Month: October 2012

“sender pays/termination charge/enhanced quality of service… fails.” ETNO – the big European telcos – wants a share of online video revenue. Deutsche Telekom and France Telecom, like most Euro telcos, are struggling because landline voice is disappearing and they still haven’t adjusted to competition. Earnings at both are below the dividends they pay. They are looking for revenue wherever they might find it.
     Vint Cerf has been following this issue since Dave Farber and Vint’s partner Bob Kahn created the first Internet peering arrangement. He made some comments on an Internet Society list and I asked if he’d explain his point of view on the record. He responded:
     “Sustainability is essential for the Internet’s continued utility. That means that all its costs need to be paid for. This does not necessarily dictate any particular business model and one can find many in the loosely-coupled Internet ecology. ETNO has proposed that application service providers pay ISPs everywhere in the world for ‘better service delivery’ for users of Internet access provision.
    It is generally the case, in the Internet, that all users (including application service providers) arrange for access to the Internet. Essentially the users (and I apply this term to application providers also) get access to the Internet under local terms and conditions and then proceed to use the Internet for whatever purpose suits their interests. ETNO seems to want to return to the ‘sender pays/termination charge’ model of the past. Recently, it has introduced a variant in which the “sender” pays for ‘enhanced quality of service.’
    This notion fails on two counts. First, it suggests that the income from users paying for local access is insufficient to compensate for the cost of providing access. The obvious solution is NOT to charge every source of traffic on the global Internet. Rather, local costs should be reflected in access prices (possibly modified by local subsidy decisions). Second, it implies that the “ordinary” service isn’t good enough quality and that the traffic sources should pay (every access provider) for “enhanced quality of service.”
    The shadow of “monetizing scarcity” looms in such proposals. Taken to an extreme, costs for every user and application provider would rise in such a model. In the Internet, demand is driven by the users on the receiving side. Since the Internet operates in a symmetric way, both sides have an obligation to defray local access costs and the intervening networks need to work out bilateral interconnection agreements.
   Old business models and the companies that revolve around them are often challenged by new technology. Darwin was right, there are only two choices: adapt or die.”
   Personally, I don’t think Deutsche Telekom or France Telecom is going to die. But the solution isn’t to tax the net. First step is to follow Telefonica and sale off some corporate jets.

Five years ago, U.S. asserted ITU is not just telephone. Ambassador David Gross led U.S. information policy in 2006 when he said “One of the great things about the I.T.U. is it has changed over the years, from telegraph to telephone to Internet. We don’t want a major international institution to become obsolete just because it couldn’t change as the world changes,” to the NY Times. Today, he’s a private lawyer leading the charge at WCIT to prevent ITU having any influence over the Internet. He’s funded, I believe, by giant Internet companies and articulates their position very effectively.

    “Everyone but the U.S. thinks ICT – Information and communications technology. Only in the U.S. are telecommunications and information kept so separate,” Columbia Professor Eli Noam told me several years ago outside a political context. Noam is the world’s leading public intellectual in the field. . His opinion is widely shared. Both the BBC and China Daily in recent articles describe ITU as the U.N. agency for the Internet. Matthias Kurth, the German regulator who nearly defeated Touré for ITU Secretary General, agreed in his campaign material the ITU mandate covered the Internet.

    “ITU is the ideal body to organize a worldwide transfer of knowledge and expertise in advanced information and communication technologies. I would initiate, for example, guidelines and principles to enhance the goal of supporting the most cost-efficient technologies for broadband access, in order to boost their worldwide penetration.” 

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Change is not good. Terry Kramer is too nice a guy to call “Dr. No,” but that was my earlier headline after listening to his press call and reading his speeches. With the exception of more power to the companies in rate negotiations, the U.S. positions amount to “no substantive change.” 

    The U.S. is going to WCIT with “non-negotiable demands,” ensuring a difficult negotiation.  ITU SG Touré repeated at Columbia September 23 his intent to decide everything by consensus, virtually giving the U.S. a veto. Touré and a large majority of the delegates believe improvements can be made, that we are not “in the best of all possible worlds.” The tension is intense at every meeting. 

    In his own words, here’s the positions of Ambassador Kramer. He has five key principles:

• Minimal changes to the preamble of the ITRs;
• Alignment of the definitions in the ITRs with those in the ITU Constitution and Convention, including no change to the definitions of telecommunications and international telecommunications service;
• Maintaining the voluntary nature of compliance with ITU-T Recommendations;
• Continuing to apply the ITRs only to recognized operating agencies or RoAs; i.e., the ITRs’ scope should not be expanded to address other operating agencies that are not involved in the provision of authorized or licensed international telecommunications services to the public; and
• Revisions of Article 6 to affirm the role played by market competition and commercially negotiated agreements for exchanging international telecommunication traffic.

and here’s the full speech, as prepared to deliver to the SAMENA event.

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