A lot of speculation has been floating around about a proposal from the United Nations that could impose a global Internet tax on the world’s largest content providers. Based on leaked documents from the European Telecommunications Network Operators’ Association (ETNO) that are being made available at WCITleaks.org, the speculation is, in fact, true.
Although the language is vague, the documents indicate that companies such as Google, Apple, Facebook, and others could be tremendously impacted. When the United Nation’s International Telecommunications Union (ITU) meets in December, the proposal, if implemented, would amend the existing telecommunications treaty, the International Telecommunications Regulations (ITR).
How would you react if the entire structure of the Internet changed? Would you still feel comfortable visiting your daily websites? Furthermore, what would it do to business and the economy? Please share your thoughts.
ETNO’s proposal calls for the “principle of sending party pays,” which, according to author and technology consultant Larry Downes, means that large content providers would be forced to pay fees, or a tax, linked to usage for the large amounts of bandwidth they use.
“This changes the whole structure of really how the Internet works and has worked successfully up until now,” he said.
Up until this point, the Internet has operated on an unmetered or peered traffic system meaning that all user traffic is treated the same. The new proposal, however, would imply that the bits that are transferred from a Google search, for example, to a user from another country would charge Google, explained Downes.
The last time the International Telecommunications Regulations was updated was in the 1980s. It began with the telegraph and was revised to include the telephone system, and now, the United Nations wants to amend it again to incorporate the Internet.
As Downes explained to us, the current version of the treaty deals with international long distance phone calls. In essence, the telephone carriers of the member countries in the United Nations set a price for the international long distance calls coming into their countries. For example, a call placed from the U.S. to France could cost a certain amount of money per minute, based on the rate that the carriers set.
ETNO’s proposal indicates that foreign countries want to impose this same type of arrangement for the Internet. Since the process is extremely secretive and the information obtained thus far is only available through leaked documents, the price range for such a tax is unknown. However, based on the costs of the telephone charges, analysts expect them to run into the billions of dollars.
“In the 1990s, the United States paid a net of $15 billion dollars,” Downes pointed out. “That is to say U.S. consumers paid $15 billion dollars to place long distance international phone calls more than what was paid on the other end for calls coming into the United States.”
Since the current proposal involves data and bandwidth, chances are, the rates would be much, much higher if the tax were implemented. What’s more, the majority of the large content providers are based in the United States, which, of course, means the tax would impact them the most.
While it seems that this specific proposal puts the United States against the rest of the world, Downes thinks the impact is much greater. He told us that it would not only be very harmful to U.S. companies, but he believes that it would also be harmful to developing countries and the Internet as a whole.
For example, if companies such as Google were taxed, these fees would translate over to consumers. It could result in Google increasing its ad rates and also being forced to cut off developing countries from which the tech giant wasn’t gaining anything in return.
“The net effect may be that some countries, particularly in the developing world, get cut off all together from the most valuable content,” explained Downes.
Based on this proposal, it appears that other countries are jealous of the U.S. and the technological developments it has made. Since the U.N. is looking to make some revisions to its telecommunications treaty, the assumption is that they are using this as an opportunity to get a piece of the pie, as the old saying goes.
“Frankly, the Europeans are concerned that most of the successful content-based businesses of the Internet are all in the United States,” said Downes. “They see this [proposal] as one way of kind of getting their pound of flesh out of the very successful Internet industry… it’s essentially just a money grab.”
“They see the U.N. as the opportunity to put that in the form of an international treaty, and therefore with the law behind it, make it easily collectible,” he added.
Another alarming aspect of these circumstances is that this is just one proposal. As mentioned earlier, these meetings and negotiations are done in secret, which leads observers to believe that there are other proposals as well. Since the ITU is looking to rewrite the ITRs, Downes and others familiar with the proceedings suspect that countries such as Iran, China, and Russia will push to have the new treaty require all content to pass through a national government gatekeeper.
“There are many countries, as I said, that are unhappy with the Internet… they are unhappy because the U.S. and developing nations are making the most money off it,” explained Downes. “Or, they’re unhappy because of the way in which information flows outside of the channels that they can control.”
“Whatever the reason, there are a lot of countries who have a lot of interest in making sure that the Internet does not continue to operate as successfully from our standpoint as it has,” he continued, “and they’re gonna do whatever they can to make that happen.”
