Infrastructure and Commons
Brett M. Frischmann
Assistant Professor of Law
Loyola University Chicago
School of Law
Research Agenda
Infrastructure
– Particular set of resources defined from the
demand-side in terms of the manner in which
the resources generate value
– Fundamental, upstream resources
– Role in complex, interdependent resource
systems
– Important subset within various areas
Outline of talk
• Background: Infrastructure and Commons
• Theory
– Jump to the model
– Typology
– Case for commons
• Network Neutrality debate
• Essential Facilities
Background
• Traditional Infrastructure
• Government intervention
• Commons management
• Positive externalities / large social surplus
Infrastructure Theory
(short version)
• Simple thesis:
– If Infrastructure, then commons
– Too simple
• More complicated version:
–
–
–
–
If infrastructure, then additional economic arguments for commons
Depends upon the mix of outputs
Infrastructure typology helps sort arguments
Need to consider value of commons management more carefully
• Demand side focus
General Infrastructure Definition
1. The resource is (or may be) consumed
nonrivalrously,
2. social demand for the resource is driven
primarily by downstream productive activity that
requires the resource as an input, and
3. the resource is used as an input into a wide range
of goods and services, including private goods,
public goods and/or non-market goods.
• Sharable, generic input into a wide variety of
outputs
• Value is realized downstream by consumers
of outputs
– Potential to generate positive externalities
– Potential for demand side market failure
because output producers will not fully
represent societal demand
Infrastructure typology
• Output focused
• Potential to generate positive externalities
• Potential for demand side market failure
because output producers will not fully
represent societal demand
Infrastructure Typology
Commercial:
Nonrival or partially (non)rival input into the production of
a wide variance of private goods.
Public:
Nonrival or partially (non)rival input into the production of
a wide variance of public goods.
Social:
Nonrival or partially (non)rival input into the production of
a wide variance of nonmarket goods.
Case for Commons?
• Commercial Infrastructure
– competitive markets (for both inputs and
outputs) should work well
– rely on antitrust principles
– from the demand-side, there is less reason to
believe that government intervention into
markets is necessary, absent anticompetitive
behavior
Case for Commons?
• Public and Social Infrastructures
– Demand manifestation problems may lead to
undersupply or misoptimization of
infrastructure
– Killer apps and small scale
– Uncertain and long-term
Costs of restricting access to
infrastructure
• Significant and difficult to observe
• Optimization for
– Known or expected applications/uses
– Applications/uses that generate observable and
appropriable value
Case for Commons?
• Commons alleviates the need to rely on either
the market mechanism or the government to
“pick winners”
– Market allocates access to infrastructure based
on appropriability of returns from outputs
– Could rely on the government to figure out
which public good or nonmarket good outputs
are worthy of subsidization or special treatment
Internet
• What makes the Internet valuable to society?
• Like other infrastructure, the Internet is
socially valuable primarily because of what it
facilitates downstream, how it can be used to
produce applications, content, relationships,
and so on.
Network neutrality
• Neutrality?
– No such thing
– End-to-end bias vs. market bias
• Network neutrality as an institutional means
for sustaining infrastructure commons
Network Core
Efficiencies:
E.g., QoS,
latency
sensitive apps,
security
???
Network Edge
Innovation:
New applications
and content
Network Core
Innovation
Network Neutrality Balancing:
An oversimplified view of the current debate
Network
Core
Efficiencies:
E.g., QoS,
latency
sensitive
apps, security
Network Core
Innovation
???
Positive externalities
from public and
nonmarket goods
Network Edge
Innovation:
New applications
and content
Network Neutrality Balancing:
Modified by Infrastructure Theory
Essential Facilities
•
liability under the essential facilities doctrine exists
where a plaintiff can establish:
1. that the monopolist controls access to an essential
facility;
2. the facility cannot be reasonably duplicated by
competitor;
3. the monopolist denies access to competitor, and
4. it was feasible to grant access.
The Essential Nature of Infrastructure
(or The Infrastructural Nature of Essential
Facilities)
• Adding a demand side component to EFD
provides needed boundaries, constraint and
theoretical support
• Plus, helps explain “bad” vs. “good” cases
• If EF, then manage as a commons
IP Pooling
• Constructing open environments
• Functional purpose of pooling
– Complementary IP-enabled solution to a non-IP
problem (e.g., collective action, infrastructure supply)
– Solution to IP problem (e.g., anticommons)
– Environment-mixing (government-industry-university
interface, “bridge building”)