INTRODUCTION AND OVERVIEW

The Internet’s original architecture - its technical inner structure - was based on three design principles: the layering principle and two versions of the end-to-end arguments.¹ Over the past years, the Internet’s architecture has been changing in ways that deviate from the Internet’s original design principles.

This chapter examines how deviations from the broad version of the end-to-end argu­ments affect the economic environment for innovation in Internet applications, content, and services and the overall amount and quality of application innovation that will occur.² The chapter’s approach to the study of architecture and innovation is an example of a more general approach to studying the architecture of complex systems, an approach I call ‘architecture and economics’.³ The approach understands architecture as one of several constraints on human behavior and uses economic theory (broadly defined) to explore the effect of these constraints.

The chapter proceeds as follows. Section 14.2 sets out the theoretical framework for understanding how architectures relate to economic systems and, more specifically, how architectures affect innovation. Section 14.3 introduces the concepts necessary to under­stand network architectures - end hosts, the core of the network, layers, and protocols - and describes two of the design principles that were used to create the Internet’s original architecture: the layering principle and the broad version of the end-to-end arguments. Section 14.4 explains how these design principles shaped the Internet’s original architec­ture. Section 14.5 discusses how the Internet’s original architecture affected the economic environment for innovation in applications, and how changes to this architecture will affect the amount and quality of application innovation that will occur. Section 14.6 concludes.

The effect of the Internet’s architecture on innovation in other areas of the architecture (e.g., in the Internet layer or in physical network technologies) is outside the scope of this chapter.⁴ Throughout the chapter, I use the term network providers to describe economic actors who provide Internet access or transport services and the term applications as shorthand for Internet applications, content, services, and uses.⁵

14.2