March 22, 2003

Internet and our service to each other

Took part in OII's event at the UK Parliament, Professor Noam was concise, and I remember him from Launch Conference. His Columbia Institute for Tele-Information seems to be intensive and surely unique.

Point was made that Internet and information markets (for network equipment, browsing software and the like) are concentrated - have less participants and more share/market power per each. Communications market has vast underused capacity. So, one of basic choices is price wars vs. oligopolies & regulation. But Internet is more than a marketplace:

We have many services on the Internet, which we take for granted, i.e. (1) web site is an information service about a company or initiative, (2) when we e-mail each other, we provide service (informational or analytical - meaning one) that is valuable, whereas e-mail, WWW, operating systems, browsing software, computer network equipment are infrastructural services that are worthy as long as they maintain medium but not per se.

Interestingly, that types and value of taken-for-granted services that network participants provide to each other are not investigated, appreciated, and reported scientifically.

1. Moreover, it seems that infrastructural lock-in (like in e-mail or browsing software) is significantly lower than "meaning lock-in." For instance, users do not concern with change of Cisco routers and can easily switch from Explorer to Netscape (say to reduce costs), but switch between R&D or statistical packages is proven to be difficult – a case with knowledge and meaning-intensive software.

2. Infrastructural services, software and even web-programming like or MS Office, or HTML are usually commoditized, rather than knowledge intensive ones like automobile engineering software and its languages.

3. Infrastructural lock-in may be serious due to high equipment and operating software costs, but "meaning lock-in" is proven to be long-lasting, expensive (billions are spent now: about 80% of new project budgets are software, and 80% of a helicopter’s cost is attributed to software), and highly hidden like cost of re-thinking one’s work in terms of new R&D software.

4. Infrastructure and standardized networks have their own economies, often they are subsidised by consortia or government, thus, they do not create significant lock-in, influence, and market power.

From other side, most of highly valuable services that people conduct over the Internet are not commercialized, hence, they are difficult to count and understand in terms influence on markets. But network participants proved to be flexible and knowledgeable actors - to remember e-mail example, I will have no wonder if people would go back to phones/handwritten faxes with their own advantages like confidentiality, paper document, identification, almost no spam, and personality.