The Internet: A Future Tragedy of the Commons?

Abstract

In the future, data communication networks’ interoperability will become critical from both technological and business strategy perspective. Significance of interoperability has to be evaluated in terms of the overall economic performance of the system. In this paper we present our view of the future of data communication networks, challenges in interoperability, and the economic challenges that will arise in this “real-time” economy. We provide insights derived from applying economic general equilibrium approach to these networks, e.g., the impact of competition and interoperability on the competing entities that own different parts of the network. We believe that potential excessive congestion is the single largest obstacle in the feasibility of a global, interoperable network. We discuss simulation experiments we have carried out to determine approximate priority prices in real-time and discuss the potential benefits in managing congestion through such a pricing scheme. We define a framework for policy research for an interoperable network which may facilitate electronic commerce. We also discuss the issues related to market structures such as monopoly, duopoly, and more competitive ownership of the parts of public data communication networks.

This research was funded in part by National Science Foundation grant #IRI-9005969 and #IRI-9225010, but does not necessarily reflect the views of the NSF. Partial support was also provided by the Texas Advanced Research Program.