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Internet Governance @ ITU? The Political Battle for the Internet


The political battle for the governance of the Internet will step up a gear at the ITU’s World Conference on International Telecommunications (WCIT) next week, which will review the current International Telecommunication Regulations for the first time since 1988 - pre web and mobile networks. Some governments and telcos are arguing that it should be the responsibility of the ITU, the telecoms’ arm of the UN, to look after the Internet. What are the key issues, why does it matter, and why don’t we think this is a good idea at all?

This post previews some of the protagonists and proposals - and specifically examines the central and most controversial element: Internet regulation, and whether the ITU has any remit to enact it.

(We will be continuing to monitor, report, and analyse the outcomes of the WCIT, and look forward to further dialogue with our customers and readers on this issue online and at our upcoming brainstorms: in Singapore 3-5 December 2012, 19-20 March 2013 Silicon Valley, and 5-6 June 2013, London).

A WCIT Game?

Between December 3rd and 14th, the ITU (International Telecoms Union) is convening the World Conference on International Telecommunications (WCIT) in Dubai . This event is primarily intended to review the current International Telecommunication Regulations (ITRs), which are now more than 20 years old. As a UN agency, this is not merely an agreement or industry standard - it is a binding global treaty. And unlike trade shows like CTIA or MWC, this event is about governments - specifically, telecoms ministries and regulators - rather than operators or vendors, although they will be in attendance as well.

So too will be half the world’s political and technology lobbyists and lawyers, with analysts and press circling and watching from a distance. While the ITU blandly describes the ITRs as being “designed to facilitate international interconnection and interoperability of information and communication services, as well as ensuring their efficiency and widespread public usefulness and availability” that belies the true importance of the event in defining the future telecoms and Internet landscape. There have already been many preparatory meetings around the world, each generating multiple submissions and proposals from local interested parties.

The last time the ITRs were reviewed was in Melbourne in 1988, before the web was even a twinkle in Tim Berners-Lee’s eye. 24 years ago, most countries were still in the early stages of telecoms deregulation, mobile networks hardly existed, and ISDN was the network technology of the future. Pretty much everyone agrees that it’s time to review and revise them - but the question is how far, and in what directions.
This post is intended to preview some of the protagonists and proposals - and specifically, to examine the central and most controversial element: Internet regulation, and whether the ITU has any remit to enact it.

This commentary and analysis necessarily blends various angles - the technical, commercial, political, diplomatic and even philosophical. When watching or reading about the WCIT preparations and discussions, it is important to note that a lot of the language used needs even more care in interpretation than normal telecom marketing-speak. A lot of important - possibly world-changing - detail and nuance is couched in vague and verbose diplomatic phraseology.

Introducing the players

Indeed, while some of the players hail from a telecom operator background (e.g. the European Telecom Network Operators association, ETNO), in many ways the “bigger battle” is a geopolitical one. Specifically, China and Russia (and others) have concerns about the way that the US takes such as central role in Internet governance. The US (having invented the Internet and clearly having benefited from it) takes a different stance, especially as it sees it as a tool for spreading democracy. One thing to bear in mind here: at a governmental level, there is more concern about the location of overall control of key assets, or issues such as security/censorship rather than (to them) the comparative trivia of telcos’ business models and profitability, or the abstract principle of Net Neutrality (our views are detailed in Net Neutrality 2.0: Don’t Block the Pipe, Lubricate the Market). While there might be some alignment in views - especially for smaller countries which “import” a lot of telecoms minutes and interconnect fees relative to GDP, or which still have state-owned telcos - in other markets the telcos (and their investors and customers) are passengers rather than drivers here.

In Telco 2.0’s view, the next month is going to contain some seriously vigorous and vitriolic debate - with a raft of media and social sideshows alongside. Here’s the programme. Get some popcorn.

Key issues

Overall, WCIT will cover a broad array of topics that the ITU thinks are important enough to warrant international regulations, or at least wider discussion. Some are relatively innocuous or uncontentious, such as treating numbering resources with respect, monitoring fraud, ensuring prompt payment of international interconnect bills, or allowing network pre-emption for reasons of emergency or distress (e.g. epidemic information from the World Health Organisation).

