Russia export controls and sanctions

Administration officials outlined the threat to international trade stemming from data localization laws in foreign countries (http://bit.ly/1wXboij). Some countries have sought to restrict the flow of data across borders in reaction to NSA surveillance activities revealed by former NSA contractor Edward Snowden, said Richard Salgado, Google law enforcement and information security legal director. Those policies can harm the U.S. economy and hamper the open Internet standards the administration seeks to secure, said administration officials at Thursday’s Brookings Institution event.

An Information Technology & Innovation Foundation (ITIF) report (http://bit.ly/WEVrxd) Tuesday suggested a “cross-border” Internet governance framework that it says lets governments pursue Internet policies that don’t infringe on the sovereignty of other nations, nor the underlying architecture of the Web (CD Sept 3 p15). ITIF hosted a webcast panel of Internet governance experts to comment on the report, all of whom supported its framework, though some wondered about its applicability for Internet governance issues such as NTIA’s transition of the Internet Assigned Numbers Authority (IANA).

ICANN Board Chairman Steve Crocker expressed support for ICANN’s proposal (http://bit.ly/1tlFgjg) to increase its board’s voting threshold requirement for rejection of the advice of the Governmental Advisory Committee (GAC), at the Technology Policy Institute conference in Aspen, Colorado, Tuesday (http://bit.ly/1pOEcVC). The proposal, which would require a two-thirds vote to reject GAC advice rather than the current simple majority, has been derided by some ICANN stakeholders (CD Aug 20 p3). Obama administration officials and Internet governance experts cautioned against assigning all Internet governance-related matters to ICANN. ICANN’s most critical task is developing its accountability process alongside the transition of the Internet Assigned Numbers Authority (IANA), said Lawrence White, New York University economics professor.

Obama administration officials dismissed perceived misnomers about NTIA’s transition of the Internet Assigned Numbers Authority (IANA) and argued at an American Enterprise Institute (AEI) conference on Internet governance Tuesday that the transition has made impossible calls for intergovernmental control of those functions. The event was webcast from the think tank’s Washington conference center. Academics and domain experts warned of an increasing climate in favor of government control for Internet governance that could threaten to derail the progress of the multistakeholder model. It’s “possible” that the State Department could become involved in a legal proceeding on the requested aquisition of the country code top-level domains for Iran, North Korea and Syria in lieu of unpaid damages to the victims of terror attacks involving those nations, said Daniel Sepulveda, deputy assistant secretary of state for economic and business affairs. Sepulveda said he’s looking into the case.

Congress shouldn’t put the transition of the Internet Assigned Numbers Authority (IANA) (CD June 23 p9) in the “hands” of the Obama administration, said Rep. Mike Kelly, R-Pa., at a Heritage Foundation-sponsored congressional briefing Tuesday. “We need to keep our oversight,” and Congress should review the transition proposal “before any final decision is made,” he said. “Can you imagine turning over the stewardship of the Internet” to Russia, China and other “bad actors?” Kelly asked. The IANA transition isn’t as “problematic” as some “have suggested,” said Eli Dourado, research fellow at the Technology Policy Program at George Mason University’s Mercatus Center. The timing of the announcement by NTIA and its failure to brief members of Congress beforehand was a “boneheaded mistake,” but the announcement itself wasn’t “out of left field,” he said. The transition is a “long-run alternative to giving oversight” of IANA to the ITU, and a “continuation of the trajectory of the Internet” from a “military experiment to a private civilian enterprise,” he said. Dourado said he was “inclined” to give the transition the “benefit of the doubt,” but “Congress should take a look” at the transition proposal.

Leaks that began a year ago this month about controversial National Security Agency surveillance programs continue to damage U.S. relations with erstwhile and potential allies on Internet governance issues, but there are signs that damage can be and already is being repaired, experts said Wednesday at a Brookings Institution event. The U.S. has been trying to maintain and grow a coalition of national governments that back the existing multistakeholder Internet governance model, in the lead- up to upcoming international forums that will affect Internet governance. U.S. Coordinator for International Communications and Information Policy Daniel Sepulveda has acknowledged the NSA programs have affected his discussions with foreign governments on Internet governance issues (CD Nov 8 p5).

