Recent developments related to the Internet and whether it is fragmenting include a diverse set of technical, economic, and policy advances and decisions that have been taken in response to the continued growth and globalization of the Internet and its evolving role as critical infrastructure for the digital economy. Taken together, they raise an overarching concern over whether the global Internet may be fragmenting due to the intended or unintended consequences of these decisions taken without full consideration of their potential impact.
A PANEL DISCUSSION FEATURING:
Deputy Assistant Secretary for Services, U.S. Department of Commerce, International Trade Administration
Global Connectivity and Technology Policy, Facebook
Vice President, International Policy, Public Knowledge
President, ACT|The App Association
Dr. M-H. Carolyn Nguyen – Moderator
Technology Policy Strategist, Microsoft
Companies depend on the movement of data. The view in Europe has been that data flow is a only a concern of giant US tech companies. This doesn’t appreciate the breadth of all companies’ dependence on data flows. All types of companies in all industries approach the ITA on this issue. For example, a 2-person office in Berlin that wants to move their employment file back to the US is now dealing with data flows. Any aspect of any business relies on the movement of data.
People have said that the IoT will be less problematic because it’s not about personal data, but other data is co-mingled with data that has privacy protections.
The experience of the safe harbor negotiations led to looking into the abyss of what happens if data doesn’t move and that was a very unappealing view. We did get out of the woods on this very narrow issue with the US-EU Privacy Shield. We spent 2.5 years on this with Europe to hash it out but there are counties all over the world where these issues have not been dealt with. Companies can’t function if they can’t move data.
The Internet allows small businesses to behave like big ones. The same thing is happening in the app space. This is one of the key factors of small business success on the Internet. The same thing that happened in the app space is now happening in the data space where economies of scale come from is the centralization of data and the ability to put data in one place and not have to have data centers everywhere.
Members of his association ACT! – The App Association) run into data protection problems moving the data and suddenly their applications couldn’t scale. Systems with more localization will hurt entrepreneurs and small businesses the most. Small businesses are the biggest economic growth and stability drivers after a recession and data restrictions hurt them the most.
His organization has members in every congressional district. This is important for him as a lobbyist but more important is the impact on the economy because these economic drivers are spread out. There is distribution of resources around the country this is a function of being able to leverage the internet to scale. This is also a function of phase 1 of the app ecosystem – local apps, loaded on to the phone, They worked off of local data. Phase 2 of the app ecosystem involves client server interaction for information. Anything that causes fragmentation of the Internet will hurt this and is bad for innovation, small businesses, and the economy.
Should fragmentation at the application layer be part of the Internet fragmentation debate? Should income inequality be part of that debate? At the opening event of this series, Ambassador Daniel Sepulveda stated that we have 50% of the planet not connected. If we want to realize the full benefits of the Internet, we need to connect everyone.
Connectivity causes substantial economic benefits. 2 million small businesses in India have Facebook accounts and promote their businesses on Facebook. Connecting the unconnected is huge problem to be solved.
There is an income inequality paradox in terms of connection. When people are connected it’s an income multiplier. When a country reaches a 24-25% adoption rate threshold as more people connect, it helps that country grow it’s GDP and income inequality between countries shrinks. The paradox is that income inequality increases in that country between the people who are connected that improve, and those that do not, and the gap grows. The only answer is to connect everyone.
An NTIA report on the subject shows that many people who are not connecting are not connecting because they don’t see the value, not because of affordability. So the first step is increase awareness of the benefits.
At the applications layer, there are people that don’t know about the Internet. How do we introduce them to the Internet in ways that are pro-consumer and not anti-competitive? There are ways this can be done, many related to zero rating. An example of a zero rating service is Amazon kindle. People love Kindle. In actuality, Amazon has a contract with AT&T to provide the connection for Kindle content which consumers are not billed for. This is an example of zero rating.
The question is how do we introduce people to the Internet to those who have not been introduced to it and increase relevance?
What about Facebook Free Basics? It’s designed to provide connectivity at low data connection rates in many parts of the world where there’s a “skinny” connection. The tech requirements are published and any app provider can use free basics as long as they meet the tech requirements, which are the same for all the apps, i.e. the Facebook app can’t use video, just as others can’t. The key question again is how do we close the adaption gap for the 4 billion that are unconnected?
At the application layer there are different business models. For example, everyone should have the ability to connect to Netflix, but Netflix has different arrangements with different studios who have release varying release windows, so not everyone everywhere can get the same content on Netflix. These are business decisions and not fragmentation.
When thinking about fragmentation, we need to look deeper into freedom of expression and economic rights, which are human rights.
It helps to clearly define fragmentation and it’s important to distinguish what type of fragmentation we are talking about – technical fragmentation which is the most dangerous kind, like when countries try to implement an alternative DNS systems – or are we talking about fragmentation to users of content and applications being delivered to them? Thus it’s important to have common standards. This goes beyond freedom of expression towards freedom of economic opportunity.
