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The Internet Upheaval: Raising Questions, Seeking Answers in Communications Policy

Editor: Ingo Vogelsang, Benjamin M. Compaine
Publisher: Cambridge, MA: MIT Press, 2000
Review Published: February 2002

 REVIEW 1: Chrys Egan
 REVIEW 2: Pat Gannon-Leary
 AUTHOR RESPONSE: Ben Compaine
 AUTHOR RESPONSE: Ingo Vogelsang

For the last few years -- and I guess it will continue for awhile yet -- those involved in communications policy have been tripping over themselves to offer predictions as to where the Internet will lead us and what will be the implications on the way there. Many of the scenarios make for interesting reading and The Internet Upheaval: Raising Questions, Seeking Answers in Communications Policy is no exception. As one of the academics at whom, according to the editors in the introduction, this volume is aimed, I found this a challenging and thought provoking book. On offer are papers from the Telecommunications Policy Research Conference, an event which claims interdisciplinarity -- academic, industrial and government representation, with the commonality of involvement in telecommunications policy. However, the A-Z of authors and affiliations are mainly from the US university sector.

This volume "draws on" papers presented and "reflects a matrix of the topics considered" (x). According to the editors, the intention is to give a wider audience "some of the most readable, informative and valuable papers." For a non-American reader, and for an international phenomenon such as the Internet, this is a very Americo-centric tome! Admittedly, the papers emanate from a national conference but why not make the conference international in the future and get input and perspectives from the other continents? What about the rest of the world? The non-American reader needs to negotiate US constitution, US law, federal rights, Supreme Court judgments, Courts of Appeal, and sales tax in the two opening chapters which could be quite off-putting to a potential readership.

Divided into four sections and sixteen chapters, this book provides an authoritative tour around the emerging trends telecommunications policy research. Of the chapters in the first section, chapter three (by Lorrie Faith Cranor, Joseph Reagle, and Mark S. Ackerman) is highly readable and probably the most appealing for a wider audience. It deals with the nature of online privacy concerns and covers initial findings on Internet user attitudes, factors motivating concerns and the resultant technical, policy, and business implications. The original population covered the USA, Canada plus "30 from other countries" (49) but only the American are reported in this chapter which draws heavily on the work of Westin to make comparisons.

This is not to denigrate the merit of the first two chapters in the section on policy issues. The first is Irina Dmitrieva's prize-winning paper, chosen from eighteen graduate student submissions and deals with violations of free speech rights by Internet, introducing the doctrines of 'state action' and 'color of state law' necessary to initiate a federal action in courts. Thereafter, there is an analysis of judicial applications of state action to shopping malls, private news providers and phone companies to help offer answers as to whether these are applicable to internet providers and under which circumstances. This is an extensively researched piece of work, as evidenced by the comprehensiveness of the literature covered, making the author a worthy winner. In the second chapter, Austan Goolsbee looks at data on purchasing decisions of approximately 25,000 online users to examine the effects of local sales taxes on Internet commerce. This demonstrates the influential role of local taxation in online commerce but is a chapter of, perhaps, limited interest to a non-American readership.

The second section discusses how the Internet changes paradigms or 'tried and tested models' (xxi) as Compaine defines them in his preface. This section's first chapter by Jed Kolko, on the 'Death of cities,' uses country-level data on commercial Internet registrations from 1994 to 1998 to examine the concept of placelessness, i.e. Internet reduction of the important of urban areas. These data are, the researcher admits, a "good though imperfect measure of Internet usage" (81), and he concludes that the Internet is a complement rather than a substitute and predicts that cities will be the long-run "winners" from Internet technology.

Linda O. Valenty and James C Brent deal with the risks and benefits of online voting to the political community and to the individual voter. Benefits posited are increased voter turnout, increased legitimacy of the political system, potential to reconnect individual with community, and reduction of costs of elections. Risks discussed are technological, legal, political and social in nature. The authors conclude that the benefits outweigh the risks. This is a very readable piece from widely read authors -- everything from Aristotle's The Politics and Rousseau's On the Social Contract through to the New York Times on Mail-in democracy and ABC News on virtual voting is cited.

