The new policy “recommends that Government departments should wherever possible deploy open standards in their procurement specifications” and defines an Open Standard as a standard made “irrevocably available on a royalty free basis”.

The BSA (British Software Alliance), a lobby group which represent many proprietary software companies, commented:

“BSA strongly supports open standards as a driver of interoperability; but we are deeply concerned that by seeking to define openness in a way which requires industry to give up its intellectual property, the UK government’s new policy will inadvertently reduce choice, hinder innovation and increase the costs of e-government” (emphasis added)

Updegrove suggest that in theory the BSA’s objection may hold:

“that if patent owners could not charge for the use of their technology by the implementers of standards, they would quit participating in developing standards, or implementing such standards if they would be required to make their own affected patents available to other implementers for free as well. Standards development and implementation would therefore grind to a stop.”

However, standards do not describe products but instead product elements, functions or characteristics and typically exist at a lower, more fundamental level in the stack compared to software. Furthermore, in the ICT sector:

“The benefits of the network effect are so enormous that having even a slight advantage or head start, such as having your technology rather than a competitor’s included in a new standard, can greatly outweigh any royalties that might have been obtained under the old regime. Companies are therefore quite happy to compete to get their technology included for free.”

Do Royalty-Free Standards “Stifle Innovation?”
@consortium.org

U.K. Comes out for Royalty-Free Standards for Government Procurement
@consortium.org

The events featured articles are briefly summarized below, including links, and the event page can be found here: www.talkstandards.com/eu-standardization-from-formalism-to-pragmatism/

Steve Mutkoski -
Standardization, Government Policy and the “Consumerization of IT”

www.talkstandards.com/standardization-government-policy-and-the-%e2%80%9cconsumerization-of-it%e2%80%9d

Steve Mutkoski draws a parallel between internally facing eGovernment standardization strategies and the “consumerization of IT” faced by enterprise CTOs in the early 2000. The lesson being that Government interoperability policies need to have both the pragmatism and flexibility to ensure that they continue to evolve and serve the citizen as both customer and consumer by reflecting the technologies that citizens want to use. “If citizen centric eGovernment is to have any meaning, government interoperability policy itself has to put the citizen into the center of the equation.”

Susannah Sheppard -
Shortlines: The new European Interoperability Framework

www.talkstandards.com/shortlines-the-new-european-interoperability-framework

Co-authored by Susannah Sheppard and Richard Kemp, the authors discuss a number of issues and implications of FRAND licensing within the EIF v2 which rejects the assertion that ‘open’ means royalty free in its contextual definition of the meaning of ‘open specification’. In fitting with the general principles of public procurement law and policy, the wording accommodates both proprietary and open source software implementations, to not exclude or discriminate against large sectors of potential suppliers. This opens up competition from proprietary providers as well as permitting any open source solution and is not incompatible with ‘open’ standards in the ICT domain then falls in line with EU law in other fields such as EU competition law.

Michele Herman -
FRAND versus Royalty-Free

www.talkstandards.com/frand-versus-royalty-free

Michele Herman describes the shift of the EIFv2 wording from “a royalty-free basis” to “FRAND terms or on a royalty-free basis” as recognition of the infeasibility of widespread practical application of a royalty-free mandate. Concerns have long been raised that an open source implementation of a standard is only possible if the standard is developed under a royalty free patent policy despite abundant evidence in the marketplace to the contrary. The EIFv2 clarifies that both FRAND and royalty free patent policies are sufficiently “open.”

Meir Pugatch -
A Formal Path Towards Interoperability and Standardisation

www.talkstandards.com/a-formal-path-towards-interoperability-and-standardisation

In many ways, the recent EU white papers on e-Government and horizontal cooperation agreements establish frameworks for standard setting that are already practiced in many cases, including FRAND licensing. Meir Pugatch questions whether it is necessary for policymakers to mandate a formal path towards interoperability and standardisation? Policymakers should take a balanced, collaborative approach toward building the most competitive and dynamic ICT marketplace possible.

George Barker -
EIFv2: From Objectives to Action

www.talkstandards.com/eifv2-from-objectives-to-action

Rather than seamless interoperability, the objectives of the EIF boil down to optimal interoperability within a framework of open and competitive markets. Yet the emphasis placed on existing standards in procurement policies and the active involvement by EU Governments in standards bodies are likely to have adverse efficiency effects. By using procurement powers to limit competition between standards, and standards bodies they will limit the extent of choice, competitive pressures and incentives for innovation and may entail the effective formation of a buyer-cartel, and abuse of market power by EU Governments.

James Bryce Clark -
Encouraging Openness and Innovation

www.talkstandards.com/encouraging-openness-and-innovation

It’s not a bad thing to be cautious in designing technology policy, but an overly formal, hierarchical regime for standardization has not served European needs well. A smart Information Society requires smart information policy and public administrations to take a much more thoughtful, deliberate and facilitative role in leading information ecologies, and in understanding and continually improving their own influence on information transactions.

