Orchard Writing

The Internet is at heart a network. It connects things – mainly, computers of various types, but more broadly the software they run and the people who use that software. Because the Internet is all about connecting things, standards that define how these things are to be connected are of utmost importance to the fundamental workings and success of the system. Standardized ways of connecting are critical to achieving “interoperability,” which is the compatible interconnection of all the various component parts of the Internet.

Defining standards is generally a technical exercise, but it is one that takes place within an economic and political context. The standards that are defined can play to the advantage or disadvantage of the various stakeholders in the affected technology. There is a lot of scholarly literature examining the ways that this non-technical context influences the technical outcomes of standards development processes and adoption, as well as the ways in which firms seek to use standardization as a competitive tool[1].

In this chapter we just want to give a broad overview of how these forces play out on the Internet, by working through a few examples of the ways that the standardization of formats and protocols serve as a point of control (or not) on the Internet. In particular we focus on three issue areas. The first is the strategic use of interoperability – proprietary ownership of a format or protocol for commercial advantage. To highlight the potential for control via strategic use of ownership of key pieces of technology we tell the story of how Microsoft leveraged its ownership of the Windows operating system to take control of that segment of the computer software market. We will then use the story of the ongoing battle to set a standard for Instant Messaging and the tug of war over music file formats to show how these strategic battles can play out on the Internet. In both examples a number of commercial interests are trying to use their market share and control over a particular format or protocol to set their product as the Internet standard.

The second issue we look at is the policies and politics within standards bodies and how various stakeholders attempt to wield influence over the process of setting standards on the Internet. In particular, we take a critical look at the politics within the Internet Engineering Task Force, a public body that works to set voluntary standards for the Internet (this can be thought of as de jure standards setting, as it involves an open and formalized process). We will also examine how various interests attempt to establish their protocols/formats as a de facto standard on the Internet – i.e. by using a variety of strategies to out-compete competitors in the relevant market thereby using the marketplace to set the standard.

The third issue area examines the interplay between stakeholders when a standards setting body adopts two standards for technologies that accomplish the same task, albeit via two very different means. In this context, it is a look at how commercial interests compete among one another to push their technology over the other and the means that they are able to effectively employ. The prime example for how this all plays out on the Internet was a standards battle between Ethernet and Token Ring technologies. Both systems use very different technology schemes to connect Local Area Networks (LANs).

In order to set the stage for the discussion to follow, recall the layered model of the Internet’s architecture – networks, applications, and abstraction. In the architecture chapters, we’ve discussed the importance of the layers in the middle – the internetworking protocols that everyone has adopted (i.e. the Internet Protocols). The definition of these protocols plays a large role in enabling what is possible/easy to do at all layers of the system – they enable the freedoms and liberties of the Internet such as the idea of “anyone can” and that control is widely distributed throughout the system in order to enable end-user empowerment. So the focus of this chapter is to look at the myriad of ways the protocols and formats that operate on top of the Internet Protocols evolve. For example, Instant Messaging relies on the Internet Protocols in order to travel across the system between end-users, but how should standard protocols for Instant Messaging be set and who should set the standard?

So when one thinks of the Internet as a whole system of lots of points of control rather than a single point of control, one of the places where control is spread across the system is that there are protocols at every layer of the Internet.  It is possible, then, for control to be exercised at every one of these points to the extent that someone could exercise control over a single or set of protocols.

For example, one way to control digital music is through the formats that people use for music files. Currently there is a standards war under way between Apple, Microsoft, and a few other sellers of digital music players and the software that makes them work to assert their relatively non-interoperable formats[2] as the de facto standard for music file sharing. Given the popular interest in digital music and the potential growth of this online market there is a real desire among these commercial interests to come out on top as the owner of the commonly accepted standard music file format. The consequences of winning control over such a marketable product are apparent when one thinks about the consequences of Microsoft’s Windows operating system having become essentially the de facto standard for personal computers. The mere mention of Microsoft chairman Bill Gates is enough to send devotees of the Macintosh operating system into apoplectic spasms.

Bill Gates is many things to many people. To some he is the savvy and visionary software developer who through aggressive marketing and business smarts built the largest software company in the world making him one of the richest people. To others his success is emblematic of a lack of scruples and adherence to the ideals of fair market practices. In their minds he is the penultimate modern day robber baron and monopolist using his wealth and power to undermine his competitors, control the personal computing world, and become a dominating force on the Internet. And still to others he is the wealthy magnate with a heart who has contributed hundreds of millions of dollars for a number of charitable causes. To this group he is viewed as a modern day Andrew Carnegie who took his small yet talented and aggressive business from the garage to the heights of capitalist success and is now giving back to the society that made it all possible.

Despite the variety of personal feelings surrounding him, there is no doubt that in his career Gates has amassed a fortune by capturing a dominant share of the software market. The means by which he was able to wrest control of this market from the hands of competitors such as Apple and one time allies such as IBM is Microsoft’s ownership and control of the Windows operating system. Windows is the platform on top of which applications must be constructed in order for them to work on personal computers. There is a link here with protocols in that they too may be used as a platform on top of which Internet applications can be built. Further, Microsoft and IBM used marketing strategies that directly parallel those used by commercial interests on the Internet to establish there product and/or technology as the Internet’s standard. As such, this represents a de facto standards setting process in that it operates beyond the authority and/or oversight of a standards setting organization such as the IETF, W3C, and others. Therefore, the story of how Windows came to dominate the market holds many parallels for how protocol and format developers use various market strategies to place their products as the dominant standards on the Internet. It also provides an apt example of the consequences to markets when one competitor so clearly dominates as Microsoft has with its Windows operating system.

What Gates did right was not so much that he invented the elements of the Windows operating system; but that he was able to see that the future of personal computing depended upon making computers easier to use and more accessible for a wide range of business and home applications. He then took the best ideas that were around him, added a few twists, and packaged them in what became the Windows operating system. In their book “Computer Wars: The Fall of IBM and the Future of Global Technology,” Charles Ferguson and Charles Morris write that Gates saw software as “…the nexus between people and machines; humanize the software, Gates argues to anyone who will listen, and the industry’s potential is limitless – and who controls the software controls the industry.”

