Internet Escapes Tighter Governmental Controls — For Now

Dan Bieler
Principal Analyst
December 21, 2012

Dan Bieler, Enza Iannopollo

Boring as it may appear, the World Conference on International Telecommunications (WCIT), which just took place in Dubai under the auspices of the International Telecommunications Union (ITU), matters to all Internet users globally. To us, the three most important questions that were discussed are:

  • Should national governments have greater influence over the global regulation of the Internet?
  • Should over-the-top providers (OTTs) like Google and business networks be governed by international telecom regulations?
  • Should the underlying business model of the Internet change from a free and neutral exchange of data to a “sender pays” model?

The purpose for gathering more than 190 governmental delegations was to discuss an update of the International Telecommunications Regulations (ITR). The ITR is the treaty that governs international telecommunications and dates back to 1988 — way before the commercial success of the Internet. In fact, the Internet was not even on the WCIT’s official agenda as an item to be discussed back then.

Essentially, two arguments were presented. In one corner, democratic countries argued for preserving the status quo of the existing Internet setup. Arguably, the central Internet agency is the US-based Internet Corporation for Assigned Names and Numbers (ICANN), which deals with domain names. ICANN operates under a multistakeholder model, comprising businesses, scientists, end users, and government representatives. In the other corner, the more autocratic countries argued for a greater state involvement in running the international communication networks under the ITU framework and potentially extending the reach towards OTTs and business networks.

The conference failed to produce a binding update of the ITR. To be fair, there was some progress regarding improved transparency in international roaming fees, the creation of a worldwide emergency number, and providing landlocked countries easier access to international fiber links. Still, most Western democratic delegations refuse to sign the revised treaty in its current form. They argue that the revised treaty opens the door to government meddling, an end to individual anonymity online, and undermines the concept of net neutrality. Opponents still want private companies to drive Internet standards.

The failure of the WCIT should be welcome, as it preserves the current framework for the Internet. Of course, Western governments — above all the US government — benefit from the current setup. But this setup has been behind one of the most dramatic global productivity increases. The McKinsey Global Institute found that the Internet accounted for 21% of GDP growth over the last five years among developed countries. Among SMBs, the Internet created 2.6 jobs for each lost to technology-related efficiencies. National economies need an open Internet more for growth than government meddling and calls by carriers for a “sender pays” Internet charging model.

Going forward, a key task will be how to address challenges to the telecoms landscape and business models that are the result of Internet dynamics. For instance, under all-IP-based network infrastructure conditions, any classic telecom service, including voice, will just be an application. It will be difficult to address such challenges without discussing the future of the Internet directly when the delegations reconvene in South Korea in 2014.


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