October 2014 – Net Policy News

Fairness for Africa: Cheaper Transit, Reasonable Royalties, Fair Taxes

“Affordability is the single most important lever to bring the Internet to everyone,” Hamadoun Touré tells us in Busan. Here are some things the richer countries can solve to help bring affordable broadband to the poor. I’m focused on correcting flaws in the system that suck

1) High backhaul/transit costs double or triple the cost of providing broadband in most of Africa. A megabit costs $0.50-$3 in most of the U.S. and much of Europe. The same megabit in Lagos costs $170, 100x as much. 50-90% of the difference is cartel pricing, based on undersea costs where there is more competition.

2) High royalties may soon double or triple the cost of a low end smartphone. Hundreds of millions fewer people will connect. Carlos Slim of Telmex told me at the Broadband Commission the $50 smartphone will connect two billion more people. On a mass product like a smartphone, a “reasonable” royalty would be something like 5-10%. Intel calculates royalties may soon be $140 on a mid-priced phone. Every international agreement calls for “reasonable” royalties and it’s time to reduce the Qualcomm tax.

3) Multinational giants should pay reasonable taxes. France and England can’t get Google or Apple to pay taxes. What chance does Cameroon or Thailand have without strong support from International groups like ITU and the giant’s home countries? Collecting through a “sender pays” is a terrible system which clearly is anti-consumer in the developed world. But changes in telecom pricing have sucked hundreds of millions in taxes/fees and probably more from some of the the poorest countries. Most of the benefit goes to carriers and consumers in richer countries, starting with carriers like AT&T that now aren’t paying the old termination charges.

News update

AT&T lawyer Kalini entangled in gov payoff scheme NY Times

Verizon “news” site SugarString forbids writing about American spying or net neutrality. Daily Dot Verizon successfully persuaded the Internet Society not to criticze them on Net Neutrality as well.

ITU Busan, where nothing will happen

The U.S. likes the the way the Internet is run dislikes any substantial change. The U.S. has enough power to block anything the U.S. doesn’t like. Therefore, any substantial change will be blocked. Everything in public here is hollow talk, including an enormous amount of posturing to the folks back home. Everyone knew this months ago. Busan in the fall isn’t a tourist destination and the parties are bland. The delegates are here to meet each other for future work, just as I am.

Diploroo, of the Australian delegation, is one of the most popular here.

Cisco: Africa in 2017 to Have More Internet Users than U.S.

300,000,000 smartphones coming soon. Carlos Slim of Telmex tells me the world is about to change. “Two billion more people will connect to the Internet when smartphones cost $50. The phone makers are promising me a $50 phone in 2014.” If Spreadtrum and Firefox deliver a $25 smartphone, as promised, that could accelerate takeover.

~310,000,000 Africans will be connected to the Internet in 2017, Arielle Sumits of Cisco predicts. The population of the U.S. is about 310,000,000, Africa over a billion. It’s inevitable that the U.S. will be dwarfed by the rest of the world. In Africa, there are already about 450,000,000 mobile phone users with substantial growth continuing. Most of them will get Internet-capable phones in the next few years.

There are fewer than 10M broadband landlines on the continent, about one line per hundred people.

Egypt has 2.5M landlines, about 14% of households. Only Egypt, South Africa and Algeria have more than a million.

The Internet expansion is remarkable. Kenya is calling itself “Silicon Savannah” with an estimated 12M connections for 40M people. lat.ms/1gLNo69 98% are wireless. Dr. Bitange Ndemo as Communications Minister proposed some of the most advanced spectrum policies in the world. Building a single network in 100 MHz provides an estimated 30%-70% more capacity.

High Frequencies: The FCC Really Does Want to Know What to do

Gigahertz frequencies support gigabit and ten gigabit wireless. The U.S. FCC, led by John Leibovitz, is following the progress very closely. They’ve just issued the Spectrum Frontiers NOI. They are asking many of the right questions here and it’s the job of our community to give them some answers. I’ve had a chance to discuss these issues with the FCC people involved. They’ve obviously done a great deal of research. The FCC is reaching out out to several of the leading experts for ideas. I believe they intend to get this right.