George Willingmyre -
European Codes and Guidelines for Standards Processes in a Bilateral and International Context

www.talkstandards.com/european-codes-and-guidelines-for-standards-processes-in-a-bilateral-and-international-context

In this contribution, George Willingmyre compares the EU’s recently published EIFv2 and updated Horizontal Guidelines to similar codes and guidelines for standards developers. The comparison is made with the American ‘OMB A-119’, for a US perspective, and the WTO’s ‘Decision on Principles for the Development of International Standards’, for an international perspective, and made in 4 key area. Namely:

• Membership and access to development
• Public Review
• Availability of standards in development and once published on reasonable terms
• Intellectual property available on a non-discriminatory, royalty-free or reasonable royalty basis to all interested parties (RAND)

Ajit Jaokar -
A More Pragmatic Approach to IPR

www.talkstandards.com/a-more-pragmatic-approach-to-ipr

The current EU document (EIF v2) attempts the complex task of defining an ‘Open standards’ by setting out qualifying criteria. The primary issue is upon which the criteria touch is FRAND and to the use of IPR in standards. Ajit Jaokar comments that as we get into a more complex regime of interplay between devices and software, the IPR issue will be a common theme of discussion in standards. But has the emphasis truly shifted from ‘questioning IPR inclusion’ to ‘accepting IPR transparency’?

Question 1: From Objectives to Action: The EIFv2 and EIS provide normative guidance on what needs to be done to foster interoperability, particularly across the semantic and organizational layers.  But how can Member State governments meet these objectives in practice?

Question 2: The implications of Open Specifications; The EIF v2 sets out attributes of “open specification” as well as a comment which appears to give public administrations some discretion to reference specifications that do not meet these openness criteria “if open specifications do not exist or do not meet functional interoperability needs.”( Section 5.2.1)  How does this differ from the language in EIF v1 and what are the practical implications of this difference in language?

Question 1: From Objectives to Action

In approaching the problem of E-governance it is important to clarify objectives at the outset. Unclear or conflicting objectives can undermine the ability to deliver effective policy.  There must also be a clear articulation of the “market failure” any proposed Government intervention is required to address, and second of how any government intervention will address the market failure. Finally any government policy needs to be consistent with broader legal and constitutional limitations on Government.

Thus interoperability frameworks and their policies and guidelines ultimately need to contribute to clear and commonly understood and measurable Government goals, in easy to articulate ways that are also consistent with the broader constitutional and legal framework of a country. In this regard the main stated objectives of the European Interoperability Framework EIF are:

• To serve as the basis for European seamless interoperability in public services delivery, thereby providing better public services at EU level;

• To support the delivery of Pan-European e-Government Services (PEGS) by furthering cross-border and cross-sector interoperability;

• To supplement the various National Interoperability Frameworks in the pan-European dimension.

To do this the EIF:

provides policies and guidelines that form the basis for the selection of standards

Presumably however  the specific goals or aims identified so far including “to ensure seamless interoperability” and support “Pan-European e-Government Services (PEGS)” must ultimately be derived from a set of  higher level, more overarching public policy goals commonly shared by member states. Thus “seamless interoperability” is actually presumably only a means to an end. Of course interoperability must meet the requirements of the pan European government services being delivered,  or the relevant G2G, G2B, G2E and G2C services in pan-European space it is to support, but more fundamentally like the government services it supports however, any Interoperability policy also  needs to ultimately relate and contribute to the nations higher level objectives.

In this regard economics is helpful in that it distinguishes between two often competing fundamental aims of public policy as relevant to interoperability as other areas. First is efficiency, or the aim of creating optimal value, wealth or income, and the second equity which relates to the distribution of value, wealth or income. As in other areas of policy, it is important then to be careful that the governance of interoperability policy does not lead to decisions on interoperability being subverted to the re-distribution of wealth to narrow political interests, for short run political gain, to the detriment of the wider public interest in efficiency and economic growth.

The core requirement then is presumably to facilitate the provision of government services (e.g. health, education, law and order) at least cost, in other words presumably the primary requirement in this regards is value for money. The governance of interoperability thus needs to minimise the risk that consumers, and local businesses pay the price of inefficient or higher cost/lower value services, when interoperability decisions become distorted to the benefit of particular providers by the adoption of misguided “local industry” policies aimed at “picking local champions” or “picking winners”, rather than leaving outcomes to competitive market processes.  The governance of interoperability thus needs to be designed to align outcomes to the public interest and maximising the size of the pie, while minimising the reward to conflicts over its distribution.

Economics has clearly shown that efficiency is best achieved through the promotion of open and competitive markets. This however typically requires respect and enforcement of property rights, including intellectual property rights, and private contractual arrangements which form the basis of a market economy.  The fact the overarching objectives of the EIF must similarly accord with the goal of efficiency and the outcomes of competitive market processes, can also be derived from the legal foundations of the EIF.  In particular the legal authority for the EIF ultimately lies in article14 and 154 of the EC Treaty which require the adoption of open competitive market processes where they state:

Article 14

(1)  The Community shall adopt measures with the aim of progressively establishing the internal market….

(2)  The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty

Article 154

(1) To help achieve the objectives referred to in Articles 14 and 158 and to enable citizens of the Union, economic operators and regional and local communities to derive full benefit from the setting-up of an area without internal frontiers, the Community shall contribute to the establishment and development of trans-European networks in the areas of transport, telecommunications and energy infrastructures.

(2) Within the framework of a system of open and competitive markets, action by the Community shall aim at promoting the interconnection and interoperability of national networks as well as access to such networks

Legally the EIF itself then must meet the fundamental requirement that it ensures “the free movement of goods, persons, services and capital” (under article 14) “Within the framework of a system of open and competitive markets” (article 154) which is consistent with the goal of efficiency.

Bringing together the notion of efficiency outlined above and the requirement of open and competitive markets one could thus generalise the common overarching objective of the EIF as “to promote efficient outcomes within the framework of a system of open and competitive markets” This clarifies that the aim then is not seamless interoperability but optimal interoperability within a framework of open and competitive markets.

