[e2e] end2end-interest Digest, Vol 39, Issue 32

David P. Reed dpreed at reed.com
Mon May 21 14:43:36 PDT 2007

Insulting the Media Lab as a playground is rather unnecessary, and since 
I claimed no credibility from where I work, it really sounds rather 
stupid as a rhetorical device.  Does it make you feel superior?

I got my terminology regarding network externalities and increasing 
returns from discussions and writings with economists and business 
school professors.  It's very possible that I'm wrong in my usage - and 
I'm happy to be corrected.

However, I didn't claim that network externalities were the *same* as 
increasing returns to scale.   My fault for a non-parallel construction 
in that sentence, which might suggest that I thought that they were the 
same thing.   They are different, and *both* apply to my argument.

I was using the economist term "network externalities" not the 
regulatory law term.   Sorry to be confusing if I was.   If you are 
instead taking the opportunity for gratuitous insult, my skin is thick.

Peyman Faratin wrote:
> David
> I am not sure whether the folks are building computers from sand in 
> the playground of the media lab, but I can say that you are "inventing 
> your own science from scratch".  
> Network externality is _not_ the same concept as increasing return to 
> scale. One is to do with (desirable/undesirable) side-effects of 
> actions of one agent on another not in the original contract 
> (externalities) and the other is to do with efficiency gains of 
> productions of a _single_ firm (where the average cost of production 
> diminishes with increasing quantities produced). The marginal cost of 
> checking these facts is insignificant in this day and age of google 
> and wikipedia. 
> Regulation and economics of networks are non-trivial and require 
> attention to the details of the arguments that people so freely 
> misrepresent. Government regulation did have a very significant impact 
> on the Internet (through differential settlement structures between 
> interconnecting PSTN and early dialup ISPs). This government 
> regulation of settlements in fact _helped_ Internet scaling, not to 
> mention their public investment in the interchanges and the backbone. 
> MSN was rolled out and could've tipped to become the dominant standard 
> (as many other inferior technologies have done so historically - 
> VHS/Betmax, Gasoline/steam,....). See [1] and [2] for some more recent 
> text on the economics and regulation of Internet. 
> Determination of causality in an (un)regulated economy is a very 
> non-trivial task and, like all sciences, the validity of an economic 
> (and the accompanying regulatory) hypothesis/proposition is 
> conditioned on the semantics of the model primitives (externalities, 
> returns to scale, etc). The devil is in the details.
> best
> Peyman
> [1] H. E. Nuechterlein and P.J. Weiser (2005) /Digital Crossroads: 
> American Telecommunications Policy in the Internet Age/, MIT Press, 
> Cambridge, MA, US, 2005
> [2] Handbook of Telecommunications Economics, Technology Evolution and 
> the Internet, Vol.2, S.K. Majumdar, I Vogelsang and M. Cave (eds), 
> Elsevier, 289—364, 2005.
>> One can, at any time, create a non-interoperable network.   Corporations 
>> do it all the time - they create a boundary at their corporate edge and 
>> block transit, entry, and exit of packets.
>> That is not the Internet.   It's a private network based on the IP 
>> protocol stack.  Things get muddier if there is limited 
>> interconnection.   Then, the Internet would be best defined as the 
>> bounded system of endpoints that can each originate packets to each 
>> other that *will* be delivered with best efforts.   It's hard to draw 
>> that boundary, but it exists.
>> Given this view, I don't think government regulations played a 
>> significant role in the growth of the Internet.   We have had lots of 
>> private networks, many larger than the Internet.   I know, for example, 
>> that Microsoft built a large x.25 based network in 1985 to provide 
>> non-Internet dialup information services for Windows.   It was called 
>> MSN, and was designed to compete with the large private AOL network.
>> What the Internet had going for it was *scalability* and 
>> *interoperability*.   Metcalfe's Law and Reed's Law and other "laws".   
>> Those created connectivity options that scaled faster than private 
>> networks could.   Economists calle these "network externalites"  or 
