Open Networks: Theoretical and Policy Lessons from the Internet Fran ç ois Bar
Modeling network change <ul><li>1. Digital networks </li></ul><ul><ul><li>Network configuration independent from physical ...
1. New network possibilities <ul><li>Digital: bits,  ubiquitous logic,  and  plentiful bandwidth   </li></ul><ul><li>Progr...
Four broad media categories live delayed interpersonal mass
Media archetypes live delayed interpersonal mass telephone mail television newspaper
Distinct technical infrastructures live delayed interpersonal mass telephone mail television newspaper Switched network co...
Distinct actors live delayed interpersonal mass telephone mail television newspaper AT&T, RBOCs Publishers USPS FedEx, UPS...
Distinct policy regimes live delayed interpersonal mass telephone mail television newspaper Common carriage Price regulati...
live delayed interpersonal mass telephone mail television newspaper voice mail conference call answering machine
live delayed interpersonal mass telephone mail television newspaper telegram overnight delivery mass mailing
live delayed interpersonal mass telephone mail television newspaper targeted  newsletters several editions  per day
live delayed interpersonal mass telephone mail television newspaper many channels taped programs reruns
Internet as convergence live delayed interpersonal mass telephone mail television newspaper ip telephone email listserv we...
old distinctions  become  irrelevant live delayed interpersonal mass telephone mail television newspaper ip telephone emai...
Characteristics of the new space? live delayed interpersonal mass <ul><li>&quot;Open&quot; means: </li></ul><ul><li>Intern...
Three-layer network model Applications Hardware Control
Control is flexibly separable Applications Hardware Control
Applications Hardware Control Applications Hardware Control Applications
Applications Hardware Control Applications Hardware Control Applications SBC AOL
Applications Hardware Control Applications Hardware Control Applications Earthlink
Applications Hardware Control Applications Hardware Control Applications Corp. LAN
Open networks' new possibilities <ul><li>Multiple diverse physical networks can be interconnected </li></ul><ul><li>Multip...
2. Open networks:   theoretical implications <ul><li>Mechanisms driving network evolution </li></ul><ul><li>New ways to su...
Hypotheses <ul><li>Users –esp. Lead users– increasingly drive network innovation. </li></ul><ul><li>Iterative exploration ...
3. Evidence <ul><li>Case studies / User Roundtables  Including: Bank of America, HP, General Motors, Levi Strauss, Bechtel...
<ul><li>Corporate Networks Evolution </li></ul>
Network evolution cycle: automation <ul><li>use network to do old things in new ways </li></ul><ul><li>organization unchan...
Network evolution cycle:  experimentation <ul><li>without fundamentally changing the network infrastructure in place after...
Network evolution cycle:   re-configuration <ul><li>limits of the old network have been reached </li></ul><ul><li>organiza...
Network Evolution:  start a new cycle <ul><li>a new network has been deployed, upon which new tasks can now be automated <...
A succession of cycles 1. automate 2. experiment 3. re-organize 5. experiment 6. re-organize 4. automate
A succession of cycles… made of smaller cycles 1. automate 2. experiment 3. re-organize 5. experiment 6. re-organize 4. au...
Key features of the network evolution cycle Iterative Cumulative End-user driven Structured learning Embedded knowledge Pa...
Co-evolution 1. automate 2. experiment 3. re-organize network organization
Co-evolution requires  Network flexibility 1. automate 2. experiment 3. re-organize configuration flexibility application ...
Co-evolution requires  Network flexibility 1.  automate 2. experiment 3. re-organize configuration flexibility application...
Network flexibility 1. automate 2. experiment 3. re-organize configuration flexibility application flexibility control lay...
Learning: using vs. doing 1. automate 2. experiment 3. re-organize learning  by using learning by doing
Learning: who learns? 1. automate 2. experiment 3. re-organize learning  by using learning by doing network user network p...
Corporate network  generations automate experiment re-organize automate experiment re-organize automate experiment re-orga...
<ul><li>Electronic Commerce </li></ul>
E-commerce promises:  Structural change and efficiency <ul><li>Entry barriers shattered </li></ul><ul><li>Small is powerfu...
The story so far... <ul><li>Entering is easy, staying is difficult </li></ul><ul><li>Large players dominate, consolidation...
Mapping E-commerce infrastructure marketplace transaction & payment deliverable
Conventional marketplace C-good Mapping E-commerce conventional infrastructure marketplace transaction & payment deliverab...
Electronic infrastructure Conventional marketplace C-good C-good Mapping E-commerce conventional electronic infrastructure...