NSA Director Mike Rogers acknowledged Tuesday that the agency does use facial recognition as part of its surveillance programs. “We use facial recognition as a tool to help us understand these foreign intelligence targets,” he said during a Bloomberg Government cybersecurity event. The NSA doesn’t collect and analyze facial recognition data “on a unilateral basis against U.S. citizens,” but “in a digital age, we will encounter U.S. persons in the wilderness.” The New York Times reported Sunday that the NSA was using facial recognition technology to collect facial data from images transmitted through text messages, emails and other social media. That issue also came up at an NTIA meeting on a facial recognition code of conduct. (See separate report below in this issue.)

Worldwide smartphone shipments will reach 1.2 billion units this year, up 23 percent from last year, and reach 1.8 billion units by 2018, said IDC. The industry research firm, in a report (http://bit.ly/1ko36sY), forecast a compound annual growth rate from 2013-2018 of 12.3 percent, driven by a doubling of shipments in emerging markets including India, Indonesia and Russia. China will account for nearly a third of all smartphone shipments in 2018, IDC said. A key to reaching the growth opportunity is “balancing affordability with expectations,” said Ramon Llamas, research manager-IDC mobile phone team. IDC projects the average selling price (ASP) of smartphones to be $314 this year, down 6.3 percent from 2013, and ASP is expected to drop to $267 by 2018. Consumers will expect premium features regardless of falling prices, Llamas said. “Until recently, low cost has equaled poor quality in the smartphone space,” said Ryan Reith, program director-IDC’s Worldwide Quarterly Mobile Phone Tracker. In the competitive high-end segment, vendors including Motorola Mobility “are trying to skate to where the puck is going by offering extremely affordable devices like the Moto E, which offer a ‘good enough’ experience that will suit the needs of many,” Reith said. Components used in high-end smartphone designs from two to three years earlier “are still sufficient in many aspects,” Reith said, allowing vendors to offer lower-cost solutions. Among operating systems, Android will remain dominant, with market share of 80.2 percent this year, IDC said. Over the forecast period, Android will lose minimal share to Windows Phone, it said.

The multistakeholder document (http://bit.ly/1nLhMBC) produced at NETmundial was a “critical achievement,” said Daniel Sepulveda, deputy assistant secretary of state for economic and business affairs, referencing last month’s Internet conference meeting in Sao Paulo, Brazil (WID May 8 p1). Sepulveda spoke on an Internet governance panel at the Council on Foreign Relations (CFR) Thursday. Internet governance stakeholders were “very pleasantly surprised” with the outcome of NETmundial, said Lynn St. Amour, CEO of Internet Matters, a nonprofit advocating for child safety online. The economic interests of developing countries trying to expand Internet access need to be considered, since many nations see the U.S. as able to “capture most of the gains” and retain a “competitive advantage” in Internet affairs, said Adam Segal, CFR senior fellow. Segal raised concerns about the effect certain countries, like Russia and China, will have on the upcoming Internet governance debates. If countries try to introduce measures to use the Internet as a means of political control, “we will oppose it, and it will not work,” said Sepulveda. The “jury’s still out,” said Segal. Sepulveda said he will lead the U.S. delegation at the ITU Plenipotentiary Conference in Busan, South Korea, Oct. 20 (http://bit.ly/1rrMHmS).

NTIA’s plan to transition the Internet Assigned Numbers Authority suffered potential setbacks Thursday, as two House committees approved separate bills that attempt to delay the transition. The House Commerce Committee approved the Domain Openness Through Continued Oversight Matters (DOTCOM) Act (HR-4342) in a markup vote. The House Appropriations Committee approved a 2015 funding bill (http://1.usa.gov/1g09VBb) that reduced NTIA’s budget to $36.7 million and didn’t provide funds for the transition. The likelihood of the DOTCOM Act’s passage in the Senate is slim, said Internet governance experts in interviews.