The basis of Gates’ control of the Windows operating system is early reliance on MS-DOS, which itself is an operating system. Windows operates on top of MS-DOS, and can be considered the user interface to the computer that allows applications to run such as programs for spreadsheets, money management, Web browsers, word processing, and so on. In the late 1970s and early 1980s Gates had aligned Microsoft with IBM, which was in the process of putting out its version of the personal computer. IBM at the time was the dominant force in the mainframe computer market and many inside the company realized that in order to maintain its growth and strategic advantage over smaller companies they had to enter the burgeoning personal computer market. In order to put this new type of computer out IBM needed an operating system to be the platform on top of which various applications would run. Gates and Microsoft were asked by IBM to provide the operating system[3] for the personal computers IBM was developing. After some negotiations it was decided that Gates would own the MS-DOS system and IBM would pay Microsoft royalties for its use[4].

As began IBM to develop their personal computer and the operating system that would run on it in the late 1970s there were essentially three other operating systems in the market – such as CPM, the first general purpose operating system for computers with disk drives[5]; VMS, which ran on Digital Equipment Corporations VAX minicomputer; and UNIX, which was developed by AT&T (due to anti-trust pressure from the US government AT&T gave licenses to UNIX nearly for free to academic researchers and institutions[6]).

In the end, as Ferguson and Morris write, MS-DOS won out over its competitors because it was the cheapest, IBM (The biggest and most powerful computer company in the world at that time) had bundled it in with their personal computers, and Lotus (a very popular electronic spreadsheet software product) had been written specifically for it. “By 1983, after almost all software for the IBM PC had come to be standardized on MS-DOS, it was effectively the only game in town.” And Bill Gates owned it.

With the success of IBM’s personal computers and Microsoft’s MS-DOS, Bill Gates maintained Microsoft’s attachment to IBM in what started as a symbiotic relationship. IBM provided significant resources to aid Microsoft in developing MS-DOS as well as other software initiatives and Gates believed that the continued success of Microsoft depended on being partnered with IBM, which could use its market share and immense size to set standards in the computer industry. However, by the late 1980s, Gates came to realize that Microsoft had grown to where it could start setting the standards on its own[7].

Amazingly, as IBM and Microsoft continued through the early and mid 1980s to improve MS-DOS and build new versions, IBM never asked for or received the rights to the source code for MS-DOS[8]. Ownership of MS-DOS essentially put Gates in the catbird’s seat as he moved forward with developing Windows, which would use the concept of icons as direct links to call up various applications and to run them. Because Windows is built on top of MS-Dos it is also considered the user interface for the MS-DOS operating system. Gates’ ownership of the architecture that underlies Windows, but was developed using the resources of IBM and then marketed with IBM’s personal computer meant that Microsoft had the best of both worlds. They had parasitically used IBM to build their company infrastructure and position their MS-DOS/Windows operating system as the industry standard. Then when the time was ripe Microsoft was able to separate from their host and enter the market with ownership of the industry’s standard operating system and user interface firmly under their control. As they developed the various versions of Windows, Microsoft not only realized Gates’ goal of greatly simplifying personal computers, but also using the company’s natural advantages to push Windows as the de facto standard for user interfaces. Part of this strategy was keeping the cost of Windows relatively low while building and promoting software such as Microsoft Word and EXCEL that would openly compete with other software venders[9]. By 1992, two years after the first release of Windows 3.0, Microsoft was selling 1 million copies of Windows 3.1 every two weeks. Windows 3.1 also was bundled as standard software by every maker of IBM-compatible personal computers – except for IBM[10]. In its heyday, MS-DOS represented nearly 80 percent of the market. The size of this market saturation acted to feed upon itself as software programmers realized that in order to compete in the wealthiest portion of the market their products had to be compatible with MS-DOS and Windows. Therefore, computer buyers looking for a system with the most available and interoperable applications considered computers with the MS-DOS/Windows operating system as the natural selection to make.

Of course Gates has been heavily criticized and accused of unfair business practices that led to court decisions against Microsoft in the United States and in Europe. Despite these setbacks, Microsoft continues to be the dominant player in the software industry with profits in 2003 at more than $10 billion and an estimated 97 percent market share for desktop computer operating systems. To say the least, Microsoft with Bill Gates has been very adept at using a number of strategies to first finance the creation of their products, retain ownership, and then make them the industry standard.

As protocols have an analogous function to operating systems there are similar attempts by the developers of Internet applications and the protocols they run on to win the same kind of ubiquity that Microsoft has managed to do with MS-DOS and Windows. The key to this ubiquity is to win de facto status as the standard or even de jure status through one of the standards setting bodies such as the Internet Engineering Task Force and the World Wide Web Consortium. De facto strategies rely on market saturation and other factors to entice Internet users to elect a particular protocol – or format for that matter – to be the standard by their patronage and preference for it. De jure strategies seek control through inserting a particular proprietary technology into a protocol under consideration by a standards setting body and advocate for that standard.

 The above story of Microsoft’s success with MS-DOS and Windows illustrates how they employed strategies to define these two technologies as de facto standards. They developed and maintained control over the key technologies for each system, through price and other tactics made it readily available to a very large number of computer users, connected it to two other key and/or popular technologies such as IBM’s early personal computers and the Lotus electronic spreadsheet software, and they aggressively competed – fairly or unfairly – in the software market.

It should also be said that Microsoft’s intimate understanding of its MS-DOS/Windows architecture gave it an advantage when competing with other software developers to build Windows compatible applications software on top of the operating system platform[11]. Essentially, the more complex the platform software (Windows) the more difficult and time consuming it is for programmers outside of the company that created it to master it and develop efficient, functioning, and compatible software products. This fore knowledge gave Microsoft a significant advantage when it came to developing software to operate on top of MS-DOS/Windows in a timely enough manner to jump out ahead of the market. This in turn allowed Microsoft to retain a significant amount of control and dominance in the Windows compatible application software market.