It is thus important to be careful to design the governance of interoperability to ensure optinmal interoperability that facilitates the creation of economic value, rather than efforts to re-distribute wealth through the political system. This requires governance structures that contribute to:

• Allocative efficiency – or the efficient allocation of public resources, so as to ensure what is produced in the public sector is that which has the highest value to society at large, entailing an optimal mix, quantity and quality of public outputs or services through the allocation of public resources – including inetroperability

• Productive efficiency – or the efficient production of public services, so that the method by which or how public sector services are produced is the most efficient. This entails the use of the lowest cost production method, entailing an optimal mix, quantity and quality of inputs in the production of public services including interoperability and

• Dynamic efficiency – or efficient processes of innovation, and adoption of new technology

Industrial policies which instead may only offer ill-defined and hidden benefits to a particular business model, or local “champion” in a non-transparent form are detrimental to economic efficiency and growth, and political accountability, and will fail to promote “efficient outcomes within the framework of a system of open and competitive markets”. Any primarily re-distributional objectives, that seek to benefit some (albeit at the expense of others) are better served through the use of tax-welfare policies, which more transparently transfer wealth by taxing some in order to benefit others – to the extent they can be justified. When efficiently designed tax-welfare policies can redistribute wealth with least distortion to competitive market processes, and are to be preferred to non-transparent “industrial policies” for such purposes.

Finally there is potentially a very large global market for interoperability services which includes demand from many corporations, consumers and governments. Given there is likely to be an active supply of interoperability services responding to these demands,  it is not clear why the EU Government needs to become actively  involved in shaping the interoperability services market as outlined in the EIF?  This issue is however not directly addressed in the EIF. The paper does not really identify the market failure or problem  that justifies any government intervention in the market, rather than attention to government failure or bureaucratic failure. Given the risk the EIF may entail an abuse of the market power by national and EU public administrations, acting in concert, in effect in a buyer’s cartel or de-facto monopsony – this gap is a serious issue.

Question 2: The Implications of Open Specifications

Despite the failure to clearly elaborate the relevant market for interoperability, and the nature of any likely market failure, the European Interoperability Frameworks (EIF) proceeds to make a number of policy recommendations entailing interventions in the interoperability services market. Thus the Draft EIF simply maintains that currently standards and technical specifications are failing to fulfil the public administration needs as noted without really proving it. To address this, the draft European Interoperability Framework recommends:

a) Limitation of competition between standards; and

b) Limitation of Intellectual Property Rights (IPR) – entailing a systematic migration towards the use of “open standards” or technical specifications

The latter limitation of IPR entails two key requirements namely to quote:

i. The intellectual property – i.e. patents possibly present – of (parts of) the open standard is made irrevocably available on a royalty free basis. and

ii. There are no constraints on the re-use of the standard.

In the following two sections I discuss the nature and likely effects of these proposals to limit competition and limit IPR further below.

The Effect of Proposed Limitations of Competition

The European Interoperability Framework clearly states an antagonism to competition between standards

Interoperability in general (that is, globally speaking) is severely handicapped by the uncontrolled and ad-hoc proliferation of multiple standards or technical specifications applicable for any one given function, as well as by their varying characteristics.

To address this concern the EIF proposes a centralised selection process for standards commenting that

From this perspective, it is clear that a globally oriented process of selecting standards and technical specifications has to be put in place to manage this situation properly.

Thus the EIF recommends

A selection process shall be organised in a transparent, fair and balanced way with a major involvement of the MS” (i.e. member states)

Commenting that

The objective of the selection is to avoid competition between existing standards and technical specifications – which impedes interoperability

The EIF summarises this approach as follows:

One way to characterise this approach is that it entails applying an “urban planning”-style analysis to the use of IT standards throughout the IT ecosystem of public administrations in Europe.

In relation to the development of new systems the EIF comments that

When defining interoperability frameworks, ICT architecture or individual ICT system, interfaces between building blocks or between the system and the “rest of the world” need to be defined. …..often …one may find a number of equivalent, competing standards or technical specifications. Using multiple, equivalent standards or technical specifications may lead to lack of interoperability or the unnecessary introduction of “converter modules

The EIF thus recommends in these circumstances that in order to minimise the use of multiple standards

It is therefore advised to the Public Administrations to agree with all involved stakeholders on the use of a minimal set of standards or technical specifications.

For this purpose the EIF comments

The proper selection of standards and technical specifications relies first of all on a clear assessment process taking into account a set of objective criteria.

and later notes

A specific initiative to harmonise such evaluations in the context of PEGS would be beneficial.

In this regard the EIF suggests the use of the proposed Common Assessment Method for Standards and Specifications (CAMSS) – which it notes is under construction – commenting

It is expected that the CAMSS project will deliver recommendations on just such an assessment methodology………… The applicable results of EU-wide assessments using CAMSS (i.e., across all EU Public Administrations, independent of any national borders or other administrative/sectoral boundaries) should be included in the EIAG” (European Interoperability Architecture Guidelines).

The EIF thus recommends that

Member states should use the CAMSS methodology and contribute to the assessment study as well as make use of the outputs of the CAMSS project.

