Reader Deane had some great questions that I thought would be worth addressing in a new post:
Your major contention seems to be that closed-source software would be less efficient than open source because the latter is more decentralized..
but arnt’ you really talking about a management style here? I think its completely plausible for a closed-source software to have a very decentralized development process.. isnt that how google seems to do stuff? i dont know about microsoft.
Does this have anything to do with the source being open? i dont think so.
Any product development seems to need a degree of centralization, with teams, firms n so on. the degree of centralization depending on the relative cost/benefits of the management decision.
So i don’t see the point really of having a debate on open source vs closed source software. or to the fact that what’s efficient at creativity n so on, as libertarians i thought we’d trust the market to make those kind of decisions, on a product by product basis.
First of all, let me make clear that I don’t see this as a debate about “open source vs. closed source software.” Both styles of software development have their place, and I certainly wouldn’t want to be misunderstood as being opposed to closed-source development. I just think that the advantages of open source software development processes tend to be underestimated, and that in particular Lanier’s criticisms were rather misguided.
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I just finished a second read-through of Chris Yoo’s excellent paper, “Network Neutrality and the Economics of Congestion.” It’s an excellent paper, and in this post I’m going to highlight some of the points I found most compelling. In a follow-up post I’ll offer a few criticisms of parts of the paper I didn’t find persuasive.
One point Yoo makes very well is that large companies’ ability to coerce their media environment is often overrated. He points out that people often overestimate the ability of media companies to dominate the online discussion. He points out, for example, that fears that the AOL Time Warner merger would become an unstoppable online juggernaut turned out to be overblown. The merged firm turned out to have little ability to shape the browsing habits of AOL customers, and AOL continued to bleed customers.
Similarly, Yoo makes the important point that when evaluating the ability of a broadband provider to coerce a website operator, it is the broadband company’s national market share, not its local market share, that matters:
application and content providers care about the total number of users they can reach. So long as their total potential customer base is sufficiently large, it does not really matter whether they are able to reach users in any particular city. This point is well illustrated by a series of recent decisions regarding the market for cable television programming. As the FCC and the D.C. Circuit recognized, a television programmer ’s viability does not depend on its ability to reach viewers in any particular localities, but rather on the total number of viewers it is able to reach nationwide. So long as a cable network can reach a sufficient number of viewers to ensure viability, the fact that a particular network owner may refuse carriage in any particular locality is of no consequence. The FCC has similarly rejected the notion that the local market power enjoyed by early cellular telephone providers posed any threat to the cellular telephone equipment market, since any one cellular provider represented a tiny fraction of the national equipment market. Simply put, it is national reach, not local reach, that matters. This in turn implies that the relevant geographic market is a national one, not a local one. What matters is not the percentage of broadband subscribers that any particular provider controls in any geographic area, but rather the percentage of a nationwide pool of subscribers that that provider
controls.
Once the relevant market is properly defined in this manner, it becomes clear that the broadband market is too unconcentrated for vertical integration to pose a threat to competition. The standard measure of market concentration is the Hershman-Hirfindahl Index (HHI), which is calculated by summing the squares the market shares of each individual firm. The guidelines employed by the Justice Department and the Federal Trade Commission establish 1800 as the HHI threshold for determining when vertical integration would be a cause for anticompetitive concern. The FCC has applied an HHI threshold of 2600 in its recent review of mergers in the wireless industry. The concentration levels for the broadband industry as of September 2005 yields an HHI of only 1110, well below the thresholds identified above. The imminent arrival of 3G, WiFi, WiMax, BPL, and other new broadband technologies promises to deconcentrate this market still further in the near future.
To put this in concrete terms, if Verizon wants to twist Google’s arm into paying fees for the privilege of Google’s customers, Verizon’s relatively limited national market share (about 9 percent) doesn’t give it a whole lot of leverage. It is, of course, important to Google to be able to reach Verizon’s customers, but Google has enough opportunities in the other 91 percent of the broadband market that it wouldn’t be catastrophic if Verizon blocked its customers from accessing Google sites. Conversely, Google would have a strong incentive
not to accede to Verizon’s demands because if it did so it would immediately face demands from the other 91 percent of the broadband market for similar payoffs. Which mens that Verizon, knowing that blocking Google would be a PR disaster for itself and that Google would be unlikely to capitulate quickly, isn’t likely to try such a stunt.
