May 4, 2006 · Tim Wu
So I’ve been in a debate with Christopher Yoo over at legal affairs on the topic of Network Neutrality –
Here’s a Snippet:
A lot of the difference in Chris and my own views stems from how we think the process of innovation occurs. Chris, rather like the later Schumpeter, believes that large firms — in this case, network operators, drive telecommunications innovation. As the later Schumpeter put it, the “large-scale establishment” is “the most powerful engine of [economic] progress and in particular of the long-run expansion of total output.”
Chris thinks incumbents like AT&T will rarely or perhaps never threaten innovation. Instead he views them as the driving force of the technologies of tomorrow.
I am skeptical. I think these view of incumbent behavior has been discredited, and that in general incumbents, particularly in a monopoly position, have a strong incentive to block market entry and innovative technologies that threat their existing business model.