Panel - The Role of Research in Policy Making

Q: Approach research issues from the starting point of the very real world, constrained by political considerations, or start from a ceteris Paribas state, looking for the “socially” optimal policy?

A: Political constraints change. Things are seldom constant

A: Difference between these two approaches is how embedded our assumptions are

Tech can change our base assumptions—need to look up occasionally

A: Feasibility constraints make for interesting problems

Ex: why is rate rebalancing so hard in this country.

Institutional

A: Time lag in connection. Research has a luxury of challenging existing orthodoxy

A: Value added for an academic is the long term

BUT – sometimes can really be helpful

C: This was an original purpose of TPRC

C: Need to explain to our students the relationship between research and use

Q: Exhilarating examples?

A: Plenty: …

C: Academics need to make their own concessions. Too policy-oriented can break a tenure case

Policy analysis is thoroughly unrewarded in academia.

C: Not a great idea if it’s not realistic

` Process from policy world to the academic world

A: Policy world is a very different audience then journals

A: Many linkages between policy and academia. Academics have legs in real world

Consultants

Solution is diversity

A: Maybe there really is a DMZ zone. It could be motivated by the need to provide “credit.”

Time cycle for journals are long

DC is good at plagiarism, but academics need credit

Keynote – William Raduchel

- Formerly of AOL and Sun

- Taught econ at Harvard, taught both Scott McNealy and Steve Balmer

o Taught Balmer the theory of monopoly

The future: reality is called “consumer”

When talking about consumers, need to adjust assumptions

People are mainly satisficers, not optimizers

Media is about shared experiences:

Talk about the movie

Watch movies on HBO that you already have – family agreement

HBO advertisers to its own subscribers: who get it for free!

Need to generate buzz to maintain subscription

Entertainment needs of NY probably met by 2 terabytes (not 100s)

Media consumed in isolation isn’t the same

At the same time, loneliness drives tech

Identity through technology: who would predict ring tone markets

Difference between hit and so-so movie is the number of times people see it

People don’t use TV guide, but watch from about 16 channels

Mass media paradigm doesn’t fit the idealized internet

Technology is a little limiting

Data usage passed TV usage in Korea

Data on college kid usage

Kids don’t believe in paying for media

Libraries of DVDs, see library copying as different

Value per bit is shrinking

Email à song à movie à HD movie

Storage costs

In a few years, every movie ever made will fit on a box for under $10k

More movies than Hollywood blockbusters, but media to be shared

Model competing with the net

Cached video storage, tivo increase

Can get every show on 16 channels for a week, each evening

Why go to net?

Problems with competing on the net

Subscription is the domain of HBO, Encore, etc

Licensing for songs

Mass media is very different from IT world

Ultra wide band is disruptive technology

Not a straight connection

Need to integrate PC and TV

IPods are popular because they integrate organization (PC) and consumption (mobile)

` Need to find out more about this tech… not sure what he means

Interface of TV will be the target of a huge battle

“Why in the world do we expect consumers to run a 30 million line sw stack themselves”

Why don’t we have consumer network boots?

In an always-on connectivity, want always on data

Issue – if all your data is in the cloud, what are the privacy issues

“The C2H5OH factor”

A VC talk with the formula of problem in the world à my solution plays really well for an academic audience…

Intellectual Property at a Crossroads

Michael Yuan - Comparing Welfare of Indefinitely Renewable Copyright and the Current Copyright System

Current system: automatically get copyright for a period

Variable – Term granted

Creator chooses

Whether to enter the market

How many original pieces to

How to price them

Legislator wants to max social welfare, and needs to decide length of copyright

Alternative: indefinitely renewable (Landes & Posner 2003)

Variable: size of fee

Creator chooses

Same as above AND length of copyright of its products

Legislature has same goal, needs to choose 1^st period

Points of comparison

Size of public domain

Tracing/Transaction/Operating costs

Rent seeking behavior

Approach: compare consumer surplus and creator profits

Two markets that have the same conditions

Compute social welfare

Analytic model – legislature chooses variable to max social welfare

Max s.t. process, and trying to get equilibrium

Q: assume zero marginal cost? Marketing considerations?