In sum, Microsoft was successful at placing its operating system as the ubiquitous standard for personal computers forcing software developers to build to that standard. They then used their knowledge of their own technology to competitive advantage in the related application software development field. Companies competing on the Internet have attempted to mimic this recipe for success.

There are a few options available to these companies as they seek to have their products achieve ubiquity throughout the Internet and among users. The first is to build the dominant technology and compete in the market with the idea of taking a significant enough share of the market to achieve what could be termed critical mass. That is, so many people are using your product that the volume acts as a force to push it as the de facto standard. New users of this particular form of technology will seek the technology that is superior in quality and interoperable with what most others are using. By being the market winner at this level while maintaining proprietary ownership of the key technology competitors will be forced to accept your technology as the de facto standard and either drop out of the market or compete on a much smaller scope for the remaining share of the market. Ownership of the key technology will also allow for vertical control of the particular market in that the owner will be in control of the platform and the products that will run on top of it.

Another option would be to short circuit the competition among proprietary technologies by placing a product in the market as a free and open source technology. In a 1996 interview for this book Ron Glaser, founder of Progressive Networks, which makes software for creating and playing audio over the Internet, describes this strategy as “the platform approach” – publish all your interface specs so others can build to your standard. The idea is to achieve ubiquity by allowing users and software developers to drift toward your product because it meets a technical need and is free to use and build on top of. Once ubiquity has been established there would be economic competition at another level based on a standard controlled by the entity that developed it. Advantage would be gained in this second tier of economic competition from control of the standard and a superior knowledge of how it works allowing that company to stay out in front of the rest of the market as it develops software and utilities to operate on the de facto standard platform. Essentially, this is a strategy to control the environment surrounding a particular technology market.

Glaser also identified a third strategy, which he termed the “carpet bombing” approach – make your client software freely available in order to get “people able to do useful things with your product, without frictions in the way such as having to pay money for the facilitating software or own a particular type of computer (i.e. PC or Macintosh).” In this scenario, the producer of a potential platform technology delivers that technology to users for free, but maintains proprietary control over it. The owner of the technology then charges third parties for supplying content or some other use to the platform. This is, as described by Joseph Farrell in his article “Arguments for Weaker Intellectual Property Protection in Network Industries,” as an attempt to rely on “Network Effect.” This refers to the idea that a good or service will increase in value as more users adopt it. The prime example, as used by Farrell, is a television. The television is worthless unless enough people have one encouraging an entity to broadcast content and charge for advertising during those broadcasts. Computers are also an apt example in that a computer is much more useful and valuable if many other people have compatible computers for which a large variety of software is available. Within the internet a good example of this strategy for ubiquity is RealPlayer. The software that makes RealPlayer work is essentially free to users while content providers and advertisers pay a fee to RealPlayer in order to use their software as a platform. RealPlayer also uses its proprietary ownership of the technology to offer users a premium product at a cost. In this way RealPlayer is able to distribute its basic platform for free while keeping a few revenue streams open.

A prime example of how all three of these strategies can be used is the ongoing battle to set the standard file format for digital music. The popularity of digital music and online stores is becoming apparent as Apple’s iTunes sold its 50 millionth song as of March 2004 and can claim more than half of the online music download business. It is also estimated that sales of online digital music will reach well into the hundreds of millions of dollars annually. There is no lack of incentive for any one of a number of software manufacturers to try and get in on this burgeoning market and attempt to steer the de facto acceptance of a standard file format toward its own interests.

For its part, Apple has been successful at getting out in front of the market by trying to vertically integrate all of its products in order to control the market. They have established their own file format called Advanced Audio Coding (AAC), which ostensibly is an open source format. However, Apple has placed a barrier between its format and the rest of the online music community meaning that music in the AAC format can only be played by an Apple iPod digital music player[12]. Therefore, Apple is trying to limit the ability of iPod owners to use online music sources other than its iTunes online music store. In this way Apple is attempting to maintain control over the key technology, which is the format in this instance, and through a combination of competitive strategies to reach a critical mass of users that would enforce AAC as the de facto standard.

There is a significant kink to this strategy, though. Microsoft is not about to let Apple run away with this entire industry and is working double time to encourage software and digital music player manufacturers to adopt their player’s and format as the format of choice. So far Microsoft has been fairly successful as music player manufacturers in competition with Apple such as Samsung, Dell, iRiver, and Creative Technology, and others[13] have adopted WMA. Online music stores have also fallen in line with Microsoft such as MusicMatch, Roxio, and the newly retooled Napster by adopting WMA. The upshot is that Apple is alone in its fight to set AAC as the de facto format standard while Microsoft has enlisted a broad array of digital music player and software manufacturers and online stores to accept the alternative WMA format. Apple still can claim the lion’s share of the market, but it is questionable as to whether the short-term success of their strategy is going to translate into long-term success. The question comes down to which of these two formats is going to be the most interoperable. How many players and online stores will opt for the WMA format as opposed to how many users will opt for the vertically integrated Apple format?

There is also a wildcard in this ongoing standards war, which is the Mp3 format. Neither Apple’s AAC nor Microsoft’s WMA are interoperable, but both are interoperable with Mp3 files. Mp3 is short for MPEG-1, audio layer 3, which was developed in 1988 as an industry standard to compress, store, and transmit music across the Internet. As with most things, it could be assumed that since the Mp3 format is free and open to the public and is interoperable with all of the popular digital players it would only be natural for users and software developers to drift in the direction of least resistance. The result of this trend would likely be the adoption of the Mp3 format as the de facto standard for both players and online stores.

