A note on Next week's vote at the FCC (I will post other points of view if well stated djf)

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Gross, David"
Date: October 15, 2009 8:02:06 AM PDT
To: dave () farber net
Subject: A New Post


Next week the Federal Communications Commission will vote on a  
proposal to consider establishing binding "net neutrality" regulations  
on companies providing Internet services. Breaking with the long  
tradition of the Clinton and Bush Administrations of ensuring that  
governments around the world do not "Regulate the Net" – the FCC’s  
vote next week may have significant unintended consequences  
internationally for the Internet.

In essence, the Commission's proposed net neutrality rules would  
result in the US government regulating the Internet (i.e., imposing  
binding rules on how Internet networks operate) rather than leaving  
those issues to technical bodies and those providing the  
infrastructure.  It has long been the desire and focus of other  
governments to play a significant role in how the Internet is  
structured and how it operates.  Those governments include not only  
China, Russia, Saudi Arabia, etc., but also others such as the  
European Union and certain of its member states.  My predecessors  
during the Clinton Administration and my colleagues in the Bush  
Administration fought hard and successfully to ensure that the  
Internet would not be regulated by the UN, by other international  
organizations, or by other countries.

However, if the US government creates a set of rules and regulations  
that will govern the relationship among those providing Internet  
facilities and services to advance US government policies – even for  
good purposes such as promoting the free flow of information -- then  
there may be virtually no basis for the United States to object to  
other governments also creating new rules governing the Internet.   
Presumably this would include not only issues about Internet content,  
but also about Internet facilities and the economic relationships  
among Internet service providers. It is easy to understand that these  
other governments will seek to design rules to help their domestic  
companies at the expense of international and American companies  as  
well as at the cost of the economically efficient design of the  
Internet.  Ironically they are also likely to use the establishment of  
new US rules regulating the Internet to impose their own restrictions  
on Internet content – especially focusing on restricting the free flow  
of information so as to promote their own interests in enhancing  
Chinese "social cohesion" or other countries that seek to "defend  
against religious defamation".

At a recent meeting of the UN’s International Telecommunication Union,  
there was great interest among ministers and regulators around the  
world regarding the FCC's net neutrality proposal and the $7.2 billion  
stimulus package to support broadband build-out.  Based upon my  
conversations with many of those ministers and regulators, they see  
the US government’s active involvement regarding the Internet and  
broadband as signaling a change towards more active government  
intervention and regulation rather than primarily relying on  
competition and market forces.  As many ministers and regulators have  
been long been looking to more actively regulate the sector -- both  
telecoms and the Internet -- the changes discussed by the FCC and  
others are seen as a basis for a return toward the traditional  
interventionist role of governments in these areas.  It seems likely  
that such a traditional role would naturally include protection of  
domestic economic interests at the expense of American and  
international players.

Of course, with globally tight credit markets and other problems  
associated with the economic recession -- especially in the developing  
world -- changing significantly the rules of the game by imposing new  
rules is also likely to have a materially adverse impact on telecoms  
capital formation.  This would likely lead to building relatively  
fewer high speed broadband facilities around the world.  At the ITU  
there was discussion about major changes in regulatory policies  
creating investment uncertainties and that, other things been similar,  
such uncertainties decrease investments, especially in difficult  
political and economic environments.  On the other hand, such  
decreased private sector investments could give a substantial boost to  
China and other economies where government support is easier to get.

I have no doubt but that the FCC’s proposals to create new Internet  
regulations are being done for the best reasons – to increase the free  
flow of information to consumers. However, in this case the law of  
unintended consequences is likely to result in serious damage being  
done internationally to the freedom of the Internet.

Ambassador David A. Gross







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