Book Reviews

Grid to the Twenty-First Century

Will a more networked society be a less free society?

By Reed Hundt

Tagged technologyThe Internet

The Big Switch: Our New Digital Destiny By Nicholas Carr • Norton • 2008 • 276
pages • $25.95

Information is born free, but everywhere is found in chains.” So, Nicholas Carr–in his latest and characteristically stimulating challenge to conventional thinking about technology–might have paraphrased Rousseau. We are destined, Carr argues, to see the Internet become a global utility that reduces every software company’s profits, shrinks corporate IT spending, increases income inequality, threatens the efficacy of democracy, empowers governments and businesses to control individuals, and foreshadows the creation of artificial intelligence, or at least the implanting of microprocessors directly into our brains. It is enough to make anyone want to log out.

This book adds to Carr’s credentials as a polemicist. A former executive editor of the Harvard Business Review, he famously argued in 2003 that information technology had no strategic significance. He drew a large volume of criticism from technology business leaders, but no one could refute his central point that no business could obtain a special, inimitable advantage against its rivals from buying computer hardware or software. In 2005, in an article in the MIT Sloan Management Review titled “The End of Corporate Computing,” Carr contended that businesses would move from buying and operating their own hardware and software systems to purchasing IT as a service; picture the Google Apps suite of word processing and spreadsheet programs, but on a larger scale. And that is where his latest book, The Big Switch, begins. Just as businesses allegedly will rent software and storage space from vendors, so too will computing move from the personal to the centralized, from the laptop to enormous, off-site buildings filled like stadiums with huge crowds of microprocessors. In short, the mainframe will come back, after decades in exile, but swollen to gargantuan size and monstrously strengthened to direct the beliefs and conduct of everyone linked to the global Web.

All technology writers skew toward either the Pollyannaish or
dystopian in their vision of the road ahead, and Carr is no exception.
Page by page, Carr’s vision grows gloomier. He believes “the years
ahead promise to be perilous as states and citizens struggle to come to
grips with the ramifications of the universal computing grid.” Yet what
can we do? After all, “technology shapes economics, and economics
shapes society.” Given this architecture: “In a society governed by
economic tradeoffs, the technological imperative [eradicates] personal

Still, as Goethe wrote at the end of Faust–that great
prefiguring of technology’s magical and dangerous powers–the “eternal
feminine draws us aloft.” So too some human agency, whether sited in
individuals or groups, somehow still matters to Carr: “Our past and our
destiny are inscribed in software code. And now, as all the world’s
computers are wired together into one machine, we have finally been
given the opportunity, or at least the temptation, to perfect the
code.” Digital information is the warp and woof of future society; the
global grid seeks to put the power of that information in someone’s or
something’s hands, and that “we” can use that power, like Faust, for
good or ill.

Presumably the “we” includes government and citizens. As Carr
implies, and I think anyone can see even without accepting his
dystopianism, the next president, Congress, trade representative,
Secretary of State, and even the inevitably much-maligned Federal
Communications Commission (FCC) chairman will need to choose a large
batch of policies to cope with the many trends Carr identifies. In that
great choice, they inevitably will show a preference for one side or
the other in the business world: the giant, dominant, multinational
firms that stand astride the known world like the Colossus at Rhodes
(the favorite of the current administration) versus the unknown,
neonate, entrepreneurial firms that can embody not only enhanced
personal freedom but also productivity gains, income growth, and
national competitiveness (in effect, the selection of the Clinton
Administration in the 1990s).

Carr does not identify this choice, focusing instead on his vision
of the global grid taking “us” down into the darkness of bad outcomes
instead of up into the sunny uplands of good outcomes. Yet we have a
choice to lead society one way or the other. Fortunately for us, the
world isn’t quite so predetermined. While Carr is right that emerging
computing technologies will radically change the way we organize
society, it’s up to today’s policymakers to decide how.