However, there is a third stakeholder in this debate, which is the recording industry. Remember, it was Mp3 files that made it so easy for the original Napster to allow music files to be shared for free among Napster’s many members. Once bitten the recording industry has become very sensitive to the threat posed by an open format and has insisted that online music stores only sell music in encrypted formats such as AAC and WMA. This strategy, though, only has a limited effect of making file sharing impractical because once a WMA or AAC file is downloaded onto a computer it can be burned onto an audio CD and then reloaded onto the computer as an Mp3. There may be some loss to the quality of the music, but it is certainly a means to work around the recording industry’s insistence that file formats be proprietary pieces of technology[14].

A second example of how the three strategies to achieve ubiquity via market competition is the ongoing battle to set a standard for Instant Messaging. Instant Messaging is an Internet application that allows two or more end-users to engage in real-time text-based communication. Though the basis of these messages is text, over the past few years the various competitors in this market have offered additional features in order to increase the value and desirability of their product. These include gewgaws such as a audible messages, emoticons (smiley faces and the like), images, games, and web cams.

Through the years there have been attempts by standards setting organizations such as the IETF to create a unified standard for Instant Messaging. However, these attempts have failed as the main stakeholders in this market competition have refused to allow their products to allow for cross-organizational communication. For example, is you use AOL Instant Messenger you are able to talk to others with the same software, but not people using Yahoo’s or Microsoft’s Instant Messaging software.

The success of these competing products is a keen exception to the rule that users and developers would tend toward standards that are free and open. These three companies have been very successful with their proprietary services by opting for Glaser’s “carpet bombing” strategy. AOL, Yahoo, and Microsoft all allow end-users to download their products for free while charging users such as businesses more for higher levels of service, advanced features, advertising, and licensing of the technology to outside developers. Meanwhile, the Instant Messaging software remains under proprietary ownership of the commercial entity denying competitors’ the ability to interconnect their products.

Obviously the best means to increase the value to consumers of Instant Messaging is to increase its interoperability with users of other services. Therein lies the rub; the owners of the three top services have been engaged in a fiercely fought battle for dominance of the market and view interconnection as a risk not a benefit.

AOL has been the strongest competitor in the market, but not by enough to tip the market toward their product. In a February 10, 2004 story on ClickZ News written by Janis Mara, she states that AOL has 20 percent of the market, Microsoft 19 percent, and Yahoo 12 percent with other services making up the remainder. This dispersal of market share comes five years after these players first started exchanging charges and counter charges in what has at times been a very bitter rivalry between services.

Initially AOL held the lion’s share of the market, which led competitors, particularly Microsoft and AOL, to claim that AOL was engaging in anti-competitive behaviors arguing that interoperability of the various services is to the benefit of all customers. As a case in point, Microsoft and Yahoo originally designed their services to allow their customers to send instant messages to AOL subscribers’ screen names. However, the day after Microsoft released its version of Instant Messaging titled “MSN Messenger,” AOL blocked access to their customers by Microsoft and Yahoo. The first shot in the standards war had been fired and both Microsoft and Yahoo complained bitterly that it is in the best interest of users that they be able to communicate across platforms. Their complaints fell on deaf ears and/or were met with counter charges by AOL that access to their subscribers represented a security risk.

Approximately three years later, though, the battle lines and rhetoric had softened as Yahoo and Microsoft were able to bite into AOL’s lead. Microsoft closed the gap by embedding MSN Messenger into the Windows operating system while Yahoo embedded their service throughout its many other Web-based services. A third phenomenon took place – since the software from all three is free they merely downloaded all three versions and shift from one service to the other on their computer in order to talk to friends who have non-compatible software. So, while Microsoft and Yahoo may have increased their customer base, it largely may not have come at the expense of AOL. It’s like having a phone to talk with friends who have MCI, another for those with AT&T, and another for those with Sprint. The difference is that the software for Instant Messaging comes free of charge.

By the summer of 2005 the mudslinging and rivalry had largely given way to an increased desire among the three to cooperate in one for or another. In July, 2004, the companies announced they would use Microsoft’s Live Communications Server, which offers Instant Messaging for corporate users, to interconnect all of their corporate clients. Private customers are excluded from this agreement, which came after all three realized that interconnection of their corporate clients made a far better business model for AOL, Microsoft, and Yahoo and their clients.

As CNET News reporter Jim Hu, who has followed the story since the late 1990s, put it, “It’s a war of attrition that’s ironically benefiting all sides. All three companies have stated publicly that they want interoperability, and the only step that’s been taken was the connection agreements with Microsoft’s corporate IM product Live Communications Server. Yahoo points its finger at AOL and MSN for dragging their heels. All three agree that, even though it’s technically easy to interconnect, it’s a business issue that needs to be resolved.

“The bottom line is that Internet users are now used to having two or more IM clients operating on their desktops. This benefits all three companies because they can offer more differentiation for their products to keep consumers loyal. As long as all three companies are happy in this period, it’s unlikely any interoperability agreements will happen in the near future.”

Beyond the de facto process of setting standards there are actual bodies such as the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C) that have as a legacy of the early years of the Internet been established to set standards. Originally they existed within the context of the early Internet community, which was mostly academics, technology researchers, and a handful of private corporations with an interest in network computing. Since the early 1990s, however, these standards setting bodies have been forced to deal with a multitude of other stakeholders as the Internet has become a place for commerce. The transition has mostly been a smooth one, but there have been instances where the bottom up consensus driven ideals of these bodies has been tested.

As a case in point, there is a February 23, 2004 New York Times story by John Markoff and Jennifer L. Schenker that looks into allegations that Microsoft has attempted to undermine support for a set of business-to-business electronic transaction standards jointly developed by the United Nations and the industry sponsored international standards group the Organization for the Advancement of Structured Information Standards. Microsoft is trying to edge out the open source standard developed by the UN and the industry group with its own proprietary standard. The standards are designed to automate buying and selling through networks of computer connections. It is predicted that the eventual victor in this competition will become key piece of technology for ecommerce thereby making it quite valuable if privately owned.