Demand function Limit of number of popular goods

A: dunno…

Results

Can show the optimal period of copyright, and of pricing

With given parameters How did he get them??

Evidence that renewable system

Robustness model - See robustness model!

Q: With the renewable system, you maintain and revalue things in the system

A: Yes. Our model is basic right now

Q: Creator doesn’t get to choose how much to produce. Layer missing

David Waterman – The Political Economy of Audio-visual Copyright Enforcement

Public image of content producers as serious enforcers

But great variation, and sometimes counterproductive

Is piracy enforcement socially optimal?

Many ways to pirate

From the theater, or home media

Cable theft, internet download

Harm estimates – tricky, we don’t know their methods

Assume that all theft is a missed sale

Enforcement

MPAA is very aggressive

Cable/DBS is rather lax

Video retailers don’t do much

Why differential enforcement?

Differential economic impact – content owners incur larger costs than media

Ex. PPV have little incentives to protect other people’s content

Asymmetry of enforcement costs

Difference in costs

Cable operator only gets $3, doesn’t feel the whole loss

Unlike physical artifacts

Moral hazard in joint costs – distributors could raise piracy to get money to stop it

Cable piracy

Occasionally run tap audits à send out amnesty & subscription offers

30% conversion à 70% don’t

“Like heroin” – first year is free

PPV piracy

Sometimes give it away to segment the market

Allow people to steal to keep them from getting a dish

Wait for

Economics – socially optimal is industry maximizing level

BUT – what is industry?

How to improve:

Vertical integration of content and distribution

Share DMCA restitutions

Digital –

Better content increases incentives to let people pirate to increase subscriptions

Q: time sensitive revenue stream for content: can downstream distributors get involved in upstream piracy?

A: hard to get evidence of that.

C: Cable distributors offer bband as well – this complicates things

Alessandro Acquisti - Darknets, DRMs, and Trusted Computing: Economic Incentives for Platform Providers

Info goods and IP solutions

Accept public good nature

Make goods rival – DRM

Make them excludable - watermarks

Darknets – distribution network for breaking things

Assumed infinite capacity

Trusted computing tries to raise the cost

Chip forces “trusted booting” à hard to change configuration

Allows remote attestation

TC advocates

Security: harder to modify OS

Could use DRM for personal data

Trusted exchanges

Have to attack the hardware

TC detractors

Control is not for users, but

Chip vendors can lock in OS

OS vendors can lock apps

App vendors can prevent file interoperability

Is it economically possible?

Model

Two platforms: TC and non-TC

Platform providers must decide whether to support TC or not

…

[Model presented]

Issue: low demand content

High demand content can always be broken b/c darknet has high reserve cost

BUT – opening files, emails, etc

Need support of multiple users, but have to get them with interoperability

Chicken and egg à longhorn separation from NGCB

Implications of TC success

Security – every complex system is breakable

No proof that TV will protect privacy – encryption needs to be used bilaterally

Innovation- CS industry of user innovation

TC inverts the model of von Neumann architecture

Q: Why would technologists support this system to protect other’s content

A: Can charge licenses, or lock in as the standard

Dennis Karjala – Congestion Externalities as a Basis for Extended Intellectual Property Protection

This paper bitch-slaps Landes & Posner J

Criticism of Landes & Posner

Predicated on the assumption of loss of value in over exposure

BUT – no overgrazing

If no incentive needed, don’t need protection

L & P – overexposure shifts the demand curve

If Bogart’s image was readily available, everyone would use it, value would go to zero

Econ analysis

Demand curve shifts: loss in value probably greater than shrinking DWL

Criticisms

Even if we lose things from copyright, they enter society

e.g. Santa clause

Basic economics: shifting demand needs to take into account value generation

Fact that demand goes to zero not sole measure

Demand curve != social value

Analysis falls flat on factual works w/ death by overexposure

e.g. people won’t stop using maps, programs

Lots of works with zero value

Very few candidates for congestion

How can a novel be over-exposed?