From the civil society perspective, this is not a distraction from the surveillance and encryption issues, but a good positive agenda to pursue. We have a lot of people coming out of the WSIS process who are paying attention to the importance of connectivity. Civil society wants to have a voice, play a role in “what type of connectivity” we are talking about. Civil society is developing a series of standards so that when international banks fund these connectivity initiatives, they take privacy and freedom of expression into consideration. This means no alternative DNS system so that people can access the same cultural and education resources that people from the global north have access to, otherwise we would be fragmenting on the side of the user experience.
We should think about the root of the problem of technical fragmentation, i.e. in China where a huge population can’t communicate clearly with populations the US and Brazil because the government is blocking access as well as trying to create a new Internet. This creates barriers for Chinese entrepreneurs and innovators. But this may have changed a bit over last few years with the likes of Ali Baba.
These are some points to distinguish what is fragmentation and what is merely a new expression of old business models. We need to keep an eye on competition and consumer rights. Europe is stronger on privacy but then you have to localize your servers. This can be bad for users in less democratic countries. Civil society has different narrative from companies on localization in Brazil.
The moderator asks what are the pressures that are causing fragmentation?
Safe Harbor was addressing multiple drivers of fragmentation at once. They needed to be disentangled and dealt with. How do counties deal with legitimate goals like protecting their citizens’ privacy while protecting data flows at the same time?
How can this be done in a way that enables trade and growth? We haven’t cracked this problem broadly and the Privacy Shield agreement covers only a piece of it. Part of the problem is protectionism. We need to get this right on a macro policy level because businesses depend on it.
We need to take into account historical cycles and the impact of Snowden revelations. There’s been an increased clash of people involving civil rights. If governments want to establish civil rights in ways that don’t follow due process, the populations will not have proper discussions to repeal these things. For example, the Microsoft case. The US was trying to access data outside the US. There are geopolitical implications of going outside existing treaties. The lack of understanding of the geopolitical environment leads to real consequences.
Very often we have government actions leading to fragmentation. There is a matrix look at government policies and actions related to connectivity.
- The well informed and well intentioned.
- Well intentioned but ill informed.
The second is frequently the case. Recently a large Asian country talked about why they need local data centers. The actual reason stated was to create jobs and tax revenues. They didn’t understand what the impact on business and direct foreign investment in their country would be. Once a data center is built there’s not many jobs in it. Local data requirements for manufacturing increase the costs of production, thus hurting economic growth.
3) The ill intentioned but well informed.
4) The ill informed and ill intentioned, that’s where you get real chaos.
There are 2 reasons for fragmentation and a lot of excuses. Protectionism and censorship. Everything else is an excuse. So the causes are what excuse was given to do a policy that fragments the Internet.
For example, the Snowden revelations weren’t revelations weren’t to the people who used them as an excuse to try to fragment the Internet. Another are the late hour attempts to block the IANA transition. There are well informed, bad actors who would like to see the open internet be less open, under multilateral institutions. What better way to bring that about then to show them that the US can’t be trusted with stewardship over ICANN by not honoring our commitment to let the IANA contract expire.
The bulk of this discussion should be aimed at those well intentioned but ill informed Countries. How can we get information out there and what are short term and long term CTA’s that can move the discussion forward?
On privacy, there are legitimate policy aims but we haven’t given folks confidence that those aims can be met without restricting data flows. A lot of this is just proving that the solutions work, e.g. making sure Privacy Shield works.
The ITA is working on cross border privacy rules in the APEC context to get ahead on this. Privacy Shield is limited solution between Europe and the US. 21 Asian economies came to consensus. They crafted a program where companies get certified that they adhere to these rules. We need to make sure solutions deliver in practice.
The key to innovation is experimentation. Success of small businesses happens when we preserve that environment of experimentation.
Take away the excuses and focus on the well intentioned, ill informed countries. There are opportunities to work with them. Most government officials aren’t techies, i.e. they don’t understand routing.
Always ask the first order question, what is the problem you’re trying to solve and find real solutions that won’t cause Fragmentation. It’s about building trust and long term relationships and helping inform the process. There is a lot of work and it needs to be done. This is not the traditional advocacy. We don’t want to move from a multi-stakeholder framework to a multilateral one.The multi-stakeholder model works but it makes a lot of governments nervous. We need to work with these small governments.
It’s not just about the policy makers. It’s about the consumers and general public as well. They need to be informed. We need a bottom up and a top down approach.
- Companies can’t function if they can’t move data. The E.U./U.S. Privacy Shield agreement only addresses a small piece of the problem.
- Small businesses are tremendous drivers of economic growth and the Internet allows for small companies to scale like big companies. The centralization of data is key to this. Restrictions on data hurt small businesses and the economy.
- It’s important to focus on Fragmentation on the technical layer, such as countries trying to create alternative DNS systems. This has human and economic rights implications because users in those countries can’t access the same information as people in other countries.
- There are legitimate privacy concerns. We haven’t found a solution on the macro level to address these without restricting data flows.
- Solutions need to address the actual problems that need to be solved in ways that don’t fragment the Internet.
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