The EIF emphasises a focus on technical interoperability – commenting on coverage that

The emphasis is initially on standardisation at the technical level,….. this comprises the elements used to deliver content across a community of interest. Elements include transport protocols, messaging specifications, security specifications, registry and discovery specifications, syntax libraries, and service and process description languages. In practice, those elements encompass all the GPSCM building blocks. Technical interoperability should be considered in numerous fields, including:

• Interconnection (e.g. Internetworking between WAN’s, Virtual Private Network)
• Security (e.g. Exchange of authentication and authorization, Signature of web resources, etc.)
• Data Exchange (e.g. Electronic Data Interchange, Markup Language, etc.)
• Discovery mechanisms (e.g. Domain Name System, Web Services Description)
• Presentation and document formats (e.g. Document distribution format, Graphic format)
• Metadata for Process and Data Descriptions (e.g. Specification of business processes and
• Business interaction protocols, Structure of documents), and
• Naming (e.g. Identification of internet resources, Country code representations, etc.).

EIF recommendations to limit competition through the selection of standards in use, is also supplemented by recommendations in the EIF that EU governments take a role in the development process for new standards. Thus the EIF recommends “The EC and the member states shall reaffirm their interest in seeing open standards adopted in the future and their support to standardisation bodies that support that goal.”

Our analysis suggests these EIF’s recommendations to limit the extent of competition, by co-ordinated action by European Governments in relation to:

a) Procurement policies on existing standards to minimise the diversity of standards in use, and

b) Active involvement by EU Governments in standards bodies  to influence their development work towards outcomes preferred by EU Governments

are only likely to have adverse efficiency effects and may even be contrary to EU competition policy.

By using procurement powers to limit competition between standards, and standards bodies they will limit the extent of choice, competitive pressures and incentives for innovation.   Our main conclusion then on the effect of limitations on the extent of competition through co-ordinated action by European Governments on selection of standards in use, and on the development of standards is that it will undermine the efficiency of operation of the single market rather than improve it. Indeed it may entail the effective formation of a buyer-cartel, and abuse of market power by EU Governments.

The Effect of  Proposed Limitations on Intellectual Property Rights.

Section 8 of the EIF  “advocates a systematic migration towards the use of open standards or technical specifications”.

The EIF thus emphasises what it calls

The overwhelming desire of Public Administrations in Europe is for a clear migration towards openness

citing the view (see: europa.eu/legislation_summaries/information_society/c11328_en.htm) that

The Commission intends to use all its instruments to foster technologies that communicate, …, promotion of open standards

This leads the EIF to recommend in relation to existing standards that openness requirements be embedded in procurement decisions as follows

Public Administrations should embed the main EIF characteristics in the PEGS-related procurement process by mean of a set of measurable criteria. These include the 5 main steps leading to successful PEGS implementation, addressing the underlying principles, the interoperability levels, the GPSCM model, the use of open standards or technical specifications, and the adoption of a sound development approach.

Noting that

To support the interoperability objectives, the openness of the technical specifications is a primary concern and is an essential characteristic of such technical specifications when the context mandates it.

In addition the however the EIF  recommends going beyond embedding openness in procurement decisions in relation to existing standards – to the government also taking a role in the development process for new standards. Thus the EIF recommends

The public sector must develop the expertise necessary to contribute to the process and influence open standard or technical specification development The EC and the member states shall reaffirm their interest in seeing open standards adopted in the future and their support to standardisation bodies that support that goal.

But what is meant by openness?

The EIF defines openness as follows:

open standards or technical specifications have a key and central role to play in attaining interoperability in the context of PEGS. One of the difficulties is however that there is no universally accepted “open standards” definition that covers all openness aspects. In order to establish a baseline, the following are the four minimal characteristics that a specification and its attendant documents must have in order to be considered an open standard [1] under the EIF v1 definition:

1. The open standard is adopted and will be maintained by a not-for-profit organisation, and its ongoing development occurs on the basis of an open decision-making procedure available to all interested parties (consensus or majority decision etc.).

2. The open standard has been published and the standard specification document is available either freely or at a nominal charge. It must be permissible to all to copy, distribute and use it for no fee or at a nominal fee.

3. The intellectual property – i.e. patents possibly present – of (parts of) the open standard is made irrevocably available on a royalty free basis.

4. There are no constraints on the re-use of the standard.

Thus the EIF’s definition of openness emphasises two key requirements (namely 3 and 4 above) as part of   “a systematic migration towards the use of “open standards” or technical specifications”.

These two recommendations would entail a significant weakening of the protection offered to Intellectual property rights.

The EIF’s recommended limitations on IPR will as a consequence lead to a weakening of relevant innovation, and sharing incentives, and contrary to intentions, a consequent deterioration in the quality and extent of interoperability in the long run. The enforcement of intellectual property rights in software is shown to have had a critical effect in both providing incentives for investment in innovative software solutions, and for distribution of new innovations or providing access through licensing and royalty agreements [2]

Reinforcing  this explicit  requirement that the open standard be made available on a royalty free basis, the EIF elsewhere cites a statement (see: europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/08/317) from the European Commissioner for Competition Policy Neelie Kroes that

When open alternatives are available, no citizen or company should be forced or encouraged to use a particular company’s technology to access government information … no citizen or company should be forced or encouraged to choose a closed technology over an open one, through a government having made that choice first

For this reason the EIF recommends that

Public administrations should ensure that, whenever possible their procurement process does not result in an obligation to citizens, businesses or other partners to acquire for a fee specific product in order to be able to use the service offered by the public administrations.

As noted contrary to intentions this initiative is not likely to achieve its objective. In essence the costs of standards will need to be recovered and will inevitably be passed on in other ways. The extent to which they are passed through will depend on the Marshall-Hicks Laws governing the elasticity of derived demand.

