Internet Regulation Poses Real Dangers, McDowell Says

Threats to Internet freedom are “real” and must be taken seriously, FCC Commissioner Robert McDowell said in a speech in Rome to the Associazione EGO and Puntoit. The comments are some of the strongest yet from McDowell, who has long warned about creeping regulation of the Internet. McDowell cautioned companies about the dangers of using intergovernmental bodies to regulate their rivals.

"As we meet here today, some member states of the International Telecommunication Union, as well as a few independent groups, are advocating for expanded intergovernmental powers over the Internet. Some proposals are seemingly small or innocuous while others are conspicuously large and radical,” McDowell said. “The proposals I am referring to are quite real, explicit and concrete. They are not imagined. Nor are they the product of caricatures or distortion, as a few pro-regulation proponents and some ITU leaders have alleged.”

Incremental changes to the International Telecommunications Regulations (ITRs) are among the biggest threats, McDowell said. “With the potential to grow larger quite rapidly, proposed ITR amendments that appear tiny today can be the most insidious and lethal to the spread of prosperity and freedom tomorrow,” he said. McDowell made specific reference to remarks by then-Russian Prime Minister Vladimir Putin a year ago during a meeting with the Secretary General of the ITU. Putin “proclaimed that member states should establish ‘international control over the Internet using the monitoring and supervisory capabilities of the International Telecommunication Union,'” McDowell said. “These words speak for themselves and should be taken seriously.” China, Russia, Tajikistan and Uzbekistan all have made direct calls at the U.N. for intergovernmental regulation of Internet content and applications last year, India introduced a resolution at the U.N. calling for a new U.N. body to oversee the Internet.

Similarly, the Telecommunications Network Operators’ Association (ETNO) is urging that IP interconnection agreements be brought under the ITRs “for the first time with a new ’sending party network pays’ construct,” McDowell said. “To be effective, the ETNO proposal would have to require an international dispute resolution forum with enforcement powers as well as an intrusive new mechanism for recording Internet traffic flows on the basis of the value of traffic delivery, presumably determined by the ITU,” he said. “Such expanded ‘monitoring capabilities’ for the ITU fit perfectly into Mr. Putin’s vision of the Internet of the future.”

The ETNO proposal “would upend the economics of the Internet by replacing market forces with international regulations that would create tremendous uncertainty, increase costs for all market players, especially consumers, and ultimately undermine the rapid proliferation of Internet connectivity throughout the globe,” McDowell said. An ETNO spokesman did not respond to a request for comment.

McDowell questioned why some international carriers would seek greater regulation as urged by ETNO. “I can’t imagine why network operators would consciously surrender their autonomy to negotiate commercial agreements to an international regulator -- unless, of course, they suffer from the ‘please regulate my rival’ malady of an industry that has been regulated too much and for too long,” he said. “History is replete with such scenarios, and the desire for more regulation for competitors always ends badly for the incumbent regulated industry in the form of unintended and harmful consequences.”

McDowell said in an interview from Rome Wednesday he has already had a number of very productive meetings there, including with officials in the Foreign Ministry and with Italian telecom regulators and has meetings scheduled with members of the nation’s Parliament. Italy plays a vital role inside the ITU’s European region, one of six regions worldwide, McDowell said. “Telecom Italia has had a different view of the ITRs, wanting to open the ITRs to be able to change the compensation regime for peering as well as being able to charge content and application providers directly with the force and effect of international law,” he said.

ETNO’s recent proposal raises the stakes, McDowell told us. “It’s important to bring together a diverse array of voices to discuss the numerous ways in which such a proposal like ETNO’s would be damaging to Internet freedom and turn the economics of the Internet on its head,” he said. McDowell said that parts of the government, including the Foreign Ministry the Autorità per le Garanzie nelle Comunicazioni, are resistant to changing the ITRs but Telecom Italia supports expanded control of the Internet. “The problem with a lot of telecom companies is the state, the government, still has a huge role, an ownership role as well as a huge regulatory role in their operations,” McDowell said. “Telecom Italia is a very heavily regulated company and their proposals thus far center on trying to regulate everyone else in their environment rather than bringing deregulation for themselves.”