Currently, spectrum in wireless networks is allocated using a property based scheme. This solves the problem of interference by providing coordinated access to capacity for users of multiple technologies at the cost of fixing the available capacity for each technology area. Recently, architectures have been proposed that use a cooperative strategy for capacity allocation. These have the advantage of increasing available capacity with the number of users. The author believes that cooperative wireless networks could be created that provide capacity that scales proportional to the number of users. In addition, a cooperative wireless network would have increased options with respect to Metcalfe's Law, the number of pairwise transactions that could occur would grow as N**2, and Reed's Law, the number of groups that could be formed would grow as 2**N.

The author argues that the scaling of capacity available in wireless networks indicates that spectrum does not behave like ordinary property and requires a different commons based allocation and coordination regime one that encourages cooperation among users in order to increase available capacity. No obvious regime exists today. However, the current Internet regime for wired communication was formed from 25 years of innovation in an open and experimental environment. The resulting regime differs significantly from the previous regime that grew under the control of the telecommunications provider. The author calls for the development of a cooperative wireless network regime by starting with an open and experimental regime that encourages cooperation much the same as the starting point for the current Internet regime for wired digital communications.

“Along every conceivable dimension — from the intimate to the institutional — digital media force both individuals and organizations to redefine what kind of relationships create value.” The result of this paradigm shift isn’t about data and information, it’s about the value and priority that people place on the quantity and quality of their relationships.

Significant advances in technology have always altered how we perceive ourselves and our relationships. The automobile had an impact beyond simply moving from point to point B, and TV had an impact beyond delivering images and sound. Both of those wrought real and profound cultural change. Whenever a new medium emerges we have to look beyond the simple mechanics of the medium to the impact the medium has on the community. What’s important to recognize is that these new digital technologies aren’t simply evolutions of preceding technologies, but that these new technologies are now networked with each other. These new networks between networks have resulted in new relationships between networks that, in turn, have created new kinds of relationships between people.

This new phase of networked technologies allows individuals and institutions alike to create new ways of interaction. Intimacy, anonymity, trust, openness, access, passion, negotiation, hierarchy, coordination and collaboration can all be mediated, monitored and managed via networks ostensibly designed to carry bits. The value challenge has shifted from gathering and disseminating information to packaging and bundling it in unexpected ways.

What people crave is the chance to communicate and relate to each other in new ways – not simply to have access to a vast feast of information. The new technologies are directly related to the essence of being human. They challenge and stretch the traditional meaning of concepts like relationship, community and interpersonal expression. People expect more from these new technologies than simple job improvement, they want it to improve their working relationships with their boss, their colleagues, their subordinates and their clients.

Ultimately what is critical to people is value, and it is people, not information, that create value. According to “Netizens” their increased sense of belonging, of being part of a larger community, greatly outweighs the benefits of having a mass of information available. Failing to understand the transformational affects of the digital technology on culture itself will result in missed opportunities.

Currently, regulatory policy in the digitally networked environment is being used to replicate the current mass media structure in which individuals are passive consumers obtaining information and content from a few commercial producers. In this paper, Benkler provides legal, regulatory, and technological examples of how the mass media producer-consumer model is being reproduced at the content, logical, and physical layers of the digitally networked environment. At the content layer, intellectual property rights are used to legally deny uses that purely provide for public discourse. At the logical layer, owners of the logical layer are allowed to design that layer to protect the use of their content even for uses that are privileged by law. At the physical layer, the FCC has gone in two opposing directions by both created a commons of digital spectrum and perpetuated the current broadcast system with the allocation of digital spectrum. And in cable broadband, providers cite "technical reasons" for creating a system that provides significantly larger downstream capacity than upstream capacity and that technically prohibits customers from becoming users by hosting servers that serve up content in both cases perpetuating the mass media producer-consumer model.

But people want to be users as is evidenced by the Internet and the fact that people using telephones have spent more than on "newspapers, magazines, broadcast cable, and movies combined" in order to participate in communication. Users consume information but also rework information and send it to others (or produce new information). The Supreme Court's view of the First Amendment has repeatedly upheld the notion of users in that it provides for "robust debate, diversity of viewpoints, and individual expressive freedom" as opposed to the view that it provides a technical rule against regulation as regulation. At the same time, mass media has become technically, economically, and legally entrenched and government regulation seeks to counteract the potentially ill-effects on the intent of the First Amendment. The reality is that mass media provides very few individuals or organizations with access to communication pathways, and hence without regulation and maybe in spite of it, it is possible for this reality to inhibit the intent of the First Amendment.

