3.10 Phone networks, monopolies and allowing innovation

As I mentioned earlier, there is some network theory in Chapter 3. This is relatively straightforward to follow if you are already familiar with the basic operation of the internet. It will seem somewhat opaque to those who are not. It is important that you do understand the basics of the technology. The animated movie Warriors of the Net tells you most of what you need to know. If the Chapter 3 material on networks still seems a bit out of reach it would be worth viewing the animation again at this point.

The internet is a network of networks that sometimes runs on the telephone wires. Warriors of the Net demonstrates the ‘end-to-end’ (e2e) nature of this network of networks. Intelligence is kept at the ends, an example being ‘Mr IP’. The networks' routers and switches just move packets around indiscriminately.

Chapter 3, ‘Commons on the Wires’, tells how the internet was built on top of a controlled physical network layer – primarily the telephone wires owned by AT&T.

AT&T, a powerful gatekeeper, controlled innovation by controlling access to the resources needed to innovate – the wires – the physical layer of the telephone network. AT&T's view of Paul Baran's packet-switching design was: ‘It can't possibly work, and if it did, damned if we are going to allow the creation of a competitor to ourselves.’

There was a conflict between the interests of the gatekeeper and the interests of innovation generally – in this case, the development of a more efficient network.

How did we get from the point where AT&T were refusing to allow an alternative network to the creation of the internet? There were three reasons:

  1. Network designers chose to use this e2e design at the code layer. This meant that the network owners could not discriminate against any data packets that happened to be travelling on their networks.

  2. The legal regulations governing the telephone networks changed in such a way that AT&T and other phone companies could no longer control what people could connect to their wires.

  3. Shared code and knowledge at the content layer provided people with the resources to innovate.

This e2e design and government regulation (law) together kept the wires of the telephone system open for innovation. It's the same with roads and with the electricity grid (imagine what it would be like if we had to get the permission of the electricity company every time we wanted to plug something new into a socket). In the previous section we noted that architecture and law would be the two most important regulators of behaviour in relation to the internet. We can now begin to see why. Architecture and law acting together meant that anyone could connect their invention to the network and the network would run it. The inventor just had to pay the neutral access fee to the telephone company. Recall that by ‘neutral’ we mean that the fee is affordable and applies equally to everyone.

The telephone network and the networks connected to it, which together made up the internet, became an ‘innovation commons’, a ‘free’ resource available to anyone with a modem, a neutral access fee and a bright idea.

"We are moving into a world in which the information is controlled increasingly by those who are not totally disinterested in the outcomes produced by the system."

(Stephen Carter)

Figure 4: mindmap of Chapter 3

3.9.1 The Concept of a Model

3.11 Activity 2