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Susan Crawford, ideas and economic growth

Susan Crawford is one of my favorite regular visitors to the Berkman Center. A professor at Cardozo Law School, she’s deeply invested in the idea of an open Internet and the accompanying struggles. She was the founder of One Web Day, a campaign to get people to celebrate the Internet much as Earth Day encourages people to celebrate our planet, and she’s a board member of ICANN.

Part of the fun of having Susan visit is that she seems to save up some of her big ideas for talks at Berkman – one recent talk focused on the potential for e-government in Libya, an idea that was provocative, at the very least. Tuesday’s talk addressed a topic that, on the surface, doesn’t sound nearly as engaging: telecommunications regulation. But Susan’s big idea is that telecom regulation, done right, is key to the future growth of the US economy.

(This is a less radical idea for those of us who have been working on telecom policy, for fun or profit, in the developing world. It’s become very clear, working in Africa, that countries that make it possible for multiple mobile phone providers to operate, for ISPs to provision their own connectivity via VSAT and for operators to set up wireless networks, see benefits at least within the tech sector, and likely within the urban business sector as a whole. But Susan’s realization that telecoms regulation was interesting to her reminded me of my own, similar revelation working on policy in Ghana several years back with Andrew McLaughlin.)

Susan contends that telecoms operators in the US and customers of telecoms have completely different views of the Internet. The incumbents are living in a world of scarcity – the internet is, if not a series of pipes, a railroad, where a limited set of tracks carry cargo from point A to point B. As a limited resource, it needs to be closely managed to ensure that it’s properly utilized.

Customers view the internet very differently – as an inexhaustible, ever-growing abundance of new ideas, applications and possibilities. Out experience of the Internet as ever-changing and evolving is squarely at odds with the incumbent view, which centers on scarcity.

One of the ways that this conflict becomes most apparent is around the idea of “convergence”. This is the oft-discussed holy grail for telecom companies, where TV, broadband internet and telephony are provided by the same company and arrive on a single bill – Susan tells us that broadband companies see convergence as “coming” just as soon as the regulators let it happen and they build out more robust networks. But consumers see convergence as something that’s already arrived, as we make phonecalls via Skype and watch YouTube videos. (Indeed, the convergence many of us are waiting for is the convergence of the mobile phone with the three other services that have converged on our wireless broadband-connected laptops, part of why people around the world are so excited about Apple’s new phone.)

This different view of the world- abundance versus scarcity – is important because it means telcos and consumers want different things from regulators. Consumers want telecom companies to behave like commodity providers – Susan suggests gravel as an appropriate metaphor. When you’re buying gravel, you want it inexpensively, and you’re not looking for many “value-added services”. (Susan clearly hasn’t bought much gravel. When you’re buying gravel, you want it delivered, and preferably, you want it delivered by a skilled dump truck operator who can spread it roughly over the area you need to cover. Trust me.)

But telcos don’t want to sell gravel – they want to sell you content, and differentiate themselves based on the high-quality content they offer along with network access. Think of the commercials you’ve seen for wireless phone providers (if you live in the US – this is a pretty US-centric talk…) – they tend to emphasize the mobile music and video you can access, as much as network reliability. Susan tells us that this is the vision telcos want to achieve – a vision where they’re distinguished by the content their network has exclusive or preferential access to, not by how cheaply they provide commodity service. Her concern is that these companies have far more influence with the FCC – the US regulator which has emerged with the most influence in this space – than citizen do.

Susan advocates a theory of communications regulation based on enabling and encouraging communication. She suggests this requires letting go of some long-standing assumptions about scarcity and embracing some economic work put forth by Paul Romer which looks at abundance and increasing returns. Romer, she tells us, is reaction to Adam Smith, who suggests that firms gain advantage by specializing and by scaling up – a firm decides to focus on making pins and gains an advantage by producing huge quantities of pins. A new firm might have a tough time breaking into the pin business, and we’d expect to see decreasing returns for all firms as new businesses moved into the space.

Romer suggests that the reason we’re not all starting pin factories and running each other out of business is that we’re able to generate or import new ideas. The economies that are most open to innovation – by importing ideas from other countries, or by creating innovation domestically by investing in higher education – see increasing, not diminishing, returns. (Nice Kevin Kelly article on Romer’s work.)

The Internet, Susan offers, is an unparalleled “idea-generation engine”. Because economic growth is triggered by new ideas, access to a diverse pool of new ideas is critical for economic success. This leads Susan to advocate for a regulatory framework that treats the internet as infrastructure, focused on keeping it open to any types of content, maximizing the possibility that the Internet will bring new ideas and economic growth to the US economy.

(I suspect I’m missing many of the subpoints in Susan’s argument – she covered a lot of ground very quickly. David Weinberger was there as well and has more complete notes than I do…)

Susan gets lots of questions on this talk:
– Isn’t there still scarcity in networks? (Yes, at the last mile, there’s still lots of network scarcity.)
– Do you need anything more than just big, open pipes? Don’t you need changes in education policy, ways of changing how people use these networks?
– Isn’t attention really the scarce resource? If I turn off my spam filters, I’ll be overwhelmed by people demanding my attention. (Yes, but the Internet is helping generate ideas and strategies to help filter these inputs.)

I share Susan’s desire for a US internet regulatory structure that maximizes openness and treats transport separately from content. And I’m very open to the idea that openness to new ideas is an economic advantage – I’ve been writing and speaking about this idea for a couple of years in the context of the difficulty US firms have in innovating to serve the developing world.

But it strikes me that the current cut of the argument is awfully abstract, more abstract than the too-abstract network neutrality arguments that I simultaneously support and am frustrated by. (There’s a reason why Ask A Ninja’s “Net Neutrality” video is so useful – it centers on a concrete example. That example happens to be wonderfully absurd, but it’s far more concrete than most of the debates on the topic.) Explaining to a telecom regulator that they need to prevent Verizon from prioritizing packets from Yahoo over Google’s packets because openness to new ideas is a critical driver of US economic competitiveness strikes me as a tough sell. Documenting the role of openness to ideas in economic development in quantitiative terms is one key step in this debate. But winning this argument is going to require sharp, concrete examples of ways that closed networks hurt economic competitiveness… which is going to require addressing tough questions like how China’s closing off of certain ideas (freedom of assembly, access to information) hasn’t crippled their booming economy.

1 thought on “Susan Crawford, ideas and economic growth”

  1. The notion that positive regulation of communications networks is a sine qua non of economic development is neither radical nor unsupported by a wealth of theory and real world experience. I’m glad Susan is now making this case.

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