But a few particular areas have given rise to controversy. Chief among these are:


  • Proposals to move international IP / Internet interconnect towards a contractual basis, with the option for QoS and new charging mechanisms, potentially on a “sender-pays” basis

  • Proposals to allow governments to control and secure (or “monitor and censor”, from another perspective) Internet traffic, especially for “cybersecurity” but also for management of spam - and perhaps pirated content

  • Examination of mobile roaming regimes - and, potentially, the instigation of international pricing controls and regulation

  • A general extension of ITU’s remit from telecoms to ICT (information & communication technologies)

It is also worth considering the general goals of ITU and national regulators. While a few regulators are linked closely to government desires to maximise revenues from spectrum sales or interconnect, others are tasked more with improving broadband and telephony penetration and reach in their countries, and ensuring competitively-priced and high-quality services for their citizens. They differ on how they see the role of the Internet in achieving those goals - and also have a spread of opinion about the economics of network deployment and investment-justification. Some countries see the Internet as a potential threat to national security (for example, social networks used for organising insurrection), while others would like to see access defined as a human right (Finland already has).

ITU pic nov 2012.png

Source:ITU

Internet charging & ETNO’s proposals

The most divisive element of the discussions is likely to be around Internet regulation - especially any moves to change from the traditional “peering” model of network-to-network connection to one which looks more like telecom interconnect. (The security / monitoring issue is considered separately, below).

One of the key players involved in this part of the WCIT proposals and preparations is a formerly little-known telco trade body called ETNO (European Telecommunications Network Operators’ Association). ETNO has 38 telco members from across Europe - including some major players such as Deutsche Telekom, KPN, Telefonica and Orange/FT, as well as smaller companies such as Albanian operator Albtelecom. A number of non-European telcos and vendors have “observer” status, such as Ericsson, Verizon and NTT DoCoMo, but conspicuously, a few big names are missing from its roster - Vodafone, BT, Bouygues, Hutchison 3 and Virgin Media are absent, for example. ETNO has also jointly run various telecom conferences, and has partnered with consulting firm A.T. Kearney “to conduct a series of joint research activities to promote a better understanding of economic policy in the telecommunications sector”.

ETNO has recently been lobbying vociferously on a broad range of topics, ranging from privacy to Internet/network interconnection business models. It has pitched both the ITU and European Commission and regulators’ group BEREC with various proposals, and its outspoken head, Luigi Gambardella, is a ubiquitous feature of both the conference circuit and social media.

In particular, in June 2012 it submitted proposals to ITU, which have proven extremely controversial. It suggests a move away from the “access and peering” model for Internet services, towards one which looks more like the traditional telecom interconnection/cascading payments structure “to ensure an adequate return on investment in high bandwidth infrastructures, operating agencies shall negotiate commercial agreements to achieve a sustainable system of fair compensation for telecommunications services and, where appropriate, respecting the principle of sending party network pays”. Whilst it does accept continued use of “best efforts” IP network delivery, it also states “Nothing shall preclude commercial agreements with differentiated quality of service delivery to develop”, which takes it headlong into conflict with Net Neutrality and opens a can of worms about competition dynamics and the potential “moral hazard” of changing the way the Internet ecosystem works.

It has defended these proposals robustly, and promoted them around the world, hoping to drum up support from other regions and countries outside Europe, which are sending delegates to WCIT. Its messaging often uses terms such as “level playing field”, “commercial arrangements between players” and “sustainable business models”, although its positions are regarded by some as highly polarising and contentious.

While certain of ETNO’s proposals and positions strike a chord with us at Telco 2.0, we are a little wary that “The Devil is in the detail”. Some of its pronouncements appear compelling at first sight (we support certain differentiated-QoS and “sender pays” models for data, for example), but we are poignantly aware that its positions are very much rooted in shoring up telcos’ businesses and insulating them from the disruptive effects of the Internet. It is notable that ETNO’s Twitter feed seems to report any “victories” against Google, Apple and peers with a measure of glee.

In general, Telco 2.0 feels that perpetuating the “them and us” story of Telcos vs. OTTs is unhelpful and unnecessarily antagonistic. ETNO does not even acknowledge that many operators now have their own Internet and digital OTT-type assets.

So while we are strong believers in operators taking robust defensive measures to protect legacy business and future opportunity, we are uneasy about the possible setting of booby-traps and landmines, or anything which might undermine innovation elsewhere in the technology ecosystem. We advocate defence, but not xenophobic protectionism against the Internet’s more successful companies. In a nutshell, we don’t support subsidising “dumb” pipes through simply taxing the “clever” people - we feel telcos should be, and often are, equally clever in developing and monetising new services, many of which also use the Internet and OTT models.

