The Internet has evolved from four university mainframes connected by 64-kilobit lines to a network of networks that spans the globe, connecting hundreds of millions of devices and carrying hundreds of exabytes of traffic per year. Its key characteristics have been adaptability and responsiveness. It has accommodated changes in its own infrastructure and topology, changes in technology at its edge, changes in type and volume of traffic, changes in types of market participants and their relationships, and changes in methods of compensation for the exchange of traffic.
The Internet has had very little formal governance and no regulation to slow its responses or divert its course. The absence of rate regulation has been particularly helpful, providing the flexibility that allows the Internet to accommodate seamlessly ever-larger volumes, suddenly-emerging new types of traffic, and new players both at the core and the edge. The Internet’s traffic moves along on commercial agreements, many of them hand-shake agreements. The system has evolved from peering among academic and government networks to a mixture of paid and unpaid peering and transit among various types of commercial networks. Competition is rife, with the five largest bandwidth providers carrying only about a third of the international capacity of the U.S., and new entrants like Google and Comcast smoothly displacing incumbents in the top 10. Because of its informality, this unregulated system has facilitated the necessary investment in infrastructure to support the explosive growth of traffic that the Internet carries, and carries at ever-lower prices. That, in turn, has stimulated economic growth and job creation in the U.S. and around the world.
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Anna-Maria Kovacs is a Visiting Senior Policy Scholar at the Center for Business and Public Policy, housed in the McDonough School of Business at Georgetown University. With an expertise in industry analysis, her area of focus is on the interplay between public policy and investment. Dr. Kovacs has followed the communications industry for over thirty years, both as a financial analyst and as a consultant. She was the founder and president of Regulatory Source Associates LLC, which provided investment professionals with analysis of the impact of federal and state regulation on investment in the telecommunications and cable industries. Her prior experience includes both portfolio management and analysis. Dr. Kovacs’ Masters in Business Administration is from the Harvard Business School. Her Ph.D. is from Harvard University, in Comparative Literature, with a focus on the impact of economic and social history on literature. Her B.A. from Boston University is in Economics and English. She is a Chartered Financial Analyst.