A NOI (Notice of Inquiry) does not propose action. Instead, NOI’s collect information that will inform them as they make proposals. The conflicting claims about spectrum are hard to reconcile even with proven technology. Good information about what’s practical in high frequency is just being discovered, making it even harder to reach a decision. The payoffs are potentially so large that many countries are moving ahead very quickly. Japan and Korea intend to deploy 5G in 2018 even though nothing is out of the labs yet.

The European Union and Korea have both dedicated $1B for research in this area; the U.S. has only scattered funding. Despite that, much of the most important work is being done here, by people like Andrea Goldsmith of Stanford, Robert Heath of Texas & Ted Rappaport of NYU.

ISOC’s Brown on what the Plenipot shouldn’t do

Kathy Brown is proving far more responsive to members and is doing a remarkable job bringing people into the Internet Society. That makes it even more crucial they align policies with their slogan, “The Internet is for Everybody.” At the ITU, they are among the strongest supporters of the new U.S. position, “Hands off the Internet, ITU and governments.” (Few remember that in 2006, U.S. Ambassador Gross applauded the ITU effort to be more involved with the Internet.}

Kathy hasn’t changed ISOC policies largely determined by the worry that ITU Governments will have too much power. We all know governments have the ability to foul things up in a major way, but corporate domination and economic power are also issues.

Net Policy News will work hard to present informed opinions that disagree with our point of view. Here’s Kathy’s widely distributed note and their official ITU presentation, in full.

ITU Plenipot 2014 Delegate List

Here are the 2,000 plus delegates accredited to the every four year ITU Plenipotentiary, as of October 10. The list is available to thousands via a standard ITU TIES account, freely available to anyone in the U.S. Secretary-General Touré has encouraged everyone to take advantage of the fact that ITU documents are public and circulate them freely. A few things I noticed:

Africa: Believes ITU is the most important event. Nigeria sends ~80< Kenya, Ghana, Morocco Cote d’Ivoire, Sudan, Zambia, Burundi, Cameroon and others a dozen or more. The ITU meeting is used as a crucial meeting point of the Africans for more than just the ITU. Since many of these countries can’t afford to go to all the other meetings, so any group that wants to relate to Africa needs to be here. Busan, Korea is not a vacation spot. They come to work.

Central Asia: Large delegations from Kazakhstan and others. Presumably meeting each other here in lieu if effective regional meetings.

England, France: Relatively small delegations, although England is leading an EU attack on the Russians.

U.S.: Only about 7 of about 140 U.S. delegates (5%) represent civil society or consumers. Multi-stakeholder?

U.S.: There are 8 from “three letter agencies” – DOD, NSA, HSA. They are not there to promote freedom of speech.

3.5 GHz: Enough spectrum for two Verizon sized networks up for sharing in the U.S.

Military willing to share enough spectrum to make a difference. Putting that to use for expanded WiFi is almost a no-brainer because WiFi is clearly delivering more value than monopoly spectrum. There’s a huge swath currently set aside for defense, which only uses it on the coasts. (Presumably, that means navy radars.) The proposal would allow others to share the spectrum where it’s not in use after checking with a location database. DOD has agreed. The best guess is 60% of the country will be available.

The current FCC proposal wants to tie up much of the spectrum coming free. Perhaps that was a good idea a while back when AT&T discussed building a large network of 3.5 GHz LTE smalls cells and some much smaller companies had some ideas. LTE absolutely does not require monopoly spectrum. Qualcomm, working with Verizon, is promising LTE in unlicensed bands. One report is that AT&T is tying that up in standards.

AT&T’s technology choices have changed since then. It’s highly unlikely they would actually build very much, if anything. LTE is proving to have more than enough capacity so far, especially because AT&T has a lot of unused frequencies including 2300. By 2018-2020, 28 GHz 5G will probably be far more attractive to AT&T in the areas they need capacity (mostly dense urban.) AT&T is one of the world leaders in exploring 28 GHz.

