From Peru with Love

The world of software may be in the midst of redefining itself. As with all such industrial transitions, new entrants and powerful incumbents tend to forecast polar extreme outcomes.

The need for policy makers to understand which parts of these diametrically opposed visions are most likely to prove true should be obvious; promoting the wrong model of software development could ripple through the entire economy. At the same time, though, some of the rash legislative proposals threaten to cripple governments’ abilities to provide effective constituent service. Government software adoption is a subtle process that needs to balance standard commercial concerns related to software quality and operating costs with political nuances, including competition among agencies and preferences for local, regional, or national developers. Bold policy pronouncements may provide useful guidelines and statements of preference, but they should never interfere with the smooth functioning of government.

And therein lies the task for government officials around the world: learn about the debate over open source, and try to harness its innova­tions to further your own industrial and economic development.

In March 2002, Peruvian Congressman Edgar Villanueva Nunez intro­duced a bill that would mandate the use of open-source software on gov­ernment computers.

First of all, we want to thank you for the chance you gave us to inform you about our work in this country for benefit of the public sector....

The bill [that you introduced] makes it compulsory for all public bodies to use only free software, that is to say open source software, which breaches the prin­ciples of equality before the law, that of nondiscrimination and the right of free private enterprise, freedom of industry and of contract, protected by the constitution

So, by compelling the State to favor a business model based entirely on open source, the bill would only discourage the local and international manufactur­ing companies, which are the ones which really undertake important expendi­tures... as opposed to a model of open source software which tends to have an ever weaker economic impact, since it mainly creates jobs in the service sector.

The bill imposes the use of open-source software without considering the dangers that this can bring from the point of view of security, guarantee, and possible violation of the intellectual property rights of third parties.

The bill uses the concept of open-source software incorrectly, since it does not necessarily imply that the software is free or of zero cost, and so arrives at mis­taken conclusions regarding State savings, with no cost-benefit analysis to vali­date its position

The bill demotivates the creativity of the Peruvian software industry....

Open source software, since it can be distributed without charge, does not allow the generation of income for its developers through exports.............................................................

If open source software satisfies all the requirements of State bodies, why do you need a law to adopt it? Shouldn’t it be the market that decides freely which products give most benefits or value?²⁹

Congressman Villanueva provided Sr.

First of all, I thank you for your letter of March 25, 2002, in which you state the official position of Microsoft relative to Bill Number 1609, Free Software in Public Administration, which is indubitably inspired by the desire for Peru to find a suitable place in the global technological context. In the same spirit, and convinced that we will find the best solutions through an exchange of clear and open ideas, I will take this opportunity to reply to the comments included in your letter.

While acknowledging that opinions such as yours constitute a significant con­tribution, it would have been even more worthwhile for me if, rather than formulating objections of a general nature (which we will analyze in detail later) you had gathered solid arguments for the advantages that proprietary software could bring to the Peruvian State, and to its citizens in general, since this would have allowed a more enlightening exchange in respect of each of our positions

It is also necessary to make it clear that the aim of the Bill we are discussing is not directly related to the amount of direct savings that can by made by using free software in state institutions. That is in any case a marginal aggregate value, but in no way is it the chief focus of the Bill. The basic principles that inspire the Bill are linked to the basic guarantees of a state of law, such as:

Free access to public information by the citizen.

Permanence of public data.

Security of the State and citizens.

To guarantee the free access of citizens to public information, it is indispen­sable that the encoding of data is not tied to a single provider.

The use of standard and open formats gives a guarantee of this free access, if necessary through the creation of compatible free software.

To guarantee the permanence of public data, it is necessary that the usability and maintenance of the software does not depend on the goodwill of the sup­pliers, or on the monopoly conditions imposed by them.

To guarantee national security or the security of the State, it is indispensable to be able to rely on systems without elements that allow control from a dis­tance or the undesired transmission of information to third parties. Systems with source code freely accessible to the public are required to allow their inspection by the State itself, by the citizens, and by a large number of independent experts throughout the world. Our proposal brings further security, since the knowl­edge of the source code will eliminate the growing number of programs with *spy code*.