>> "increasing returns to scale".
>> Gov't regulation *could* have killed the Internet's scalability.   Easy 
>> ways would be to make interconnection of networks a point of control 
>> that was taxed or monitored (e.g. if trans-border connectivity were 
>> viewed as a point for US Customs do inspect or if CALEA were implemented 
>> at peering points).
>> But lacking that, AOL and MSN just could not compete with the 
>> scalability of the Internet.
>> That has nothing to do with competition to supply IP software stacks in 
>> operating systems, or competition among Ethernet hardware vendors.
>> However, increasing returns to scale is not Destiny.   The Internet was 
>> not destined to become the sole network.   But all the members of the 
>> Internet (people who can communicate with anyone else on it) would be 
>> nuts to choose a lesser network unless they suffer badly enough to 
>> outweigh the collective benefits.
>> Individualist hermits don't get this, I guess.   If you want to be left 
>> alone, and don't depend on anyone else, there are no returns to scale 
>> for you at any scale.   Grow your own bits in the backyard, make your 
>> own computers from sand, invent your own science from scratch.   If the 
>> walls are high enough, perhaps you can survive without connectivity.
>> ------------------------------
>> Message: 3
>> Date: Fri, 18 May 2007 14:46:03 -0400
>> From: Haining Wang <hnw at cs.wm.edu <mailto:hnw at cs.wm.edu>>
>> Subject: [e2e] Call for Participation - IWQoS'2007
>> To: end2end-interest at postel.org <mailto:end2end-interest at postel.org>
>> Message-ID: <FDC6B43C-8B6E-4FFD-8799-3A7DAE1091AE at cs.wm.edu 
>> <mailto:FDC6B43C-8B6E-4FFD-8799-3A7DAE1091AE at cs.wm.edu>>
>> Content-Type: text/plain; charset=US-ASCII; delsp=yes; format=flowed
>> (Apologies if you have received this more than once)
>> ========================================================================
>>                            CALL FOR PARTICIPATION
>> Fifteenth IEEE International Workshop on Quality of Service (IWQoS 2007)
>>                       Chicago, IL, USA,   June 21-22, 2007
>>                         http://iwqos07.ece.ucdavis.edu/
>> IWQoS has emerged as the premier workshop on cutting edge research and
>> technologies on quality of service (QoS) since its first establishment
>> in 1994. Building on the successes of previous workshops, the objective
>> of IEEE IWQoS 2007 is to bring together researchers, developers, and
>> practitioners working in this area to discuss innovative research
>> results, and identify future directions and challenges. We will continue
>> IWQoS's long standing tradition of being highly interactive while
>> maintaining highest standards of competitiveness and excellence. This
>> characteristic will be re-emphasized through a technical program
>> consisting of keynote addresses, rigorously reviewed technical sessions
>> (including both long and short papers), and stimulating panel
>> discussions about controversial and cutting edge topics. The panel and
>> the short paper sessions will be highly interactive and leave much time
>> and space for the audience to get involved.
>> We encourage you to check our Web site for the registration and advance
>> program as well as up-to-date conference information:
>> 1. Registration.  The early registration deadline is 6/4.  Please check
>>     out the registration online at
>>     http://iwqos07.ece.ucdavis.edu/registration.html
>> 2. Hotel reservation. We have reserved a block of rooms at Hilton Garden
>> Inn.  The group rate is USD 129 per night, USD 10 per extra person. The
>> group code is "IWQoS". The reservation line is 847/475-6400 or
>> 1-877-STAYHGI (782-9444). Please be sure to mention the group code to
>> get the discounted rate. The CUT OFF DATE for this reservation is MAY  
>> 29.
>> That is, the reservations and the rate are valid only till then.  
>> Therefore,
>> PLEASE RESERVE YOUR ROOM ASAP.  Note that it will be very hard to get
>> any room after the deadline.  For more information, check out the  
>> travel page
>> at the IWQoS website:
>> http://www.cs.northwestern.edu/~ychen/services/iwqos07-travel.html 
>> <http://www.cs.northwestern.edu/%7Eychen/services/iwqos07-travel.html>
>> ------------------------------
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>> End of end2end-interest Digest, Vol 39, Issue 32
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