Internet Society  Public Policy Discussion with Robert Pepper

Internet Society Public Policy Discussion with Robert Pepper

Markus: Hi I’m Markus Kummer I’m the VP for Public Policy
at the Internet Society and today we are starting what we
hope will be the first in a series of talks with eminent personalities on Internet policy issues I’m sitting here in my office in geneva
and I’m linking up with a tech policy conference in Napa, California and
today our first guest is Robert Pepper. He is the VP of Global Technology Policy
at Cisco, a distinguished academic with a long career in Internet policy previously worked for the Federal
Communication Commission in the United States and he has also many academic linkages. With Bob we have Sally Wentworth, from our public policy team
and she will conduct the conversation with Bob Pepper I have two questions I’d be interested in hearing what Pepper’s views are and these questions have come up in the context of
preparing for The World Conference on International Telecommunications One of them is, What is actually the difference between the Internet and Telephony? and the other one is about
sustainability of the Internet business model But with this I will hand it over to both of you Sally and Bob and I look forward to your chat. please! Sally: Well good morning Bob it’s great to have you here with us, as Markus said we wanted to have a conversation about some of the
Internet trends and discussions that are happening particularly in 2012 on a global basis within the United
Nations a lot of questions coming up about Internet public policy and the role of the United
Nations, the role of governments and many countries seem to
approach these issues from the perspective that the Internet is very similar to the telecom
model and therefore the policy approach can be very similar to the telecom model. I wondered if you could talk
to us about why that might not be the case and why that might not be in the
best interests of Internet growth and Internet
connectivity worldwide. Bob: Sure! And by the way thanks a lot this is
great i think this is something that ISOC actually does so well which is raise these issues with a global audience
one of the things that we know is that transparent conversation, fact-based
analytical you know analysis, empirical analysis
actually helps the policy process and all too
often we don’t have enough of that ISOC does that especially in the
Internet space so this is great that this to be the first of these kinds
of conversations First there are technical issues related to
the Internet and differences with traditional telephone network but they’re also
some fundamental differences in terms of economic policy regulation. So first but maybe i should just the way i think about it is the traditional telephone industry was based
upon five assumptions The first assumption he by
the way they were correct for many many years decades One, the first assumption is that the
product is voice Second, the metric by which you measured it build it and regulated it was the minute. Then in terms of first principles for economics where you had an incremental
cost you have an incremental charge so the length of time you talked actually affected the cost Sally: Right.
Bob: So the duration of call the distance
over which you were talking affected the cost location where you were affects
the cost in a flat IP network none of those assumptions are correct Sally: But I think it’s important to say in the
context of the WCIT which Markus mentioned, the 1988 treaty was
written at a time when those assumptions applied Bob: Those assumptions were correct, the 1988 international telecommunications regulations which actually go back to what, 1875,
Sally: Yes Bob: That was first one been around for a while and they keep getting updated but they’re about telecom they were never intended to be about the Internet and they were really about these
traditional networks based upon those assumptions taking trying to modify those regulations to apply to you know networks
that technically are completely different that are structured differently that the economics are different but to
take those old rules and try to apply them doesn’t make any sense Sally: So let’s talk about whats different about you spoke about the telecom networks and
and the assumptions that they were built on What is different about IP networks Bob: So for one thing most of the connectivity on IPÉ first of all the product group the thing that we’re talking about is connectivity the metric is a bandwidth They are not traffic sensitive in the
same respect so today’s broadband networks tend to be a cap x network You re either on or off, the network is there or not how much you use it does not affect
the incremental cost of that underlying cost of the network therefore trying to impose the old legacy regulation of pricing on these networks would have very significant adverse consequences because the
underlying costs in economics would not match the pricing. What I mean by that in the traditional telephone networks there were what were called international
accounting rates Sally: Right
Bob: With settlements
Sally: And a lot of money
transacted hands
Bob: Billions of dollars were flowing Sally: yes
Bob: These pricing arrangements were based upon incremental use there are you know some of the debate about
extending these international telecommunications regulations or by people who want to take that old telephone model
of pricing and pose it on the Internet now one of the things that we did by the
way in the U.S. in the 19 80s was make a very conscious decision to
not apply what we called access charges to Internet
access the fact that the Internet is not
regulated is not an accident there were very conscious decisions
Sally: Yes
Bob: To make sure the Internet is not regulated like a phone network and if you think about that if there had been these per minute charges just like for long distance calls. If there had
been per minute charges when we had to modems that were whistling at one
another to connect and people were having to pay you know ten fifteen cents per
minute to connect to be online. The Internet would not have developed they way
it did. Sally: So if I’m a regulator in a
developing counter, an emerging economy and I have responsibility to my people to build out the networks to support
more investment one of the things i will have noticed
is that the settlement regime that you have spoken about the billions of dollars
that was flowing has stop flowing and so i may view
Bob: Stopped diminishing
Sally: Right, its diminishing, diminishing rapidly and so i’m looking for an
alternative source to help fund the infrastructure of my country But we’re saying here
that the traditional settlement regime can’t really be applied to the InternetInternet so what do
i need to do instead
Bob: So the goal of having a connectivity for building up
your nationally infrastructures is completely important, totally an appropriate goal for governments and in fact one of the things that the UN, the UN has a broadband commission Sally: Yes Bob: So the UN broadband commission has one of its goals to bring broadband to the
bottom of the pyramid if we think about its to extend the the mobile miracle having five billion people on the planet having cell phones mobiles. Extend that to broadband so it is about investment it is about
infrastructures its about connecting people you know in the past with the traditional telephone
network the argument was that we would the country’s
developing countries we take these revenues from accounting rates and invest them in
networks There is a separate discussion about whether
they ever did that there is a lot of evidence that many countries in ever did.