Our main conclusions on the effect of limitations on intellectual property rights then are that

1. they will lead to a weakening of relevant innovation, and sharing incentives, and contrary to intentions, a consequent deterioration in the quality and extent of interoperability in the long run.

2. they will not alleviate the need for citizens and businesses to ultimately pay for interoperability in PEGS. Indeed it may lead them to pay a higher price, In essence the costs of standards will need to be recovered, and will inevitably be passed on in other ways. The extent to which they are passed through will depend on the Marshall-Hicks Laws governing the elasticity of derived demand. The additional problem however is that any loss of efficiency in the operation of the interoperability market caused by the limitations to IPR will also impose an additional cost on citizens and businesses.

Given these problems with the EIF recommendations for concerted government action, it is important to consider whether these initiatives may only entail a misguided or unintentional potential abuse of the market power by national and EU public administrations, acting in concert, in effect in a buyer’s cartel or de-facto monopsony, forcing better terms on ICT suppliers – including lower royalties.

Conclusions

Our analysis suggests that the EIF proposals may have adverse economic effects as follows:

a) Limitations on competition between standard may lead to inefficient outcomes. This is because there are a number of reasons why competing standards in a market may be efficient. This includes the scope to differentiation or heterogeneity in consumer preferences for technical, and user characteristics, and cost sharing. In the absence of barriers to entry, and exit and with constant scope for innovation  it seems important not to limit the competitive process at all

b) limitations on intellectual property rights may lead to inefficient market outcomes and indeed cause market failure. For example limiting the right to charge royalties, will reduce incentives for investment in intellectual property rights and incentives for sharing, distribution or their availability for use.

The barriers to inter-op in PEGS do not seem to lie in the market for technical interoperability services and IPR. They are more likely to lie in organisational incentives and information problems within Government or government failure. Attention may therefore be best focused on performance agreements within Government agencies to enhance incentives for interoperability  – rather than the interventions proposed in interoperability markets

Finally at the end of the day compatibility bridges may be more efficient than single standard options, by better supporting the inevitable heterogeneity of demand for functionality in interoperability markets

[1] The EIF includes a footnote at this point noting “In this definition, we used the term open standard in its broadest sense, including the open technical specifications, the objective being to focus on the “open” nature of this technical specification not specifically to focus on who is producing it.
[2] The economic analysis of intellectual property rights is derived largely from early papers on the economic nature of information by a number of influential economists including Kenneth J Arrow, “Economic Welfare and the Allocation of Resources for Invention”, in NBER, The Rate and Direction of Inventive Activity, Princeton University Press, Princeton, NJ, 1962; and George J Stigler, “The Economics of Information”, Journal of Political Economy volume 69 (1961), page 213. This work was advanced in later applied work, including William Landes and Richard Posner “An Economic Analysis of Copyright Law” 18 J. Legal Studies 325 (1989)  .

This year’s event will focus on the theme “Challenges of Change”, which the organisers describe as:

“This ‘challenge’ reflects the sense of urgency that is felt by politicians, policy makers, companies and citizens, all seeking for ways to provide ICT a prominent role in the current economic crisis and the economic recovery package in Europe and in the rest of the world.”

The event covers a broad range of topics covering a number of areas in which ICT is expected to play an increasingly important role. Specifically, it is broken down into the following 10 “tracks”:

• Creative Industries
• eGovernment
• eHealth
• eInclusion
• Energy
• Mobility
• Security & Safety
• Sharing Space
• Water
• Finance Special

The conference will be interesting in both the large number of people the event attracts (they claim over 2,500 for 88 countries have registered) and the broad range of backgrounds and disciplines present. This interdisciplinary is highly valuable in the modern world, in which we interact with technology in new and increasingly innovative ways. The event will hopefully result in interesting and collaborative discussions between the participants which include: Policy markers, Engineers, Ecologists, Lawyers, Economists, etc.

More recently, along with everybody else in my field, I have found myself increasingly involved in eGovernment projects that are using Web2.0 technologies (sometimes called Gov2.0) to improve the way that they work with their constituents.

Working with these projects I have become aware of two factors that have changed the way that I think about a subset of the communication standards that the projects rely upon.

1. Companies like Facebook and Twitter are still evolving, rapidly and in real time. To maintain their pace of innovation they need to be able to constantly update the APIs and protocols that clients use to interconnect with them.
2. As software development has become more agile it is increasingly easier for developers to keep up with these rapid changes. The myriad of twitter clients that change as the TwitterAPI changes is a good example of this agile software development in action.

This change has led me to think more about the evolution of innovation, and when it should and should not intersect with a standardization process.

The whole curve introduces more complexity than would be suitable for this blog post, however to drive the conversation of today’s topic I would suggest that at the start of the curve, while services are still evolving and users requirements are still being understood, it frequently not appropriate to standardize these emerging technologies.

At the same time as companies like Twitter and Facebook have adopted a policy of publishing the details of their interfaces in an open and transparent manner they have provided a platform that is suitable for governments to adopt, in the way that those same governments could only have adopted internationally peer review standards in the past.

The Gov2.0 projects have introduced us to an era where we do see governments adopting technology that we would have considered emerging and unstable in previous years, and they are adopting those technologies with a great deal of both success and a great deal of support from their citizens.

We have a new form of standardization that happens in real time.

