Transcript Breaking the Ice Kevin Werbach The Wharton School [email protected] February 2005 The Layered Model Jockeying for Position, or getting Butchered? Kevin Werbach The Wharton School [email protected] February 2005

Breaking the Ice
Kevin Werbach
The Wharton School
[email protected]
February 2005
The Layered Model
Jockeying for Position,
or getting Butchered?
Kevin Werbach
The Wharton School
[email protected]
February 2005
Washington, We Have a Problem

Digital convergence is transforming telecom
Significant economic dislocation
 Traditional divisions go away
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New kinds of market participants
Skype
 Xbox Live
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Thorny legal issues
Broadband classification, open access and net neutrality
 Broadcast flag
 CALEA

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Legacy Silo Legal Structure
Data
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Telephony
Broadcast
Cable
(Title II)
(Title III)
(Title VI)
Emerging Reality
Web
Voice
Email
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Data
Video
File
Transfer
Layered Telecom Policy Model
Content
Protocols
Application
Protocols
Logical
Protocols
Physical
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Benefits of Layered Thinking

Modularity
Specialization allows exploitation of the full value of real
options (Clark and Baldwin)
 In regulatory terms, more granularity

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Corresponds to engineering practice

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Shouldn’t law governing networks reflect the way those
networks actually work?
Focuses attention on the key issues
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Revised 3+2 Layer Model
Content
What?
Interface
How?
Application
Why?
Logical
Who?
Physical
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Where?
Two Kinds of Layers
FUNCTIONAL
CONNECTIVE
FUNCTIONAL
CONNECTIVE
FUNCTIONAL
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The Connective Layers
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Historically ignored
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Assumed to be internal elements of the carrier
Critical leverage points
Gateways to markets in applications and content
 Site of key emerging issues (e.g. broadcast flag, Net
neutrality, and CALEA)
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
Opportunities for regulatory innovation
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E.g., tie universal service to phone numbers
What the Layered Model Is Not

An engineering specification

Not all technical interfaces must be published

A prohibition on multi-layer businesses

A prohibition on layer crossing

Legitimate economies of scope exist

Purely a way to address market power issues

A blueprint solely for regulators

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Some oversight may be through self-regulatory
organizations or ex post antitrust review