Sally: Exactly
Bob: Setting that aside, It’s not going achieve that goal for broadband and in fact one of the things that the
UN broadband commission recommends as part of the the set
of recommendations we have is don’t tax broadband maybe we should be doing is lowering the
price of broadband not increasing it what you want to do is not have high taxes, that are going to increase the cost
of the price to end users that should be low so what you want to do is use other
mechanisms to build out national infrastructure you know ISOC study on Internet exchange points Sally: Yeah we are really proud of that.
Bob: You should be because fact-based decision empirically when you have local Internet exchange points it lowers the cost of Internet access if we take Africa for example within the last three, three years we
now see not just the deployment but
turning on and using a new competitive submarine cables on
both the east coast to west coast Sally: That will transform
Bob: Totally transform and
you have some of those operators like Seacom that there their business model is having landing stations that will be open and accessible to any ISP in the country so they’re not just saying i’m just
going to work with you or you. Anybody who wants to connect but then there’s the question how do I
get the broadband across the country and that’s where local IXPs are important that’s where local entry
is important that’s what competition is important
and most of the developing countries the technology by which people are gonna
actually access the Internet is wireless so you need more spectrum you need spectrum that’s going to for license broadband you need more spectrum for WiFi because the networks of the future are going to be what we call
heterogeneous you’re going to have macro cell broadband LTE WiMax 3g but you’re also going to have a small cell
WiFi 80% of the use of mobile devices like your iPad indoors sitting down like we are now Sally: Right
Bob: So i don’t need an outdoor network
for that i can blend an outdoor network WiFi indoor network then it’s going to have to connect into a fiber otherwise it’s not going to virtual
fiber otherwise you are not going to get the
backhaul. So the question is for developing country how do i get my
investment you have like radio spectrum they can make it available, attracts investment in the private sector so some of it is
some of the city private sector led in fact most of the
mobile operators across africa it’s all private capital it’s not government money the real key in the developing world is
how do i get my backhaul? And there are a variety of mechanisms that developing countries are using to attract private sector investment for using tax credits for making some of
their own investments to get the backhaul and middle mile networks deployed
including Internet exchange points Sally: Right and we somehow need to work with developing countries so that they can
demonstrate their own lessons learned. Bob: Oh absolutely and by the way they are
doing this without taxing the Internet and you’re doing it without taking money
from international voice revenue there are a whole series of other
mechanisms other tools the government’s have that have nothing to do with imposing traditional telecom
regulation on the Internet Sally: Isn’t thereÉ stepping back from the developing country perspective and there’s a tendency and even in
developed countries to look at something like ITRs as a way to sustain a traditional
business model for telecom and we are seeing some of that and what do you think the impact it’s going to be again global connectivity it also going to have reverberations in developing countries Bob: So if you impose the traditional telephonic counting rate on Internet
traffic what you’ll see unfortunately is
the cutting off the blocking of traffic to the developing countries becauseÉ
Sally: Amazing. Bob: Because if you think about it
somebody is there’s there’s less unfortunately there’s less content
available locally in the developing world. We need to work on
that as well but for now the Internet users in emerging
economies go to the developed world for content so if you are living in a Francophone country in africa you’re looking for French language
content in in addition to local language content you’re going to France and there’s all this Internet
traffic that is coming from France and to Francophone country in africa if some of these accounting rate proposals go through the it sounds crazy but this is what’s being
proposed the French content providers would have to
pay the (Laughs) you know developing country phone company or ISP in Africa for the transmission of that content that
somebody in that country has requested and that would you know raised the cost to the french content provider and the question is are they gonna pay
that or will they just love block that content Sally: (Interrupting) they are not going to deliver that
content Sally: and you know an interesting example of that
is these countries focus on the things like distance learning Bob: Right
Sally: Or E-health or other allocations, with health care they are relating on that international transmission that may not be available to them Bob: Thats right. Bob: So some of the proposals that are being
made I don’t think they have been thought through and i
think there could be very serious consequences for the the emerging economies what’s actually really interesting is in this transition from the world of the
old assumptions to the new realities it’s really hard for the existing players
because their business models are still based upon charging for voice
Sally: Right Bob: So there is this chasm that they
have to leap across what’s interesting is that the large U.S. carriers AT&T and Verizon have actually done that and so when you look at how the proposals globally AT&T and Verizon are
leading the efforts to not impose traditional telecom regulation on
the Internet THey have gone through huge struggles to restructure their business models they have become broadband companies,
Internet companies and mobile wireless companies their traditional fixed line voice revenue is declining
they recognize that but they have made this leap they’ve already made
the shift it so he can be done.
