Internet can be seen from different angles and it is interesting that from each of these angles you can attach different economic consideration.
1) A pure infrastructure (wire) angle. Here the growth is based on traffic capacity consideration from an Operator point of view but lately we (at least in Telecom Italia) have started to ask ourselves what sense does it make to increase our capacity (investing money) when we basically do not get any more money in return. This is particularly true in the wireless domain where capacity is more limited. The only reason to do it is to avoid losing market share, with people going to other providers that can afford extra capacity because their networks are less loaded having less clients and tend to consider the extra traffic at marginal cost.

Anyhow, “this” Internet is growing in a planned and engineered way; engineers are doing it.
2) A content/application angle. Here the growth of content is probably uniform but the real interest is not on content/application “per se” but that attracting interest and therefore generating traffic. Very little engineering here, no planning. Today it is that content/application, tomorrow it may be something completely different. The economic return, if any, is tied to content and to what people decide they like. Similar reasoning applies to services (can you tell in advance how many downloads you will see for that application from the Apple store?). Here, however, you can look, and attempt modelling, using power law distribution, small worlds math, and this relates to the way social networks behave.
3) The user angle. Here you have that users are shifting their behaviour more and more according to social networks dynamics (above a certain stepping stone of the day by day communications, deriving from the old days). Economics is related to value perceived by single users and by how this perception can influence the behaviour and perception of others.In a way it is similar to the brain. The brain consists of wiring (neurons) and you can see that you need to have certain architectures in place, otherwise the brain will not work properly. If an area gets damaged you can have a variety of problems, small…big,  fatal. But the wiring, although essential, is telling you nothing about what’s going on there, the thoughts. If you want to understand the person you don’t look at the wiring but at the trains of thoughts and then again that is not enough. You may have the same thoughts and behave quite differently. So in the end you need to look at the behaviour.

I see much more relationship between Internet and the brain/mind/behaviour than to any social networks or physical network.
Clearly, each of this “layer” has implication on the others, and this applies to both the brain and Internet. So I do not think that the wiring is in absolute terms conditioning the thinking (or the traffic) neither that the thinking (traffic) is conditioning the wiring. It is a bit of both.
When you reach a point where a system exceeds a certain level of complexity and its parts are no longer centrally controlled but loosely connected, with space to react to local stimuli, then you need to accept different concurrent modelling approaches. I feel that this is the situation with Internet/content/applications/users/dollars today.

Summarizing. My idea is that we need to look at Internet from many perspectives, each one is good “per sé” but it is not sufficient to grasp it all. Each perspective may require different modelling approaches and economic consideratiosn and on top of that you have the problem of making sense when placing the different views together.

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Tags: brain, Internet, small worlds, Social Networks

This entry was posted on Saturday, May 9th, 2009 at 2:37 am and is filed under Modeling an Economic Ecosystem. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.