Electronic infrastructure Conventional marketplace Electronic marketplace C-good C-good C-good Mapping E-commerce E-paymen...
Electronic infrastructure Conventional marketplace Electronic marketplace E-good C-good C-good C-good E-delivery Mapping E...
Electronic infrastructure Conventional marketplace Electronic marketplace E-good C-good C-good C-good E-delivery E-payment...
Not so new:  Network-aided commerce <ul><li>Enhance the flow of market-related information </li></ul><ul><li>Inform price ...
 
Really new: The network is the marketplace <ul><li>The network has become the place where fundamental market processes tak...
Network configuration determines  Marketplace architecture <ul><li>Who can play? </li></ul><ul><ul><li>Buyers, sellers, th...
Multiple marketplaces <ul><li>Consolidate existing market relationships and market power (e.g. auto, Dell) </li></ul><ul><...
-  Discovery  +  -  execution / fulfillment  + Existing channels automation E-marketplace Content & Community portals Neut...
Airline reservation systems automate experiment re-organize automate experiment re-organize automate experiment re-organiz...
4. What this means <ul><li>User-driven innovation  is now a core driver of network change </li></ul><ul><li>E co nomic  or...
Policy implications <ul><li>A  generic problem:  </li></ul><ul><ul><li>Microsoft Windows as &quot;control layer&quot; </li...
 
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  • C525

    1. 1. Open Networks: Theoretical and Policy Lessons from the Internet Fran ç ois Bar
    2. 2. Modeling network change <ul><li>1. Digital networks </li></ul><ul><ul><li>Network configuration independent from physical layout </li></ul></ul><ul><ul><li>Control separable from ownership </li></ul></ul><ul><li>2. Hypotheses </li></ul><ul><ul><li>New network uses / innovation patterns </li></ul></ul><ul><ul><li>New network evolution dynamics </li></ul></ul><ul><li>3. Evidence </li></ul><ul><ul><li>Corporate networks </li></ul></ul><ul><ul><li>Electronic marketplaces </li></ul></ul><ul><li>4. Implications </li></ul><ul><ul><li>Understanding network transformation </li></ul></ul><ul><ul><li>Policy lessons </li></ul></ul>
    3. 3. 1. New network possibilities <ul><li>Digital: bits, ubiquitous logic, and plentiful bandwidth </li></ul><ul><li>Programmable networks: network configuration written in software </li></ul><ul><li>A given network supports multiple communication patterns </li></ul><ul><li>Network control becomes flexibly separable from network ownership </li></ul>
    4. 4. Four broad media categories live delayed interpersonal mass
    5. 5. Media archetypes live delayed interpersonal mass telephone mail television newspaper
    6. 6. Distinct technical infrastructures live delayed interpersonal mass telephone mail television newspaper Switched network copper wires Packet switched trucks, planes, trains Broadcast network radio waves broadcast network print and deliver
    7. 7. Distinct actors live delayed interpersonal mass telephone mail television newspaper AT&T, RBOCs Publishers USPS FedEx, UPS CBS, ABC, NBC, Fox cable channels, cable networks
    8. 8. Distinct policy regimes live delayed interpersonal mass telephone mail television newspaper Common carriage Price regulation Universal service Free speech no prior restraint Common carriage Gov nt ownership License
    9. 9. live delayed interpersonal mass telephone mail television newspaper voice mail conference call answering machine
    10. 10. live delayed interpersonal mass telephone mail television newspaper telegram overnight delivery mass mailing
    11. 11. live delayed interpersonal mass telephone mail television newspaper targeted newsletters several editions per day
    12. 12. live delayed interpersonal mass telephone mail television newspaper many channels taped programs reruns
    13. 13. Internet as convergence live delayed interpersonal mass telephone mail television newspaper ip telephone email listserv web-cast
    14. 14. old distinctions become irrelevant live delayed interpersonal mass telephone mail television newspaper ip telephone email listserv web-cast web CU-seeme software updates
    15. 15. Characteristics of the new space? live delayed interpersonal mass <ul><li>&quot;Open&quot; means: </li></ul><ul><li>Internet as software overlay on existing networks </li></ul><ul><li>multiple communication patterns , invented by (lead) users </li></ul><ul><li>Interconnection becomes key </li></ul>
    16. 16. Three-layer network model Applications Hardware Control
    17. 17. Control is flexibly separable Applications Hardware Control