L&P requires people to be exposed so much that they are sick of it

Only viable example is fictional characters

Mona Lisa, van Gogh, Beethoven

Are these things not popular?

Wouldn’t someone pay for them if they were under copyright

I think I just lost his argument… what is he arguing for?

Q:(David) If implication of model is that restricting access creates value, so we should do that more, isn’t that nonsense on face?

A: Yes.

Q: Doesn’t the L&P say that consumption reduces value? And that this is bad?

A: Yes, but a little different for digital good.

C: If there is no scarcity, economics has little to say about scarcity

C: Different type of externality: slash fiction for Mickey Mouse would reduce demand for family cartoons

Wow… cartoon sex at 9:30 in the morning…

A: BUT – that creates a different standard of value

Broadband Economics Policy and Diffusion

Local context matters for broadband

Big difference between municipal

Sharon Gillette, William Lehr and Carlos Osario – Municipal Electric Utilities’ Role in Telecommunication Services

Data – survey from 2000 public utilities from APPA

Key findings

“internal” predict offerings to public

Competition & demographics not as strong predictors

State policies have a real effect

About 250 MEUs of 2000 offer communications

Some of it is “internal” – billing and mgmt info, or services for muni gov’t

Why would MEUs start offering external service

Technology & knowledge

Level of policy autonomy

Market: two hypotheses

Competitive: Enter an attractive market, can find new profits

Public good – bad market

Additional factors

Demographics, geography, existing bband market, policy climate

Results

Technology push suggests a process

State prohibition is strong, policy climate not huge

State policies – direction could be going the other way

Reaction to forward thinking MEUs

Q: Subsidies to target this for Universal Service?

A: No, the opposite. Only subsidize private groups

Q: Have any utilities had to unplug their networks b/c of rules?

A: No, but usually states grandfather things in

Q: BBand over power lines? (BPL?)

A: Interferes with ham radios

Q: What were the implications of the Nixon decision

A: Telcom Act did not did not pre-empt state restrictions on muni entry

Marvin Sirbu, Sharon Gillett, William Lehr – Broadband Open Access: Lessons from Municipal Network Case Studies

Need to define what is *shared* (Broken down by layers)

Conduit, dark fiber leasing, fiber & link-layer, basic IP service

Access to which services? Voice, data as ISP, data as transport, video

Partnership model:

Can the network operator compete?

Control over identity and number of SP’s?

[Comparison of Braintree MA and Spencer, IA]

Former is quite closed, latter is rather open

[Several other case studies]

Technology and open access must be aligned.

Impact of Everything-over-IP

If SP is open, are other things open?

Not quite that simple: QoS,

Conclusions

…

Govt has played a big role in open access

Q: Has the third wire made a big difference, given two existing formats?

A: Communities see lower costs from other modes. These should be included in community benefit calculations

Kenneth Flamm – The Determinants of Broadband Competition: Economics, Demographics and State Policy

Econometric view of competition, at the zip code level

Can use a longitudinal analysis from FCC data

Issues with the FCC data

Range of quality within the bband definition is tricky

Estimates zip codes with no data

FCC may have underestimated number of zip codes with no high speed lines

Think about this for King’s class…

Keynote – Nancy Kranich of the ALA

-Past president of American Library Association Yay librarians!

History of librarians sticking up for rights

A librarian protecting the “Berrigan brothers” went to jail to protect them

FBI tried to get in

1990s

Publishers accused librarians of being pirates

Religious Right accused them of running a peep show

Ashcroft accused them of being ‘duped’ by the ACLU – But so have the courts J

Values that librarians defend are the values of traditional America

Policy solution: need to propose, not oppose policy

Step back: what kind of information society do we want

Enclosure metaphor – no single action closed all the agricultural commons

Scholars tried to establish a literature that the commons were not always a tragedy

Olgstrom – fisheries, natural resources, air

When controlled by groups, things work better

“Governing the commons”

Libraries have always been protective of the commons

Features of commons

Open access, free/low cost, sustainability

Scholarly communications as commons

Open access, Public Library of Science, open archiving

Q: Are there other countries doing a better job?