According to critics of Microsoft, the UN has been quietly turning it back on its own standard after Microsoft started working behind the scenes to push its own standard and provided financial support to several members of the UN standards body. Microsoft and senior UN officials have argued the allegations are false, the contributions were relatively modest, complied with UN guidelines, and did not unduly influence the process of establishing the standard.

Whether Microsoft has tried to use financial contributions, though minor, to influence the standards setting process or not this story demonstrates there is no doubt that Microsoft is working to establish its own proprietary software as the standard rather than the open and free standard developed by the UN. Private control of the technology underlying the standard would make it quite valuable and give Microsoft a considerable advantage as they compete to market software to operate on top of that standard. The UN has not made any definitive move to bury its own standard in favor of Microsoft’s, but it is clear to technologists and others who believe in open standards, which are by definition divorced of intellectual property rights issues, establishing a proprietary standard may pose a threat to the openness of this one piece of the Internet.

One place where the risk of an “owned” piece of technology becoming a standard is significantly blunted is the Internet Engineering Task Force (IETF). In Chapter Five we discussed the highly decentralized, open, and consensus driven process by which the IETF is organized and how that process is designed to protect against the kinds of politics that are discussed in the above story. To a large degree this structure has proven to be effective at nominating certain technologies to be accepted as standards while avoiding proprietary and private control of a particular standard.

Despite the effectiveness of the structure it does not in and of itself completely remove politics from the process nor completely protects the process from manipulation by small factions. The IETF is perhaps a better means to make sausage, but it is still making sausage.

In a paper written by MIT researcher William Lehr titled “Compatibility Standards and Interoperability: Lessons from the Internet,”[15] Lehr takes a critical look at how the IETF operates.

Political power and/or control can be concentrated or diluted, but rarely can it be completely eliminated. This is especially true when a particular organization must act in a deliberate manner to make decisions and function in an effective and efficient way. The IETF does a good job of distributing power by spreading organizational control among a set of working group heads and by allowing for all interested individuals to become a member of the organization and/or participate in the standards setting process.

Remember, the IETF is organized into working groups that deal with standards issues in ten functional areas. Each of these areas is under the direction of an area director, who in turn sits, with a chairman, on the Internet Engineering Steering Group, which is charged with the management of the IETF. Following a bottom up decision making model, the actual standards are developed within the working groups. Once a working group has completed its task it is disbanded. Draft standards are also debated on various electronic bulletin boards that are accessible to all who have access to the Internet. Minutes of meetings, drafts of standards, and other pertinent information is also posted in “Request for Comments” (RFC) form on the RFC Editor’s website.

Once a standard has been thoroughly vetted and consensus is believed to exist it is sent to the Internet Engineering Steering Group where it is formally accepted.

While this process has the appearance of being as completely open as is possible, there are a few subtle points to be made that point to a more closed system than would be detected on the IETF’s surface. The first strikes to the heart of the process in that the working group chairs have far more discretion for how the development process unfolds than in other more formal and rigid standards setting bodies. For example, in most standards organizations consensus is proved through voting. When a critical mass of voters decides a standard is ready the standard moves forward. By contrast, in the IETF consensus is demonstrated by a lack of vocal opposition, which can cut two ways. The first would be to argue that since the process is opened to the entirety of the Internet community it can be assumed that when opposition is no longer present consensus has been reached. The other side would be to argue the process allows for only a relatively vague feeling that consensus has been reached as it is not convincingly demonstrated via a vote.

In this process the working group chairs play the role of arbiter deciding when a lack of opposition has been established to indicate that consensus has been reached. Once a chair decides consensus has been reached the standard is moved to the Internet Engineering Steering Group (IESG) where the Area Director for that particular working group meets with peers and the General Area Director (the chair of the IESG) to make a decision as to what the recommendation for the standard should be. The recommendation is then forwarded to the Internet Architecture Board (IAB), which is a third tier of the IETF standards process providing architectural oversight of IETF activities. The IAB also adjudicates appeals when complaints regarding a standard are made and oversees the appointment of the RFC Editor. According to Lehr, in the past these latter groups’ (IESG and IAB) proceedings are closed and are composed of a relatively small number of members who have historically worked together for a relatively long time[16].

Both of these groups without being constrained by formal decision making procedures use their discretion to determine if consensus has been achieved. The result is that in the absence of formal rules to judge when consensus has been reached quite a bit of power is consolidated within these two groups. It would be possible for the IAB and IESG to determine that a particular dissenting view should be overruled and declare that consensus had been reached. The result, according to Lehr[17], “It is probably easier for the IAB and the IETF to exercise their discretion to block decisions they oppose than it is to enforce decisions which are opposed by members of the Internet community. Rather than demanding that consensus be convincingly demonstrated… the IETF process presumes consensus exists in the absence of vocal opposition.” In a footnote Lehr adds, “It is much easier to ignore calls for action or disregard comments for additional features than it is to approve features which are opposed by a vocal opposition.”

At the head of the hierarchy sits the IAB. The IAB, according to the Internet Standards Process as enunciated in RFC 2026, is the ultimate authority to make decisions when a particular issue regarding a protocol remains unresolved after going through a conflict resolution process. The process is based on a hierarchy beginning with the chair of the relevant working group. If unresolved at that level the conflict then can be brought to the attention of the area director, followed by the IESG and then ultimately the IAB. The IAB is empowered to enforce a final decision based on its belief that the Internet standards procedures have been followed or not.

Though Lehr and others identified these aspects of the IETF standards setting process[18] in the early and mid 1990s, for the most part the IETF has remained largely unchanged. That is until November of 2002. During its annual meeting the IETF established a working group under the title “Problem” after a significant enough number of members complained the organization was moving too slowly on setting standards and not adequately responding to real-world issues. Formation of this working group began a profound process of self examination by the organization in order to come to grips with the changing nature of the Internet and the growth of heterogeneous actors attempting to influence the standards setting process.

