by Seth Johnson
“Recognized Operating Agencies”
Competition and the Internet
Vertical Integration and the Internet Platform
Some Notes on Defending the Internet in a Transnational Context
My initial analysis of the contributions of the US Delegation at the outset of the ITU’s World Conference on International Telecommunications (WCIT), concluding tomorrow, focused on highlighting certain discrepancies between the US’s rhetorical stance of opposition to a new international regulatory regime, increased control over Internet governance, and censorship, and what the actual recommended language would actually accomplish. It shows how the US’s proposals emphasize a generalized conception of liberalized competition that if endorsed as part of the frame established by the ITU would serve to legitimize the failed conception of competition embodied by the telecommunications regulatory regime in the United States. It also illustrates how the US recommendations do not actually limit the ITU from extending its scope beyond “traditional telecommunications,” as the Internet Society advocates that they should. Instead the US’s position provides a broadly-stated frame that lets the ITU continue the expansive interpretation of its scope that it has already expressed in its previous proceedings, such as the Geneva and Tunis Declarations for the World Summit for the Information Society, and the Hyderabad World Telecommunications Development Conference Declaration.
In the following I extend my comments to further illustrate the implications for the open Internet of the US’s position and to describe how the goal of preserving the Internet’s nature would be most effectively served. Along the way, I first examine the dispute over applying the International Telecommunications Regulations (ITRs) to “recognized operating agencies” (ROAs) as the US has advocated, or to all “operating agencies” (OAs). I also offer comments pertaining to the relation between the generalized language regarding competition that the US advocates, and the US incumbents’ conception of telecommunications in the IP-enabled world as a vertically integrated market which that language fully supports.
As the conference has proceeded, the US has presented its advocacy for the term “recognized operating agencies” (ROAs) as guarding against efforts to extend the scope of the ITU to cover the Internet. In this recent interview, US Ambassador and head of the US Delegation Terry Kramer associates ROAs with traditional providers of telecom services while referencing the conference’s charter, which is focused on telecommunications, thereby projecting the ROAs versus OAs issue as about distinguishing telecommunications from Internet concerns. However, what should also be noted is that the US is seeking to define a relationship between the ITU and international telecommunications providers that designates certain providers as specially “recognized” by their governments.
The debate over ROAs or OAs is a dispute between contingents that both want to endorse oversight by the ITU — while we have not yet actually limited its scope or defined the distinction between “traditional telecommunications” and such terms as the Internet, ICTs, or information services, and while we are endorsing a broadly-stated definition of telecommunications that the ITU has already seen fit to interpret expansively in other proceedings prior to the WCIT.
The distinction between the two positions is simply about two different modes by which to define the relationship of the ITU to providers of international telecommunications: either 1) by enacting explicit rules now that go beyond “traditional telecommunications,” and applying them to all “operating agencies” among nations that sign onto the ITRs; or 2) by not enacting rules that address the Internet (as yet), but by endorsing the ITU’s oversight in relation to particular “recognized” operating agencies that will then hold a special status under international rules for providing international connectivity to the public within their Member States.
These are not the only options available for defining this relationship, and below I will explain how recognizing the nature of the Internet’s foundation would guard the Internet more effectively than the frame presently being promulgated at the the WCIT. Nevertheless, the US presents its position for ROAs favorably as compared to the position of nations proposing to cover all OAs, by identifying the proposals of these nations as extending the ITU’s scope to the Internet and opening up the prospect of empowering censorship. As I noted in my previous analysis, this stance against censorship can easily divert attention from addressing critical questions that might arise given the ITU’s already-established relationship to providers of physical telecommunications infrastructure. The US’s argument for using the ROA term in terms of resisting censorship is an example of this, whereby it advocates a relationship between the ITU and US providers of international telecommunications services that places the incumbents’ national network offering in a unique new position legitimized by the framing of an international body.