Back to the Forum

Further to these, Microsoft announced a new Azure service now included in the CTP. Codenamed “Dallas,” the new service gives developers the ability to discover, purchase, and manage data subscriptions within Azure. The technology was showcased at PDC by Federal CIO Vivek Kundra. Kundra demonstrated a career-finding application based on Department of Labor teaching data stored and catalogued by Dallas that allowed, for example, teachers to find which areas of the country needed more teachers. The application was able to drill down within the dataset, for example, to find out exactly what kind of special education teachers were required in a particular area. Behind the scenes, Dallas itself is built atop Windows Azure and SQL Azure.

I like this. There is a critical difference between Government as a DATA platform vs. Government as a TECHNOLOGY platform. Governments should be in the business of liberating data (data platform) and letting the industry decide how that data will be used. As the above example shows, useful services are technology agnostic once data is liberated. Secondly, developers are already familiar with specific technologies and it would be a shame if governments mandated that they learn specific technologies.

Far better to liberate data and let developers apply their own creativity.

For a background see “Egovernment in Perspective”, http://www.talkstandards.com/?p=2273

Centralization

Much of the discussion about egovernment takes a production perspective. The development of services to date has relied on (internal) decisions within government agencies and the public sector. Strategies have relied heavily on centralized management and administration.

For instance, the discussion about interoperability often focuses on how ICT-systems, either within or across government agencies, should interact. The debate typically centers around two issues, (i) the possibility to integrate hardware and software from different vendors in the same system within a particular government body and (ii) the scope for exchange of information and data between separate agencies and bodies of the public sector.

These administrative and practical questions are natural and legitimate. In a political context, this translates into a strategy that is mandating certain solutions and puts the focus on regulation of outcomes.

This centralized perspective on egovernment is distinguishable from a market-perspective in at least three important ways.  First, it emphasizes control while markets involve choices. Second, it focuses on cost-reductions rather than innovation. Third, it is very influenced by legal procedures, while market interaction typically involves flexible negotiations and agreements.

Within this centralized framework, a number of policy proposals have been debated and sometimes implemented. Some of which are economically reasonable, while others seem less effective.

One important discussion relates to interoperability, i.e. the ability of ICT-systems to interact both within and across government agencies. The benefit of interoperability is that it allows greater exploitation of network benefits and scale economies. It also reduces the risk of vendor lock-in. It is today recognized that effective interaction and collaboration in some cases requires technical, organizational as well as semantic interoperability. While technical interoperability is important, it is no magic solution to interaction and collaboration.

It is worth noting that open interaction does not require a forced uniform use of technology. On the contrary, interoperability can be achieved between competing technologies, either with the use of a common interface or with the use of or translation between parallel technologies, which is a real possibility in both hardware and software. Translation and parallel use of technologies has the advantage that technology competition is promoted and long-term switching costs are reduced. It accordingly has the benefit that choice as well as innovation is stimulated.

Several political, historical, cultural and legal barriers segment the markets for provision of public services, particularly in an international perspective. Global market-based standards that facilitate interaction and technological interoperability of ICT systems are abundant. At the same time there is a lack of corresponding semantic and organizational interoperability on a global scale between public bodies and service providers in different countries.

Organizational and legal barriers that exist due to political differences across jurisdictions and countries effectively blocks the use and development of global solutions, e.g. in health, education, culture, media etc. Many of these barriers are controlled by governments and involve political priorities and decisions.

A specific issue discussed in relation to egovernment is the proper role of standards. It is often argued that the government should rely on standardization de jure, i.e. standards developed by formal standardization bodies.

There is, however, considerable competition between informal standards bodies. This results in a dynamic evolution of standards and a clear focus on value. Accordingly, the current consensus view appears to be that the public sector can benefit from a greater use of informal standardization and de facto industry-standards.

It is sometimes argued that the public sector should have specific critieria for the standardization organizations that are recognized and, further, that the government should mandate the use of specific standards. One may note in this context that, it is typically very hard to select technologies that are superior to other alternatives for all applications.  In markets with innovation and fast technological development the risk is that a list of standards is either quickly obsolete or hinders the introduction of new and superior innovations.

Related to this issue is the question of intellectual property rights. It is sometimes argued that the public sector should avoid using technologies protected by IPR or, alternatively, use its leverage to force IPR holders to license their technology royalty free.

These ideas contrast sharply with the public sector’s consumption of technologies protected by intellectual property rights; an experience which is generally good. Organizations and agencies within the public sector have not proven to lack the necessary resources to reward innovators and holders of IP.

Some commentators would also like to see open source as a preferred choice for the public sector. Experience from the private as well as the public sector suggests that effective choices are based on neutral, rather than ideological, criteria. There is a considerable scope for expanding the assessment of alternatives from in-house development to proprietary source, open source as well as software as a service. A comparison between heterogeneous alternatives requires a life-cycle, total-cost evaluation.

Decentralization

Wide access to fast broadband allows decentralized interaction. Development of network services enables citizens, employees and entrepreneurs to engage in development of and contribution to public services. It also permits development of fluid and dynamic electronic market places where transactions can take place continuously on a global level at low cost.

A market-oriented decentralized approach to egovernment differs from a centralized regulation-oriented strategy in many respects. Under a market-oriented approach, development and allocation is determined by competition between different alternatives.  This fosters innovation and differentiation while the level of control is reduced compared to a centralized approach.

Market-oriented strategies are not homogenous. Emphasis is put on different measures depending on conditions and political preferences. With this said, decentralized interaction and competition nevertheless occurs in several areas with some common features.

First, outsourcing and procurement of ICT hardware and software allow governments to buy products and services in ICT markets which are often global and competitive. Any customer, including the public sector, obtains significant benefits from the scale economies, the positive network effects and the efficiencies from international specialization in global ICT markets. In these markets, proprietary software competes with open source, unique development competes with existing products and in-house systems compete with scalable ex-house alternatives.

