The FCC’s De-Americanization of the Internet

Scott Cleland Contributor
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The world is watching.

The world knows America invented and developed today’s global Internet.

Governments around the world also know that America persuaded most all of them to adopt America’s Internet model, specifically not regulating their Internet like they previously regulated their telephone networks.

Now the governments of the world are watching to see if the FCC officially votes to de-Americanize the Internet with a U-turn change in American Internet policy by regulating America’s Internet like a telephone utility network.

That’s because in November President Obama publicly urged the FCC to legally reclassify the Internet from a non-price regulated information service to a utility, price-regulated, telecommunications service using the “strongest possible rules.”

Legally, “telecommunications” is what international treaties and agreements regulate like a telephone utility under the United Nations’ International Telecommunications Union (ITU).

Specifically, ITU-T D.50 recognizes the sovereign right of each state to regulate “telecommunications” as that state determines.

Historically countries regulated “telecommunications,” or their telephone networks as a utility under a “sending party pays” economic model, where every country set its own per-minute price for calls coming into their country — much like a trade tariff on imports.

This means if the FCC abandons America’s global Internet policy for national purposes, other governments naturally could as well.

Other countries could gratefully price regulate the Internet like a national telephone network by imposing per megabyte tariffs on sending party Internet traffic, because the overwhelming net traffic to be tariffed would be America’s traffic sent from Silicon Valley.

For other countries, it would be the legal equivalent of the U.S. reactivating a mothballed trade agreement that rightfully would permit them to tariff, inspect and control America’s Internet and digital exports into their countries.

It would be a de fact end to America’s global free (trade) and open (unregulated) Internet, and the U.S. couldn’t legitimately object to other countries following America’s new lead.

In a nutshell, moving away from a global Internet toward a national, bordered, and tariffed Internet could allow every country to turn their current large implicit Internet trade deficit with America into a future, explicit, large and highly lucrative Internet trade surplus at the expense of America’s bandwidth-hogging Internet companies.

So why would the FCC vote for an Internet policy U-turn?

Apparently, the FCC’s partisan Obama-Net vision is very different than America’s 1990’s bipartisan Clinton-Net vision that effectively created the Internet marketplace we know today.

In 1994, the Clinton administration made a seminal decision to free the Internet from government control by privatizing ownership and operation of the Internet backbone via unregulated peering agreements rather than FCC telephone regulation.

In 1996, President Clinton signed the Telecommunications Act into law, which set Internet “policy for the United States to preserve the vibrant and competitive free market… Internet… unfettered by federal or state regulation.”

In 1997, the Clinton administration established a global Internet policy in its “Framework for Global Electronic Commerce.” Its first two guiding principles were that “the private sector should lead and “governments should avoid undue restrictions on electronic commerce.”

In line with this global Clinton-Net vision of a borderless, un-tariffed Internet, the Clinton administration effectively led the world to not regulate Internet networks and traffic under the ITU telecommunications “sending party pays” telephone economic model.

Fast forward to today, the Obama administration and FCC are on path to impose the “strongest possible rules” on America’s Internet.

This would repudiate the highly successful and bipartisan Clinton-Net vision, which is a global, privatized and non-price-regulated Internet, by replacing it with an Obama-Net vision, which would be a quasi-nationalized, government-controlled, and price-regulated Internet.

The Clinton-Net free trade Internet vision has produced an unprecedented, global free flow and trade of digital information, goods and services, precisely because it is private sector driven, borderless and un-tariffed today.

In stark contrast, a “strongest possible rules” Obama-Net vision could condone other governments’ quasi-nationalization of their Internets, like China and Russia have already effectively done.

American “strongest possible rules’ leadership could also legally empower other governments, especially autocratic ones, to take control of the flow of digital information at their borders with deep packet inspection points to charge for incoming traffic and to censor what does not comply with their national laws.

By attempting to fix an Internet that Americans know is not broken, the FCC is recklessly risking de-Americanizing the Internet and destroying the American benefits of a global Internet — America’s most influential innovation and export in the modern era.

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.