Governance in Cyberspace: Content and Carriage

Stefan Probst (by way of chiari mario <>) stefan.probst a OPTICOM.V-NAM.NET
Ven 9 Mar 2001 16:21:54 CET

[Hi,  qualcuno sa chi si occupa di questi temi in Italia?]
By Mark Armstrong and David Mitchell
Date: 08 Sep 1999

... copied from this most interesting paper ...
Redressing carriage inequities?

Whilst the issues of content governance are now well-known, attention is
only beginning to focus on an issue which ultimately affects the cost of
cyberspace access for all Asian users and providers. That is the imbalance
in payment for carriage of Internet content between the US and other

Many ISPs in Asia argue that the commercial arrangements to access the US
Internet backbone disadvantage them as they have to pay for the whole link
to US irrespective of the direction of traffic flows. For example, the
largest Australian carrier has recently claimed:

The current situation where non-US carriers are paying the cost of
carrying significant amounts of trans-Pacific Internet traffic into and
out of the USA, while the US carriers pay nothing, is inequitable, [and]
does not, in our view, represent commercial reality in a truly competitive
global environment.

US interests argue, on the other hand, that they funded the early stages
of Internet development and that the focus has been to emphasise network
expansion and interconnection rather than profit maximisation. By
convention, each network joining the Internet backbone has been
responsible for its own costs of connection. Until recently, there was
sufficient bandwidth available to accommodate growth, and ISPs largely
interconnected without regard to traffic flows or measured settlements.
However, as traffic increases exponentially new infrastructure is required
to cope with the demand for bandwidth and carriers are increasingly
concerned by the US position.

The US has taken contrasting positions on international settlements for
telephony on the one hand and Internet traffic on the other. On the issue
of international settlement rates for telephony the FCC has taken an
interventionist approach, by setting maximum settlement rates that may be
paid by US carriers to non-US carriers. The FCC reasoned that the US
should not be subsidising other countries' telephone networks through the
settlement system. During the inquiry which led to this position, three
East Asian carriers filed a writ in the US courts objecting to the FCC's
new settlement rate regime: Telstra, Singapore Telecom and KDD. They
claimed that it was equally inequitable for foreign carriers to subsidies
US Internet users by being forced to pay the full circuit cost of US
Internet connections. While it appears that all countries have a traffic
imbalance with the US, the US demand for foreign content is increasing,
and it was argued that US users should pay for traffic which they
generate. However, the litigation did not succeed.

This paper is not concerned with the merits of the dispute. The point is
that it exists, and goes to the foundation of cyberspace. Remarks about
the current dispute can only indicate some of the issues, sufficient to
raise the issue about governance. The whole issue of charging for Internet
carriage is extremely challenging and complex, and analyses of it have
only recently started to appear. The APEC TEL Working Group has
established a Task Force to study international Internet traffic flows and
ways in which some kind of settlement system may be developed to redress
some of the current problems and allow for charges to be calculated on the
basis of network usage. The nature of packet-switched communications means
that there is no method akin to telephony's minutes of use to measure
Internet traffic and all over the world ISPs are struggling to develop
user-pays interconnection agreements for both domestic and international

What form of governance is available to resolve an international dispute
such as this? There are problems in relying on domestic regulators or
courts to resolve a contentious international dispute (the US authorities
in this case). In theory, the WTO or the ITU might be an appropriate
forum. But neither is simply an international tribunal, and there would be
all kinds of ramifications in trying to convert either of them into one.
Furthermore, the US would resist such changes, using the whole balance of
international trade policy to reinforce its position. So we are left with
an international arena devoid of anti-trust or competition law, at a time
when the Internet is profoundly affected by the domestic laws of the US
and other countries.


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