A: US has been a library leader, but is falling behind. Maybe Finland…

Problem is that the US leads bad copyright policy

Q: What about congressional archives. Aren’t they closed?

A: Congressmen don’t understand that it’s about

-Same with presidential libraries: private foundations can take over

-Can be awkward

Q: What about science academic community, where I have tenure issues

A: Lots of these groups sold off their publishing side, to poor results.

Communities are starting to see it as a problem

C: As we change the distribution method, need to have another way of sorting value of information

Journals have survived because people need information value signals

Economic and Technical Aspects of Networks

Brett M Frischmann – An Economic Theory of Infrastructure and Sustainable Infrastructure Commons

-Full draft available on SSRN

Project – economics of foundation resources on the demand side

Where does value come from

Law & Econ, but many disciplines among them

Open access vs. control debate

If(infrastructure) then commons

Not a rule, but an organizing principles

General infrastructure definition

Infrastructure is/may be consumed nonrivalrously

Demand driven by downstream activity

Output-based typology

Commercial infrastructure – input into the production of a wide variance of private goods

Basic manufacturing processes, cable, roads, internet

Public infrastructure – input produces wide variance of public goods

Basic research, internet

Potential for a market failure

Access determines presence of externality

Social infrastructure – production of non-market goods

Externalities built in

Internet could be all of these – mixed infrastructure

No such thing as neutrality – E2E vs. market bias

Case for Commons

Commercial infrastructure seems ok

Public & Social – demand manifestation

Killer apps have immediate payoff

Many small scale activities could add up to a large social benefit

Commons obviates the need for either market or government to “pick winners”

Q: Is there actually non-rivalrous consumption? A space on the road is taken

A: Yes. Most is mixed, but lots of things are non-rivalrous most of the time

Need to examine the contrapositive.

Q: Is the “market place of ideas” a market or a commons

A: They aren’t antithetical. Commons is an access question, not selection

C: Different states of development

Christian Sandvig & David Young – Hidden Interfaces to “Ownerless” Networks

Story of networks told as the product of inventors and big institutions

What happens in between

Wireless networks

Mesh, route-able, single standard

Who is doing things

Academia, businesses, government and “other”

Other is kind of cool – amateur radio enthusiasts

Story of wireless mesh

Limitations of extant wireless meshing algorithms

65 algs are in the lit, implementations of about two

Bottlenecks

1649 wireless products on the market BUT 182 in available catalogs

only 128 obtainable, and only 18 of those on PCM-CIA

40 firms interested, 15 building them, 6 selling them, 2 sell more than 70%

Hard to get interface documents

NOT specs

Still have access issues to the “open” network

Q: What about reverse engineering

A: Raises cost of innovation dramatically

Q: Where would one turn to learn about compatibility issue?

A: CUCWN, but remember that mesh has many different ideas

Things are really new. There is no one true answer

Q: Why did you have a hard time getting interface info

A: Internet has culture of openness, but corporate industry has culture of secrecy

Yochia Benkler – Distributed social provisioning of survivable critical infrastructures

Not sure what was new about this paper-maybe the legal perspective. But “P2P is neat and can solve problems” is a little 2001, isnt’ it?

(An application of Sharing Nicely in YLJ)

P2P is pretty incredible as a storage system

Think about it as security for critical storage

Peer-sharing is a new model

Highly survivable systems

Social motivations, rather than prices or firms

“Sharable goods”

Survivablity is a unique security ideas – (Baran “On Distributed Communications 1964)

Distributed, redundant, adaptive

Internet is survivable on the network level, not the local level

Example – ad hoc wireless networks

Feasible

Migration path is a little tricker – may need policy

Taking down napster didn’t destroy files

OceanStore

Diversity enhances

Shareable goods

Lumpy – discrete packaging, but not perfectly aligned with demand for functional flow

