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Interoperability and the Economics of Information Infrastructure

``` Date: Thu, 22 Jun 1995 15:51:40 -0400 (EDT) From: BRIAN KAHIN

Cross-Industry Working Team

Freedom Forum Media Studies Center

Technology Policy Working Group Information Infrastructure Task Force

Science, Technology and Public Policy Program John F. Kennedy School of Government, Harvard University

Division of Networking & Communications Research & Infrastructure National Science Foundation

INTEROPERABILITY AND THE ECONOMICS OF INFORMATION INFRASTRUCTURE

July 6-7, 1995 Freedom Forum 1101 Wilson Boulevard Rosslyn, Virginia

This intensive two-day workshop will examine interoperability as the central strategic issue in industry convergence and the central policy feature of information infrastructure. The workshop addresses the following questions:

-- How do business strategies affect capital formation, competition, market development, complementary markets, and users? How do different kinds of firms view the benefits and detriments of interoperability? What strategies are effective for promoting or frustrating interoperability? How do intellectual property laws and practices inform strategies toward interoperability? What roles do industry structure, industry convergence, and antitrust policy play?

-- What does experience with the Internet reveal about the realization and benefits of interoperability? Are there other relevant models for "networked" technology in the computer or telecommunications industries or other business sectors? What does experience reveal about the relationship between industry practices and preferred or optimal levels or interoperability?

-- What are the economic and social benefits of interoperability and what are the costs? How do technological, economic, and business variables affect the value of interoperability?

-- When and how should public agencies support collaborative standards development and other tools and technologies for achieving interoperability? How should research program priorities reflect the importance of interoperability and other special characteristics of advanced information infrastructure?

-- When and why do markets make the wrong decisions about interoperability? How will policy makers be informed that such market failures have occurred and of the measures that may be taken to compensate? What corrective measures are appropriate? How should policies which are reactive in nature be balanced with proactive policies?

-- How does interoperability achieved by published, proprietary de facto standards differ from interoperability achieved by collaborative process? Under what circumstances, if any, should public policy favor one or other? What policy mechanisms should be used to advance policy preferences towards interoperability? Are changes are needed in laws governing intellectual property rights and procedures, antitrust, tax incentives, or research funding? Does the answer depend on the functional position within the information infrastructure? For example, should different policies apply for certain "critical" interfaces and, if so, why?

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Achieving interoperability across heterogeneous systems is recognized as one of the most challenging issues in the development of the National Information Infrastructure. While the Internet may provide a useful model for demonstrating how standards processes and practices can work to achieve such interoperability, it is unclear whether Internet-style processes will suffice in a broader environment where there are established stakeholders with large investments at risk. Indeed, to the extent interoperability is achieved, it will have the effect of bringing diverse business interests into contact and competition with each other. While interoperability accelerates the development of markets, including ancillary and unforeseen markets, concern is sometimes expressed that interoperability may lead to commoditization and reduced incentives to investment. Over the past year, a number of efforts have sought to address the problem of interoperability from a policy perspective. A report issued by the Computer Systems Policy Project in February 1994 identified four critical interfaces in the NII which, the report claimed, should be "open." A National Research Council Report, Realizing the Information Future, addressed interoperability in terms of the architectural design of the NII. Premised on the need for interoperability, a June 1994 workshop held by NIST, the Technology Policy Working Group, and Harvard addressed the broader challenge of standards policy for the NII. The Cross-Industry Working Team's report, "An Architectural Framework for the National Information Infrastructure," identifies interoperability as fundamental to realizing the NII. Several bills before Congress address interoperability, especially at the "set-top," one of the critical interfaces ("network-appliance") identified by CSPP. In July 1994, NSF, TPWG, and Harvard held a one-day Information Infrastructure Forum on the economics of information infrastructure in order to explore economic issues in information infrastructure beyond facilities-based telecommunications. The July 1995 workshop builds on that effort but focuses on interoperability as the linchpin linking issues of expanded interconnection in traditional telecommunications with issues of standards development, intellectual property, and antitrust at the higher levels of information infrastructure. In particular, it seeks to understand how the diverse and unique economic characteristics of higher-level infrastructure (such as Internet access, on-line services, published software, access to databases, etc.) inform business strategy and public policy.

Preliminary Agenda:

July 6 (9 a.m. - 5 p.m.)

What Is Interoperability? Business Strategy and Interoperability (two sessions) Benefits and Costs of Interoperability

July 7 (9 a.m. - 4 p.m.)

Information Infrastructure Economics and Public Policy Interconnection and Interoperability Standards, Intellectual Property, and Antitrust

Partial list of panelists and presenters:

Francois Bar, Berkeley Roundtable on the International Economy Stanley Besen, Charles River Associates Karl Buhl, Microsoft Nicholas Economides, New York University Henry Ergas, Harvard University Kenneth Flamm, Department of Defense Brian Kahin, Harvard University Mary Keeler, University of Washington Robert Lucky, Bellcore Srinagesh Padmanabhan, Bellcore Lori Perine, NIST Edward Roche, University of California, Berkeley David Salant, GTE Dan Schutzer, Citicorp Mark Shurmer, Brunel University (U.K.) Marvin Sirbu, Carnegie-Mellon University Neal Stolleman, Bellcore Gregory Sweeney, AT&T Hal Varian, University of Michigan Christopher Weare, University of Southern California Andrew Whinston, University of Texas Glenn Woroch, University of California, Berkeley Akiko Yamazaki, Stanford University

Registration:

The registration fee for the two-day workshop is $400, which includes food and materials. Requests for waivers and scholarships should be submitted in writing, preferably by email, for review by the sponsoring organizations. Open registration will be limited to 50. To ensure wide exposure among policy makers, industry, and the public, workshop papers and selected additional materials will be published by the MIT Press as part of the Harvard Information Infrastructure Project series. Please notify Jim Keller (below) if you wish to receive information if you wish to receive information about the book when available.

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To register please provide the following information:

Name:

Title:

Organization:

Address:

Phone:

Fax:

Email:

Method of payment:

____ VISA ____ Mastercard ____ Check enclosed (payable to Harvard University)

Credit card number: Expiration date:

Send to:

James Keller Information Infrastructure Project Kennedy School of Government 79 JFK Street Cambridge, MA 02138

617-496-4042 617-495-8963 Fax

jkeller@harvard.edu ```

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