Category: Symposium (The Master Switch)

The Master Switch Symposium: Open and Closed, Unformalized and Formalized

The Master Switch Symposium: Open and Closed, Unformalized and Formalized

Tim Wu’s The Master Switch compiles a series of fascinating stories about the history and development of the information industries.  The book is interesting, fun to read, and provides a provocative framework for interpreting that history in light of what Wu calls “The Cycle” from open to closed as a cautionary tale for current policy debates.  In this post I will try to poke a bit at that framework to raise some issues that I think could use more detailed analysis in the future work that will undoubtedly build on this important contribution. 1.       Open v. closed. The Master Switch frames the history of the information industries as a Cycle between paradigms labeled “open” and “closed.”  It seems to me that this analytic structure may obscure some important diversity of degrees and kinds of “openness” and “closedness.”  Among important types of openness are open access (anyone can use the technology), open dissemination (anyone can sell or otherwise disseminate the technology), open “connection” (anyone can interface with the technology to make complementary goods), and open follow-on (information is revealed to permit anyone to build upon the technology). Even this catalog is quite over-simplified since openness of any of these types is often more accessible to some (those with money?  those with absorptive capacity?) than to others.  For example, where one sees knowledge sharing among technological innovators, the sharing often confined within a particular community.  Historical studies (see, for example, Allen’s and Meyer’s fascinating studies of collective invention and von Hippel’s studies of innovative communities) and theoretical modeling (see, for example, Bessen’s terrific recent paper) suggest that there is often something else going on – perhaps a repeat player dynamic of reciprocal openness or an insurgency in which innovators of a new technology make common cause against the market dominance of an old technology. “Open” and “closed” are thus complex concepts that perhaps could use some further unpacking than is reflected in the Cycle framework.  These different kinds of openness need not coexist and may sometimes (perhaps often?) be in tension with one another.  Different types of openness may well have different social consequences, potentially creating different winners and losers and different varieties of the “human flourishing” that Paul Ohm correctly emphasizes in his Symposium post. Google, for example, is held up as a paradigm of openness in The Master Switch, yet in many very important ways Google is anything but open.  Google’s search technology is open primarily in the sense of access by searchers and “connection” by those who are the subjects of search.  It is quite closed in the senses of both dissemination and follow-on innovation.  Google’s algorithms are patented and protected by trade secrecy and its databases of information about users and their searches (which are crowd-sourced entirely from users themselves) are also protected by secrecy.  To call Google open is, for better or worse, implicitly to privilege certain kinds of openness.  It may be important to surface these distinctions. As a general matter – and not just in...

A few Qs on the Master Switch

A few Qs on the Master Switch

The Master Switch is a great read — thanks, Tim, for unearthing and synthesizing such an astounding amount of history. I thought I’d share some of the questions that came up as I read it — Patents: At different places Tim underscores how crucial a role they play in the development of an industry.  At times the story is one where patents helped competition, as when they allow the little guy to avoid being crushed by the prevailing behemoth.  Bell can hold off the Western Union thanks to patents.  But at other times they’re clearly subject to abuse, such as with the movie trust.  What, in short, would you recommend changing about current patent policy, if anything?  Is misuse doctrine enough to carve away the bad uses while leaving the salutary ones?  Why not be supportive of at least some business method patents, in circumstances where they could help the little guy too? Peering: Given the worries expressed in the book about consolidation, I’m so curious to know what Tim and others think about the current state of play in Internet peering.  To what extent should peering agreements be, as they largely are today, confidential?  How much should gov’t intervene in peering disputes, such as the famed recent blowout between Level3 and Comcast over Netflix traffic — which apparently accounts for a stunning 40% — 40%! — of U.S. bandwidth usage? Do we have a neutral net today?: The dark matter of the Internet makes no appearance in the book: Akamai.  At one point Tim brings up the spectre of a broadband provider offering a fast lane to faraway content providers for an extra fee — and suggests how awful that would be.  But then what of Akamai, which offers exactly that kind of fast lane?  It is saving the Net by offering a quality-of-service set of efficiencies to speed video on its way through clever co-location — indeed, that’s how Netflix got to people before the Level3 imbroglio — or is it exactly the model that makes it harder for new entrants, at least new bandwidth-intensive entrants, to compete? The net neutrality tripwire: The book points out the power of corporate norms — if today’s barons are looking to build empires, they’re certainly not advertising it the way their predecessors did.  The few examples of actual net neutrality violations are pretty thin, and as the book points out, quickly disavowed as the actions of rogue employees, or accidents, when uncovered.  Should systematic net neutrality violations take place, wouldn’t that result in a rather quick sea change in favor of net neutrality? Search neutrality: Frank Pasquale hasn’t put it to Tim in this symposium, so I will!  At the end of the day Google comes out pretty well in your estimation, though it’s on probation as any private behemoth would be in your eyes.  But you do accord it the privilege of, among everyone, currently holding the closest thing to the Master Switch.  So: should there be some kind of...