Mid-grained – packages can be provisioned

Transactional frameworks

Price-system

Firm hierarchy

Social sharing and exchanging

Motivation Crowding Out theory – lose the social-minded people, but gain the profit-minded people

Commodification kicks out altruists

Changing economic nature of network resources due to network convergence

How does network convergence shape econ nature of the Internet

New Econ iessues will appear in the era of the converged network

Today’s internet

Excludability and rivalry à common resource

Think about congestion and tolls

Common resources are usually inefficiently used

Traffic congestion, spam mails

Technological inability to distinguish to differentiate

Inefficient resource allocation

OR – a feature, not a bug…\

Using the internet today

Korea: for fun, rather than work

P2P is for pleasure

BCN - Future of convergence has all data has same line

Advanced traffic engineering tech

Have specified routes, constraint-based routing

Differentiated services

How do you have decentralized router policy?

Q: how to you spread policy across network?

A: market will solve that problem. My bank will find an ISP…

Q: Is congestion or spam that big a problem

A: No, it might be, though

Shane Greenstein, Chris Forman, Avi Goldfarb – How did location shape commercial internet adoption

Look at tech usage in businesses

Internet investment in 1990s

US IT spending grew 20% b/w 1990 & 2000

$450 Billion + investment

Where did it go?

Investment persists overtime

Models

Global village theory - distance is smaller

Marginal contribution of density is declining in density

More frequent adoption in low density

Urban leadership theory – urban support network matters

High desity area, costs are lower

Industry composition theory

Who they are matters – path dependency is critical

These hold

Standard diffusion model

BUT – these give you contrasting theories

Method

86,879 business establishments with 100+ employees

(Best data to date)

Measure

Participation – bare minimums

Enhancement – pretty much anything with TCP/IP

Inter, Intra

Results

No real difference by city size for participation – everyone participates

Less variance for urban, though

Enhancement: more in the cities, wide variance in rural

Conclusions

Results consistent with a couple of theories

Industry patterns predominate:

YJ Park, Ian MacInnes, Sang-Min Whang – Virtual World Governance: Digital Item Trade and its Consequences in Korea

Korea has large quantity of popular virtual worlds

Virtual worlds are a subset of the virtual community

Use virtual worlds to

Make friends, find partners, engage in economic activities

Theory

Property rights – who owns digital items

Rules - Should trade be allowed

Institutions – how to resolve disputes

Method – collaboration with Yonsei University in Korea

Online survey of Korean online users of lineage

Interviews with ItemBay, large digital item trading house

Who should own the items?

Game developers

Cybercrime issue – 70% of cybercrime associated with digital items?

Theory of internet policy issues: order of approach

-Property rights ownership of digital code

-Digital code allocation trade

-Cybercrime / dispute resolution

-Institutionalization

Haakon Flage Bratsberg & Ole Christain Wasenden – Changing regulation: impacts on mobile content distribution

Ringtone market in Norway 1999-2003

Two mobile operators have common content-provisioning and content aggregator

Private decision to harmonize prices

Changing regulations in the EU about electronic goods

Payment system – EU e-money directive about ID and verification system

While different parts have common goal of efficiency, each layer has separate goals

Distribuition – network integrity

Content –incentives for creators

Payment – financial stability, anti-counterfeit

Privacy in a Connected World

Lauren Gelman – A DMCA for Privacy

-paper posted on her website, not the conference

RFID aren’t actually a privacy threat

What does a network look like that may cause privacy to be threatened?

Conditions where information is floating around – other people may want to access it

Ways to look at privacy issues

How is the data protected in the devices

How well is it protected by law

Types of attacks

Obtaining device, false query, interception of legit query

Problem – each attack falls under different computer crime law

Doesn’t make any sense

[Paper has a full analysis of computer security laws]

Example – CFAA specifies “computer” but is RFID a computer?

Example – Can RFID fall under “interstate communication”

Attacks – why wouldn’t RFID intercept be a pre-defined internet

Law isn’t written to deal with passive intercept

Counterfeit laws for spoofing

RFID attacks need to either link to UID db, or use tracking. Legal impact?