Benkler calls for regulatory policy to move away from providing better service to consumers and towards enabling use and that consumption, production, and exchange of content is the purview of users - a move from the mass media producer-consumer model to an information commons. Today, technologically through the digitally networked environment and through appropriate regulatory policy, it is possible to develop a system in which individuals are free to participate in the consumption, production, and exchange of information - an information commons. Such a system would provide the intent of the First Amendment as regulatory policy today seeks to provide in spite of the realities of the mass media producer consumer model. However, such a system is not guaranteed and is not without regulation and therefore appropriate regulatory choices must be made at all levels (physical layer, logical layer, and content layer) to ensure a commons.

Background:

The story starts at a banker's conference where Xavier was doing a presentation on e-Banking. The room suddenly woke up at the last slide when he offered a model to explain how banks could move forward. The impact was stunning, all of a sudden everybody wanted to jump into the discussion.

The model was the result of observations from Swissquote Inc, where intermediaries had become agents of change within the company and had help transform it into a hyperproductive company.

The model has since then been refined, with the definition of the "transformActors" and "ConsumActors", and the classification of knowledge (inspired from Mathematics) and interactivity along the 2 axis of a matrix.

The model has also been validated against 3 real cases with 3 Swiss companies: Swissquote, Largeur.com and Cla-Val.

The Model

1. The problem:
   
   low cost offshoring, baby boomers reaching retirement age, etc… create tension in the economy. And the answer is not in lowering costs, but rather in achieving high productivity.
2. The solution:
   
   changing Consumers into ConsumActors. We have heard of crowdsourcing, but the real underlying change is that the customers are getting more involved into the value chain.
3. Technologies of Cooperation
   
   While technology helps improve processes, the real value behind these technologies is the shift in the interactivity between the producers and the consumers: consumers are getting used to getting more and more involved into the process (self service, product configuration and customization, etc...)
4. Levels of interactivity

   The level of interactivity that is possible with ConsumActors can be classified as follows:

   • 4.1 Passive consumption:
     
     The consumer is getting products or services with no real interaction and no real choice. He has to take whatever is available.
   • 4.2 Self Service
     
     The consumer is now given the ability to choose between various products or services. This first step is already a huge step forward, as the consumer can go around the vendor to pick and choose what he wants.
   • 4.3 DIY: Do It Yourself
     
     At this level, the consumer starts getting involved in the value chain. This is what IKEA offers, where you are not just buying a product, you are actually also delivering it to your home and building it yourself. This case is an example of the first disruption from the standard retail value chain.
   • 4.4 Co-design
     
     At this level, the consumer starts adding value by customizing the product and therefore defining his needs himself (as opposed to buying a product defined by the product management team). This is what Dell is asking from customers when they have to pick and choose options to build a computer.
   • 4.5 Co-creation
     
     This is the ultimate level of involvement, where the consumer is actually involved in the design of the product or service itself. This is what Open Source does for developers, and what Wikipedia does for knowledge consumers. Similarly Procter and Gamble has a "Connect and Develop" program that lets innovators define products.
5. Levels of knowledge

   Being able to interact at the various level listed above requires various levels of access to knowledge. For example co-designing a computer on the Dell website implies that the consumer has a good understanding of the various components and their importance within the system. A slow processor with lots of memory, or a fast processor with very little RAM are not going to be good options.
   
   And then knowledge includes a notion of context that should also be taken into account: knowing that something is small is only useful relative to a context: is Jean small because he is only 4 years old, or is he small because most people his age are typically 5" tall?

   Following these concepts, knowledge can be classified as follows:

   • 5.1 Basic Knowledge
     • 5.1.1 Raw Data
       
       Data, typically from measurements, or attributes (small, big, expensive, etc...)
     • 5.1.2 Information
       
       Information is data that I can make sense of. Data within a referential or data that can be tied to a process, so that I can establish a first level of knowledge. If I can measure, and if I can compare, I will be able to develop a sense of understanding: Jean is 4 feet, and I can measure his classmates to decide whether Jean is small or not. From information I can develop basic knowledge.
   • 5.2 Formal knowledge
     • 5.2.1 Classification, categorization
       
       This second level of knowledge is when I can better define the context. In the example of Jean, I can place the information into categories to reach another level of understanding: boy/girl, small/tall. By defining categories and sub-categories, I can refine the level of knowledge I have.
     • 5.2.2 Process/Time
       
       The third level of knowledge is when you start introducing the concept of time, and evolution over time. This introduces another level of complexity and another level of understanding beyond what can be known now.
     • 5.2.3 Logic
       