The Master Switch Symposium: Information Ideology and Corporate Culture

The Master Switch Symposium: Information Ideology and Corporate Culture

I particularly liked two things about The Master Switch. The first is that Wu’s history of information networks in the 20th century (though sadly not before) has a meaningful theory of corporate ideology, and uses it effectively. The book opens with a 1916 banquet in Washington, D.C. honoring Theodore Vail and the Bell system. The highlight of the evening was a mildly absurd demo: a phone call to General Pershing in El Paso: “Hello, General Pershing!” “Hello, Mr. Carty.” “How’s everything on the border?” “All’s quiet on the border.” “Did you realize you were talking with eight hundred people?” “No, I did not,” answered General Pershing. “If I had known it, I might have thought of something worthwhile to say.” It’s a great scene, and it captures the spirit of particular company and a moment in history. The Bell system was as Establishment as you can get; the event was shot through with patriotic symbolism. The tech demos were gifts from a benevolent, stabilizing, centralizing AT&T to the American people, with Vail both basking in accomplishment and promising the future. Wu’s point, here as throughout the book, is that you can’t understand AT&T, or its economic and social impact, or the way it shaped and struggled with the legal system, without appreciating the way it saw itself and the world. Plenty of writers have described the endless [back-and-forth(http://www.inforules.com/)] between the forces of openness and the forces of closure. Wu’s history shows, repeatedly, how the different companies taking part in the struggle justified themselves — and how those essentially ideological justifications in turn frequently drove key corporate decisions. The Master Switch doesn’t assert, as too many people who should know better do, that corporations simply act in the interests of their shareholders. Nor is this a work of hagiography or demonization; one does not walk away with the impression that Theodore Vail built the Bell system with his bare hands. Instead, Instead, it gives examples of companies so in thrall to a vision of their inevitable triumph or their social role that they dove headlong off a marketplace or regulatory cliff — and also examples of executives who won their companies’, their industries’, and their regulators’ support only through the subtle arts of persuasion. Wu’s discussion of the Hush-a-Phone brings out the way in which AT&T’s “One System, One Policy, Universal Service” philosophy drove it into a legal fight it would have been better off ignoring. And who helped Hush-a-Phone poke the first, critical hole in AT&T’s policy against foreign attachments? Leo Beranek and J.C.R. Licklider, major figures in the development of the Internet. In another example, after successfully shaking off Edison’s control of film patents, the Independent movie companies fractured. Some of them were thrilled to entrench themselves as a new cartel controlling distribution; others much less so. Wu’s portraits of monopolists, insurgents, and particularly of insurgents-turned-monopolists illustrate the power of a compelling vision of how information can or should be distributed to shape, and sometimes to warp, the design...

The Master Switch Symposium: Network Neutrality and Human Flourishing

The Master Switch Symposium: Network Neutrality and Human Flourishing

Since launching the Network Neutrality debate, Tim Wu has continued to play an invaluable role, constantly reminding us that the debate is about more than just economics. Too many experts on both sides of the debate view things solely through an economic lens, which has led us to intractable differences. As I have argued elsewhere, because respected economists line up on both sides, it is very hard to tell whether mandatory network neutrality will, on net, enhance or reduce innovation. In The Master Switch, a fascinating and important book, Wu argues powerfully that policies like net neutrality are necessary also to protect noneconomic ideals like free speech. (He highlights other benefits of neutrality, most importantly the way it helps us resist tyranny, in his chapter on AT&T’s role in the NSA wiretapping program, but he left me wanting more from this example.) Although free speech is of paramount importance, I think this book provides a welcome opportunity to focus on other noneconomic benefits and values beyond free speech that are also today at risk in the battlefields of neutrality.