Some of ETNO’s Internet proposals seem rather poorly thought-through - for example, the definition of “sender” is very vague, especially as in many cases users request and “pull” data rather than having it “sent”. We are wary of the practicalities of implementing ETNO’s ideas, and have serious concerns about unintended consequences, especially if it will be another 25 years before ITRs are revised again. For instance, if charges are levied for imbalances in data “flow” between networks, it is trivially simple to re-engineer applications to send equal and opposite amounts of traffic in both directions, to net out the interconnect. That would likely lead to more overall traffic, congestion and cost, rather than more revenue. (Our associate Dean Bubley takes a rather stronger view on ETNO’s proposals here).

It is also worth noting that ETNO’s focus is on interconnect between countries/networks, rather than relating to Net Neutrality on the customer-facing access part of the broadband network. ETNO’s notion of “a new IP interconnection ecosystem that provides both, best effort delivery and end-to-end Quality of Service delivery” is one that has been proposed (broadly) on many previous occasions, but has failed to gain traction or support. It is worth noting that a recent OECD report found that 99.5% of today’s Internet peering relationships do not have formal contracts and are run “on a handshake”. OECD attributes much of the successful growth of the Internet ecosystem to that model, and also suggests that it is, indeed, “sustainable”, as long as opto-electronics R&D continues to allow ever-faster core network switches to be developed.

Clearly, ETNO’s proposals are just a starting point for negotiations and discussion at WCIT. But they indicate that at least some participants are hoping that the Dubai event completely redefines the relationship between Internet and telecom worlds. It is notable that the draft ITRs suggested as a starting point by ITU include the following ETNO-inspired text:

… to ensure an adequate return on investment in high bandwidth infrastructures, operating agencies shall negotiate commercial agreements to achieve a sustainable system of fair compensation for telecommunications services and, where appropriate, respecting the principle of sending party network pays.

While we would expect many Internet companies to disagree with this, it is interesting that BEREC - the European Regulators’ association and therefore essentially ETNO’s “opposite numbers” in Government - have themselves also rebutted the premise:

There is no evidence that operators’ network costs are already not fully covered and paid for in the Internet value chain

While we at Telco 2.0 certainly agree that innovative broadband business models are desirable, we are not yet convinced that this type of intervention - via a United Nations agency and international treaties - is the best mechanism for enshrining both flexibility and appropriate safeguards.

Cybersecurity

While ETNO’s proposals for new Internet interconnect models maps onto Telco 2.0’s thoughts on new business models in some areas, another issue is perhaps even larger, but indirectly connected. It relates to “Cybersecurity” - and especially the ability of governments and networks (and hence telcos) to better monitor and control what transits their networks.

Instead of ETNO, the lobbyist-in-chief here is probably Russian software company Kaspersky Labs, which was a major sponsor of the recent ITU World conference (also in Dubai, and attended by many of the same attendees as WCIT). The ITU’s Secretary-General also met Russian premier Putin last year - Forbes reported that he said hoped for “establishing international control over the Internet using the monitoring and supervisory capability of the International Telecommunications Union”.

Here, the discussion is more nuanced, and relates to the issue of Internet governance. At one level, it is designed to help national governments avoid future risks of cyberwarfare, especially in the light of sophisticated viruses such as Stuxnet, which crippled the Iranian nuclear uranium-enrichment programme for a while, and which is understood to have been of US/Israeli origins. ITU also worked with Kaspersky to analyse the Flame virus, again thought to have been developed by governmental powers hostile to Iran. While this has allowed ITU to claim the moral high ground in proposing methods to track malware at a pan-governmental level, it has also raised uncomfortable questions.

This relates to unease in certain countries (especially Russia and China) about the overall US control of certain Internet bodies like ICANN. While that could be considered the strategic geopolitical risk to those countries, there is a related tactical issue around censorship, or the ability to block/control specific services or content. The recent uprisings in the Middle East have thrown new light on the role of social media in driving revolutions or pro-democracy movements, for example. While viruses (or content piracy) are definitely bogeymen that few will disagree are worth chasing, many participants will have more qualms when faced with comments such as “The Internet must be managed by governments, with a particular focus on the influence of social networks on society”.

