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A Budding War Over Internet Economics

Proposals for a “sender pays” policy will roil UN talks in Dubai.
December 1, 2012

A United Nations agency opens debate on Monday over whether it should begin to regulate the Internet. The most hotly contested proposals come from European telecommunications providers and African and Arab countries that want big content providers to pay to send data across their networks.

More authority?: Hamadoun Touré is secretary-general of the ITU, a United Nations agency that on Monday will begin to weigh whether to regulate the Internet.

The concept—known as “sender pays”—would radically alter today’s Internet economics. Some countries say their networks are groaning under video and other content provided in large part by U.S. companies such as Facebook, Netflix, and Google. These countries suggest that fees on content providers would help defray local infrastructure costs.

At a conference that begins Monday in Dubai, United Arab Emirates, 193 member countries will decide whether the International Telecommunications Union, a United Nations agency, should somehow start regulating the Internet through updates to its International Telecommunication Regulations. The ITU sets worldwide standards and does things like coördinate use of radio spectrum and long-distance telephone calls. But it hasn’t updated its regulations since 1988 and doesn’t cover the Internet.

That’s how things should stay, argues the U.S. government—a position shared by Vinton Cerf, an original inventor of Internet protocols who now works for Google as its chief Internet evangelist. Cerf asserts that some countries promoting “sender pays” ideas are simply trying to replace the usurious fees they once gained from state monopoly telecom companies. “What they neglect to observe is that in the Internet model, everybody pays to get on the Internet—[people at the] source and destination. The system is symmetric,” he says. “The whole system has evolved to be practical, and it works very well.”

A sender-pays model was originally floated by European telecom companies in a proposal earlier this year. A delegation of European nations recently said it will not advance those proposals, but Arab and African nations have proposed their own versions. (Proposals of all kinds can be viewed at Wcitleaks, which is posting documents related to this upcoming conference, called the World Conference on International Telecommunications.)

The European telecom companies were piqued by a study they commissioned that contended that video-intensive services were becoming a burden on their networks. It said that if networks were upgraded to address the demand—and no additional revenue arrived—network operators could start to lose money. And that might slow broadband expansion.

As proposed by the European telecom companies, a company such as Netflix would pay telecom providers to make sure its bits got delivered fast enough. That idea is anathema to the idea of “net neutrality,” which holds that no services should be prioritized over ones that can’t afford to pay more. In a recent report, the Internet Society, a nonprofit cofounded by Cerf that oversees Internet standards, called the proposal an attempt to carry on the “scams and arbitrage that plague the traditional communications model.”

Cerf says that the “sender pays” proposals were unlikely to pass. But Ethan Zuckerman, who heads the MIT Center for Civic Media and cofounded Global Voices, a community of international bloggers, points out that whether the proposals pass or not, there’s still a large problem to be solved: 4.5 billion people lack Internet access.

“In the developing world, Internet access is still very expensive for many people, and access to high-speed infrastructure is uncommon. While we’ve seen a great deal of progress, it’s worth asking whether the models that have worked so well so far will simply scale and include the whole world, or whether we do need to rethink payment and governance models,” Zuckerman says.

He says he doesn’t think the ITU will be a good place to solve these issues, and doesn’t expect much from the Dubai conference. And while he doesn’t approve of the sender-pays ideas, “I worry that the answer pro-open-Net folks often give—‘The Net works well the way it does, let’s not tinker with the governance structures we’ve set up’—is too orthodox and limiting,” he says. “I wish we could find ways to put ideas on the table that make the Net more accessible and inclusive while avoiding the traps of UN bureaucracy, or creating new points of control manipulated by censorious governments.”

Indeed, some of the proposals from Russia and China would allow greater national control. And a group of 17 Arab countries want the Internet to carry “identity information” about the senders of data.

Cerf also worries about the process the ITU will follow in passing regulations. In an interview with Reuters, ITU Secretary-General Hamadoun Touré was quoted as saying that updates to the telecommunications regulations could be approved by a simple majority, but that, in practice, nothing would be adopted without near-unanimity. But he also came out against the idea of having countries’ representatives vote. “Voting means winners and losers. We can’t afford that in the ITU,” he was quoted as saying.

“This guy is as slippery as an eel. By insisting there are no votes and that there is consensus, it means … anybody who can declare consensus can declare it,” Cerf says. “It’s a very slippery tactic, but it leaves open that a declaration of consensus will be made and that nobody will be able to refute it.”

The ITU press office did not reply to an inquiry seeking comment.

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