The AT&T Story

The AT&T Story

In my view, The Master Switch is required reading for those interested in Internet and information policy.  In fact, in my Telecoms and Internet Policy seminar this semester, I have required it, for I think that those who practice, work in, or just care about Internet policy must know the historical episodes that Tim Wu so wonderfully relates.  It is simply the “walking around knowledge” of our field in much the way that Vosburg v. Putney and Fletcher v. Rylands are in Torts. I will have much to say about the conclusions of the book, but for the moment want to focus a little more deeply on one of the central stories Wu tells — the rise, consolidation, break up, and re-invigoration of AT&T.  (Disclosure:  I was, from 1993-1998, a private-practicing lawyer at a big firm, helping to represent, among other clients, the company then known as AT&T, first in matters under the Consent Decree and then in the first throes of the 1996 Act, together with a smattering of important regulatory controversies such as the death of long-distance tariffing.) I have no brief with the basic story as Wu tells it:  of the Bell System’s ruthless elimination of some competitors, in several different periods; of the FCC’s sometimes ineffective regulation (especially of attachments); of divestiture’s ushering in more competitive long-distance, manufacturing, and consumer equipment markets; or even of the Baby Bells’ ability, after the 1996 Act, to reclaim much of the vertical and horizontal scope lost at the Break Up (see this great summary by Colbert of the re-building of AT&T, starting at 2:20).  I share Wu’s admiration for the public spirit of the Bell System, and its awesome engineering accomplishments.  Nearly universal telephone service came to the U.S. long before most of industrialized Europe. What I think, however, may be lost in the retelling is the enormous difficulty of discerning the errors in the moments in which the regulatory policy is being made or decided.  Hush-a-Phone is a fun case, but it is not a morality play.  Regulation kept the price of basic telephone service low, through aggressive cross-subsidies, which gave Bell an incentive to keep others out of the adjacent, potentially competitive markets such as attachments.  But, prices of basic telephone service were in fact quite low.  Was this bad social policy?  Indeed, although the book’s stance is basically to condemn the regulation that perpetuated the Bell System for so long, it is not clear whether this is because local service was never (or no longer at some point) a natural monopoly, or because the regulators did not recognize the exclusion arising from the protection of cross-subsidy.  At what point should regulators have decided that long-distance was competitive, before they did?  Or is it even the point that long-distance became potentially competitive (at least for a time, at least until high-capacity fiber optics are deployed)? Do not misunderstand:  I do not think the antitrust case against the Bell System was misguided (although it is an interesting exercise...

The Master Switch Symposium: From Hale to Wu

The Master Switch Symposium: From Hale to Wu

A Columbia law professor writes a series of cutting edge articles on dominant firms of his day. He publishes some of his leading works during an age of laissez-faire, but they still attract a dedicated following. When a Democrat seizes the presidency after an economic calamity, some of his top appointees are influenced by the theories of the professor. The professor’s magnum opus articulates a vision of responsible corporate conduct, arguing that personal freedom depends on the conduct of leading businesses in the community. At this point, I could either be describing Robert Lee Hale or Tim Wu. Both have addressed “private coercive power” backed by the state. Hale addressed public utilities’ exploitation of their monopoly position. Wu has analogized the internet to the electric grid, reasoning that the grid’s “general purpose and neutral nature” enabled “waves of innovation.” Rejecting laissez-faire, Wu observes that a “pure [market plus] antitrust approach is inadequate for any of the main ‘public callings,’ i.e., the businesses of money, transport, communications, and energy” (303). Hale also recognized the case for regulation in such industries. Wu forcefully demonstrates that we are entering an era of digital “public callings,” by comparing companies like Apple to media and communications barons of old. But the vast differences between Hale’s Freedom Through Law (1952) and Wu’s The Master Switch (2010) speak volumes about changes in the American political climate over the past six decades. Hale’s work chronicled the gradual victory of democratic constraints over arbitrary and exploitative business practices. Wu acknowledges those victories, but is often more interested in the dark and collusive forces of capture (83, 312) than the promise of enlightened regulation. Hale saw coercive private power everywhere, but Wu concludes that norms now restrain it: “rare is the firm willing to assert an intention and a right to dominate layers of the information industry beyond its core business” (314). Hale discussed the “principles for determining how the wealth of the community should be distributed” (541), patiently detailing the case law of ratemaking and taxation in the first half of the 20th century. Wu’s book is postmaterialist, more interested in the cultural and political impacts of our information age giants than the grubby details of what they charge. Wu’s emphasis on culture and freedom to tinker makes his book a much better read than Hale’s. Wu regales the reader with stories of high-power dinner parties and casual comments from powerbrokers ranging from Theodore Vail to Eric Schmidt. His prose is a tour de force, animating “industrial wars” long entombed in dry-as-dust tomes. (I recently perused a sample of such works at the Prelinger Library’s media history section, and Wu’s writing beats that of any I read.) Hale plods though the minutiae of the prerogatives of investors in railroads and telephone companies, making Freedom Through Law a slog for all but the most determined reader.

Symposium on “The Master Switch”

Symposium on “The Master Switch”

I am pleased to announce that Concurring Opinions will host a symposium this week on Tim Wu’s The Master Switch:  The Rise and Fall of Information Empires. Contributors will include Steve Jobs, Bill Gates, Mark Zuckerberg, & AT&T. Well . . . not really.  The actual contributors will be: 1.  Tim Wu 2.  Our own Frank Pasquale 3.  Paul Ohm (Colorado) 4.  Jim Speta (Northwestern) 5.  Katherine Strandburg (NYU) 6.  Siva Vaidhyanathan (Virginia) 7.  Jonathan Zittrain (Harvard) I’m looking forward to a fun exchange of ideas about Tim’s book, which you can purchase here. UPDATE:  James Grimmelmann (New York Law School) has also agreed to talk about Tim’s book (during the same week that he’s guest blogging on Volokh).  Impressive!