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Regulation as Innovation

The European Telecommunications Network Operators’ Association (ETNO) has issued a press release in which its Executive Board Chair and the ITU’s Secretary-General “reiterated the importance of the WCIT to lay the framework that will facilitate the further growth of an innovative, and sustainable future for the telecom and information and communication technology sector (including the Internet)”. It’s good to know that the ITU will be hosting a Conference that will ensure an “innovative and sustainable future” Internet.

Presumably, invitations will be sent to those responsible for the current Internet that has proven incredibly innovative, extremely robust, and a significant growth area in an otherwise dismal world economy. In reality, that isn’t likely.

Rather, it appears that we will ignore the evidence of a vibrant and growing Internet economy and instead face claims that there is a “need for a new eco-system for the Internet” based on an “economic model favouring innovation, openness and consumer choice”. Fortunately, we already have innovation, openness, and consumer choice in the current Internet eco-system. What’s missing?

ETNO would have us believe that user experience is at risk under the current economic model. This risk stems from the “strain on network resources” brought about by “growth in traffic” and that “end to end quality of service” agreements would encourage “innovation and improved user experience”.

To address this user experience risk, ETNO has made an “innovative proposal” that would introduce a “sender pays model”. It is unclear how this model would improve user experience but it would certainly alter the economics and operations of virtually every Internet participant (we all are senders). This would be a massive change and like all such changes, is extremely risky.

One might wonder how we would transition to this new economic model. ETNO’s answer is through the tried and true method of the past century and a half—regulation. The vehicle for that regulation is the International Telecommunications Regulations (ITRs), the same Treaty Instrument that was modified 25 years ago to “liberalize” (read deregulate) the telecommunications industry. This liberalization led to, by the ITU’s own admission, “the telecommunications revolution of the 1990s” and “new technologies such as mobile and the Internet”.

If I have this right, the Internet’s success was facilitated by liberalized telecommunications regulations. In order to preserve an open, innovative, non-prescriptive, vibrant, successful, and robust Internet, we must resort to regulation. If you’re like me, the logic here is inescapable, if not understandable.

By Bill Smith, Sr. Policy Advisor, Technology Evangelist at PayPal

(Disclaimer: While I am a PayPal employee, the opinions expressed here are my own.)

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