Sally: That is one of the
important points is that Internet Society has made about what’s important about the Internet the Internet architecture is not there to
protect any one business model any one business. We don’t re-architect the Internet to protect an industry The Internet has it grows and evolves on the basis of what your users demand what their creativity will inspire and rules like what we are seeing
emerge this year and moving into next year would almost flick the switch on that notion that we
can’t without we can’t just simply be about
Bob: Though when I was at the FCC one of our goals was
to introduce competition so we talk about protecting
competition not protecting specific individual competitors because you actually need this disruptive innovation and
competition brings that and the traditional operators have to change and they will it’s difficult it is really hard but we’ve seen where they’d actually
been able to do this so you know you’re absolutely right it’s a
about moving forward not backwards and you know some people joke that sometimes
the traditional operators would rather invest in lawyers than in
engineers and technology
Sally: Right (laughs) and seeing that some parts of the world
today not here, In the U.S. fortunately but that’s sort of the first
reaction by a lot of the traditional operators
and then they realize by the way even when they do that doesn’t work Sally: Right Bob: But in the process that could be very
disruptive and counterproductive if they try to impose the telephone model of regulation on the Internet
it just won’t work and actually could have very significant adverse consequences not just in the developed world but
specially in the developing world. Sally: So what do you think the Internet Society
should be doing in this space what is the role well we have that we have this
community a 55,000 members and we have chapters around the world
and regional bureaus what’s the role of Internet Society on this
particular set of issues? Bob: So let me go back to where I started which is, the Internet Society one of the great things is that the
there is a lot of engineers so it is technically based it is fact based, they’re really smart people and a lot of this is about educating government leaders.
Sally: Right. Bob: And the reason for that is you know any of these international meetings only
governments vote.
Sally: That’s right. Bob: And very frankly you know most government officials who go to
these meetings are engineers are not technical people they don’t really
understand what’s next. A lot of them use the Internet they love it but they don’t understand
how it gets to their iPad. Sally: Well I think the other thing we always have to keep
in mind that we look at some of these proposals we think it almost appears that they are trying to stop the flow of progress but when you actually speak these
countries they want more of the Internet not less. Bob: Not only do they want more they don’t
want to stop it they love it they are all focused on the bottom of the pyramid what they are
saying especially emerging economies if you have 5%, 10%, 15% of the
population on the Internet they want a 100% of their people connected to the Internet so they want more right and they’re looking they’ve been told oh if you do some of these traditional
things that’s how you get more investment..
Sally: (Interrupts) If you just put 3 lines in
the treaty the problem will be solved. Bob: Obviously that’s not the case i think
that the local chapters actually have a huge role to play in very calmly empirically based fact-based engage government leaders in each future future of your own
country and explain you know how is the Internet.. how does that work? Where does all the traffic come from? why has it worked so well for the last
30 years? The fact is it has worked and it has not
been regulated as a traditional phone company and in fact the reason it’s been
successful is precisely because it has not been regulated that way and a lot of government officials,
countries don’t understand that. Fortunately here the U.S. The U.S. Government totally gets that
and is one of the biggest advocates for not composing a regulation on the Internet but there’s a lot of work to be done globally because when it comes to these meetings only countries vote and you know and some of you may remember
the old it is now bankrupt right Simms
where Marcy Simms would say “An educated consumer is our best customer.”
In other words more information actually helps. Sally: Well that’s what we are aiming to do and i
thank you for joining us on this video cast and hopefully we can do more of this I think this is an clearly an important dialogue it captured the interests of people around the world well it is a difficult year for I think Internet Policy
It does open the door for Internet Society to do that sort of fact-based empirical discussions on these issues.
Bob: It really matters it is really important and people have to get engaged uh… And ISOC is a great way to do that thank you Markus: My thanks from Geneva, I thank you both. Great talk. Thanks bye bye

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