In the same way, our proposal strengthens the security of the citizens, both in their role as legitimate owners of information managed by the state, and in their role as consumers. In this second case, by allowing the growth of a widespread availability of free software not containing *spy code* able to put at risk privacy and individual freedoms.

In this sense, the Bill is limited to establishing the conditions under which the state bodies will obtain software in the future, that is, in a way compatible with these basic principles.

From reading the Bill it will be clear that once passed:

^• the law does not forbid the production of proprietary software

^• the law does not forbid the sale of proprietary software

^• the law does not specify which concrete software to use

^• the law does not dictate the supplier from whom software will be bought

^• the law does not limit the terms under which a software product can be licensed.

What the Bill does express clearly is that, for software to be acceptable for the state it is not enough that it is technically capable of fulfilling a task, but that further the contractual conditions must satisfy a series of requirements regarding the license, without which the State cannot guarantee the citizen adequate processing of his data, watching over its integrity, confidentiality, and accessibility throughout time, as these are very critical aspects for its normal functioning.

We agree, Sr. Gonzalez, that information and communication technology have a significant impact on the quality of life of the citizens (whether it be positive or negative). We surely also agree that the basic values I have pointed out above are fundamental in a democratic state like Peru. So we are very interested to know of any other way of guaranteeing these principles, other than through the use of free software in the terms defined by the Bill.

As for the observations you have made, we will now go on to analyze them in detail.

[Almost 5,000 words later]

I wish you the greatest respect, and would like to repeat that my office will always be open for you to expound your point of view to whatever level of detail you consider suitable.³⁰

Congressman Villanueva drafted his letter in April 2002. Multiple translations made it to the Web almost immediately, and the Congress­man is reportedly well on his way to becoming a demigod. For all I know, the congressman could be a hacker—or, for that matter, an ex-hacker, an aspiring hacker, or even a recovering hacker.³¹ Even if that were the case, as a member of the Peruvian Congress, he would hardly be a stereo­typical hacker. What’s more, his proposal is likely to be a bit too dra­conian to actually generate all of the benefits that he would like to see; though Sr. Gonzalez undoubtedly erred in the other direction, many of his points were fundamentally sound. Nevertheless, this entire exchange serves as an important reminder that the information sector is a global phenomenon that relates to important ideals of liberty and openness— not just to those of property and development. It’s also a reminder that government matters. Government decisions could help determine whether, in the information sector’s future, we’ll worship at the cathe­drals of proprietary software, shop in open-source bazaars, or flit happily between devotion and consumption without ever having to choose one over the other.

This conclusion thus brings us full circle: government always played a critical role in the information sector, and government still has a crit­ical role to play. Government developed the information sector’s basic plumbing and turned it over to the private sector. Once there, it became easier and cheaper for the world’s hackers to communicate and to exchange ideas, effectively reducing transaction costs enough to enable complex software development by bazaar. That product-development model then led to new business models, largely focused on add-on prod­ucts or on service, support, and customization. Consumers win, because it provides them with better software and delivers it faster. Producers win because they can participate in product development while sinking only a fraction of the development costs. And that innovative explo­sion all occurred without the government. But that doesn’t mean that governmental involvement can no longer serve a purpose. Because amidst all those winners, Microsoft and the smaller companies that follow its business model stand poised to lose—and no one sensible ever loses without fighting. Open-source threatens Microsoft’s role as the head of the world’s largest software-distribution chain by promising to undermine distribution profits. Microsoft is thus fighting back using all of the weapons at its disposal—IP rights, restrictive licenses, existing relationships throughout the software industry, and innuendo about copylefting. Microsoft possesses many of these weapons only because the government set industrial policy without really considering its implications.

The tension between Linux and Windows, or more accurately the tension between open-source and trade-secret-protected platforms, is precisely the tension at the heart of the future of the information sector; it pits reduced transaction costs against distributors whose revenue

Fresh from the Source 201 streams are about to run dry. It’s hardly surprising that it hit software— the industry with the longest history in the information sector—first. But software won’t be the last place it hits. Government policy makers must understand what happens each time a new industry undergoes the meta­morphosis into an information industry, because each one is likely to introduce its own unique set of issues. Consider, for instance, what hap­pened to the music industry....