Information and Communication Technology Policy and Strategy

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Introduction

Promotion: Broadband Initiatives

Promotion: Digital Literacy and Access

Regulating Infrastructure Competition

Regulating Geography of Cyberspace

Regulating Content

Summary

Outline of Lecture

Introduction

Why Govern?

Promotion Related

Extending benefits to ever larger numbers of individuals

Improving the quality of Internet services

Digital literacy and inclusion: how and why?

Both promotion and regulation related objectives are part of what was traditionally considered ‘telecommunication regulation’

Traditionally telecommunications is an infrastructure industry similar to transport, electricity, and water

The ‘infrastructure’ regulation perspective remains powerful

Governing the Internet has several objectives:

Regulation Related

Promotion of competition by preventing capture

Assuring non-discriminatory access

Making the Internet ‘safe’ for all members of society

Introduction

Infrastructure industries have several features:

High fixed costs

‘Natural’ economies of scale

(cheaper to have a single infrastructure than two or more)

The preceding two features suggest that an infrastructure industry will have limited competition

Infrastructures are also seen as necessary/desirable for society – sanitation implies water and sewage, modern productivity implies electricity and roads.

Similarly, there are powerful arguments for extending the availability to the Internet to everyone – facilitating education, commerce, and government services

Is the Internet an ‘infrastructure’ in all the above senses?

Yes – There are important aspects of the Internet which are like infrastructure

No – Only some parts of the Internet are subject to ‘natural’ monopoly

‘Natural’ Monopoly

MC = marginal cost (additional cost of producing one more unit)

ATC = average total cost (unit cost)

MR = marginal revenue (additional revenue from selling one more unit)

Home PC

LAN

ISP

IXP

Internet

T1, ADSL, or Fibre Connection

ADSL

T3 Line

Backbone

(fibre)

Simplified Architecture of Internet

‘Natural’ monopoly

(local loop & parts

of backbone)

More competition

than ‘natural’ monopoly possible

Introduction

IXP=

Internet

eXchange

Point

(e.g. ISP to ISP links)

Backbone = intercity or intercontinental connections

Promotion: Broadband Initiatives

The Killer Application

Since the 1980s, in many countries telecommunication companies have been reluctant to extend the Internet with very high quality infrastructure (e.g. 10 mbps or 100 mbps) because of the absence of a ‘killer application’

Killer application = one that users would pay enough for to justify the investment cost of network improvement. Possibilities:

Video dial tone – an unlimited number of Television channels

-- Do people really want more than cable or satellite brings?

-- Becoming more difficult as cable/satellite expands programming

-- Seems to be served by ‘video streaming’ services which invest in delivery infrastructure (e.g. Netflix through Amazon)

High definition teleconferencing

-- Do people really want to look at each other in HDTVs?

-- Yes, but not enough of them

Downloading

-- Already a big problem with digital rights management

-- Extending the capacity will enlarge the problem

Gaming

-- Yes, but are there enough of them?

-- Somehow this doesn’t seem a ‘serious’ enough use to justify investment

But this is really a ‘chicken and egg’ problem – if people do not have

experience with fast Internet, they aren’t going to know they need it

Promotion: Broadband Initiatives

Universal Service Issues: The Telecoms Back Story

In the second half of the 20th century telecommunication regulation focussed on extending service towards universal access

-- Principle everyone should be able to have access to a telephone in their home in the rich countries

-- Steady progress in extension of telecommunication services should be made in other countries

What standard should be adopted for the Internet?

One argument – over time costs will become cheap enough that everyone will have access so do not not force the issue

Other argument – the delay is creating exclusion so a standard should be set

Even if we push for universal service – at what quality? Londoners can access 10 mbps services at reasonable cost -- outside the university and Brighton we can’t in Southeast and Wales is even worse outside of Cardiff

Promotion: Digital Literacy

Digital Literacy and Access

Because the Internet is seen as socially valuable (education, government services, commerce) the question of extending ‘inclusion’ is raised.

It is not only physical access, but access to skills

There is a debate, however, about what skills are needed:

The ‘keyboarding approach’ – teaching people how to enter information and do basic searches

Digital literacy – knowledge of how computers work and basic programming knowledge

Like the argument on physical access it is argued that technical progress will ease access problems so that ‘natural language’ interfaces and ‘intelligent agents’ may substitute for deeper computer skills. Is this true?

How would you approach the digital literacy agenda?

Promotion: Broadband Initiatives

Quality of Service (QOS) Issues

The voice telecommunication network was based on a definition of quality of service (calls dropped, wrong connections, absence of line interference)

Internet service is not based on assured quality but on ‘best effort’ (the internet service provider is not responsible if congestion degrades the quality of the connection)

-- If you don’t like your service you may connect with another ISP

-- This does not change the fact that your ‘local loop’ is usually maintained by the incumbent telecommunication company which is often a monopoly

-- ‘Unbundling’ the local loop – a Rail Track solution?

-- Mobile – do we really want to use spectrum in this way?

ISPs seem to be co-ordinating behaviour in order to reduce costs of provision

-- Heavy use leads to higher charges or termination

-- Traffic ‘shaping’

-- Both practices restrain ‘unfair’ use but also could create a downward spiral in service

-- New form of price discrimination?

ISPs might like to sell QOS for specific applications – e.g. streaming video, VOIP, downloads – but this raises questions about ‘network neutrality’ and the possibility that some companies will gain an advantage over others. Those who are most worried about this development do not want to reproduce the concentration experienced with Sky television in this country.