The editorial preface to this volume points out that "chapters 6 through 8 are very different from the preceding" (xxii), and this holds true. These chapters appeal perhaps to a more specialized audience and this reviewer acknowledges a lack of knowledge of economics which may have militated on producing a more insightful critique. R. Glenn Hubbard and William Lehr in their chapter on telecommunications, the Internet and the cost of capital apply a two-period model of investment to examine how consideration associated with Internet decisions might be expected to affect the cost of capital for telecommunications infrastructure firms in the light of the Internet upheaval of the volume's title. One suspects the equations in the earlier paragraphs may be unintelligible to non-economists but the discussion of how the Internet is helping to fuel industrial convergence and the likely effects of competition in cyberspace is illuminating.

Steven G. Lanning et al offer an alternative, unconventional approach to traffic estimates in studying telecommunications demand, abandoning their "crystal balls" to "look to aggregate demand elasticity as a guide for forecasting" (151). Presumably the results of this innovative approach will be of interest to policymakers in the telecommunications sector in respect of competitive strategies and their findings have implications for network planners, regulators, and investors. However, the authors acknowledge that additional research is required to confirm some of their findings.

Paul Milgrom et al deal with competitive effects of Internet peering policies and describe the technology and organisation of Internet services markets, analyzing how peering arrangements among core ISPs can affect efficiency and competition in these markets. What is lacking here is a clear definition of what is meant by peering, although two key features of such arrangements are highlighted. This economic analysis of Internet connections concludes that routing costs are lower in a hierarchy in which a relatively small number of core ISPs interconnect to provide full routine services to themselves and noncore ISPs. However, the authors emphasize that routing costs do not comprise the whole picture and account needs to be taking on the effects of peering decisions on core ISPs market power and consumer prices.

Section three is on the Internet, competition, and market power, and Benjamin M. Compaine's contribution on media mergers, divestitures, and the Internet uses the case of Matt Drudge and the breaking of the Monica Lewinsky story in 1998 on an Internet site which goaded the mass media into running the story. Media power and ability to shape attitudes, opinions, beliefs no longer limited by national boundaries, and intermedia boundaries are blurring too. Compaine examines the economic and antitrust version of media world and addresses some of the socio-political concerns. It demonstrates the opportunity for greater number of information outlets and the possibilities of diversity, accessibility, and affordability.

Douglas Lichtman's chapter on open architecture approaches to innovation seems ill-placed in this section and might have fitted better in the previous one, as it seems to be heavily slanted towards the economic aspects. It deals with the tradition that platform owners adopt open architecture approaches, letting others identify new uses for a given platform and then develop corresponding hardware or software add-ons. Platform owners earn profits because of the resultant increases in platform sales. Lichtman focuses on the consequent problem created by open architecture strategy, i.e. the creation of a market 'fraught with externalities' (232). Shane Greenstein's contribution uses empirical evidence on advanced services at commercial Internet access providers. This presents an analysis of the service offerings of ISPs using 1998 data on services of 3816 ISPs. It views the Internet access market this way to aid understanding of the Internet upheaval of the book's title. It uses a novel approach examining the services at a particularly detailed service and geographical level and raises questions about the distribution of economic growth in Internet infrastructure markets.

Jeffrey K. Mackie-Mason et al cover the pricing and bundling electronic information goods, reporting on a large-scale field experiment in pricing and bundling for e-access to scholarly journals. They provided Internet based delivery of the contents of 1200 Elsevier journals to users at multiple campus and commercial facilities. The research aim was to generate empirical evidence on user behaviour in the face of a variety of bundling schemes and price structures. Results are that decision makers quickly comprehended the innovative pricing scheme offered, the 'generalized subscription' (277) on offer successfully balanced paid usage with easy access to a larger body of content than had previously been available, and, lastly, monetary and non-monetary user costs both significantly impact on the demand for electronic access.