The way the US distinguishes other agencies from “recognized” operating agencies offers indications of the special status that ROAs would have (“other operating agencies that are not involved in the provision of authorized or licensed international telecommunications services to the public”). Apparently other agencies will not provide international Internet connectivity to the public, and would need a license or authorization of some sort to hold “recognized” status. This distinction in terms of authorization or licensing may also reveal that Article 9, the provision allowing “special arrangements” separate from the 1988 ITRs, and under which the international Internet was developed since then, will need to be removed or made subject to new forms of authorization (although revisions to that effect have not been proposed).
In his recent interview, Ambassador Kramer offers new distinctions, identifying the ROA term with “traditional providers of public telecommunications services,” distinguishing this category from “Internet players” and private or governmental networks, rather than describing the distinction in terms of whether agencies provide international connectivity to the public or are authorized to do so. This newer formulation does not clearly reveal whether by “private networks” Kramer means other providers competing at the physical layer and offering international connectivity to the public.
Kramer also repeats the framing of the ROAs vs OAs issue in terms of resisting censorship, distinguishing telecommunications from Internet issues by noting the OA term could include “Internet players” and thus extend the regulations to give oversight of content. Again, this allows the US to valorize its position in contrast to the prospect of censorship, but it also directs attention away from the fundamental basis of the dynamism of the Internet in competition at the physical layer.
When entry by competing providers at the physical layer is impeded by dominant providers in any region, you do not have an Internet within that region — you have an intranet. There is no Internet if there is no interoperation between autonomous networks — and there is no free market in information products without competition at the physical layer making that market possible for end users.
Likewise, there is no Internet within a vertically integrated telecommunications environment that has joined the physical layer with the higher layers within which Internet applications are deployed.
Telecommunications policy is fundamentally about transmitting information across physical space, whether through the air or carried over or buried under the ground. The freedom to compete at the physical layer is the crucial basis for the Internet that is at stake when developing telecommunications policy frameworks, including in the international context.
Communications advocates recognize that the Internet platform that existed in the United States before 2005 was characterized by a highly competitive market among autonomous Internet providers at the physical layer. Bruce Kushnick of The New Networks Institute has long chronicled the developments in communications policy in the United States, and in a recent article on Huffington Post he provides an instructive detailing of the history of Internet and broadband provisioning. As of the end of 2000, there were over 9,000 independent ISPs in the field providing access to the Internet to 77.5 million subscribers, and while we can’t measure the demand produced by the Internet platform in terms of the products of the “traditional telecommunications” context, Kushnick shows that this competition at the physical layer was associated with a pronounced growth in deployed phone lines.
The disappearance of this market was not a case of horizontal or vertical market consolidation by the incumbents; it was a regulatory act that in one move eliminated the competition and allowed the US incumbents to claim the physical infrastructure layer and vertically integrate it with their own information services offerings.
We will not be able to guard the Internet until policy frameworks are articulated that clearly identify the role of competition at the physical layer in such a way that regulators will clearly understand the importance of the distinction.
The foremost question that delegates for the US must address regarding international telecommunications in the IP-enabled world is about potential impacts on the dynamism that comes from a real Internet that would be brought by the vertically integrated telecommunications context represented by the US incumbents. A vertically integrated market benefits the competitiveness of particular telecommunications providers in certain ways but it works directly against other benefits for the public that are crucial aspects of the Internet platform and the market it creates.
The merits of a vertical market in telecommunications in relation to public policy regarding the Internet cannot be assessed according to indicators related to particular products offered by particular telecommunications providers who have vertically integrated their production and supply lines across the physical layer. Instead, the relevant merits are about the direct social advantages of: 1) the flexible, general purpose platform that is assured as a natural result of providers competing at the physical layer, who must also interoperate in a general purpose manner for the sake of their end users’ global reach and in support of the unpredictable variety of products that may be developed or consumed on other participating networks; and 2) the very differentiation of products and services made possible by this highly flexible platform, on the basis of which end users and network providers compete.
