Oct 2

Jesse Robbins

Jesse Robbins

You Become what You Disrupt

An idea we've been exploring in advance of the Web2.0 Summit is "You become what you disrupt":

  1. What changes occur when you win a platform play, when you go from disruptive technology to a public utility?
  2. Where are the opportunities to innovate instead of regulate?
  3. What parts of "eTel" are becoming "Tel"?
  4. Where else will this happen?

For example, the ongoing US VoIP/911 debacle was a missed opportunity to improve a life-saving technology. There have been years of delays, lawsuits, and regulatory standoffs while emergency calls go unanswered. Yes, the fine print says that VoIP isn't a replacement for your phone line, and suggests that you educate "anybody that might be in your home" about how to call 911. At some point in the adoption curve that kind of disclaimer becomes unacceptable... but where?

The 911 Modernization and Public Safety Act (H.R. 3403) is now being considered by Congress. This bill is intended to give VoIP providers the same access to the 911 system as wireless carriers. It appears to have broad support from both public safety officials and VoIP providers. However, according to internetnews.com, it's opposed by established operators because it "provides more access to 911 infrastructure than wireless carriers have and therefore an unfair advantage".

How do we avoid this kind of problem in the future? Where should we be looking now?

Services like Skype are classified as "data services", meaning they don't have to provide 911 access for now. It's unclear how services like SkypeOut and Skype embedded handsets change this, although their terms of service say:

"7.4.2 No Compulsion to Offer Emergency Services. You recognize and agree that Skype is not required to offer Emergency Services pursuant to any applicable local and or national rules, regulation or law. You further recognize that Skype is not a replacement for Your primary telephone service."

Perhaps this Skype job posting provides clues as to how this will play out:

Director of Government and Regulatory Affairs, North America
Goals: (...edited...)
* Influence legislative and regulatory developments in the North American region
* Minimize exposure to political and regulatory risk
* Develop specific expertise in the area of public safety and state telecommunications public policy
* Act as educator to government and regulatory stakeholders
* Promote Skype's interests through various coalitions, trade associations and public safety groups in particular the state government affairs groups inside the VON Coalition and other industry trade associations
* Act as early warning system for regulatory risks

These questions take us far beyond 911. The Telecommunications Act of 1996 states that "consumers in all regions of the nation, including low income consumers should have access to telecommunications and information services". Will the Universal Service Fund subsidize internet and VoIP? Should it?

Similarly, new "utilities" are emerging from the web as a platform. Will utility computing services like 3tera Applogic or Amazon EC2 eventually become regulated? What about identity services, or even "social utilities" like Facebook?

Your thoughts and feedback are most welcome!

Previous  |  Next

0 TrackBacks

TrackBack URL for this entry: http://blogs.oreilly.com/cgi-bin/mt/mt-t.cgi/5886

Comments: 9

  Simon Wardley [10.02.07 10:30 AM]

Talk about setting the cat among the pigeons .... great post, great question.

To quote from J.M Keynes "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

As far as XaaS goes (covering software as a service through to hardware as a service), this is fundamentally about commoditisation of IT - the change from novel, new to common and ubiquitous. As opposed to commodification which is about the change from social to economic value and part of Marxist political theory (another topic, another day).

Now commoditisation leads to undifferentiated price competition, which most businesses attempt to protect against with first patents, then branding and pricing strategy (e.g. the flexible pricing plans designed for you, which are more likely designed to make comparison against services difficult).

Now if a particular innovation (let's say HaaS) becomes generally useful (which I have no doubt of, since that it reduces non strategic costs for most businesses), it will becomes an infrastructural issue as it is widely used (as per electricity and other such services).

Now unlike electricity, we are not neutral to our hardware, as our data and applications reside somewhere. So our ability to move from one service provider to another, a sort of fungibility of service provision, is more complex and critical.

Hence the importance of standards - and it is good to see the recent OVF (open machine virtual format) proposal. Once you start to have multiple common service providers, and the ability to move between providers, then it is possible for competitive utility markets to form.

However, you going to need several things for this to happen.

A. Agreed standards for primitives of service provision.

B. Some form of compliance or regulatory control to provide assurance to end users that they can move from one service provider to another.

C. For common resource providers to appear, those providers will not want to hand over strategic control of their business to a proprietary technological.

IMHO the most likely way this will go, is for open sourced implementations of standards in the XaaS arena to gain rapid adoption through positive network effects and by reducing barriers to entry. This will allow for competitive utility markets to form and 3rd party monitoring and assurance services to develop. Competition will be based upon implementation details and comparison between price and QoS.

The alternatives will probably start with monopoly service provision and end finally with state regulation to an infrastructural marketplace which becomes too essential to leave to organisations that will generally try to avoid undifferentiated price competition.