After an initial period where concerns were shared via an electronic mailing list the Problem Working Group submitted a draft statement in October of 2003. While complementing themselves for having produced a large quantity of high quality work, the working group laid out a number of problem categories. For the most part they dealt with ways to increase the efficiency of the organization such as “The IETF does not Consistently use Effective Engineering Practices” and “The IETF’s Workload Exceeds the Number of Fully Engaged Participants.”

Beyond these issues the Problem Working Group identified some key areas where the IETF allows political power to be concentrated or for certain interests to exert undue influence.

These problems include a lack of common understanding of its mission, which could be attributed to the increased scope and complexity of the Internet as well as the increasing heterogeneity of the Internet community. The consequences of which include, “Working Groups can potentially be hijacked by sectional interests to the detriment of the IETF’s mission.”

The draft report also identified an issue discussed above regarding the concentration of authority within a small number of people who sit on the IESG and IAB. In particular, the report notes that in an effort to preserve continuity of IESG and IAB membership successive nominating committees have created an “affinity group” system, “which tended to re-select the same leaders from a limited pool of people who had proved competent and committed in the past.” Further, this affinity group has come to share a cultural outlook that matches the “dominant cultural ethos of the IETF (North American, English speaking). Newcomers to the organization and others outside the affinity group are reluctant to challenge the apparent authority of the extended affinity group during debates and consequently influence remains concentrated in a relatively small group of people.”

A later draft report from the Problem Working Group titled “IETF Problem Resolution Process” reinforced the above concerns. The report was designed to offer non-judgmental processes to address the problems identified in the previous draft report. While this document parrots much of what the first argued it did add it is possible for one or two members of the IESG to block working group documents while at the area director’s review stage or the IESG review. The report then advocates modifying internal processes to the IESG in order to remove the potential for one or two members to indefinitely delay a working group document either intentionally or due to work overload.

It is also important to note that this report states, “Although ‘rough consensus’ is considered a core value of the IETF, consensus-based decision making works best in smaller groups with a common viewpoint and common goals. Somehow we need to resolve the apparent conflict between our core values regarding rough consensus, and our desire to be an effective organization with several thousand participants.”

These are just a few of the issues that have emerged within the Internet’s predominant protocol standards setting organization. However, they point to systemic issues of the system that run counter to a stated desire of the IETF for a process that is as transparent and open as is possible. They also point to issues that are more of an inadvertent nature as opposed to overt attempt to subjugate the process to the control of the few as opposed to the many. As such, when looking at the myriad other standards and technical bodies of the Internet who advertise openness and transparency as fundamental to their ethos, it is possible for a more closed structure to exist than would be perceived at first glance.

While the above issues are of a procedural nature, there are also a few strategic decisions working group chairs may use in order to exert some control over the process as it unfolds within their group. Former SNMP working group chair Marshall Rose is quoted by Lehr in another piece titled “Compatibility Standards and the Internet,” as describing his role as chair as follows, “The role of chair of the SNMP Working Group is little more than political arbiter. Technical work is performed by a few key members of the group, and the chair tries to provide an environment to allow this. As current chair there are a couple of simple-minded tricks I use. For example, meetings are scheduled off the beaten track, simply to reduce attendance by hangers-on and standards go-areaways – who attend to make seminal contributions and enjoy many fine lunches and dinners… Thus, the job of the chair is to make the process appear ‘open and friendly,’ whilst making sure that none of the ‘doggie biscuits’ tossed about have any bad effects on the working aspects of the technology.”

The IETF and other standards bodies are not free from outside actors’ attempts to exercise some degree of influence over the selection of standards. Nowhere is this threat greater than when intellectual property rights and standards creation intersect.

It is commonly accepted that technologies that hold patented material within them should be avoided. The idea is to create standards that are as interoperable with as few barriers as is possible to ensure openness throughout the entire system. Unfortunately, simply saying you aren’t going to set a standard with a patent in it is not as easy as it may appear as the World Wide Web Consortium (W3C) found out while working on a proposed standard titled “Platform for Privacy Preferences” (P3P). P3P is software that allows a user’s computer to negotiate privacy practices with that of a website. For example, the user establishes the level of privacy s/he wants to maintain and the P3P software works to ensure that level of privacy is achieved in communications on the Internet. There is a negotiation that occurs between a website’s server and the user’s computer that sets certain rules such as establishing the user’s name and address can be disclosed to the website, but the website cannot then give it to any other entity[19].

Given the obvious privacy concerns that have surrounded the Internet for a number of years P3P would provide an important means for web servers and users to be able to set reasonable privacy standards in a way that is hidden to both. Should a single company successfully place a piece of patented technology within that standard it would likely be a very lucrative maneuver as they would be able to charge fees for the use of the standard.

Enter W3C.

The World Wide Web Consortium is a standards setting body that not unlike the IETF takes a rather passive stance toward how it establishes a standard for the Web. By this we mean to say that the W3C does not hold some sort of authoritative power to determine the technologies that should be standards. Rather, they publish as “W3C Recommendations” the technologies that they believe would work best as standards leaving their acceptance up to the Internet community. Their recommendations come with a great deal of credibility as W3C puts proposed standards through an extensive development and testing process to ensure the their recommendations meet strict criteria regarding functionality, interoperability, and improving accessibility and usability of the Web. As the organization’s website claims, “The W3C is pretty much the flag bearer for the Web.”

However, the W3C is not founded on the same principles and ethos of openness as the IETF. There are some similarities in that the W3C uses working groups to do all of the research and work to develop recommendations. The working groups also seek consensus as the basis of their decision making process, though when conflicts arise there are formal voting rules. There is also a period of time during the development process for individuals and organizations that are members and non-members to comment on proposals.

The similarities pretty much end there as the W3C is a members only organization that cedes all final decision making authority to its director. Not surprisingly, the director is Tim Berners-Lee, the inventor of the World Wide Web.