A somewhat less contentious part of the theme of Internet control relates to spam, and whether it is possible (and/or desirable) to put in place an international framework to block it via ITRs. While few would disagree that spam is a menace, it is doubtful that institutionalised interception and filtering of email would be broadly popular. Given the spats about encrypted BlackBerry email in certain countries recently, it is questionable whether such a move would purely be about spam, rather than as a diplomatic cover for more general email or communications monitoring.

Other issues

A plethora of other issues are also being discussed during WCIT. The thorny issue of mobile roaming is one such area. There is growing sense in some quarters of the industry that competition here doesn’t work - evidenced by per-minute calling fees that often remain stubbornly above $1/minute for many roamers, especially outside of regions with price-regulation such as the EU. A number of operator executives have themselves indicated that egregiously-high pricing is almost an embarrassment, as it is clearly hard to justify to customers - and thus can undermine loyalty. Nevertheless, many operators - and the GSMA - appear reticent to kill the golden goose, suggesting instead that individual governments or bilateral deals can help to lower prices. Telco 2.0 recognises the importance of roaming revenues and profits to some operators - but also feels that ITU may have the moral high ground on this issue, as pricing seems to be disconnected from underlying costs to a significant degree.

Less contentious are ITU’s proposals to remove the risk of “double taxation” of international telecoms services, in both originating and terminating countries.

Personalities and politics

One thing that can be expected at WCIT is the emergence of certain individuals or countries as champions, advocates or obstacles. Given such a highly politicised gathering, with ministers and UN officials, it is also likely that some machinations will relate more to personal influence and power, rather than objectively what is “right”. We don’t pretend to understand the attitudes of each individual involved, but it can reasonably be assumed that most of the attendees - from Secretary-General TourĂ© downwards - have broader career ambitions than just regulating phone calls and web-browsing.

This is also likely to occur at an organisational level. ITU itself is thought by many to be somewhat anachronistic and unrepresentative of the modern communications environment. It is aware of this, and is trying to recreate its role and image for the 21st Century, despite its 19th Century heritage from the era of telegraphy. One thing that we have noticed in recent years is a slight sense from ITU that “telecoms is too important to leave up to the telcos” - and it is clearly trying to extend its reach to the Internet as well. There is also a certain amount of tension between ITU and GSMA, about where the central locus of telecoms-industry power resides. Some of the responses to the draft ITRs from GSMA have seemed pretty dismissive - especially about roaming and cybersecurity, for which it feels ITRs and treaties are inappropriate tools for change, as they lack flexibility and nuance.

Many countries’ delegations should be watched closely. It is widely felt that the Russian authorities are wary of the US hold over key Internet bodies such as ICANN, while the Chinese and Arabic nations are also - perhaps less blatantly - interested in prospects for Internet control. It is probably worth noting that some nations such as China and UAE already “firewall” Internet access to the outside world, while Iran has recently discussed creation of a completely separate “Halal” intranet for its citizens and perhaps the wider Islamic world.

Another group to watch are countries that currently enjoy large “imports” of telecoms minutes, benefiting from inward revenue flows from call termination. They are keen to avoid revenue erosion from VoIP, and would also be very interested in extending the model to data traffic, as per ETNO’s suggestions. This is particularly true for countries where governments still hold sizable direct stakes in incumbent operators, and therefore see interconnect fees as direct inward capital flows.

The stance and participation of the US is important to scrutinise as well - whether its delegates lobby broadly and deeply for consensus, or whether it becomes more internal, shrugs its shoulders and just refuses to ratify anything it disagrees with. Obama’s re-election may alter both its attitude (the Democrats are more pro-Neutrality than Republicans) and the attitude of other countries to its persuasion. The US has already taken a strong stance against ITU exerting control over the Internet, including passing a resolution in Congress asserting the primacy of the current “multi-stakeholder” model of Internet governance.

Our sense is that many OECD countries (especially Western Europe and Japan) will side with the US on many issues. Notably, the European Regulators’ Group BEREC has castigated the ETNO Internet proposals publicly in very strong terms, and raises similar issues to those we mention above “put simply, ETNO is trying to extract additional revenues from its existing network assets, in a bid to reassert control over a changing communications ecosystem”. We also sense that some of the issues on cybersecurity and Internet business models are of much less concern to certain developing nations than fostering broadband availability and local Internet/ICT industries and expertise.

