Open Letter to Internet Association on Broadband Utility Regulation

Open Letter to Internet Association on Broadband Utility Regulation
May 29, 2014

Scott Cleland

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts.... (read full bio)

Dear Executives of Internet Association Companies,

 
Have you thought through the global implications of your businesses’ public lobbying for regulating broadband like a public telephone utility?

 
Possibly you are unaware that “The French government said it would push for a new European law later this year to classify Google and other Web giants like public utilities, forcing them to guarantee access to all services like phone operators. … We don’t want to become a digital colony of global Internet giants” said the French Economy Minister, per Wall Street Journal reporting.

 
As members of the global Internet giant association, and as global companies with large majorities of your current or future revenues coming from overseas, it could be beneficial to better think through the global implications of your high-profile policy support for new broadband utility regulation in the U.S.

 

Other countries’ politicians and regulators watch the U.S. process closely. They could interpret your policy support for strictest utility regulation of American broadband companies with less than 30% market share, as sympathy for European utility and privacy regulation of Internet Association companies which often command much higher market shares.

 
While Internet Association members may argue that only physical networks could be dominant, anti-competitive or discriminatory, others with more objectivity could argue that virtual networks, which have displayed a natural tendency towards maximal market concentration to date, could be dominant, anti-competitive, and discriminatory – as well.

 
Distracting rhetoric aside, what your companies apparently really want from the U.S. Government is a permanent zero-price guarantee and economic subsidy for all downstream video Internet traffic that your companies may send via the U.S. Internet. If this somehow is a mischaracterization of your position on U.S. broadband regulation, please make it publicly clear that your lobbying position has nothing to do with money or any potential net neutrality “free lunch” for Internet giants.

 
Specifically, please consider two logical global implications of your public leadership for maximal regulation of broadband in the U.S.

 
First, could it undermine your companies’ credibility and influence to oppose legislation in Europe or other countries that could regulate your company like a public utility for business and/or privacy purposes? On what principled basis could your company square the circle in public that less dominant companies deserve maximal regulation but most dominant companies’ deserve minimal regulation?

 
Second, could it undermine your companies’ credibility and influence to oppose UN International Telecommunications Union (ITU) efforts to gain governance/oversight over the Internet?

 
The Internet Association’s support for maximal broadband regulation appears ignorant of how ITU-member countries regulated utility telecommunications in the past, and how over a majority of ITU member states (which are almost all autocratic) would like to vote to regulate the Internet overall as utility to gain maximal sovereign control.

 
Like the Internet Association, the autocratic majority of ITU member states that want to regulate their Internet as public utilities, also understand this issue of utility regulation is also about the money. If regulated as telecommunications utilities as they did for decades, ITU-member states maximally could regulate international settlements of telecommunications payments.

 
In the past, most countries overall enjoyed many billions of dollars of payments from U.S. companies because net-net there were more inbound call minute charges from the U.S. than outbound call minutes charges to the U.S.  Simply the old system was an UN-ITU orchestrated wealth-transfer-machine from U.S. companies and consumers to foreign governments, most of which were autocratic.

 
Apparently, Internet Association companies have not thought through what utility regulation of U.S. broadband companies could mean. Internet traffic is even more asymmetric inbound to foreign countries than telephone calls were. That means Internet “utility” regulation could revive the old system that resulted in multi-ten-billion dollar wealth-transfers overseas annually over time — paid for this time in part by the U.S. Internet giants who substantially contribute to this very asymmetric traffic.

 
In sum, Internet Association members appear to not appreciate that other countries monitor what U.S. companies and the FCC do and often apply it overseas.

 
Moreover, Internet companies appear to imagine that their status as America’s richest, most profitable, most protected, least regulated, least taxed, and least accountable companies, entitles them to the same treatment overseas. It does not.

 
As the old adage goes, be careful what you ask for.

 
The Internet Association’s members aren’t in Kansas any more…

Scott Cleland

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts.... (read full bio)