IP: Washington Diary #3 -- The Facts of Life in DC

[Dave Farber <farber () cis upenn edu>]

First some personal comments. We still both love Washington -- maybe too 
much Going to be hard to go back in seven months. GG's prognosis is very 
good and we are thankful for the fine medical capabilities of the DC area.

I have now been in Washington  for five months. I feel like a veteran 
Washingtonian -- even an inside the beltway figure.

This is the first in a set of diary entries addressed to the 
important  issues facing the government, public and industry in cyberspace 
and what I have a learned about the Government in general and the 
regulatory bodies in specific.

While I promised not to keep disclaiming, in this report I must emphasize 
that this certainly is not the FCC speaking nor any of the Commissioners -- 
just Dave Farber.

First the FCC, The attitude at the FCC is very much to loosen regulation on 
traditional services; to  encourage the exploration of new services on 
established systems and to count on market forces to control competition 
and drive prices down. Sounds great and works rather well in a competitive 
market place -- like cellular and long distance,

In the Internet space, the attitude of Washington outside the Congress is 
"we don't understand it and lets leave it alone" [  at least till they 
understand it better :-) ]. Again it is very much , "let market forces do 
the regulation".

I have a big problem with this strategy. not that I like the other obvious 
one any better -- namely regulate, My concern is centered around the 
question of whether in a dynamic field such as the Internet where 
technology drives it fast -- can the reliance on market forces work  to 
avoid damaging our citizens.

The center of the issue is  whether by the time you determine that there 
has been a failure of market forces, will it be too late to correct things.

Counting on such slow acting forces such as regulation and anti-trust will 
leave dead bodies and bankrupt companies and dominant players either 
slowing innovation or controlling price/service.

A case in point is Microsoft, IF the government contention is upheld, we 
have a case where clearly market forces did not work, where many hopeful 
competitors are dead and where even after the proposed breakup, the 
established customer base and startup nature of real competition will still 
give Microsoft a big edge.

I should have said early on I am not a trained economist. I am a scientist 
and a entrepreneur so my terms may be incorrect in economic theory but are 
the ideas  right?

So what can be done.  Real hard!  I can give you a set of future scenarios 
which would make the Robber Baron's envious.

The only way I can see out of this is for the Government to establish a set 
of trip wires that define the boundaries of acceptable behavior. The 
purpose of the trip wires is not to just constrain behavior but to help 
companies not to trespass on dangerous ground. Without such understood trip 
wires no one knows when they go to far.

How are these trip wires articulated, not in private negotiations but in 
very public speeches by , in the FCC case , the Commissioners and senior staff.

In many ways this reminds me of Herman Kahn at the RAND Corp in his books 
on Thinking the Unthinkable -- on Thermonuclear war. Herman was endlessly 
criticized for daring to think of thermonuclear war. His comment was it was 
the highest form of irresponsibility not to understand the steps involved 
so you had an understanding of what actions would result in -- hundreds of 
millions of dead. I believe Herman helped to stop nuclear Armageddon.

The analogy in this case is there is no Herman Kahn (I am just a learner) 
who has articulated future scenarios and established based on the analysis 
of these scenarios,  where the trip wires are and what are reasonable 
directions.

Example, would a duopoly that controls data access to homes control path 
and content be acceptable? Would an equivalent of the ALLEGED behavior of 
MS mapped over to the communications field be acceptable? What are the 
scenarios that would allow this to happen and how realistic are they and 
where to be put the tripwire such that we can detect problems before it is 
too late and what do we then do.

Boy, it was easy in the old days when progress was slow and you had time to 
react and patch prior to a rip in the economic fabric -- not now people!!

In the next Diary entry -- will security issues sink the internet into 
regulation (hint my call is yes).

Dave

ps: if you are in DC yell and lets meet.