Carr begins The Big Switch by drawing an analogy between the
evolution of the Internet and the evolution of electricity generation a
century ago. At first, electricity was generated near where it was
used; each factory had its own power generator. Over time, this morphed
into the more efficient model we have today. This centralized
electricity generation, coupled with massive distribution networks,
produced the “cheap and plentiful electricity [that] shaped the world
we live.” Carr believes that we are seeing a similar transformation in
computing. At one point, almost all computing function occurred in the
black box under your desk or in an enterprise’s mainframes. The
Internet then allowed computers to link up into networks, and that, in
turn, created the ability for certain functions to be housed off-site.
While most consumers still have various programs resident on their
desktop or laptop, that is beginning to change. For instance, all
webmail services–such as Hotmail and Gmail–are run by remote computers.
Carr argues that this is just the beginning: “Computing is turning into
a utility,” built around a grid rather than individual computers.
According to Carr, it follows that grid computing radically curtails
the ability of software companies to charge for many copies of the same
code, and it empowers the centralized data center proprietors, just as
it did electric utilities. It is in those computer banks that a few
firms will capture, manipulate, and turn into value all the world’s
information. They will make free only what they choose to make free;
they will charge for everything to which a price can be attached.

Here Carr goes too far: As history repeats itself, doesn’t it follow
that government will either own or tightly regulate the data centers?
That is what happened with electric utilities. Indeed, in individual
states, regulation of both telephone companies and electric utilities
is normally done through the same regulatory agency. Only the federal
government, inefficiently and unproductively, separates those tasks
into one fairly powerful agency, the FCC, and one chronically disutile
agency, the Federal Energy Regulatory Commission (FERC). Most
assuredly, China will either own or regulate, or both, all its control
points; so too, Russia; probably, India; very likely, Europe; and
eventually even libertarian America will place some checks on the power
of data center owners, just as it did to electricity a hundred years
ago. Indeed, as those owners increasingly ask the government for
favors, which they cannot resist doing, they are wrapping themselves in
the elastic and unbreakable spider’s web of government. The real
question is not whether regulation will occur–it will–but whether the
American people, as citizens or consumers, will have something to say
about these congeries of information.

Of course, data centers are just one part of the new model;
accessing them is the other. Carr asserts that “[t]hanks to all the
fiber optic cable laid by communications companies during the dotcom
boom…Internet bandwidth has become abundant and abundantly
cheap.” Therefore, any computer or any person with a computer can
dispense with software applications (and perhaps memory chips?), and
resort instead to high-speed access to the cloud, or, more prosaically,
the data centers, from which all information and spread sheets can be
downloaded in a blink and for hardly any price. (On a purely personal
note, it is gratifying to read this defense of the dotcom boom, given
that in the early years of the George W. Bush Administration, I was
often condemned by business writers–and even Nobel Prize-winning
economist Joseph Stiglitz–for adopting policies, while the chair of the
FCC from 1993 to 1997, that allegedly produced a wasteful allocation of
capital to fiber optic cables. The scale of my quondam sin, which is
now the Internet’s salvation, was about $100 billion in America, by the
way: hardly a penny compared with Alan Greenspan’s flotation of the
country’s housing stock on the sea of speculation).

The current administration, however, has imperiled this future by
mismanaging the bandwidth issue by abandoning competition, curtailing
the construction of multiple access routes from users to the Internet,
and embracing the consolidation of such Internet access principally in
the hands of the new reconstituted, twinned Bell companies, Verizon and
AT&T (AT&T 2.0, as it were). The Twin Bells are the dominant
wireless and wire-based providers of access, three and four times
bigger than the biggest of the cable companies. They are thriving while
their rivals are diving. All this is a result of excellent management
and a completely supportive array of administration supporters, who
have steadily reversed and derogated all the checks on market power
that had promoted competition instead of oligopolization in access from
the 1970s through 2001.

Carr ignores the encroaching bottlenecks in the access network, both
wire and wireless, that mean the pricing of the bandwidth will grow
ever dearer. As access pricing goes up, data centers will decrease in
usage and hence importance. Already the big data center proprietors are
striking their own separate peaces with the Twin Bells to protect
against their power over access. But in doing so, they are opening the
door to price increases for consumers, and more importantly, to the
prospect of reduced entrepreneurship both in access and in the centers

Here we see more clearly the choice the next administration has to
make: Side with the big companies that own those centers and those
networks, or with entrepreneurs, consumers, and citizens. Imagine that
government had allowed electric utilities to charge monopoly prices,
and then to expand into the market for all products that used
electricity. Imagine that the firm that owns the power line to your
house can enter the market for refrigerators and charge a preferential
price for its cooling devices and a much higher price for a
competitor’s. It’s hard to believe that government, as long as we have
a democracy, will permit that sort of adjacent market entry to take
place in any market.