    18. 18. Applications Hardware Control Applications Hardware Control Applications
    19. 19. Applications Hardware Control Applications Hardware Control Applications SBC AOL
    20. 20. Applications Hardware Control Applications Hardware Control Applications Earthlink
    21. 21. Applications Hardware Control Applications Hardware Control Applications Corp. LAN
    22. 22. Open networks' new possibilities <ul><li>Multiple diverse physical networks can be interconnected </li></ul><ul><li>Multiple communication patterns can be overlaid on a given network </li></ul><ul><li>Network owners no longer are the only actors who can do that </li></ul><ul><li>Users can control and configure the network they use </li></ul><ul><li>New drivers of network evolution </li></ul>
    23. 23. 2. Open networks: theoretical implications <ul><li>Mechanisms driving network evolution </li></ul><ul><li>New ways to support and structure economic activities </li></ul><ul><ul><li>Organizations </li></ul></ul><ul><ul><li>Markets </li></ul></ul>
    24. 24. Hypotheses <ul><li>Users –esp. Lead users– increasingly drive network innovation. </li></ul><ul><li>Iterative exploration process </li></ul><ul><li>Organizations and networks co-evolve </li></ul><ul><li>Network architecture matters </li></ul><ul><li>Various modes of intermediation yield different modes of innovation creation and diffusion </li></ul>
    25. 25. 3. Evidence <ul><li>Case studies / User Roundtables Including: Bank of America, HP, General Motors, Levi Strauss, Bechtel, Cisco, Quantum, Peoplesoft, Solectron, Silicon Graphics,… </li></ul><ul><li>Internal corporate networks </li></ul><ul><li>Inter-organizational networks </li></ul><ul><li>Electronic markets </li></ul>
    26. 26. <ul><li>Corporate Networks Evolution </li></ul>
    27. 27. Network evolution cycle: automation <ul><li>use network to do old things in new ways </li></ul><ul><li>organization unchanged, new infrastructure deployed </li></ul><ul><li>network as tool </li></ul>1. automate
    28. 28. Network evolution cycle: experimentation <ul><li>without fundamentally changing the network infrastructure in place after the automation phase, experiment with new applications </li></ul><ul><li>marginal changes in organization and in network </li></ul><ul><li>network as lab (bricolage) </li></ul>1. automate 2. experiment
    29. 29. Network evolution cycle: re-configuration <ul><li>limits of the old network have been reached </li></ul><ul><li>organization and network change simultaneously </li></ul><ul><li>network articulates change </li></ul>1. automate 2. experiment 3. re-organize
    30. 30. Network Evolution: start a new cycle <ul><li>a new network has been deployed, upon which new tasks can now be automated </li></ul><ul><li>new network generation </li></ul>1. automate 2. experiment 3. re-organize
    31. 31. A succession of cycles 1. automate 2. experiment 3. re-organize 5. experiment 6. re-organize 4. automate
    32. 32. A succession of cycles… made of smaller cycles 1. automate 2. experiment 3. re-organize 5. experiment 6. re-organize 4. automate
    33. 33. Key features of the network evolution cycle Iterative Cumulative End-user driven Structured learning Embedded knowledge Path-dependent 1. automate 2. experiment 3. re-organize
    34. 34. Co-evolution 1. automate 2. experiment 3. re-organize network organization
    35. 35. Co-evolution requires Network flexibility 1. automate 2. experiment 3. re-organize configuration flexibility application flexibility
    36. 36. Co-evolution requires Network flexibility 1. automate 2. experiment 3. re-organize configuration flexibility application flexibility deploy a range of applications over a stable network configuration simultaneously - change network configuration to provide new applications and -invent new applications that t ake advantage of new configuration possibilities
    37. 37. Network flexibility 1. automate 2. experiment 3. re-organize configuration flexibility application flexibility control layer physical layer application layer
    38. 38. Learning: using vs. doing 1. automate 2. experiment 3. re-organize learning by using learning by doing
    39. 39. Learning: who learns? 1. automate 2. experiment 3. re-organize learning by using learning by doing network user network provider
    40. 40. Corporate network generations automate experiment re-organize automate experiment re-organize automate experiment re-organize public network private network hybrid network web portfolio 1975-85 1995-? 1985-95 ? automate experiment re-organize
    41. 41. <ul><li>Electronic Commerce </li></ul>