Membership to the W3C is open to individuals, but is primarily populated by a diverse group of companies and organizations such as Microsoft, AOL, IBM, the United States Defense Information Systems Agency, and a number of educational institutions and small to medium size companies. Membership is open, but it does cost money. For companies with annual gross revenue less than $50 million, non-profits, and governmental departments and agencies the yearly fee is $5,750. For companies with revenues exceeding $50 million the yearly fee is $57,500. As the W3C’s website notes, “If you can’t find that amount of funding, you’re out of luck.” The organization is no less candid in describing the advantages of membership arguing membership means, “Basically, you’ll have a seat at the table, advance knowledge of what’s coming out, and access to the discussions that formed the basis for standards. Knowing why a standard was written a particular way may help you plan for future versions more effectively than your competitors. This may be worth much more to your organization than US$5,750 (or even US$57,500).” This obviously is not the same environment within which the IETF works. Joining an IETF working group is free and requires only signing up for the mailing list. Funding is derived through a number of sources that include nominal fees such as attending certain meetings (one meeting in 2004 cost $500 to attend) and contributions.

Despite its strict membership rules and hierarchy the goals of the standards recommendations from the W3C are largely shared by the community of Internet technologists, which equates to an ethos of keeping the system as open and accessible as is possible. The challenge to consistently achieving these goals is the increased use of the Internet and the growing heterogeneity of the Internet community, which has helped shift the Internet, and the Web, from a singularly communications based technology to an open market place. Within this market place is the ever present competition to patent new and useful products and place those patented technologies where Internet users are likely to use them. This includes the standards recommendations that are produced by the W3C and other standards organizations.

Early in the W3C’s existence the stated policy regarding intellectual property rights issues was to avoid them and only recommend standards on a royalty free basis. This plan worked well when the Web and Internet were relatively small and homogeneous, but after a patent claim was filed affecting the implementation of P3P technology after its acceptance as a W3C Recommendation did the organization begin the process to establish a formal policy.

In the late 1990s as W3C was developing the P3P recommendation, a member company of the organization and the P3P working group titled Intermind was applying for and subsequently received a patent that Intermind believed would have an impact on the standard. Specifically, if an organization attempted to implement the P3P standard they would infringe on Intermind’s patent and owe the company payment for its use.

As was required by W3C policy at the time, Intermind had declared to the working group that they were seeking a patent that could impact implementation of the standard. In a story written by Lisa Rein titled, “The W3C, P3P and the Intermind Patent,[20]” she quotes Peter Heymann, one of Intermind’s founders, as saying, “We have repeatedly asserted to the standards group the existence of our intellectual property. This is something we have taken very seriously, at the risk of being perceived as mildly abrasive.” Despite such declarations, the W3C did not take any actions until Intermind received its patent and filed a patent claim. The seriousness of this development was stated by rein in her story, “If the innovation and open development process which have so far characterized the rapid growth of the Web are to continue, then careful measures must be taken to avoid the capture of open standards by individual corporations.”

The W3C agreed and mounted a significant and ultimately successful challenge to Intermind’s patent claim. It was determined that the technology underlying P3P did not closely enough resemble that patented by Intermind.

Off the hook for this particular recommendation W3C set about ensuring such an episode was never repeated. The result is the organizations policy on intellectual property rights that establishes a two tiered system for dealing with these issues. The first tier requires all technology recommended by W3C be royalty free when the technology is essential to or in some way would impact the core of the Web’s infrastructure. The core is considered to be the lower layers of the Web’s architecture and as such protecting it from patented technology is important in maintaining global interoperability of the Web. A “Backgrounder for W3C Patent Policy Framework,” states, “…there are aspects of the infrastructure that are sufficiently central that they should be designed to be implementable without license fees.”

The next tier deals with areas of the Web’s architecture located along the periphery at a higher level (layer) of the Web’s architecture. In this instance, the W3C believes it may be appropriate to accept certain patented technologies within a W3C Recommendation under the concept of licensing on “Reasonable and Non-Discriminatory” terms, or RAND. The requirements for a RAND license are[21]: must be available to all implementers; must extend to all essential claims; may be limited to implementations of the recommendation, and to what is required by the recommendation; may be conditioned on a grant of a reciprocal license on RAND terms to all Essential Claims owned or controlled by the licensee and its affiliates; may be conditioned on payment of reasonable, non-discriminatory royalties or fees; may not impose any further conditions or restrictions on the use of any technology, intellectual property rights, or other restrictions on behavior of the licensee; may include reasonable, customary terms relating to operation or maintenance of the licensee relationship such as the following: audit (when relevant to fees), choice of law, and dispute resolution.

The policy also improved on disclosure of patent conflicts, opened the disclosure process up to the general public, and gave working groups the flexibility to select the proper patent licensing regimen for their particular area of work.

Of course, the new policy was not universally embraced. A posting on an email bulletin board on the W3C’s website, takes exception with the allowance for certain standards recommendations to contain RAND licenses. He writes that these licenses “Fail to acknowledge the Internet and its associated standards are public property and therefore require public standards.” He goes on to add that adoption of the policy as is “Provides clear incentive for a new standards body to be created to ensure the Internet and its associated standards are public property.”

As the W3C is not the only standards setting body operating on the Internet there are a number of options that standards bodies may take in addressing intellectual property rights issues. They can just allow the inclusion of protected technologies and allow the market place to figure out licensing terms and how the issue is to be settled on a case by case basis. For obvious reasons this is not an ideal resolution for many members of the Internet community as it would allow a standard to essentially be owned creating an island on the Internet where access is not free and open.

Standards bodies can choose the other extreme, which is to not allow any protected technologies to be included in any recommended standard. This would make most members of the Internet community happy, but is difficult to accomplish one hundred percent of the time. Requiring and enforcing the use of disclosure of protected technologies can only be effective to a point. There is just no guarantee that protected materials will not find their way into a standard.

The third option is to allow patented items to be included in the standard, but require that they be given royalty free. This is an adequate compromise in that it protects the Internet community from technologies that require licenses to use while giving entrepreneurs an incentive to develop new technologies.