1. Infrastructure regulation for efficiency and equity

2. Geographic regulation for a worldwide infrastructure

3. Content Regulation = making the Internet safe

http://commons.wikimedia.org/wiki/File:Child_and_Computer_08473.jpg

http://www.dailymail.co.uk/news/article-468603/Child-TV-addicts-greedy-unhappy.html

Introduction

A standard for thinking about Internet regulation is broadcasting where we are concerned what children watch

Regulation

Regulating Infrastructure Competition

The basic solution to access and QOS is infrastructural competition

ISPs are allowed access to telephone subscribers on the same terms as the owner of local loop connections – may the best company prevail

ISPs may access other parts of the network on a non-discriminatory basis or they may construct their own infrastructure (e.g. microwave or leased fibre links)

Backbone infrastructure providers are able to price discriminate but must serve all comers

Note: This is a bit simplified – as services become more complex issues of cost allocation and ‘fair’ pricing are re- emerging

A saving feature is that the technologies for backbone services are progressing very rapidly – fibre capacities are becoming much bigger

However, there are still questions about who pays for this capacity and how

Infrastructural Competition

Regulating Infrastructure Competition

Lingering Concerns

‘Private’ QOS regulation has become controversial with the FCC

in the US ruling that users should not be barred from using peer to peer applications (used for Skype, music file downloading)

In effect, this means that regulatory policy is moving towards allowing discrimination in service or price based upon ‘legitimate’ aims (e.g. reducing network congestion)

The ruling is an instance of ‘network neutrality’ which means that all of the various parts of the network must be equally accessible to all

This raises questions about how telecommunication companies can generate revenues to extend infrastructure since the higher value added services will attract competitors able to compete with similar costs

It is still possible to create different service classes so that broadcast television channels can have priority access or large companies with big data communication needs can have rapid response

But these services have to be available on non-discriminatory terms to others who can subdivide the capacity to offer further competitive offerings

Regulating Geography of Cyberspace

Internet Corporation for Assigned Names and Numbers

ICANN

ICANN is a private (although non-profit) corporation established in the US which sets the rules concerning domain names (.com, .tv, .co.uk, etc)

Having this authority means that ICANN has an important role in establishing the ‘geography’ of cyberspace

This was controversial because ICANN was not until 2016

-- an internationally governed organisation

-- must set prices to recover the costs of administering domain registration services

-- because certain interests have not been able to establish the domains they wish

An important feature of ICANN is that it allows country level determination of domains within a country (hence ac.uk and co.uk)

ICANN has now evolved into a ‘multi-stakeholder governed’ organisation which practically means it has become an international organisation similar to World Trade Organisation (WTO) or the World Intellectual Property Organisation (WIPO)

Regulating Geography of Cyberspace

Naming Conflicts

The use of a name can result in trademark type conflicts

For example Apple computer was compelled to make an arrangement with Apple Records when it entered the music business and with a US consumer electronics company for the use of the word Macintosh in relation to its computers

The same issues are present in naming conventions:

-- If I wish to have the name steinmueller.co.uk will I have a conflict with the internationally known photographer who spells his name the same way as I do?

-- A company may be known in one country with a name and wishes to enter the gTLD (general Top Level Domain) such as .com, but there is already a company there (e.g. mccain.com is owned by the UK processed food company)

-- Speculators may ‘buy up’ domains that might prove attractive in the future, e.g. bigdata.com or cameron.co.uk

Regulating Content

Global Access

The Internet is ‘borderless’ in its basic design which means that content can be accessed in a country that violates laws attempting to regulate

pornography

ethnic or racial discrimination

depictions or incitements to violence

and other types of content

without the ability to take ‘local’ action against the supplier of such content

Certain countries (e.g. Syria, Iran, China) do not allow international connections that bypass a central server which can be used to monitor and or block communication with particular IP addresses

Some countries have (e.g. China) have pressured companies (e.g. Google) to restrict the supply of specific information

In Europe, there is increasing pressure to regulate the Internet and to impose ‘editorial responsibility’ on content providers

Regulating Content

Child Protection

For the Internet to be used by children, it is desirable to protect them from explicit sexual content

To do this the ‘adult entertainment industry’ has agreed to self-identify its offerings in a way that allows browsers to restrict access

It is not clear how effective such restrictions are to older children who may be able to download and install software or modify the ‘protection’ software

This is an example of self-governance which largely predominates in current content regulation

It seems very likely that this issue will continue to re-appear – we have had local activism in SE England on the issue of depictions of sexual violence and there are many campaigns seeking more restriction and international pressure in this area

Regulating Content

Intellectual Property Again and End to End Access

President Sarkozy of France entered the domain of Internet regulation by advocating the termination of Internet access to those who violate copyright restrictions called Hadapi

This approach was relatively quickly rejected by the French Justice Minister (Aurélie Filippetti) as disproportionate after dismal experience with Hadapi. Illegal downloading still may attract fines of up to 1500 euro.

The EU and the UK are both working on legislation that would allow ISPs to restrict access of users so long as the terms and conditions were transparent – the logic is that lower cost services could be provided if users could only access particular sites

A variant is the question of what happens with Kindle in Europe. Kindle is an e-book reader with wireless Internet access which restricts the connections users can make hence blocking end to end access

Further discussion of the IPR issues will occur in next week’s lecture

Summary

The Internet has some features of an infrastructure industry – industries that generally require regulation

So far, most regulation has been designed to promote competition by assuring equality of access

A number of the actors (including telecommunication companies and ISPs) are not satisfied with this

They lobby for the ability to gain better access for them (which would restrict competition) because it might improve competition by extending choice

They are opposed by those who wish to maintain a ‘level playing’ field among service offerings

Some unevenness in the playing field seem inevitable, but market power increasing unevenness is not inevitable

In domain naming and content regulation, industry self-governance rather than regulators prevail

Whether this will continue is unclear (e.g. President Sarkozy)

QOS and non-discrimination (net neutrality) issues are likely to continue to be ‘hot’ for the foreseeable future and even darker possibilities are possible