    42. 42. E-commerce promises: Structural change and efficiency <ul><li>Entry barriers shattered </li></ul><ul><li>Small is powerful </li></ul><ul><li>Disintermediation </li></ul><ul><li>Frictionless economy </li></ul>
    43. 43. The story so far... <ul><li>Entering is easy, staying is difficult </li></ul><ul><li>Large players dominate, consolidation </li></ul><ul><li>New intermediaries emerge, old intermediaries adapt </li></ul><ul><li>Stickiness provides traction, friction-free is slippery </li></ul>
    44. 44. Mapping E-commerce infrastructure marketplace transaction & payment deliverable
    45. 45. Conventional marketplace C-good Mapping E-commerce conventional infrastructure marketplace transaction & payment deliverable Conventional Commerce
    46. 46. Electronic infrastructure Conventional marketplace C-good C-good Mapping E-commerce conventional electronic infrastructure marketplace transaction & payment deliverable Conventional Commerce Net-aided Commerce
    47. 47. Electronic infrastructure Conventional marketplace Electronic marketplace C-good C-good C-good Mapping E-commerce E-payment conventional electronic infrastructure marketplace transaction & payment deliverable Conventional Commerce Net-aided Commerce Indirect E-commerce
    48. 48. Electronic infrastructure Conventional marketplace Electronic marketplace E-good C-good C-good C-good E-delivery Mapping E-commerce E-payment conventional electronic infrastructure marketplace transaction & payment deliverable Conventional Commerce Net-aided Commerce Indirect E-commerce Direct E-Commerce
    49. 49. Electronic infrastructure Conventional marketplace Electronic marketplace E-good C-good C-good C-good E-delivery E-payment conventional electronic marketplace Mapping E-commerce Creating new Marketplaces
    50. 50. Not so new: Network-aided commerce <ul><li>Enhance the flow of market-related information </li></ul><ul><li>Inform price changes and relay them (&quot;more dynamic pricing&quot;) </li></ul><ul><li>Fast, cost-effective demand and supply matching </li></ul><ul><li>Speed up transactions </li></ul><ul><li>Reach new customers </li></ul><ul><li>Lower sales and marketing costs </li></ul><ul><li>Lower procurement costs </li></ul>
    51. 52. Really new: The network is the marketplace <ul><li>The network has become the place where fundamental market processes take place: </li></ul><ul><ul><li>discovery </li></ul></ul><ul><ul><li>matching </li></ul></ul><ul><ul><li>negotiation </li></ul></ul><ul><ul><li>transaction </li></ul></ul><ul><ul><li>(sometimes) delivery </li></ul></ul>
    52. 53. Network configuration determines Marketplace architecture <ul><li>Who can play? </li></ul><ul><ul><li>Buyers, sellers, third parties </li></ul></ul><ul><ul><li>Equal or differential access </li></ul></ul><ul><li>By what rules? </li></ul><ul><ul><li>Exchange (bid/ask), auctions, catalog, brokerage,... </li></ul></ul><ul><ul><li>level or biased </li></ul></ul><ul><li>network control yields market control </li></ul>
    53. 54. Multiple marketplaces <ul><li>Consolidate existing market relationships and market power (e.g. auto, Dell) </li></ul><ul><li>New trading and distribution spaces (e.g. Napster, content syndication) </li></ul><ul><li>Aggregate buyer power (e.g. procurement) </li></ul><ul><li>Walled gardens (e.g. AOL-TW, broadband cable, I-mode, WAP) </li></ul>
    54. 55. - Discovery + - execution / fulfillment + Existing channels automation E-marketplace Content & Community portals Neutral exchanges Buyers’ agents Sellers’ agents
    55. 56. Airline reservation systems automate experiment re-organize automate experiment re-organize automate experiment re-organize SABRE, closed system SABRE as open marketplace Internet direct sales, multiple marketplaces Orbitz, SABRE (travelocity) automate experiment re-organize
    56. 57. 4. What this means <ul><li>User-driven innovation is now a core driver of network change </li></ul><ul><li>E co nomic organization and net work infrastructure co- evolve (true at various levels of analysis: small groups, firm, firm clusters, markets, national economy) </li></ul><ul><li>Network architecture matters economic control, innovation creation and diffusion, cross-learning, intermediation. </li></ul>
    57. 58. Policy implications <ul><li>A generic problem: </li></ul><ul><ul><li>Microsoft Windows as &quot;control layer&quot; </li></ul></ul><ul><ul><li>Broadband internet access </li></ul></ul><ul><ul><li>Interactive TV </li></ul></ul><ul><ul><li>Wireless </li></ul></ul><ul><li>Allocation of network control becomes a key policy issue </li></ul><ul><li>Open networks foster broad-based innovation </li></ul>

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