       The final level of knowledge is when you understand enough of a thing that you can capture this understanding into a logical model. From this comes automation. This is how we started building calculators, encapsulating logic into a machine, and now expanding to building transistors into microchips to build computers for example. It all seems as if mathematic algorithms were slowly but irreversibly being materialized into automated processes. And we are only at the very beginning of an exponential curve in this area.
   • 5.3. Informal Knowledge
     
     Another type of knowledge that will not be considered in this document, but should be mentioned, is informal knowledge.
     • 5.3.1 Informal Experience
       
       This is knowledge learned from accumulated experience. This is how people learn how to drive for example
     • 5.3.2 Informal Thinking
       
       This is the knowledge from "soft" fields, for example philosophical, cultural, religious, moral or ethical knowledge. They should not be ignored since they are at the forefront of the political, social and cultural scene. An expression of this type of knowledge is on display in blogs or reality TV shows for example.

     The management of Knowledge is what has led to major changes in the way we work today:

     • It all started with the concept of “Community of practice” presented by Etienne Wenger on 9/18/88
     • It evolved towards becoming a core engine of the enterprise, with Knowledge Management, to manage both static (as in encyclopedias) and dynamic knowledge (as in knowledge facilitated by groupware, starting with email).
     • It has also now been opened and shared to allow for collective intelligence, benefiting both from internal and external input.
6. The matrix

   Using the 2 axis that were defined, it is possible to create a matrix that can be used to resolve the issue of transferring production from the producer to the consumer.

   On the vertical axis:
   
   Data - info - classification/categories - time process - model

   On the horizontal axis:
   
   Receive - Self Service - Do It Yourself - Co-design - Co-creation

   To use the matrix you need to start from the bottom left (data/Receive), to then evolve towards the right to include the consumer into the value chain and define the level of knowledge that needs to be transferred to the consumer to enable his involvement.

7. The matrix can be used for several analytical purposes:
   • 7.1 Historical analysis - the matrix can be used to compare the result of 2 strategies used at different times, to analyze why one worked better than the other:
     
     Nestle had tried to sell Nespresso through the regular channels without much success. Then they decided to change strategy (break with history) and created the Club Nespresso, where customers are educated and provided with a tool to order directly online, which completely change the buying and consuming experience
   • 7.2. Market analysis - the matrix can be used to compare the strategy of two different companies on the same market:
     
     Napster introduced technology that allowed users to download songs for free. The technology also allowed mixing and matching of songs so that users could create their own CDs. The same concept was then used by Apple to create iTune and the iPod, while Sony decided to simply extend its existing model to make room for this new technology, but trying to keep as-is the control of the IP.
     
     The matrix shows that the game was about adding a level of freedom in the consumption of songs, rather than just extending technology.
   • 7.3 Strategic analysis - the matrix can be used to define where to direct future developments:
     
     Telcos are being threatened by VOIP, which allows near free communication anywhere around the world. Several options are available for them to react: bundle services, or offer new services for mobile, where VOIP is not a player today. Docomo is now offering payments through mobile phones, thus starting to compete with banks. The matrix can help figure out which players they should work with to make this strategy successful
   • 7.4 Positioning analysis - the matrix can help position a product on a market. A computer is a complex thing and I can decide to buy through an expert who will help me design the computer I need, or I can go to Dell to build online my own. The 2 market segments can co-exist today, but the matrix can help understand which market will survive in the long term
8. Case studies
   • 8.1 Swissquote (a Swiss equivalent of eTrade)
     
     From the CEO prospective, the success of Swissquote is due to:
     • Empowerment: providing the right information and tools to customers to allow them to trade online
     • Monitoring: performing statistical analysis to evaluate risk, as a tool for both the bank and the users
     • E-wealth management: tools to help users optimize their investments

     One challenge was and still is the education of customers. 2 types of classes are offered: first step (free), and paying classes on specific topics. This is a very costly undertaking, a risk taken to help the transformation

     The other challenge is to provide the right tools, allowing to perform complex operations while remaining user friendly. This challenge still needs to be addressed today.

     Looking at the banking industry, there are 2 major trends that can be identified:

     • Communities of practice are taking over the education of consumers and improved interactions
     • Models need to be improved to help provide more sophisticated tools

     The matrix can help clarify these trends and challenges

   • 8.2 Largeur.com - citizen journalism
     
     After several experiments, Largeur.com has settled for a model where they produce high quality journalism but getting the content from freelancers and offering aggressive prices. Once the customer base was established, they looked into opening the platform to students and other members of the civil society (teachers, thought leaders but also unemployed people), which are representative of the audience they are addressing already.