The fourth section is on Universal Service and all the chapters within this are relevant to this category. Riordan gives an economist's perspective on universal residential telephone service, aiming to explain the economists' argument that current pricing arrangements for phone services are an inefficient way to achieve established universal service goals. Although this is another chapter by an economist it is intelligible to a layperson. He sets out his stall in the introduction and confines his mathematics to an appendix so that the text is not punctuated with mathematical symbols and formulae.

Chapter 14 is also clear to the non-economist even though it deals with the issues of tariffs. Geoffrey Myers defines tariffs as a set of prices for access and calls (local, long distance and Internet). He also defines his use of "unbalanced" -- i.e. the tariff is not cost-reflective and "cost" as being taken to include reasonable return on capital (333). The introduction makes the topic seem complex but Myers makes a clear exposition briefly talking about unbalanced tariffs generally before focusing on the issue in Jamaica where customers are set to suffer increased line rental and local call charges with the potential of being driven off the network, militating against universal service. Myers proposes solutions to this issue in the shape of five different types of tariff -- hence the 'squaring the circle' of the title.

Barbara A. Cherry's chapter is on the Irony of Telecommunications deregulation and, amazingly, Europe and the EU merit mention here, with the EU viewed as a United States of Europe. The US has adopted deregulatory policies in respect of telecommunications. EU policy requires each member state to adopt national policy, permitting telecommunications providers to rate rebalance towards costs but allows the establishment of a national universal service fund if desired to ensure affordable rates. The prior focus of research asked the 'what' policy questions. Cherry focuses on the 'how,' identifying differences in institutional constraints on US and EU federal policy processes to explain policy divergences. She utilizes Kingdon's model of policy formation from the political science literature and the result is a very scholarly piece of research.

Finally, Bradley S. Wimmer and Gregory L. Rosston report on winners and losers from the universal service subsidy battle, applying a two period investment model to examine the options associated with investment decisions in the context of the Internet upheaval of the volume's title.

The editorial introduction to this collection claims to capture the "essence of upheavals" (xvii) and raise questions about strategies and policies, governmental and other. It is concerned less with what is happening in the world of communications and more with the why it is happening: "Criterion for including the papers selected . . . was their contribution to further understanding of existing issues or the identification of potentially important issues" (xix). Whether or not this aim has been met is probably determinant on the interest and prior knowledge of the individual reader. Clearly, a crucial factor in engaging fully with this volume is having at least a background in economics. It also helps to be American. For this reviewer, chapters 3, 5, and 12 were the most engrossing of the whole collection and this may well be the case for other non-American, non-economists.

The editors elected not to write a concluding chapter but express their "confidence in the ability of readers to draw their own conclusions" (xxviii). This would seem like a cop out, albeit couched in flattery. A bringing together of the strands in a nice summing up would be useful.

Some minor niggles could be appended here. Firstly, an expression of concern over typos in this volume. The reviewer did not attempt to proofread but the following jumped out the page:

    p.47 line 4 a "studsy"
    p. 49, third paragraph of section Sample characteristics ... "elimintaed"
    p. 227 "accessability"

There may well be more. This is not good in an academic volume.

Secondly, an expression of doubt about the appropriateness of the title -- perhaps a little frivolous given the erudite nature of the content. This might mislead the potential readership of this dense and demanding, but worthy, tome.

Pat Gannon-Leary:
Pat Gannon-Leary is a researcher at the University of Northumbria's Information Mangement Research Institute. She spent 18 years working as an academic librarian in universities in the United Kingdom and USA. She has written numerous articles on e-mail ethics and electronic information services.  <patricia.gannonleary@unn.ac.uk>

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