Should the Internet be treated like traditional phone services when it comes to regulation and pricing? That is the contentious question as the International Telecommunications Union, a United Nations agency with roots dating back to 1865 and the interconnection of telegraph services, meets in Dubai next week for the World Conference on International Telecommunications (WCIT). The WCIT is a treaty-writing event that has attracted growing attention given fears that the ITU and countries such as Russia plan to use it to press for greater control over the Internet.
There are certainly legitimate reasons for WCIT suspicion since the ITU lacks transparency and largely excludes public participation. For months, the ITU proposals scheduled for debate (known as International Telecommunications Regulations or ITRs) were shrouded in secrecy and the organization itself offered only limited opportunity for public participation. Moreover, some countries view the WCIT as an opportunity to increase their leverage over the Internet by proposing regulations that would increase governmental controls.
While these issues are cause for concern, proposals aimed at seizing control of Internet governance are unlikely to succeed and the reality is that governments already flex their regulatory muscles within the current U.S.-backed Internet governance framework.
The focus on a UN takeover of the Internet has obscured the real concern with the WCIT, namely efforts by telecom companies to find new sources of revenue by changing the way we pay for the Internet.
Before the emergence of the Internet, telecom companies often enjoyed monopolies within their own countries and were able to extract enormous fees for long distance calling and other services. Those revenues have diminished in recent years as the Internet enables consumers to shift from expensive telecom services to cheaper, more flexible, and less regulated Internet-based alternatives such as Internet telephony, instant messaging, and over-the-top video services.
Some telecom companies and developing countries with government-backed monopoly providers now view the WCIT as an opportunity to bring the traditional telecom model to the Internet. For example, the European Telecommunications Network Operators Association (ETNO), a consortium of 41 telecom companies, has proposed a new sender pay model for Internet traffic so that its members receive “fair compensation.”
The interconnection of Internet traffic is generally managed through “peering” arrangements in which Internet providers exchange traffic without metering or further charges. The system means that sending Internet traffic to another provider is effectively free with revenues generated through a receiver pay model (ie. consumer and business monthly Internet access subscription fees). Internet providers face costs in building and maintaining their networks, but peering arrangements ensure that there are few additional costs in transmitting the data.
The ETNO has proposed replacing the current peering model with a “sending network party pays” model, which would create enormous new costs for major content providers such as Google or Netflix. The long-term impact would be to either shift significant new costs to consumers or lead to a global digital divide in which the large content companies stop sending traffic to uneconomic countries where the financial return from sending traffic is outweighed by the new transmission costs.
Not only is ETNO seeking a new payment model for Internet traffic, but it also wants new “quality of service” rules for the Internet that are reminiscent of older telecom models and which would threaten net neutrality principles that ensure that all Internet traffic is treated equally.
Many countries, Internet companies, and even North American telecom companies are on record as opposing ETNO’s plans. Some have gone further by asking whether Internet services belong in a telecom discussion and expressing doubts about the need for ITRs in a marketplace that is largely deregulated and has relied on private contracts to address network traffic management. As the telecom world gathers in Dubai, it is these issues that bear watching, not over-the-top claims about a United Nations takeover of the Internet.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at firstname.lastname@example.org or online at www.michaelgeist.ca.