     The media industry is organized around 3 major poles:

     • Convergence (synergy between traditional media and the Internet) - Financial Times, Wall Street Journal
     • Divergence (break from the traditional model to go towards a crowdsourcing approach) - OhMyNews
     • Complementarities (compromise between the other two) - TSR.ch

     The matrix can help rationalize the various content production and content delivery tools (blogs, RSS, Web, SMS/MMS, and Newspapers) to better understand the media industry

   • 8.3 Cla-Val - pumps to regulate pressure
     
     They have evolved around 4 major poles:
     • Commoditization: they have accumulated over the years more than 100 standard products
     • Customization: their customers cannot get an end to end solution from just the standard products
     • Geographical expansion: the experience gained in the implementation of custom solutions opens new geographical markets and allows rapid expansion
     • Customer innovation: customization has also introduced flexibility into the system, and combined with remote management capabilities has enabled co-innovation

   The matrix clearly shows how this evolution was possible.

9. Conclusion

   Direct economy is the result of 5 major factors:

   • Introduction of the consumer into the value chain
   • Death of the old intermediaries, to leave room for new types of interactions
   • Empowerment of ordinary people to include them in the innovation process, which creates the issue of Intellectual Property and how to handle it
   • Emergence of new business models that threaten the existing monopolies
   • Emergence of new pricing models: donations (OhMyNews) or Bidding (EBay).

   IKEA, Easyjet, Dell, Nokia, L'Oreal, Procter&Gamble, Swissquote are examples of the transformations that can be implemented. Companies have to move towards hypergrowth to survive.
   
   What is interesting is that new sub-categories of products are being created in the process (song vs. album), that banks and credit cards were not setup to handle originally. Hel looks and The Satorialist are examples of what is happening in the fashion industry. Istockphoto, Innocentive or Marketocracy are example of consumer involvement in the value chain.

   In conclusion, isn't it that the changes we are witnessing in the economy are similar to what happened with Direct Democracy in Switzerland?
   
   The consumers have been empowered, and are we not slowly evolving towards a Direct Economy, completely changing the underlying principles of the Global Economy as we know it today?

10. Epilogue

    While Switzerland introduced Direct Democracy, they are now lagging in their e-government implementation effort. The matrix can help understand what is happening and what needs to be done. It can help compare what is available today against what others in Europe are doing. The key is to enable the transformation towards the ultimate e-government, which is not a strategic option but rather an implementation issue to be resolved.

Although Darwin's 19th century advocates stressed the role of competition in natural selection, Darwin established speculation about cultural evolution in regard to human cooperation: "It must not be forgotten that although a high standard of morality gives but slight or no advantage to each individual man and his children over other men of the tribe, yet that an increase in the number of well-endowed men and an advancement in the standard of morality will certainly give an immense advantage to one tribe over another. A tribe including many members who, from possessing in a high degree the spirit of patriotism, fidelity, obedience, courage, and sympathy, were always ready to aid one another, and to sacrifice for the common good, would be victorious over most other tribes; and t his would be natural selection."

The authors note that human social complexity is far beyond that of other social animals, and that biological mechanisms of kin selection and reciprocity are not adequate to fully explain human social behavior. Culture, defined as "information stored in individual brains (or in books and analogous media) that was acquired by imitation of, or teaching by others," has the properties of transmission forward through time and selection of successful strategies in common with genetic evolution. As Homo sapiens evolved, the mental and social capacity for cooperative work was highly adaptive for groups of small, relatively weak creatures with neither fangs nor claws nor wings. "Social instincts" enabled humans to band together in groups larger than the 50 individuals that our brain size allows in other primates. But that made cultural transmission of learning possible, which over-rode genetic group selection.

Although the Pleistocene era, with its radical climate changes, could have exerted long-term pressure on genetic group selection, the rapid evolution of social complexity over the past 10,000 years has not been long enough for significant genetic selection. Culture is both enabled by genetically-shaped human sociality, and is a means of progressively ratcheting mutually beneficial social cooperation. Once sociality, learning, and symbolic media make it possible to externalize and transmit individual learning, cooperative invention changes the game. Individual innovators can gain advantage through prestige and reputation, but only by displaying what they know, while learning and innovation enable the entire tribe to benefit from their innovations.

Culture harnesses and channels social instincts, enabling the creation of institutions. Norms enable the diffusion of enforcement of altruistic punishment through the population, leveraging emotions such as anger and shame to guard against free-riding, defection, and exploitation.