The U.N.'s War on the Internet: Could the Web Lose?




By: Abby Johnson | Staff Writer

Interview: The U.N. tax proposal is essentially "just a money grab"

A lot of speculation has been floating around about a proposal from the United Nations that could impose a global Internet tax on the world's largest content providers. Based on leaked documents from the European Telecommunications Network Operators' Association (ETNO) that are being made available at WCITleaks.org, the speculation is, in fact, true.

Although the language is vague, the documents indicate that companies such as Google, Apple, Facebook, and others could be tremendously impacted. When the United Nation's International Telecommunications Union (ITU) meets in December, the proposal, if implemented, would amend the existing telecommunications treaty, the International Telecommunications Regulations (ITR).

How would you react if the entire structure of the Internet changed? Would you still feel comfortable visiting your daily websites? Furthermore, what would it do to business and the economy? Please share your thoughts.

ETNO's proposal calls for the "principle of sending party pays," which, according to author and technology consultant Larry Downes, means that large content providers would be forced to pay fees, or a tax, linked to usage for the large amounts of bandwidth they use.

"This changes the whole structure of really how the Internet works and has worked successfully up until now," he said.

Up until this point, the Internet has operated on an unmetered or peered traffic system meaning that all user traffic is treated the same. The new proposal, however, would imply that the bits that are transferred from a Google search, for example, to a user from another country would charge Google, explained Downes.

The last time the International Telecommunications Regulations was updated was in the 1980s. It began with the telegraph and was revised to include the telephone system, and now, the United Nations wants to amend it again to incorporate the Internet.
As Downes explained to us, the current version of the treaty deals with international long distance phone calls. In essence, the telephone carriers of the member countries in the United Nations set a price for the international long distance calls coming into their countries. For example, a call placed from the U.S. to France could cost a certain amount of money per minute, based on the rate that the carriers set.

ETNO's proposal indicates that foreign countries want to impose this same type of arrangement for the Internet. Since the process is extremely secretive and the information obtained thus far is only available through leaked documents, the price range for such a tax is unknown. However, based on the costs of the telephone charges, analysts expect them to run into the billions of dollars.

"In the 1990s, the United States paid a net of $15 billion dollars," Downes pointed out. "That is to say U.S. consumers paid $15 billion dollars to place long distance international phone calls more than what was paid on the other end for calls coming into the United States."

Since the current proposal involves data and bandwidth, chances are, the rates would be much, much higher if the tax were implemented. What's more, the majority of the large content providers are based in the United States, which, of course, means the tax would impact them the most.

While it seems that this specific proposal puts the United States against the rest of the world, Downes thinks the impact is much greater. He told us that it would not only be very harmful to U.S. companies, but he believes that it would also be harmful to developing countries and the Internet as a whole.

For example, if companies such as Google were taxed, these fees would translate over to consumers. It could result in Google increasing its ad rates and also being forced to cut off developing countries from which the tech giant wasn't gaining anything in return.
"The net effect may be that some countries, particularly in the developing world, get cut off all together from the most valuable content," explained Downes.

Based on this proposal, it appears that other countries are jealous of the U.S. and the technological developments it has made. Since the U.N. is looking to make some revisions to its telecommunications treaty, the assumption is that they are using this as an opportunity to get a piece of the pie, as the old saying goes.

"Frankly, the Europeans are concerned that most of the successful content-based businesses of the Internet are all in the United States," said Downes. "They see this [proposal] as one way of kind of getting their pound of flesh out of the very successful Internet industry... it's essentially just a money grab."

"They see the U.N. as the opportunity to put that in the form of an international treaty, and therefore with the law behind it, make it easily collectible," he added.

Another alarming aspect of these circumstances is that this is just one proposal. As mentioned earlier, these meetings and negotiations are done in secret, which leads observers to believe that there are other proposals as well. Since the ITU is looking to rewrite the ITRs, Downes and others familiar with the proceedings suspect that countries such as Iran, China, and Russia will push to have the new treaty require all content to pass through a national government gatekeeper.

"There are many countries, as I said, that are unhappy with the Internet... they are unhappy because the U.S. and developing nations are making the most money off it," explained Downes. "Or, they're unhappy because of the way in which information flows outside of the channels that they can control."

"Whatever the reason, there are a lot of countries who have a lot of interest in making sure that the Internet does not continue to operate as successfully from our standpoint as it has," he continued, "and they're gonna do whatever they can to make that happen."

What Downes is saying and what other news publications have indicated is that this proposal, and others that are not yet public, could be the first step in the United Nations attempting to govern the Internet. At this point, the Internet is governed by multi-stakeholder structure. The Internet Society, which is made up of several engineers, also plays a role in establishing protocols and, most recently, was involved in successfully rolling out IPv6. The Internet Corporation for Assigned Names and Numbers (ICANN) and the Worldwide Web Consortium are also involved in the governance and address issues like network and domain name administration. Through this process, the Internet has been able to evolve naturally and quickly respond to the ever-changing advancements in technology.

The White House, the State Department, and Congress have all expressed concern about this proposal and are working to raise awareness of the potential dangers it could pose since it would completely transform the existing and successful model of the Internet. Robert McDowell, a commissioner on the Federal Communications Commission, has been very outspoken on the issue and wrote a piece in the Wall Street Journal in February warning of the dangers. In part, he wrote:

"Upending this model with a new regulatory treaty is likely to partition the Internet as some countries would inevitably choose to opt out. A balkanized Internet would be devastating to global free trade and national sovereignty. It would impair Internet growth most severely in the developing world but also globally as technologists are forced to seek bureaucratic permission to innovate and invest. This would also undermine the proliferation of new cross-border technologies, such as cloud computing.

Abby Johnson is a reporter for WebProNews.