Second, the full value of competition in global ICT markets is intimately linked to the use of industry-developed ICT standards from informal consortia, i.e. de facto standards. The current system for industry-developed ICT standards is voluntary and informal. Different standard-setting initiatives compete and both the procedures and the outcome of the process differ. The value of a specific ICT standard and standard-setting organization is linked to the use of the developed standard in the market place. The standard-setting market is very competitive due to limited regulation, significant flexibility and a clear commercial focus.

Third, in recent years electronic markets have been developed for many applications, sometimes with international or global scale. In procurement markets, different vendors can offer services or products that jointly constitute supply, while different and separate government bodies, that jointly constitute demand, can buy offered services and goods at market prices. Electronic market places have many advantages, particularly compared to ad hoc procurement coordination between government bodies, since neither the supply nor the demand need to be static. Buyers and seller can enter and exit the market, contributing to dynamic competition and fostering innovation.

Fourth, electronic auctions are used to allocate assets or exclusive rights, such as radio spectrum, land, shares in public companies etc. One significant benefit of electronic auctions is the possibility to have multiple rounds of bidding, possibly in continuous time. A second advantage is the scope for running multiple simultaneous actions. ICT systems enable complex auctions with combinatorial bids and rules that are hard to implement in a conventional auction. This helps to explain why electronic auctions have grown increasingly popular.

Fifth, electronic systems are used to introduce choice for citizens between different service providers. This type of electronic systems already exists in some countries, e.g. for mandatory savings (pension plans), health services, insurances etc.

Sixth, decentralized user-contributions and network interaction between users have grown increasingly common in the private sector. There are, however, relatively few egovernment services that rely on contributions from and interaction between users.

Even though several promising market-based electronic services have been introduced in recent years, one needs to conclude that electronic markets are only exploited to a limited extent. This has a natural explanation. Individual government agencies lack the incentives and capabilities to introduce international, and even national, markets in most cases. Substitution between service providers requires portability and a general institutional framework that single agencies cannot provide.

Before proceeding to the policy issues, it is worth starting with a characterization of the current state of egov in countries that are at, or close to, the technology frontier. A brief analysis of the main factors explaining the current situation provides a useful background to a discussion about strategy.

What are the main characteristics of egov today?

A natural starting point is to note that the use of ICT is extensive in most parts of the public sector. Governments have done considerable investment in ICT. And these investments in computer hardware and software as well as digital communications have contributed to increased productivity in many cases.

It is probably fair to say that ICT investments have not primarily been undertaken to innovate or develop new services but rather to reduce internal cost and to facilitate distribution to and collection of information from citizens and companies.

ICT has in this respect improved governments´ openness considerably. It has thus added value for users, whether citizens or companies. Input and output of individualized data from government databases have increased access to information considerably.

A related and interesting observation is that egovernment services, narrowly defined as electronic government services for citizens and companies, typically involve input and output from databases that have existed for a long time. These services are primarily related to the transfer system – i.e. taxes and social benefits – or bilateral communication related to public registers.

As many government databases include sensitive information, it is natural that most government systems are closed to protect privacy and security. A side-effect is that this limits the scope for interaction between government agencies, between service providers and between citizens.

Government services are often the result of local or national political decisions.  One side of this is that services are adapted and designed to meet local preferences. The other side of this is that few services permit consumption across international borders.

Now, what can be concluded from these general observations?

First and foremost, egov has been, and remains, primarily an organizational and administrative interest, i.e. a question of how government agencies should produce services and communicate with citizens and companies. Development and investments have been budget-driven. Actions have been undertaken to reduce costs or to facilitate production of public services.

Second, control has been, and still is, a primary concern for the public sector. Designing and maintaining systems that are stable, secure and safe has accordingly been much more important than development of innovative, new services.

Egovernment in the making?

While the current status of egov is quite telling, valuable and perhaps even more interesting lessons can be learnt from an analysis of what egov is not.

Electronic systems are used for procurement and electronic orders. There are, however, surprisingly few electronic markets in which companies can sell products and services to the public sector.

User-contributed services are rare. There has been essentially no bottom-up development of services to date. Why are teachers in public schools not sharing more material and experiences through common knowledge databases?  Why are citizens’ contribution to databases on local history limited? Why is public service media not exploiting the strength of user-produced content? Why are health care providers not building systems for patients to share experiences? Etc etc…

In addition, citizens have only limited control over data. Very few systems permit the user to transfer data between competing service providers or across international borders. Portability of data for the citizens is essentially a non-existing phenomenon.

Interaction and communication between citizens, users, employees, decision-makers is limited. Few services exploit the possibility to have direct communication between users and consumers of public services.

Why is the full potential of egov not realized?

The most obvious reason is that innovation rarely has any immediate positive effect on a single government agency´s budget. Unlike cost-reducing investments that are easily measured and motivated, it is significantly harder to motivate investment with a non-measurable contribution to the utility of citizens.

Second, legal rather than commercial principles dominate the public sector´s activities. For instance, public procurement is not undertaken under the same flexible and dynamic conditions as private procurement. The public sector is bound by the fundamental principles of equal treatment, rule of law and transparency. In combination with an extensive right to appeal, this results in cautious administrative behavior.

Third, many ICT systems have considerable network externalities, i.e. the value to a single user increases as the number of other users increases. Network externalities can be either on the demand side, the supply side, or both. Creating certain systems, particularly electronic markets, accordingly requires that a coordination problem is solved. Significant scale economies as a result of large fixed costs often make this infeasible for a single government body.

