Battle for control of the Internet:

Are Europeans trying to plug gains by countries such as ours?

Kalinga Seneviratne

A looming battle for the control of the Internet is underway as the World Conference on International Telecommunications (WCIT-12) was held in Dubai from December 3-14, the battle ground between Europe on one-side and basically the rest of the world on the other.

Satellite dish

WCIT-12 is a United Nations mega-talkfest was held under the auspices of the International Telecommunication Union (ITU), the inter-governmental UN agency entrusted with telecommunication issues.

In a recently released paper titled ‘A Giant Step Backward or the Way Forward An Analysis of some Proposals before WCIT’, internationally renowned Sri Lankan telecommunication expert and the CEO of LIRNSasia, Dr Rohan Samarajiva, warns that this proposal “seek to reverse twenty years of liberalized, pro-market policies in international telecom regulation”, policies that have delivered “affordable connectivity to some of the world’s most remote peoples and places”.

ETNO, which is a Brussels based lobby group representing large telecommunication companies in 35 European countries, wants the ITU to designate Internet content providers as “call originators” and subject them to a “sending party network pays” rule that would allow telecommunications operators to charge them rates they believe are commensurate with the bandwidth their content consumes.

“Such a change would have enormous implications for the expansion of the digital economy in the developing world” argues Dr Samarajiva. “Access to content would become more expensive (and) the Internet would be ‘balkanized’ by cutting off some countries from large swaths of content”.

“Loss of this access to content and applications, given the role played by the Internet in supporting these countries’ transitions from low-income to middle-income economies, could cost them billions of dollars in lost growth” he argues.

Wider broadband access

Though the stated purpose by ETNO is to raise enough revenue to provide wider broadband access to developing countries, the battles lines are something different. European telecom giants have been fighting the likes of Google and Facebook to get a slice of the enormous revenue they make by providing contents to worldwide users that use European telecom networks. However, the European telecom companies and the American contents producers have been making billions of dollars in revenue due to rapid expansion of the Internet around the world.

Browsing Internet

According to ETNO’s 2011 annual report, telecom sector in Europe has been growing slowly in 2010 with the bulk of revenue coming from mobile services. Yet, the overall telecom revenue in Europe for date and Internet services has increased from EUR 61.5 billion in 2009 to EUR 62.9 billion (USD 79.9 billion) in 2010. The broadband and ultra-fast broadband segments are the major growth drivers in Europe’s telecom services market, fuelled by a growing subscriber base.

In comparison the United States based Internet content provider giants Google’s 2011 revenue was USD 37.9 billion with about USD 2 billion of it believed to be revenue streams generated by the user-generated video site YouTube’s 161 million users last year, while Facebook is believed to have made about USD 4 billion last year.

Internet service providers

Since early 2010 European telecommunication giants and Google have been battling an increasingly heated commercial war, where the telecom companies are trying to get Google to pay for the bandwidth YouTube and its other websites are using.

This war is now invading the UN system with the forthcoming ITU conference the battleground. “Many dangerous ideas are floating around the ITU” argues Khaled Koubaa, policy manager for Google in North Africa. “The proposal put forth by ETNO would harm internet users in less developed countries”.

Writing in Eygpt’s English language Daily News, Koubaa pointed out that what ETNO is trying to do is to change the way Internet traffic flows around the world though “unregulated commercial agreements” with an interconnection agreement that will require the user to pay.

“This development would be detrimental, in particularly to the developing world” he noted. “Many Internet service providers would attempt to limit connections with destinations deemed not worth the cost of termination.”

“Since many applications and services, especially video, consume large amounts of bandwidth, these interconnection fees can quickly become extraordinarily high. YouTube, its parent company Google, Facebook, Amazon and iTunes, on down to non-profits like Khan Academy, would have to pay national network operators significantly more for the bandwidth their services use” warns Dr Samarajiva. He gives as example to illustrate its impact on the developing world’s poor.

While working on her algebra homework at the kitchen table of her small home in Accra, Ghana, a schoolgirl finds herself challenged by a difficult quadratic equation.