I asked AT&T if they were actually committed to building in the band if the FCC made it available. They aren’t.

Internet Society members finally at the ITU: Multi-stakeholder breakthrough:

ISOC can bring 100 members of civil society, bend ITU toward consumers. That would do more for “multi-stakeholder” goals than everything else ISOC is doing. Grigori Saghyan, of ISOC Armenia, is going to Busan as a member of the ISOC delegation. The U.S. is sending 100+ to the Busan Plenipot. I asked Secretary-General Touré whether ISOC could send 100 as well and he confirmed they’d be welcome to send as many as we choose. ISOC is an ITU member entitled to send as many people as we like to WCIT, Plenipot and other meetings.

Bringing dozens of community representatives could dramatically change the tone of ITU meetings, currently dominated by government and corporate reps. In practice, the ITU meetings are very open and civil society representatives can make a huge difference. Harold Feld of Public Knowledge had impact at WCIT.

Sally Wentworth has replaced Kummer and isn’t being as stiff necked as Kummer. She writes, “I understand that you had a question about the ISOC delegation. As you may recall, a few months back, we issued a call for applications to support 5 chapter members to attend Plenipot as part of their national delegations. Grigori was among those selected. Unfortunately, for some of our chapters, participating on their national delegations has proven to be difficult and so, as we got closer to the deadline, we welcomed them to the ISOC delegation.” At ISOC/ICANN, Veni Markovski said chapters have been asking for this for years and it was a welcome change this year. Raul Echeberria of ISOC said that unless there’s a problem ISOC will do more.

Spectrum Auctions: Do they work if companies cut deals?

In America, looks like Verizon and AT&T find a way. Bidder’s rings are as old as auctions With just a few players they become easier to create. As a former Time Warner VP explained a while back, “We’ve become so good at signalling we don’t have to meet in airport motels anymore.”

AT&T President John Stankey and Verizon CFO Fran Shammo didn’t get together in an exclusive club and cut an auction deal. They could go to jail. Stankey at a public conference said they would bid $10B in the 2015 auction but weren’t particularly interested in the 2014. Soon after, Shammo told Wall Street they were focusing on the 2014 auction and wouldn’t commit to even entering 2015.

These are incredibly able executives likely to find a way to “bid rationally.”

Secretary-General Houlin Zhao has seen poverty

18 year old Houlin Zhao was sent to live with the peasants. “I worked in the rice fields and in construction. It was a very hard time. My father made clothes and we were not affluent but what I saw in the country was very different. Even after 30 years as a technical expert I have never forgotten what I saw.” I asked what he was doing before 1973 because it was a challenging time in China. The country was still in upheaval after the Cultural Revolution. The failure of the Great Leap Forward was a decade in the past. Deng Xiaoping’s reforms were a decade in the future.

In 1975 Zhao graduated from the Nanjing University of Posts and Telecommunications and spent a decade working for the Ministry. He won awards, wrote articles and attended international conferences. Master of Science in telematics from the University of Essex in England.

Filters: Do conservative countries want them because their people search more porn?

Demand for filters and pornography correlate in the U.S. “Mormon Nevada,” a purveyor once told me, “is our best market. We sell more in conservative states.” I thought he was joking, but the Washington Post reports an academic study with confirmation that many comservatice states have high demand for exciting lit. (Not Utah, however.)

In the ITU and other international fora, religious countries like Saudi Arabia are often in the lead calling for “security,” which to them includes protection against immoral content. Perhaps the elite in the nation’s strongest in opposing censorship (Denmark, U.S. but not France or Germany) are less worried because they believe their citizens are jaded from an early age. That might be true in Washington or New York even if Southerners are less easily satiated.

Conservative Texas and Georgia are at the top of the chart for Google searches for this content. Vermonters, who send the only socialist to the U.S. Senate, is at the bottom. Liberal California is also near the top, which might be a result of other behavior patterns.