What Downes is saying and what other news publications have indicated is that this proposal, and others that are not yet public, could be the first step in the United Nations attempting to govern the Internet. At this point, the Internet is governed by multi-stakeholder structure. The Internet Society, which is made up of several engineers, also plays a role in establishing protocols and, most recently, was involved in successfully rolling out IPv6. The Internet Corporation for Assigned Names and Numbers (ICANN) and the Worldwide Web Consortium are also involved in the governance and address issues like network and domain name administration. Through this process, the Internet has been able to evolve naturally and quickly respond to the ever-changing advancements in technology.
The White House, the State Department, and Congress have all expressed concern about this proposal and are working to raise awareness of the potential dangers it could pose since it would completely transform the existing and successful model of the Internet. Robert McDowell, a commissioner on the Federal Communications Commission, has been very outspoken on the issue and wrote a piece in the Wall Street Journal in February warning of the dangers. In part, he wrote:
“Upending this model with a new regulatory treaty is likely to partition the Internet as some countries would inevitably choose to opt out. A balkanized Internet would be devastating to global free trade and national sovereignty. It would impair Internet growth most severely in the developing world but also globally as technologists are forced to seek bureaucratic permission to innovate and invest. This would also undermine the proliferation of new cross-border technologies, such as cloud computing.
A top-down, centralized, international regulatory overlay is antithetical to the architecture of the Net, which is a global network of networks without borders. No government, let alone an intergovernmental body, can make engineering and economic decisions in lightning-fast Internet time. Productivity, rising living standards and the spread of freedom everywhere, but especially in the developing world, would grind to a halt as engineering and business decisions become politically paralyzed within a global regulatory body.
Any attempts to expand intergovernmental powers over the Internet—no matter how incremental or seemingly innocuous—should be turned back. Modernization and reform can be constructive, but not if the end result is a new global bureaucracy that departs from the multi-stakeholder model. Enlightened nations should draw a line in the sand against new regulations while welcoming reform that could include a nonregulatory role for the ITU.”
Late last month, at a U.S. House committee meeting, members of Congress on both sides of the aisle and the White House expressed warnings of this initiative as well. During the hearing, Vint Cerf, the Chief Internet Evangelist at Google and who is also known as one of the fathers of the Internet, voiced his fears about the issue saying:
“As a result of these efforts, there is a strong possibility that this December the ITU will significantly amend the International Telecommunication Regulations – a multilateral treaty last revised in 1988 – in a way that authorizes increased ITU and member state control over the Internet. These proposals, if implemented, would change the foundational structure of the Internet that has historically led to unprecedented worldwide innovation and economic growth.
The open Internet has never been at a higher risk than it is now.”
This proposal and more than likely others are expected to be debated in December at the World Conference on International Telecommunications. Each of the 193 country members of the U.N. will have 1 vote to decide on a new treaty. Once the vote is taken, the treaty will go back to the individual countries for approval.
There are lots of speculations that the United States will not reach the two-thirds minimum requirement to ratify it. However, if this is the case, the U.S. could still face problems since it has global business relations with countries who will likely approve it.
Incidentally, just this week, new leaked documents confirm fears that repressive governments truly are hoping to see the December WCIT meetings result in U.N.-sanctioned technologies for surveillance of Internet communications, which could essentially authorize censorship of the Web. Russia, specifically, is proposing an amendment that would give U.N. member states “unrestricted public access to international telecommunication services and the unrestricted use of international telecommunications, except in cases where international telecommunication services are used for the purpose of interfering in the internal affairs or undermining the sovereignty, national security, territorial integrity and public safety of other States, or to divulge information of a sensitive nature.”
Eli Dourado, who is one of the two researchers at George Mason University that is running the WCITleaks site, wrote a blog post discussing these developments and stated that this current dispute is really a battle between all Internet users and their governments:
“Who benefits from increased ITU oversight of the Internet? Certainly not ordinary users in foreign countries, who would then be censored and spied upon by their governments with full international approval. The winners would be autocratic regimes, not their subjects.”
Also earlier this week, Rep. Mary Bono Mack introduced a bipartisan resolution that is especially critical of the U.N.’s seemingly growing initiative to govern the Internet. The goal of it is to unify efforts of opposition to the ITU’s endeavors. The House Energy and Commerce Committee is expected to approve it very soon.
If the U.N. really is attempting to take over the Internet, is the U.S. doing enough to stop it from happening? Or, is it doing all it can at this point? What do you think? Let us know.
While it doesn’t look like the U.S. will see any legislation regarding online piracy this year, intellectual property attorney Miles Feldman tells us that it is a serious issue.