The girl is lucky enough to be part of a family that was able to purchase an Internet-enabled smartphone just a few months before. Using the phone’s Web browser, the girl navigates to Khan Academy (www.khanacademy.org), a non-profit site that offers free access to some 3,300 video lessons on topics ranging from computer science to history to maths. Under the “Math” menu, the girl selects “algebra.” Under the submenu, “Quadratic Functions,” she finds 38 videos that can provide review and assistance. After selecting and playing “Applying the Quadratic Formula,” which is delivered from a YouTube server in the U.S., her classroom lessons are reinforced and she is able to solve the problem.

“This girl’s story is a classic example of how international Internet connectivity improves the quality of life for anyone, anywhere in the world, who has access” points out Dr Samarajiva.

But, ETNO’s chairman Gambardella argues otherwise. In a recent interview with CNET, he assured: “We don’t want to touch the services that are offered today”.

He argues that the current situation is putting at risk European telecom companies’ ability to invest in building capacities and “we need to rethink together to establish a new balance”. He described what they are proposing is to improve the quality of service to a certain kind of speed, especially when films or videos are streamed.

“We make an agreement and we allow them to offer this service. From the point of view of the service provider, he can have an additional revenue that he cannot have today because of the limitation of the network. Sometimes quality is not guaranteed” he explained, adding, “the customer has something that is today not yet offered. And we can add revenue”. He did not explain nor expressed any concerns about how a non-profit organisation like Khan Academy (or the school girl in Ghana) could benefit from his proposal.

The ETNO’s proposal which if signed by most of the 193 governments who are members of the ITU will require sending parties to pay for contents they post and it will effectively tax the high-volume Internet content providers, most of whom are non-European companies, mainly American. The Europeans are however dressing this up as a revenue raiser to help developing countries to build broadband infrastructure.

The Americans are expected to fight this move to the bitter end in Dubai and this is perhaps the only issue where the Democrats and the Republicans agree on a common platform after the bitter election battle. In June the US House of Representatives unanimously passed a resolution reiterating its “unequivocal policy” to promote global Internet free from government control.

“We’re facing off against those who want the world’s approval” argued Senator John Kerry, chairman of the Senate Foreign Relations Committee, “to balkanize the Internet into countries where governments can censure speech or impose new taxes on the transmission of information across national boundaries”.

Initially, some developing and emerging countries such as Russia, China, Brazil, India, Iran and a host of others worried about the Internet’s role in destabilizing their political systems were known to be sympathetic to the ETNO proposal seeing it as a way to regulate the flow of damaging contents on the Internet by controlling the flow at the input stage.

But, lately many of them are believed to be suspicious of the European’s self-serving claim that the new settlements regimes can offer additional sources of revenue to fund their (emerging countries’) infrastructure development.

Changing world order

What perhaps is appealing to the emerging countries in the ETNO move is the chance to dismantle the United States’ control of the Internet technology. The ITU’s secretary-general Hamadoun Toure is a Mali born African who was educated in the former Soviet Union and now lives in Geneva. His recent comment to Vanity Fair magazine has alarmed the Americans and their free-speech supporters.

“When an invention becomes used by billions across the world, it no longer remains the sole property of one nation, however powerful that nation might be. There should be a mechanism where many countries have an opportunity to have a say. I think that’s democratic” Toure told the Vanity Fair.

A large number of ITU member countries have openly called for a “new global body” to oversee online policy and the Dubai ITU meeting is expected to come up with such a regime – at least in a form of a statement. But there are many issues to be hammered out such as sovereignty issues with respect to cross-border content flow, piracy and intellectual property rights (free flow vs rights holders’ payments), online anonymity (that allows creativity and dissent as well as disruptive and criminal behavior) and national security and personal surveillance issues.

The battle at ITU is building up like the acrimonious New World Information and Communication Order (NWICO) debates of the 1970s at another UN agency UNESCO, where the West was united in their opposition to developing countries’ and communist bloc’s moves to regulate the international flow of news and information. This time both camps are split, perhaps a reflection of the changing world order.

When it comes to economic issues with the center of gravity of the world economic moving towards the East, as well as Africa, the old North-South battlegrounds of the past becomes a bit murky.

“The enormous momentum that the developing countries have achieved in telecommunications is endangered by the ill thought out proposals before the WCIT,” warns Dr Samarajiva. “If the revised ITRs (International Telecommunication Regulations) artificially raise the cost of network interconnection, content delivery, or quality of service, all these costs will be passed along to those least able to afford them, or will result in their exclusion from the Internet economy”.