internet as a critical infrastructure: lessons from the backbone experience in south america f....
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Internet as a critical infrastructure: lessons from the backbone experience in South America
F. Beltran, A. Bourdeau de Fontenay, & M. Wohlers
Presentation:
IDATE, Montpellier
22 November 2005
A. Bourdeau de Fontenay & J. Liebenau
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Agenda
Given Internet’s strategic role in economic activities around the world,
Is Internet a critical infrastructure & what is it that is “critical” in Internet?
What can we learn from and for the South American experience?
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South America’s Internet Infrastructures
Analysis restricted to: Argentine, Brazil, Chile, Colombia, Peru, & Venezuela; Below IP: backbones & interconnection/NAPs;
How can we understand different governance structures? Is Internet perceived/treated as an infrastructure? How to compare various governance?
Only a preliminary research step: Internet not studied from that perspective; and Limited empirical information.
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Problem Is the backbone sector “competitive”?
Contestability (role of vertical integration); Efficiency.
South America policy perspective Historical & growth; Universal access; vs. targeted access; Suggest some “infrastructure perspective.”
Internet as an infrastructure Markets & market structure; Governance & exchange commons; Internet geography.
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Telecommunicationsin Latin America Significant overall progress
Fixed telephones almost doubled 53 million to close to 93 million;
Mobile grew 8.5 times 20 million to 172 million;
Internet users increased twelve-fold 6 million to 72 million.
Growing digital divide 14% penetration in Latin America vs. 50% access in
developed countries; Substantial population without access.
Policy concern Universal vs. localized-targeted.
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Emergence of South America Internet
Access characteristics Use of IBPs (international broadband
providers); All traffic routed via US.
Mid-90s: commercial access New entrants; Existing data networks; Some incumbents.
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1998: NAP Cabase Argentina Cabase: Argentine Chamber for Databases and
On-line Services; ISPs
Initially: 3 ISPs Now: 12, a mix of ISPs, data networks, & telco.
Not-for-profit NAP outsourced to Comsat Argentina Advocacy
NAP 100% of national interconnection - all must be peering
Exclude international links (bilateral agreements)
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Cabase Argentina governance
Open-Policy “equalitarian” NAP governance
Uniform membership requirements Largely consensus; Egalitarian
NAP contracts are uniform Exclusively peering; Members’ routing tables available to all
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Governance sustainability 2003: Defection by 4 members
Commercially motivated (expected due to VOIP) Traffic scale-based justification but Disruptive to others (e.g., routing tables) Request for compensation Originally partial & eventually total.
Governance problem No provision for defection foreclosure No provision for dealing with conflicts among members
Appeal to government Available but not pursued
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NAP Chile Initiated by 6 ISPs Led to Internet Provider Association Regulation
Non-discriminatory, e.g., Access to content Access to backbones
Peering obligation (national traffic) Quality requirements
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1998: NAP Colombia 12 ISPs create the Colombian Chamber of
Informatics and Telecommunications (CCIT) Egalitarian governance
Exclusively peering Member-shared routing tables 90% national traffic Overall cost saving estimated at $1 Million Operating costs migrated from equally shared to
traffic-based
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Lessons from South America Geographically-based NAPs; Significance of NAP creation
Commercial/tier-based vs. equalitarian Ability to evolve through time & potential for
disruption Significant cost considerations
Possible lessons Critical infrastructure Justifications for government intervention
Short run vs. long run Peering vs. transit Discrimination
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Background Is Internet a critical infrastructure? What constitutes Internet’s infrastructure?
Layer & function-based Utilization routines
Interaction between infrastructure and market structure
Governance efficiency & sustainability
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What’s an infrastructure? Intuitive and, yet, complex:
“The basic underlying framework or features of a system or organization.”
Conventional views: Capital-intensive high sunk cost activities (e.g., streets); & Society-wide activities (e.g., health).
Ignored by modern economic analysis Today’s analysis based on goods & services & market-
type environment Limited integration of “exchange commons” dimensions:
Externalities Governance
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Critical infrastructures What is happening to infrastructures?
Is infrastructure still a relevant concept? Established New?
How are infrastructures evolving through time?
Are infrastructures context-specific? Today’s FCC Internet regulatory policies Yes: 9-11/terrorism No: Deregulation of incumbents Yes? Broadband as primary strategic goal
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Adam Smith & infrastructure economics Government’s 3 duties
Defence Justice Infrastructures
The extent of the market & competition conditional upon the government’s duties
Minimization of government’s role conditional upon the government providing infrastructures
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Infrastructure economics:government & market roles Infrastructures generally evolve from markets A review of Coase’s lighthouse analysis:
Private sector Can provide infrastructures; Inadequate treatment of rivalry & excludability Externalities
Regulation &/or licensing “Exchange commons” governance is what
matters
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Infrastructures and “round about” production Young (1928): division of labor evolved to “round
about”/layered production/transaction activities Growing complexity of outputs Increasing layering of processes Innovation-based discontinuities
Implications for infrastructures What layers are infrastructures? Are “systems” (e.g., Internet as a system)
infrastructures?Modern infrastructures support
a very wide range of activities across the economy
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Infrastructures and “exchange commons” Exchange commons
Conceptualization of transactions taking place in a generalized exchange regime within which markets of various kinds are subsets
Infrastructures are operated within exchange commons Market inadequacy Role of governance
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Internet’s geography Internet transforms rather than eliminates the
geographical dimension of economic activities Good for some regions & bad for others Human exchanges can only be partially “codified”
Codification leads to geographical independence Hard-to-codify knowledge implies geographical
limitations (e.g., exchange of personal views, complex transfer of information)
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Conclusions