Missing the question of access is only one of the central challenges
facing the future of Internet regulation that Carr misses. For
instance, take his exploration into the question whether this new
technology and the global economy it powers is good for most Americans
or not. Carr concludes, after not a lot of discussion, that “the
universal computing grid…may concentrate wealth in the hands of a small
number of individuals, eroding the middle class and widening the divide
between haves and have-nots.” In other words, “In the YouTube economy,
everyone is free to play, but only a few reap the rewards.”

If, in fact, the universal grid has the draconian effects on income
(as opposed to wealth, if I understand him correctly) distribution, it
is still more likely that the distribution of computing, like the
distribution of electricity, will end up regulated like electricity and
telephony before it with the aim of providing an affordable service to
everyone in America, while assuring the providers of the service enough
profit to maintain their networks. The other possibility is that Carr’s
vision is wrong, or at least wrong for so many years that it need not
generate policy discussion now. Either way, what is almost certain, is
that the next administration will assign some blame for increasing
income inequality (and perhaps wealth disparity) and will undertake
some efforts at rebalancing across the whole population. The era of big
government may be over for welfare grants to the poor in the bottom
quartile of the income ranks, but it is only just beginning in its
twenty-first century version for the second, third, and fourth

But Carr goes further and sees this new global grid not just as an
economic threat, but as a societal one, producing “[c]ultural
impoverishment and social fragmentation” instead of “greater harmony
and understanding.” As a result, “compromise” and “consensus-building”
(which are “at the heart of democratic government”) become harder to
come by. In other words, the global grid may topple our republic. Here
Carr is skating on intellectually thin ice. There’s much evidence that
science is advancing at a much faster rate because of the Internet’s
rapid aggregation of knowledge and dissemination of information. If he
means by “culture” a web of beliefs and values, the Internet almost
certainly creates a tighter and broader web that reifies and
strengthens culture. Carr could summon some proof that social networks
of the Web 2.0 are less compromise-ridden than, say, the audiences for
broadcast television in the 1950s and 1960s. But faction, opinion,
debate, and resolution by voting are the building blocks of democracy,
whereas “compromise” per se is not necessarily the same as majority
rule. In any case, if Carr is right, again government action is likely.
It is hard to imagine that those who gain power from government
positions, namely Congress, will not tinker with the Internet if it in
fact threatens their ability to obtain the consent of the governed.

Contrary to what Carr argues, the nature of the Internet will not
prevent government intervention. “Technology is amoral,” he writes, and
so we cannot “hold inventors liable for the misuse of the invention.”
But this logic hasn’t stopped government regulation before: Tobacco
companies were targets not just for misleading ads, but for the product
they sell. Even the creators of spam, viruses, and other “inventions”
that thwart computing and communications would not obviously deserve
immunity for liability from the misuse of their “inventions.” In any
case, if in fact terrorists do use the Internet, as we are told they
indeed do, then government intervention is certain; that is precisely
the issue in the Foreign Intelligence Security Act (FISA) legislation
under consideration in Congress. Add to that the risks of domestic
surveillance through the global grid, and it raises, rather than
diminishes, the possibility of government action. Moreover, we don’t
have to pause long to recognize that Carr’s prediction of circuits
implanted in the brain’s cell structure is likely to bring still more
government intervention.

Carr has indirectly and perhaps unintentionally written a list of
reasons why the Internet’s next phase of evolution will call for much
more public debate than occurred in the salad days of dial-up access,
with that era’s insouciant exploration of whatever might happen. That
public debate is long overdue. The nation has slept for the last eight
years while the world has spun round many times. Exactly what is good
or bad regulation in this area is where the next president will be on
uncharted ground, given that the current administration has not done
much. Policymakers in 2009 may not take as gospel the fears and terrors
that Carr outlines, just as businesses are not certain to move as
quickly to utility computing as Carr suggests. But the list of issues
is still vast and none of them have been thoroughly debated anywhere,
even in the academy. Moreover, even the factual assumptions of the
current administration need to be set aside as incomplete and in some
cases misleading. If Carr is even half-right about the twists and turns
of the Internet’s odyssey, the next president has–in addition to Iraq,
Pakistan, immigration, and most importantly climate change–a roster of
very tough and important technology questions to ask and answer. And no
search engine will select the answers.

Read more about technologyThe Internet

Reed Hundt served as chairman of the Federal Communications Commission from 1993 to 1997. He is currently a board member at several technology companies.

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