Different laws cover different aspects of the network that need protection

DMCA – handles protected content in open networks

Same approach needed for personal data

Proposal – Digital Privacy Protection Act

Unlawful to circumvent a privacy-protecting technology

Can’t traffic

Felony to do it commercially or for financial gain

Protects Personally Identifiable Information – PII

Paraphrase of Bruce Lehman about people not putting info on their network

DMCA not such a good law, but the motivation applies to PII

BUT – like DMCA, no way for the _owner_ of PII to access the data

Why there won’t be a DPPA

Privacy proponents won’t support a legal backing to a bad security system

Huh? Oh. Because the DMCA has bad flaws because it tried to protect

Intention based approach

Q: What about EU paradigm

A: It’s pretty different, but it’s also civil. US motivation is perceived

Q: My parking garage is giving me an RFID. What is the PII? Where is the boundary

A: Not sure that I would un

Q: RFID is a key to PII database. How does that fit in?

A: …

Q: What about electronic passport with biometrics? Protect the manufacturers from privacy liabilities.

-Work with EPIC

A: Worked with EPIC from the DMCA. Problem with DMCA

C: Metaphor with DMCA is a little sticky, lots of baggage

Rajiv Shah and Jay Kesan – Old Wine in a New Bottle: RFID & Cookies

[Intro to RFID]

Pictures aren’t actually of RFID chips, they are the one-bit theft protection thingies

Similarities with RFID and Cookies

Both entities allow maintenance of infor

Ubiquity

Use and potential revision can be surreptitious

Development process dependent on institutions

Norms and processes of institutions reflect on technology

Coookies: NCSA vs, Netscape vs. IETF

Privacy built into cookie technology from security perspective

Early implementation contained serious security flaw, could have been caught

RFID: research driven by firms for efficiency and effectiveness

Designers can build privacy potential into the process

Use of technology – regulating and reconfiguring

Users need to be informed, choice

Cookies: no one knew about cookies

No one has a *choice* about cookies, but they can determine use & configuration

Need to think that way about RFID

Shaping of process through market

Market doesn’t sort things out – had to rely on public interest groups

Analytic framework – technology-centered approach

Development, use and role for society

Lots of lessons we can take from cookies

Q: What is the flaw with 3^rd party cookies?

A: Have URL be critical to look up cookie

Q: What is the modification option for RFID, given a UID model

A: Can RFID be set as a different number…

Scenario: underwear has identifiable info. Re-assign UID to a store-specific code

C: BUT – harder to implement, more expensive. This is a tradeoff.

Security issues for store, time delay issue

A: Every inventory control device has similar issues

C: Everyone has a computer & browser who is affected by cookies, but not sure who can modify their own

Junseok Hwang and Alexandre Repkine – Economic Models of Online Digital Identity, Identity Management Systems and Service Interconnection Policy

How is collected information shared?

Users subscribe to several services, with various IDs

Sometimes expect them to flow together, so the information will have to flow as well

Conflicting user needs: privacy with customization

Economist “A Residual value that is hard to define or protect in the abstract”

Trade-off between auithentication and privacy

Policy questions

How much info should Certificate Service Providers ask?

Minimum provisioning rules about interconnection among IMS’s

Market based mechs

IMS – multiple identities are a major inconvenience to individuals

NO! Multiple IDENTIFIERS and AUTHENTICATORS are hard. IDENTITIES are desirable.

[Econ model presented]

User will maximize utility from partial identity – amount of personal data

He doesn’t cite any of the literature that did some of this stuff

Policy implications

Encourage interconnection level

Socially optimal outcome may differ from Nash à regulate

Increase consumer privacy awareness

Interconnection policy to track bits of identifiers

About these notes

These notes were transcribed by Allan Friedman at the conference. They represent only a fraction of the papers presented, since the conference consisted of several parallel sessions. It is possible that I may have misunderstood some of these presentations, or missed an important point. It goes without saying that curious readers should read the actual papers, which can be found on the TPRC website.