The analysis would be different if we had a single firm that controlled a significant chunk of the broadband market—say 50 percent. But there aren’t any firms like that. The largest appear to be Comcast and AT&T, with about 20 percent each. That’s a small enough market share that they’re unlikely to have too much leverage over web providers, which makes me think it unlikely that broadband providers would have the ability to unilaterally impose a “server pays” regime on them.
Yesterday at the Consumer Electronics Show in Las Vegas, General Motors chief executive Rick Wagoner delivered an address on the future of automobiles and technology and hyped the concept of “autonomous driving.” “Autonomous driving means that someday you could do your e-mail, eat breakfast, do your makeup, and watch a video while commuting to work,” Wagoner said. “In other words, you could do all the things you do now while commuting to work but do them safely.”
Now don’t get me wrong, I’m no Luddite. Matter of fact, I’m obsessed with technology and A/V gadgets, and I have covered tech policy issues for a living a 3 different think tanks over the past 16 years. I love all things tech. But I love driving more. A lot more. I have been fanatical about my sports cars ever since I was a kid. From my first car–a 1979 “Smokey & the Bandit” Pontiac TransAm–to my 86 Mustang GT, to my 90 Nissan 300ZX Twin Turbo, my BMWs (two M3s and an 850i) all the way to my current 2005 Lotus Elise–I have been completely obsessed with cars and the joys of motoring throughout my life. And the idea that we’ll all one day soon be driving to work in the equivalent of personal subway cars makes me a little sad because it means the joy of driving might me lost in coming generations.
I wonder if my son will grow up with the same passion for motoring that I have, and that my dad had before me. (I’m certainly going to have something to say about it!) And I wonder if, a generation from now, “driver’s education” classes will consist of little more than downloading a user name and password for your computer-car.
On the upside, I suppose I could see the advantage of making the driving experience fully automated for all those idiots on the road who really do engage in risky behaviors in their cars, like “e-mail, eat[ing] breakfast, do[ing] your makeup, and watch[ing] a video while commuting to work,” as Wagoner suggests. I hate those SOBs. They give me nightmares because, at a minimum, I fear what they might do to my car when they are not looking at the road. Worse yet, I think of the danger they pose to pedestrians (like my kids). So, perhaps a Jetsons-mobile for these morons will be an effective way to reduce accidents and traffic fatalities.
But as for myself, I will pass on “autonomous driving,” thank you very much. I want to be fully in control of my motoring experience forever more. Especially behind the wheel of my beloved Lotus Elise!
Check out this article that describes how the state of Victoria in Australia will be trying out GPS speed monitoring devices that are installed in cars. The GPS technology identifies speed limits on all roads and operates on three levels:
Drivers get an audible warning they are over the limit at level one.
At level two, the device cuts power to the engine to prevent the driver from speeding, but the system can be adjusted or overridden.
At level three, the system cannot be switched off or adjusted and all speeding is cut.
Not sure Americans would ever go for this! And it seems to me that there are sometimes legitimate reasons to go above the posted speed limit (maybe passing a car?), and all of a sudden having the throttle shut down could be dangerous.
Is Frontline Wireless having a Keyser Söze moment? After convincing the FCC to largely accept its plan for public safety spectrum in the 700 MHz band, the well-connected startup may be saying “poof,” and just like that, be gone. According to Jeffrey Silva in RCR Wireless:
The future of Frontline Wireless L.L.C., the Silicon Valley-backed and politically connected startup that spent months positioning itself to bid big in the upcoming 700 MHz auction, has suddenly become shrouded in mystery.
“Frontline is closed for business at this time. We have no further comment,” Frontline said in a statement.
Ars Technica has more as does MRT Magazine, but not much more since it’s all pretty mysterious. The most significant potential impact of the news, as MRT notes, is that “If no one bids on the D Block, the spectrum would be returned to the FCC, which could reauction the spectrum with different rules.” That could be a good or a bad thing depending on the new rules.
Anyone know anything else?
It seems this week that “change” is on everyone’s lips, with every presidential candidate from Barack Obama to Duncan Hunter claiming to embody the word. But change isn’t limited to the campaign trail — with some fanfare, the National Association of Broadcasters announced this week that it was jumping in the game with some changes of its own. 
