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Interconnection & Interoperability

Interconnection & Interoperability. Agreement: fundamental goal Disagreement : What is an interface? Which interfaces are critical? What is “open”? How should standards be set? M ap out the debate. 3 fundamental problems. C lash of two concepts and of two debates:

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Interconnection & Interoperability

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  1. Interconnection & Interoperability • Agreement: fundamental goal • Disagreement: • What is an interface? • Which interfaces are critical? • What is “open”? • How should standards be set? • Map out the debate

  2. 3 fundamental problems • Clash of two concepts and of two debates: • Interconnection (telecom) • Interoperability (computing) • Economics / Strategy: • Technical merit • Strategic interest of the parties • Three policy domains: • IP protection • antitrust • regulatory oversight • Noclear separation, many conflicts

  3. Interconnection v. Interoperability • Degree? Interop > Interconnect • Two distinct traditions: • Telecom Interconnection • Computing Interoperability • What are the relevant Interfaces? • What is the primary policy goal?

  4. interface telecom interconnection computer interoperability appliance to network · physical: modular phone or CATV plugs · logical: standardsignaling ethernet (10baseT) appliance-to-application (not a major concern of traditional Telecom) Windows and Intel-based machines v. MacOS and Motorola-based machines application-to-application · interface between voice-mail systems service provider to carrier interface (ONA's BSAs/BSEs as the network's APIs) · file exchange between applications · message passing among different e-mail services · client/server compatibility · APIs: OS to application interface network-to-network MCI to PacBell, voice call [equal access] · internet [TCP/IP]

  5. Primary policy goal? • Interconnection / Telecom: network effects, pursued through regulation • Interoperability/ Computing: encourage innovation, pursued through IP protection • Reflects inherent trade-off between integration and diversity

  6. Policy trade-off integration diversity

  7. Policy trade-off (monopoly) integration diversity (competition)

  8. Policy trade-off (monopoly) integration diversity (competition)

  9. Policy trade-off Ideal (monopoly) integration diversity (competition)

  10. Policy trade-off Ideal (monopoly) integration Virtual integration diversity (competition)

  11. Policy trade-off Ideal Virtual differentiation (monopoly) integration Virtual integration diversity (competition)

  12. Policy trade-off Telecom integration (Regulated Interconnection) Computing diversity (IP protection& competition)

  13. Policy trade-off Ideal Virtual differentiation integration Virtual integration diversity

  14. Interfaces and Strategy • which interfaces are critical? • what is “open”? • Fully open • Fully Closed • Most lie in between • what is “proprietary”? • how should interface standards be set? • government mandate • Voluntary consensus • Market competition

  15. Compatibility & interconnection

  16. Compatibility & interconnection Users

  17. Compatibility & interconnection Users Producers with locked-in, quasi-monopoly position (Microsoft, IBM, CATV)

  18. Compatibility & interconnection Common carriers Suppliers without monopoly position Users Producers with locked-in, quasi-monopoly position (Microsoft, IBM, CATV)

  19. Interfaces and Policy • Primary concern: • Telecom: encourage network effects. Regulatory oversight. Ex-ante (introduce competition within monopolies) • Computing: encourage innovation IP protection. Ex-Post (grant IP protection -- monopoly -- remedies if abuses

  20. Interfaces and Policy (cont'd) • Intellectual Property: temporary monopoly • Copyright • Patents • Trends? • - Toward denying IP protection for interfaces • - Increasing use of patent protection for software (as functional) • Antitrust • Counterweight to IP • "Essential Facilities" • Blunt instrument • Regulatory oversight

  21. Conclusion • Should we care? • Will private incentives serve the public interest? • Is there scope for beneficial government action?

  22. Conclusion • Should we care? YES • Will private incentives serve the public interest? • Is there scope for beneficial government action?

  23. Conclusion • Should we care? YES • Will private incentives serve the public interest?NO • Is there scope for beneficial government action?

  24. Conclusion • Should we care? YES • Will private incentives serve the public interest?NO • Is there scope for beneficial government action?MAYBE…

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