most
likely have behaved just as every network owner in history
has behaved--to control access and use architecture to minimize
competition. If it hadn't been as cheap to dial a local bulletin-board
system (BBS) as it was to dial a local friend; had the Baby
Bells kept the power to force customers to a Baby Bell ISP;
had the government not insisted that competitors be connected
and had it not policed pricing to ensure nondiscrimination--had
it not, in short, used the power of law to force a competitive
neutrality onto the telephone system, the telephone system
would not have inspired the extraordinary innovation that
By keeping the network neutral, by keeping
it open to innovation, the FCC has made possible the extraordinary
innovation that the Internet has produced. Open access was
the rule; a regulation produced that rule.
Competition Policy and Innovation
There is a lesson to be drawn from these three
spaces of innovation, a lesson about the relationship between
innovation and the power to control. Open code, end-to-end,
and open access all seek the same result: a platform where
the right to innovate is protected. To this end, they all
use a form of regulation to disable a power to control. Open
code uses contract, end-to-end uses norms, and open access
uses law. This regulation, while fundamentally different from
the regulations that gave us the original AT&T, is still
regulation. Its aim is to coerce behavior that we would not
expect network owners and coders to choose voluntarily, at
least after they've gotten control over the network or over
Now of course my point is not that all control
stifles innovation; it is not that corporations inhibit rather
than build innovation. How much innovation is protected by
these regulations is a hard question. How much less innovation
there would be if these principles of the original Net were
ignored is also a hard question. We have no good way to measure
the effect of these regulations protecting innovation. We
have no good way to tell whether in fact they were necessary.
But neither do we know enough to say the opposite.
We can't say that open code would have flourished as fully
as it has without its strict license, or that the Internet
would have grown just as it did without the norm of end-to-end;
and we don't know whether the Internet would have flourished
without the FCC's control over the Baby Bells.
And yet now we must decide whether the same
principles of open access and end-to-end should also govern
broadband--whether it be cable broadband, wireless broadband,
or broadband through telephone wires. How should we answer
this question in the face of what we don't know? How should
we resolve it when we can't be certain?
In my view, our bias should be in favor of
what has worked unimaginably well. Having tripped onto this
environment of extraordinary innovation, we should be cautious
before we allow it to be changed. If we can identify the principles
that have distinguished the Internet from earlier, less successful
networks, then these principles should guide us in choosing
rules to govern networks in the future. End-to-end, enforced
through open access, has been a central part of the Internet
revolution. At a minimum, the burden should be on those who
would compromise that principle to show that it will not take
away from the innovation we have seen so far.
The choice is not between regulation and no
regulation. The choice is whether we architect the network
to give power to network owners to regulate innovation, or
whether we architect it to remove that power to regulate.
Rules that entrench the right to innovate have done well for
us so far. They should not be repealed because of a confusion