Networks & economic paradigms

I will start by the above revisited version of Maslow's pyramid for human needs. It's a funny expression of how internet is now a basic need, making all of us "data" consumers. Data delivery to consumers is organized in different ways, according to different economic models. In the following I will go through these different ways and their correlation to known paradigms for organizing economy: liberalism, centrally planned economy & participatory economy.

The first paradigm is current internet decentralized organization which is based on liberalism or free trade, the dominant ideology nowadays. A user is connected to internet through eyeballs, e.g. the local ISP or mobile operator. Now eyeballs are connected to internet via different kinds of peerings:

• Directly peer with content providers such as Google, Amazon & Netflix,
• Peer with other regional eyeballs to exchange traffic directly,
• Peer with backbone providers such as Level 3 & Cogent who globally connect eyeballs together.

The dynamics driving network meshing are very interesting. An eyeball has many questions to answer in order to guarantee a good internet connectivity and a profitable business:

• Which of the above peering kinds should we build? in which breakdown?
• With which networks should we peer? what capacity? private peering or through internet exchanges?
• In which geographical locations should we peer with a considered network? in which carrier hotels?
• What is the cost of transport network to those locations?
• Should we pay for a peering or is it free?
• How should we diversify peerings to guarantee resiliency?

The main driver of building internet networks is making profit because it is managed by private sector. Meanwhile, we have witnessed competition, price compression, innovation, rise of broadband.... But making profit means only serving solvable consumers, which has lead to the below unfair image of the world in terms of network connection density.

The second paradigm is the organization of access network of a national eyeball which is based on central planning. Indeed, network expansion and deployment is planned according to usage forecasts given by marketing studies, and it's decided centrally by the eyeball in a top-down approach. The main driver of building such kind of networks depends on whether it is a public or private service, and on the telecom regulation pressure, thus leading to more or less fair network coverage.

The main advantage of this model is a more rational and efficient use of resources (network assets, people) to satisfy the present and future needs of population. On the technical plan, network is more controlled and thus potentially providing better service, for example:

• Traffic types (voice, download..) are differentiated and quality is manged from end to end.
• Traffic routing is better controlled with any chosen protocol, where on internet only BGP can be used with its limitations.
• Some specific techniques can be used to optimize the network usage, such as mutlicast for video streaming, where it's almost impossible on internet.

But on the other hand, planning cycles have important inertia and often can't cope with demand dynamics. Moreover, eyeballs are not leaders in terms of innovation, for example, the ongoing SDN/NFV revolution in networks is driven by software companies like Google.

The third paradigm is the FON model, based on participatory economy, i.e. network is crowd sourced by users themselves.

As explained in the above video, a Fonero (user participating to the FON network) shares its home WiFi connection with others in a secure way, and thus has access to others' WiFi anywhere anytime. By making use of the idle bandwidth on your internet box, you gain access to thousands of hotspots around the world for free. It's the same concept of P2P for downloading files on internet.

The main driver of such communities is making the world a better place in a bottom-up approach. Agility, innovation, open standards & free service are keywords in this model.

As a final word, I personally believe in a 4th paradigm which is a mix of the last two. I will try to develop it in a future post.

Third industrial revolution?

Well yes, a big shift in economy is happening in our digital era. Economy is moving from a centralized production system to a more distributed one with the help of internet and information technology. It means that people exchange directly goods and services without the direct need of traditional intermediate corporations. I will illustrate this shift through examples from different sectors:

• Transportation: Uber is destabilizing the taxi industry by its model where non professional drivers serve directly passengers with a sexy and real time mobile application. Before Uber, car pooling was growing for inter cities transportation and thus competing lightly with trains & buses.
• Hospitality: With the same spirit, AirBnb is threatening the established business of hotel chains, especially on the low-end tourism market. Couchsurfing also took a part of this market somehow.
• Energy: Consumers are called to be micro producers through solar energy for example. Energy production would be managed intelligently with smart grids and moreover with connected objects.
• Consumer Goods:  We are witnessing the emergence of websites praising the reuse of consumer goods such as: toys, tools, high tech products... and more generally products that are not used frequently so people rather prefer to rent it. Some even say that this pushing the notion of private property to disappear!
• IT: Instead of centralized datacenters, a new buzz word is here: fog computing. A more distributed architecture than cloud computing, where end devices stores and process information. I was especially impressed by the French Startup Qarnot Computing who proposes computing capacity through its distributed servers in households. Their brilliant idea is heating households using installed servers!
• Finance: Who of us didn't participate through crowdfunding to help the project of an association? the launch of music album? the new idea of a startup? Banks/business angels/love money will not stay the exclusive ways of funding ventures.

Some, like Jeremy Rifkin, call this shift a revolution, the revolution of "commons", a "croudsourced" economy that seems more just and equal. Well, I do not share this point of view. I think that distributed model disrupt the structure of the players in our market based economy, but it does not change the capitalist nature of this economy: private property, seek for profit, class differences... indeed, the established corporations (see above for examples) will loose power to new players who control information. If we take the example of hospitality industry, well yes some big hotel chains will hardly survive in front of Airbnb, but this online platform would behave just as its old competitors: hire employees, look for profitability, compete to have a monopole...

Nevertheless, this shift might provide a good basis for a real conscious revolution on how we manage economy today.  When individuals are more involved in the production system, not as work-providers but as contributors, they will want to contribute also to decision making. What is really missing is a distributed decision making, a real democracy! Digital revolution is a wonderful opportunity for achieving this. I like very much the example of an Argentinian political party (Partido de la red) who's representatives only vote in parliament what people has decided online (Democracy OS).