Change certainly would be welcome a the NAB, which took some rather oddball positions last year, arguing for subsidies to ensure that “no TV set…gets disenfranchised” (“One TV Set, One Vote: Broadcasters Assert Rights for Televisions“), and asserting simutaneously that broadcasters do and do not compete with satellite radio (“National Association of Broadcasters v. National Association of Broadcasters“).
So now will NAB retract these silly positions, starting out the new year fresh, with better-grounded arguments on behalf of its members? Sadly, no. The change implemented at the NAB is a new logo. And a new tagline: “Advocacy. Education. Innovation.” NAB President David Rehr says this will embody the interest group’s “reinvigorated sense of advocacy.”
Right. Now if only it can work on reinvigorating a sense of good policies to advocate.
Declan reports that Silicon Valley hasn’t lost its libertarian streak:
Boyapati isn’t the only Googler who’s braving New Hampshire’s sub-zero winter to advance Paul’s message of lowering taxes and government spending, opposing the Real ID Act, and withdrawing from Iraq immediately. Paul is the only Republican candidate for president who opposes the Iraq war and occupation.
One other former employee and five current Google engineers, who work on projects including an Asian version of Google Answers and the design of data center hardware, are staying with him in a four-bedroom group house close to Hackett Hill Road near Manchester. Boyapati says he doesn’t know any Googlers who have come east to volunteer for other candidates…
In addition to having broad support online, Paul is by far the most popular Republican candidate among Google employees. He received $22,650 in contributions from them, according to Opensecrets.org, compared with a mere $2,300 that Googlers gave John McCain. They gave no contributions to Mike Huckabee or Mitt Romney.
Google employees, in fact, represent the single top contributor to Ron Paul’s campaign. They narrowly beat out men and women in the U.S. Army and Navy, who are in second and third place, respectively.
It’s ironic. The more that new technology makes it possible for people to communicate, the more that free speech is threatened.
Internationally, the censorship trend is worrisome. First, there’s this Guardian article about how Russia wants to create an internationalized domain name for .ru that would allow Russian speakers to use Cyrillic characters for typing the country code. Sounds great, but there’s the fear that the government would create an Internet just for Russia, providing the government with greater control over what is accessed on the global Internet.
Then there’s Saudi Arabia. A New York Times article confirms that the government has detained a Saudi blogger “for purposes of interrogation” about his writings about political prisoners. Apparently writing about political prisoners will make you one.
No surprise that China is still an active censor, the latest news being that China will restrict where Internet videos can be broadcast. Only websites that have a permit can broadcast or allow users to upload video content. “The policy will ban providers from broadcasting video that involves national secrets, hurts the reputation of China, disrupts social stability or promotes pornography,” the AP reports. Though as Forbes reports, this may only be a scare tactic threat for self-policing by sites like YouTube, because China’s government lacks the ability to filter video like it does text. China also just announced that it is cracking down on sex in all video and audio products.
What is a surprise is Australia’s ambitious net censorship proposal. According this Australian news article, the federal government would host a blacklist of sites that ISPs would be required to block. Communications Minister Stephen Conroy wants filters in place to shield children from online porn and violence.
Even in the digital age, government is “here to help” – only just may not “hear” (or read or see) anything.
Commerce Secretary Carlos Gutierrez issued this statement on Friday:
The TV Converter Coupon Program opened as scheduled on January 1, and is off to a great start. Americans have begun requesting coupons that will help them get the converter boxes needed for when our television signals change on February 17, 2009. With these coupons, the federal government will defray $40 of the cost of an eligible converter, which is expected to cost between $50 and $70.
The demand for coupons is strong. We’ve taken requests from every state for nearly 1.9 million coupons from more than one million households.
The demand is strong? Really? For something that’s free? You’re kidding.
Let’s see, 1.9 million coupons requested at $40 a pop is $76 million of taxpayer money out the door in just four days. As Secretary Gutierrez says, “off to a great start” indeed. At this “great” pace it’s good to know the coupon fund totals $1 billion.
What are you waiting for? Get your piece of the American dream here.
The case of Crawford v. Marion County Election Board is being argued in the Supreme Court tomorrow. In a TechKnowledge commentary out today, I argue that the voter ID debate is largely a tempest in a teapot. But teapots can boil over . . .
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