The interesting difference, is that open source provides a way for this new market to play "nicely", competition to form, and to potentially avoid government regulation.

However, there will certainly need to be some questioning of the issue of patenting in this area. The problem is whether patents will drive innovation (which historically can be argued) or now potentially inhibit the spread of new innovations, and whether at a societal level they still remain a fair exchange for the length of term given.

IMHO, this market will highlight this question.

Still, interesting times ahead.

Not least of which will be that the continuing commoditisation of IT will reduce the barriers of entry into many information markets (as per what is happening with news / blogging etc) and we are likely to see even greater disruption in IT dependent fields - as once passive consumers find they can cheaply express, enquire and participate in once closed fields and hence become producers and not just consumers.

Still all fun.

Oh, and of course this isn't just limited to the "web as a platform" as far as hardware, frameworks and software (or application) as a service providers are concerned. The stack goes much higher than that and the "open" meme will spread much further than just software, content, hardware, finance etc

Jesse, what a great question you've asked, a sort of "are we going to play nicely?" or "are we going to need regulation?" - excellent.

  Kango Traveler [10.02.07 11:38 AM]

Skype should probably not be compelled provide emergency services to the public; computer applications are not really used as primary telecommuncation services by the vast majority of users... these types of laws should be designed for the rule, not the exception.

  Jesse Robbins [10.02.07 12:46 PM]


In the case of the US telcos, wasn't it first a bunch of small providers, then a monopoly, then a regulated monopoly, then it was "deregulated" which opened the door to multiple providers again (sort of).

Will a monopoly emerge? If not, why would the industry become regulated?

  Simon Wardley [10.02.07 05:01 PM]

With something such as HaaS which could be considered likely to become an infrastructural good used by most companies, then if an oligopoly or a monopoly emerges, I'd expect to eventually see some form of government intervention / regulation (as per my "The alternatives will probably start with monopoly service provision ... ") or as per your US telcos example.

However I suspect it is more likely that utility computing markets will establish based upon standards and open sourced implementations of such standards.

My reasoning for this, is that IMHO adoption of XaaS will only increase rapidly once there is "fungibility between service providers" and this will require standards, open source means of operationally implementing such and 3rd party assurance services.

You'll still get large players etc but I'd see less of a reason for specific regulation beyond what already exists.

  Jesse Robbins [10.02.07 10:05 PM]

"However I suspect it is more likely that utility computing markets will establish based upon standards and open sourced implementations of such standards."

so... "code is law"?

  Simon Wardley [10.03.07 05:08 AM]

Not at all, such competitive utility markets require the free movement of service between providers, and without such the rate of XaaS adoption will be lower because of concerns over risk.

So XaaS adoption, utility markets, standards and open source go hand in hand.

It's not a question of freedom or liberties, it's a question of adoption.

  Bert Armijo [10.09.07 01:22 AM]

Despite good intentions, regulation and standards when poorly implemented, can have unexpected consequences.

Your example of VoIP and 911 service illustrates one problem that occurs when regulations age and new technologies emerge. It was the replacement of competition with legislation that allowed established players to control their new competitor's access to the system. Their marketing machines then ramped up efforts to discredit new services.

When written too early in the development of a technology, standards can have a similar effect. Simon mentions OVF, which offers a timely example. OVF offers no interoperability or portability between services. Nor does it promise to. It's simply an agreement on how to label a package. They've left the real heavy lifting for the future. Meanwhile, at 3tera, our users already enjoy the ability to migrate complete multi-tier services between providers at will.

Utility computing is a new technology, and we're just beginning to realize what this new technology can offer users.

  Simon Wardley [10.10.07 12:07 AM]

Hi Bert,

OVF is designed to be a transport mechanism for virtual machine templates and to increase portability.

I'll quote from your own blog - "For instance, the OVF is intended to provide interchange of applications between services. To my knowledge, no vendor other than 3tera has ever demonstrated this ability."

Now OVF is just a standard, not a product as per your company's. It is also early stages. However what it is ... is a standard rather than proprietary technology, and if we want portability without exit costs or lock-in then it is a start.

Now in the case of legislation, if we don't have portability and competitive markets but instead end up with monopoly environment in an infrastructural service - we will see some form of legislation.

As for companies controlling markets through open standards, as long as those standards are open and contain no proprietary IP - then any control is limited to implementation details. What is really needed is open source implementations of those standards - a means of operationally achieving the standard.

Yes the marketing machines will go into swing, but so far no-one has pushed Apache of the top spot for web servers.

  oyun indir [01.25.08 05:19 PM]

The alternatives will probably start with monopoly service provision and end finally with state regulation to an infrastructural marketplace which becomes too essential to leave to organisations that will generally try to avoid undifferentiated price competition

Post A Comment:

 (please be patient, comments may take awhile to post)

Type the characters you see in the picture above.