The last option, which is what the W3C chose, is to refrain from including patented materials when possible, require royalty free licenses when protected materials are included in standards near the core of the architecture, and allow limited RAND licenses when intellectual property rights issues are unavoidable on the outer layers of the architecture.

There is a long history of entrenched interests using their influence in an attempt to determine the outcomes of both de jure and de facto standards setting processes. This history exists within the market place that is the Internet as well as many other areas of commerce. It reflects the desire for interests to either promote a standard they believe would give them a strategic advantage or prevent one they feel would strategically disadvantage them. For example, to what lengths would telecommunications companies go to compromise the acceptance of a protocol that would allow free cable telephony? It is not hard to see that the world’s telephone companies would work aggressively to prevent their products and services from going the way of the eight-track player and Beta videos.

One of the earliest examples of this kind of strategic use of influence within a standards setting process occurred with the development of Local Area Network (LAN) technology. The technology for LANs, which connects various personal computers in a network within a limited area such as an office or building, had been in the works as of the late 1960s[22]. It wasn’t until 1983, however, that the Ethernet protocols were established as the first international standard LAN technology by the Institute of Electrical and Electronics Engineers (IEEE). This development came well after IBM’s Systems Network Architecture had become the de facto standard architecture for mainframe computer systems. IBM had attained enough of a market share – approximately 70 percent[23] – in the manufacture and sales of mainframe computers to achieve the critical mass necessary to place its technology as the industry’s de facto standard. Therefore, IBM had no inclination whatsoever to support the forward progress of LAN technology, which posed a strategic threat to mainframe computing. Mainframe computers hold all of the valuable files and saved data within one central machine. Attached to that machine are work stations known as “dumb terminals.[24]” The terminals send requests for data to the mainframe, which then prioritizes the incoming requests, looks for the data, does all of the necessary computing work to process the data, and then sends the requested information back to the work station terminal. LAN technology, on the other hand, became popular as smaller personal computers were being developed and allowed these devices to communicate and share data as peers within a localized network. The entrance of “peer” networks of computers meant each computer could perform the same function as a mainframe more quickly and efficiently with fewer disruptions of service.

During the early 1970s as LAN technologies were being developed[25] and personal computers were going from a good idea to a marketable product, IBM steadfastly held onto its control of the mainframe computer market and for a time either ignored or failed to see the impact personal computers and LAN technology would eventually have on the computer market for business applications. Even the inventor if the Ethernet, Robert Metcalfe, did not realize the marketable aspects of his creation until June of 1979, “Only then did it dawn on me that Ethernet would be a successful standard worth building a company around[26].”

By 1980 it also began to dawn on IBM that not only should they enter into the personal computer market, but entry should be coupled with their own LAN technology. Rather than work with the Ethernet protocols, which were backed by companies such as Xerox, Digital Equipment Corp., and Intel Corp., IBM decided to establish their own set of LAN protocols called Token Ring. IBM was the biggest computer maker on the block and by shear virtue of its size was able in many ways to establish industry standards as it did with the MS-DOS operating system for its personal computer. The development of Token Ring represented an attempt to maintain software dominance in the face of the burgeoning success of Ethernet. However, it would take IBM about 4 years to finally introduce Token Ring, which gave them a distinct disadvantage.

In 1985, IBM successfully established Token Ring as an IEEE accepted standard to compete with the Ethernet standard. While Token Ring and Ethernet achieve the same goal, they each take two very different paths to achieve that goal. The technical and design differences allowed each to be accepted by IEEE as a standard LAN protocol. The challenge in setting up a LAN is to find a way to ensure that data exchanges within the network will not collide as they travel through the system. There has to be some form of communications timer or traffic cop in order for a LAN to work. Ethernet is set up in a linear style in that the computers are essentially on the same cable and communications collisions are avoided through protocols that determine the ordering of data transfers. On the other hand Token Ring is pretty much what it sounds like. The computers are configured in a circular manner as opposed to shunting off the same linear cable. In order to prevent collisions the protocols establish a “token” within the system. The token travels constantly through the ring until it is stopped by a computer wishing to send data. The holder of the token is allowed to send data while the other computers know to wait until it is their turn to speak.

The launch of Token Ring began a standards war that had all the makings of a battle royale with Xerox and other large firms lined up against the behemoth of IBM. However, things did not exactly go IBM’s way. They were late out of the gate, and once out their product proved to be more expensive, less efficient, and served by only three vendors – IBM, Madge Networks, and Olicom Inc. – while Ethernet was served by many vendors. As of the mid 1990s the shine had worn off of IBM’s Token Ring and many market watchers were predicting its demise.

By 1998, Token Ring port shipments – the means to assess market share – were predicted to be approximately 500,000 while Ethernet’s were expected to be 22.5 million. In fact, a market developed around producing products to help network managers shift from Token Ring to Ethernet. A 1998 story written by John Fantana and published by Interweek.com titled “Olicom To Migrate Token Ring Users to Ethernet,” reported the announcement by Olicom that it would begin easing itself out of the Token Ring market and offer a suite of Ethernet products to help its customers migrate from Token Ring. Fontana wrote that the decision by Olicom signals that Token Ring “…is indeed sliding toward oblivion.” He adds Token Ring will likely survive as a niche technology only because “…the move off Token Ring is just too painful for some IT managers.”

In the end, despite the worldwide dominance of IBM up through the mid 1980s it was unable to maneuver its own LAN protocols into becoming the industry’s de facto standard. The backers of Ethernet were first to the punch with a product that works well and is far less expensive. However, this story would have had a much different ending if IBM had been better at adapting to the changing dynamics within the computer world and worked more forcefully to put out its LAN standard in a timelier manner. The size of IBM, by some accounts more a global empire than a company, would have proven a very formidable opponent to the allied efforts of Xerox, Digital, Intel, and others.

As the Internet moves forward one can see that there exist large powers wishing to play a role in the various protocol standards that are set. The question then becomes, will they be better able to adapt to changing technologies than IBM, and if so, will their relative size give them a significant advantage in the setting of de jure and de facto standards?