Metcalfe’s Law and the Crews Corollary

by on July 30, 2007 · 10 comments

I agree with Tim that open networks are great and likely preferable in most situations, but to say that open networks simply “tend to be better than closed networks” doesn’t make sense.

This is akin to saying that copper is more efficient than iron. This begs the question. More efficient at what? Copper is more efficient than iron in some applications like conduction of electricity, but it’s a much less efficient armor plating. Ends dictate the standard by which we judge efficiency, otherwise efficiency is meaningless.

That said, not all networks are built for the same ends. While the Internet is an undisputed engine of growth and innovation, it’s not the only model that EVER makes sense. Closed or limited networks can also have value because Metcalfe’s Law–which states that a network’s utility increases in proportion to the square of the number of members–is not the only factor in determining network worth, despite being a very strong factor.

Wayne Crews, my policy boss here at CEI, has proposed that Metcalfe’s Law needs a bit of an addendum. Wayne points out that there is an underlying assumption in this law that is crucial to its holding true. The “network effects” associated with Metcalfe’s Law will diminish if a sufficient number of users don’t have an interest in the health and security of a network. In fact, if members are added that are overtly hostile and seek to attack a network–exploiting features of its open architecture–then the value of that network decreases. Openness, therefore, is only valuable so long as the vast majority of users have an interest in the health of a network and the owner of that network can act to enforce policies that maximize network value.

I’m in favor of openness–it’s great! Most implementations of networks will benefit from a fair amount of openness, but it’s not the only way to make a network that will be of value.

I also agree that “it’s a mistake for libertarians to hang our opposition to government regulation of networks on the contention that closed networks are better than open ones.” But it’s also quite silly for the opposition to say that only open networks should exist. If it’s true that open networks are much better than closed, partly-closed, mostly open, or slightly-limited networks, then the market will bear that out and banning them outright would be unnecessary.

Robert Kahn, inventor of TCP/IP, has said publicly that he is “totally opposed to mandating that nothing interesting can happen inside the net.” I agree, network architecture differences should be a part of network competition.

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