Propaganda and counter-propaganda

In recent months, the noise about WCIT has ramped up significantly, as many Internet lobby and activist groups have woken up to it. While some of these are relatively measured and responsible, a broad swathe of fringe or niche-interest groups is being more careless with their facts and interpretations. There is considerable disquiet about the perceived “backroom” preparations and negotiations that are taking place (not unusual for a UN agency or national bodies engaging in “diplomacy”), and there are already attempts at enforcing transparency through guerrilla tactics like the “WCITleaks” website.

For its part, ITU has made something of a nod towards openness and public engagement, with an open consultation soliciting responses from a broad range of interested (and interesting) parties, and a July 2012 posting of the draft ITR changes suggested. It has also published a presentation on “myths” about WCIT, and has strongly rebutted a number of claims.

As if the flood of information, misinformation, rhetoric and invective isn’t enough, we would not be at all surprised if activist group Anonymous also gets involved - probably in its customary heavy-handed fashion. If we were security advisers to the world’s telecoms ministers and regulators, we would be suggesting hardening websites and other assets against denial-of-service or other attacks during December.

Conclusion & recommendations

At this stage, it is probably too late for telcos and vendors to make substantive impacts on the outcome of WCIT, although keeping in touch with their countries’ delegations will be important. It may however be possible to send observers to the event, or even have staff be included as part of certain countries’ delegate groups. It may be worthwhile having a team on standby to provide backup data or other material, which could be offered to negotiators via lobbyists or other channels to illustrate a key point or recommendation.

Overall, we think it is in the ITU members’ interest to encourage innovation, wherever it comes from (and it is worth pointing out the increasing relevance of web/OTT players emerging from Africa, Asia and Latin America - developing countries may well be hosting “the next Google and Facebook” already, and we would not like to see them disadvantaged). While we are keen to see new telecom business models evolve, we are not certain that enshrining them in global government-level treaties is the right approach - unintended consequences seem inevitable, especially given the pace of technology and market evolution compared to the speed of supra-national legislative change.

We feel that ITU has a hugely important role to play in creating core telecoms standards, and extending the reach and value of telecoms and Internet access to bridge the “digital divide”. Oversight of aspects such as roaming and fraud management also seems a wise move, given the increasingly international nature of communications. But we are concerned that ITRs may not be the right vehicle to manage the overall relationship between governments and the Internet, not least because of the lack of consensus on the role of openness and intervention at a network level. That may be better confined to national legislation and regulation.

Telco 2.0’s views

Telco 2.0 is not broadly a political organisation - we exist to promote innovation and drive digital transformation. We also believe strongly that these should be forces that improve the lot of people and businesses across the globe.

We believe that the ‘Internet’ has to respect the laws of the land in which it is consumed. We also believe that freedom of speech fuels innovation, innovation drives economic growth, and economic growth and freedom of speech together reduce social unrest and promote wellbeing.

We therefore hope that regulators and governments alike should value and pursue these goals and accord freedoms and rules that achieve them.

However, we also recognise that not all ‘freedoms of communication or action’ are beneficial. There are relatively black-and white examples, such as that child porn should not be made or propagated. There are many more ‘grey areas’ just in terms of the moral and legal aspects, and further complexities even within the semantics of definitions (e.g. what does ‘consumption’ mean - is it when a piece of content is viewed or when it is downloaded?).

Despite the importance of the ITU’s role, we don’t think it would be a significant improvement over the current arrangements for the ITU to take on the responsibility for governing the internet. It seems difficult to imagine that the ITU would prove a suitably positioned and dynamic body to take on such a complex issue, especially with the range of powerful international political forces at play within the UN.

However, we do think that the World Economic Forum’s work in this area provides the basis for a more enlightened, independent and practical approach. For example, on the issue of cybersecurity, we recommend this WEF article: Risk and Responsibility in a Hyperconnected World: Pathways to Global Cyber Resilience.

We will be continuing to monitor, report, and analyse the outcomes of the WCIT, and look forward to further dialogue with our customers and readers on this issue online and at our upcoming brainstorms in Singapore (3-5 December 2012, 19-20 March 2013 Silicon Valley, and 5-6 June 2013, London).

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