Wu, Skype, Walled Gardens and “Openness”

by on February 24, 2007 · 4 comments

Carlo of TechDirt has posted a detailed deconstruction of the Wu “Wireless Net Neutrality” paper and Skype “Carterfone for Wireless” petition that we have spent so much time writing about here. I highly recommend you read the entire thing because Carlo is covering some new ground that we haven’t hit here yet. Specifically, Carlo picks up on a theme that I was planning on discussing in a follow-up post this week, namely, the myth that the wireless sector is dominated by walled gardens that restrict content flows, and which will only disappear with regulation. Carlo destroys this argument:

Walled gardens have, for the most part, disappeared from the landscape (once, again, Verizon proving the exception). If customers desire open net access on their mobile phone, they have multiple options available to get it. When nearly every other operator takes a different route than Verizon in this area, are regulations really necessary to bring it in line with its rivals?

Wu’s calls for neutrality regulations are premature and unnecessary. The walled garden model isn’t sustainable–the web model he’s so fond of has proven that. Part of the reason that it’s been able to persist in mobile is that few people really care enough to make it an issue. Most people care about price and coverage–everything else is incidental. This does have a bit of chicken-and-egg feel to it, since a stifled environment for innovation means there are a limited number of compelling applications and services to make the general public more interested in mobile data services. But, as subscriber growth slows and operators become more focused on increasing non-voice spending, they will need to fix this, and remove many of the barriers to innovation and new services that exist in the market. Walled gardens and locked-down devices won’t cut it, as the competitive market–and yes, it really is pretty competitive, all things considered–simply won’t allow it. The move towards operators fully embracing openness is happening–slowly, but it’s happening.

This is exactly right. Yet, when you read the Wu paper and Skype petition, you’re lead to believe that consumers are mindless sheep, locked into walled gardens that they don’t want to be grazing in. And only benevolent regulators can free us. It’s all quite silly. Most of the people who want to get around carrier-imposed restrictions can do so, as I documented in this earlier essay.

But, as Carlo correctly points out, most people just don’t give a hoot. And sometimes walled garden approaches have advantages for some subscribers. This gets to one of the biggest problems when techies and tech companies try to craft public policy based on their specific preferences. Wu and Skype want us to believe that the whole planet is up in arms because of walled gardens or locked phones. Nonsense.

It is easy for sophisticated users and academic digerati to imagine that they speak for the hoi polloi when it comes to these matters. They presume that their personal preferences would make sense for the broader universe of Internet / cell phone users. In reality, they speak only for that segment of our society who has more experience with high-speed networks, Internet technologies and online services.

Many wireless subscribers just want the basics: Reliable voice service and perhaps a few extras. It is hard to imagine how these consumers would be well-served by mandating that wireless carriers be forced to convert their networks into purely dumb pipes that prohibited them from offering any integrated intelligence or applications within their networks. As Andrew Odlyzko of the University of Minnesota’s Digital Technology Center, argues: “The ‘stupid network’ is only stupid in the core, and imposes huge burdens on end users. Many of those users might be willing to sacrifice some of the openness and flexibility in order to be relieved of the frustrating chore of being their own network administrators.”

What else explains the fact that, at the height of it’s success, America Online–the mother of all walled gardens–had over 30 million subscribers while charging $24 bucks a month? For those of us who have always been Net-savvy, AOL represented somewhat of a joke; almost an insult to our intelligence. Why in the world would someone want to have their Internet experience constrained in this fashion and then pay $24 bucks for it?! But that’s just it, we were not like everyone else. Many others, especially those of the pre-Net generation (like our parents) enjoyed the “guided tour” approach to Web surfing that AOL offered them. It was logical and comfortable.

Eventually, however, AOL’s popularity waned. People got tired of having their hands held while they walked through cyberspace. And so the walls around the garden started crumbling. AOL is now free for anyone to use. That being said, AOL (and other services like it) still exist to assist those who want their hand held to some extent. On balance, however, as the first generation of Net users ages, those approaches are likely to give way, even in the wireless world. Again, as Carlo argues, “The move towards operators fully embracing openness is happening–slowly, but it’s happening.”

In sum, open systems do have many advantages over closed systems, and if that is how markets naturally evolve, so be it. Other times, however, closed systems make all the sense in the world for some users. But policymakers should not tip the balance one way or the other. They should remain fundamentally agnostic with regard to network architecture and business model. In the end, wireless networks will probably have a mix of open and closed systems, with the open systems likely dominating over time.

  • http://www.handsoff.org HandsOff

    Just as in the larger net neutrality debate, Wu et al. are seeking government intervention not because the market is broken and in need of regulation but because the market is not producing the exact result they want. And as I’ve noted before, I do some work with the Hands Off the Internet coalition, but I’ve always felt that unnecessarily preemptive regulation is simply bad policy.

  • http://www.handsoff.org HandsOff

    Just as in the larger net neutrality debate, Wu et al. are seeking government intervention not because the market is broken and in need of regulation but because the market is not producing the exact result they want. And as I’ve noted before, I do some work with the Hands Off the Internet coalition, but I’ve always felt that unnecessarily preemptive regulation is simply bad policy.

  • http://weblog.ipcentral.info/ Noel Le

    It sounds like Carlo would also argue that we should let the market settle DRM issues rather than repeal the DMCA.

    I generally find TechDirt trying too hard to be catchy. Their goal in critiquing any business model or policy is to show that its not 100% rational or logical. Now, thats both the role and value of analysts, but only after you realize that business and policy decisions can be necessary or valuable without being 100%, and thereby cut the analysts out of the final decision making. Otherwise society would be hamstrung and make no decisions at all.

  • http://weblog.ipcentral.info/ Noel Le

    It sounds like Carlo would also argue that we should let the market settle DRM issues rather than repeal the DMCA.

    I generally find TechDirt trying too hard to be catchy. Their goal in critiquing any business model or policy is to show that its not 100% rational or logical. Now, thats both the role and value of analysts, but only after you realize that business and policy decisions can be necessary or valuable without being 100%, and thereby cut the analysts out of the final decision making. Otherwise society would be hamstrung and make no decisions at all.

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