Both of these advantages of the competitive market in interoperating, independent providers at the physical layer are counteracted when telecommunications providers gain market dominance by vertically integrating the physical layer with higher layers.
These two advantages express the underlying dynamics produced by establishing a general purpose medium among interoperating providers that enables a new market in globally accessible and distributable information products. The economics of vertical markets, on the other hand, relate to control and efficiency for particular producers and particular products supported by their production and supply chains. An analysis in those terms does not address the impact of that integration on the very basis for a new kind of market made possible by a globally connected platform whose flexibility is assured by competition among providers at the physical layer.
As long as the Article 9 provision for special arrangements remains in the ITRs, we can always continue to use that as we have in the past, and ignore overtures by other countries (or the US) proposing that the ITU extend its provenance in such a way as to allow it to legitimize constraints on competitive access to the physical layer or to enact rules that obstruct innovation on the Internet platform established on that foundation. If we consider eliminating Article 9, however, then “recognizing” particular providers for oversight under the ITRs is not a particularly relevant limitation for preventing the ITU from undermining the Internet platform, or from expanding its scope to Internet governance.
If we are to limit the ITU from expanding its scope in such a way as to interfere with the Internet, then we must recognize the nature of the Internet’s basic foundation. There is only an Internet in a context constituted by open and free competition among independent providers who can readily gain access at the physical layer. Conversely, when access to communications across physical space is impeded by privileged providers of infrastructure, that constitutes an intranet, not an Internet. Thus recognition of the physical layer is key to defending the Internet, while overlooking the distinction alows the platform to be undermined.
We can only secure that platform from the ambitions of an intergovernmental forum like the ITU by making sure the forum is not empowered with a frame that lets its provenance over the activities of providers of international connectivity be asserted in such a way that independent, private network providers are not readily able to enter the field and interoperate.
Note that of course this approach cannot stop oppressive governments from interfering with the Internet within their own national networks, but this is the frame that in the long (and short) run will defend and preserve the Internet, because it is only within those national traditions that place a priority on fundamental freedoms that the kind of environment that will continue to route around censorship will exist. It is only within this kind of environment that the Internet actually thrives and survives because in such a free country the activities of its citizens on that platform are secured by their claim of fundamental rights. This is what we rely on to secure freedom in America — not “recognized” operating agencies, generalized support for “liberalized competition,” or broadly stated definitions of telecommunications.
Rather than endorsing the ITU with a frame that helps rationalize what passes for competition here in the US while setting the US incumbents up with a special relationship to new international rules governing international telecommunications, the WCIT proceedings in Dubai could become the occasion for setting a frame that secures the Internet platform while preventing international governance from becoming a means for empowering local governments to act through their special relationships with providers of national intranets to disrupt the freedom of the platform.
The WCIT can be an opportunity to set a marker beyond which the executive branch in the US will not allow the US incumbents to pass. Whatever happens with the ongoing efforts of the US incumbents to characterize attempts to enforce the obligations that they incur along with the privileges they obtain in relation to the public right of way as governmental regulatory takings or violations of their free speech rights, we still can put their efforts to set the frame in these terms within an larger political context that can help us take back our communications policy. But we can do so only so long as the executive branch is willing to use the treatymaking power to draw the line rather than to help the incumbents extend their reach to the international arena.
We certainly don’t want our executive branch to endorse an international forum with a frame that will legitimize the failed conception of the US incumbents and let it stand as what we rely on to represent what fosters the development of infrastructure to support the Internet.
If the administration were ready to state that we cannot secure the Internet unless we recognize that it’s based on a foundation of network providers that can readily gain access to and compete at the physical layer, then the WCIT could become an historic occasion to re-empower the Internet, to effectively guard against misapplications of international governance related to the Internet, to reassure US constituencies that have long sought to redirect telecommunications policy in the US, and to reassert the basis in fundamental freedoms that is the actual foundation that renders the Internet capable of routing around censorship.