Fourth, hardware and software lends itself naturally to global or international use as technologies are generic and transportation costs are low. Governments on the other hand have geographically limited jurisdiction. They provide local and national services and have little interest in development of services that can be exploited on an international scale.

Fifth, any service provider, including single agencies or organizations in the public sector, has limited interest in facilitating substitution. It is consequently not surprising that the scope for citizens to port data is limited. Also worth noting is that transfer of data across international borders is limited by the jurisdiction of each welfare state.

All in all, one needs to conclude that there are many historical, institutional and legal barriers that hinder the realization of the full potential of egov. Unless these barriers are dismantled it is quite likely that many hopes that the new technology brings, including cross-border mobility, user-contributed services, innovative solutions and involvement of citizens, will not materialize.

Stacy Baird stressed the key role played by those who implement eGov strategies, i.e. government employees. He argued that training is critical for the success of new e-services. Workers may otherwise not have the right skills to undertake the needs and not find their place in the new organizational.

Ajit Jaokar pointed out that “Open Government”, a new buzz phrase, does not necessarily demand the implementation of open standards and open source software. Rather, Open Government is Government as a Platform or Government 2.0 which in itself is a philosophy. What is important is not the code but the philosophy of openness. The technology on which eGov services is built could vary.

Steve Mutoski drew some lessons from a recent review of eGovernment Interoperability Frameworks (eGIFS). He argued that many policy makers have an ineffective and misplaced focus. Technological interoperability, which is the main focus, is to a large extent an issue already taken care of by the marketplace. eGIFs deserves further attention.

Tore Hoel took a special look at Learning, Education and Training (LET), which is an emerging domain where the use of standard catalogues is a primary form of governance. He argued that the idea of standards catalogues is flawed. In emerging domains it is difficult to determine the optimal candidate for recommendation, therefore eGovernment standards boards should focus on semantic, organizational, cultural, political and legal interoperability. Then, the LET domain might innovate by the implementation of ‘unstable’ standards.

Oliver Bell went on to point out an important ‘glitch’ in the innovation process of data exchange. The 1990’s switch towards electronic handling of data brought measures to digitally handle information but not to archive it. This has resulted in a decade without appropriate government records. As we now stand before the next step into Government 2.0, we must not make the same mistake. The further digitization of services, communication and interaction needs to be matched by the development of archiving standards. The key is to include archiving standards as a core part of system design, not to try and solve the problem after the fact.

Mattias Ganslandt highlighted some experiences and lessons from Sweden, the number one country on the UN eGovernment readiness ranking. The government’s willingness to use ICT as a means to distribute individualized information and collect information from citizens has resulted in a number of very successful eGov services, e.g. eIdentification and online filing of tax returns. The Swedish experience shows that a pragmatic, value-oriented and neutral approach to eGovernment and procurement of ICT and software works well when applied in an open economy with a good basic ICT infrastructure. It also shows that adoption and development works well if applied on a limited scale.

A common theme for the discussion is the challenges presenting eGov policy makers in the process of creating a decentralized, open and interactive government. Although innovation has taken development of the public sector quite a bit already, much work remains to be done before the vision of trans-nationally interoperable eGov systems is realized.

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Over the past few months, I reviewed a range of (but by no means all) national eGIFs, charted out some of the resulting data and shared it at a workshop at the FutureGov2009 conference in Indonesia. What jumped off the page at me? First, the review suggests that policymakers are focusing too much on technical interoperability, which although significant a decade ago, have increasingly been worked out. Governments (and consultants) are often turning to policy tools that are largely modeled on what the UK did in 2000 (largely focused on the technical domain), to the detriment of much more substantial semantic and organizational issues that today are the main barriers to eGovernment interoperability. It’s not hard to see the common ancestry that many of these technically-oriented eGIFs share. Just one example is the so-called “8µ Law” standard, a non-existent standard that initially appeared on the UK list and then somehow wound up under consideration in at least 7 other countries in the context of their eGIF. The existence of this “standard” across so many other countries raises some important questions about the utility and effectiveness of these policy tools, nearly a decade after they were first rolled out.

Even more intriguing, one of the most touted benefits of these technical focused frameworks– that they give governments a mechanism to mandate specific technical standards which in turn result in better interoperability– doesn’t appear supported by the data. Instead, the data appear to present a case of “the tail wagging the dog.” Rather than dictating the standards that will lead to better interoperability, these standards lists largely capture the commonly used standards that the market has already embraced and agreed to use for interoperability purposes. If you look at the group of standards that are shared across roughly 80% of the standards lists (a dozen or so standards), you don’t find many surprises. What you find are core networking and interconnection standards (HTML, HTTP, XML, etc) that have long been supported by any product that wants to have any chance at achieving widespread marketshare. While there are some interesting questions raised by the many, many other standards that appear on only one or two lists, there is little evidence that eGIFs were/are being used by governments to drive adoption and use (through requirements or mandates) of various standards, with an aim toward improving technical interoperability. It’s possible that the technically-focused approach contributed a whole lot less to improvements in eGovernment interoperability over the last decade than some governments and practitioners believe.

There is a ton of work to be done in the next decade to make eGovernment work better. It is critical as we start out the next decade that we make sure we have the right mix of policy tools at hand. My preliminary look back suggests that we need to take a more thoughtful look at whether the current incarnation of eGIFs is the right starting point for the next decade.