DCNN (Un)Fair Share and Zero Rating: Who Pays for the Internet? | IGF 2023

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The internet architecture has significantly changed over the past 15-20 years, with content now being located closer to users. This transformation has led to the emergence of micro data centers, content delivery networks, and caching infrastructures, revolutionizing the way content is delivered.

Additionally, there has been a remarkable reduction in data storage costs, with prices decreasing by as much as 98% or 99% during this period. These changes have not only made the service more affordable and efficient but have also resulted in cost savings for IP transit contracts.

While these developments have brought benefits to users and content providers, telcos are facing pressure from large digital platforms to provide content for free.

Previously, telcos charged both content providers and users through IP transit contracts. However, due to pressure from big tech platforms, telcos are now compelled to provide content without charge, leading to a shift towards a one-sided market. This transition has placed telcos in a challenging position as they are unable to increase charges for users due to legal restrictions on data caps and other market factors.

A market solution is seen as a positive approach to address the pressure telcos face from big tech platforms.

Creating a healthy and sustainable network is an incentive for both telcos and big digital platforms, emphasizing the need for a market-driven solution.

It is important to differentiate whether the pressure telcos experience is a result of bargain power or market power exerted by big tech platforms.

If the pressure is due to bargain power, it is considered a norm within the business environment. However, if it is a consequence of market power, then it becomes a structural issue that necessitates intervention from regulators and legislators. This distinction is crucial in determining the appropriate course of action.

In Brazil, regulators are adopting an evidence-based approach to define the problem before seeking a solution.

Gathering evidence and understanding the issue better is seen as essential for achieving the objective of increasing funds available for network investment.

When designing the concept of a fair share, careful consideration must be given to ensure sufficient funds are allocated to network investment.

If the fair share results in pricing competition among users, the available funds for investment could be depleted. Therefore, striking a balance between fair treatment and maintaining adequate investment funds is vital.

In conclusion, the evolution of internet architecture has brought about positive changes, including cost reduction and improved services.

However, telcos now face challenges due to pressure from big tech platforms. Finding a market solution and distinguishing between bargain power and market power will be crucial for maintaining healthy networks. Regulatory intervention may be necessary in cases involving market power.

The regulator in Brazil is adopting an evidence-based approach to addressing the issue at hand. Designing a fair share concept that enables investment without depletion of funds is of utmost importance.

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The discussion surrounding Europe’s influence on Latin America’s policy decisions is of great interest. While the sentiment towards this topic remains neutral, it is acknowledged that everything discussed in Europe has a significant impact on Latin America’s policy agenda.

This highlights the interconnectedness between the two regions in terms of policy-making.

The development of the interconnection ecosystem has been a notable achievement for the internet technical community. Previously, all the interconnections between ISPs and content providers used to happen in Miami.

However, a significant effort has been made to develop a completely new interconnection ecosystem. This development has been positively received and is seen as a step forward in enhancing access for people and supporting industry, innovation, and infrastructure, in line with SDG9.

On the other hand, the adoption of new policies by countries like Brazil can have negative consequences.

When a country adopts a particular policy, companies are required to pay and comply with the law, which may result in additional costs. As a result, companies may choose not to bring their caches and peerings into exchange points. This policy change can disrupt the existing system and have an adverse effect on telecommunications companies and content providers.

The smaller stakeholders, such as small ISPs, small platforms, and small internet companies, will be particularly affected by such changes. The disruption caused by this policy change is expected to be significant, with results similar to the current scenario.

The European telecom sector is facing several challenges, with a major concern being the cost involved.

The sector has experienced a decrease in revenues by 30% since 2011. Furthermore, the returns on investment for the capital employees have been lower than those in the US. This negative trend highlights the need for attention and potential solutions to address the financial health of the sector.

Investment in networks is considered of utmost importance.

The focus remains on the quality of networks, along with the need to improve coverage, especially regarding 5G networks. The current adoption rate of 5G in Europe stands at 15%, underscoring the room for growth and the importance of investing in network infrastructure.

These investments align with the goals of SDG9, which include industry, innovation, and infrastructure.

Another suggestion put forth during the discussion is the idea of redistributing funds from over-the-top (OTT) platforms to support telecommunications services, particularly in rural areas.

This proposal aims to utilize the funds obtained from OTT platforms as a source for a Universal Service Fund, which can be dedicated to strengthening telecommunications services in areas with limited connectivity. This concept resonates with the focus of the SDGs on reducing inequalities (SDG10) and industry, innovation, and infrastructure (SDG9).

In conclusion, the discussion on Europe’s influence on Latin America’s policy decisions provides valuable insights into various aspects of policy-making, interconnection ecosystems, the impact on small stakeholders, challenges faced by the European telecom sector, the importance of investment in networks, and the potential of redistributing funds for rural telecommunications services.

While some of these points have positive implications, others highlight concerns and challenges, making it a diverse and multifaceted discussion.

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The analysis of the speakers’ views on the internet ecosystem and its impact on consumers, innovation, and infrastructure provides valuable insights. One of the key points emphasised by the speakers is the need to enhance the open internet to drive innovation and foster digital transformation.

They argue that strong emphasis should be placed on preserving the open nature of the internet, as it has been a game-changer in providing access to information for people globally. They also highlight how the internet has become an essential tool for everyday life and the economy as a whole.

Efforts to improve internet connectivity should not only focus on urban areas but also on reaching the last 5-10% of the population in hard-to-reach areas.

The aim is to bridge the digital divide and ensure that everyone can benefit from the opportunities offered by the internet. In this regard, it is important to facilitate the easier deployment of internet infrastructure, making it more accessible to remote communities.

The analysis also recognises the significant contributions made by content and application providers in the internet ecosystem.

These providers play a crucial role in driving innovation and creating products that attract customers. Additionally, they fund infrastructure such as subsea cables, which help transport traffic more efficiently and save costs for internet service providers (ISPs). The speakers argue that content and application providers should be acknowledged for their massive contributions and the positive impact they have on the network infrastructure.

Regulatory frameworks and market evolution were also discussed as important factors in shaping the internet landscape.

The speakers suggest that improvements can be made to regulatory frameworks, both in Europe and worldwide, to accommodate new technologies and seize emerging opportunities. They highlight the need for a forward-thinking approach that embraces the positive aspects of the evolving market.

Stakeholder inclusion was another aspect that was emphasised.

The speakers argue that all stakeholders, including consumer organisations, civil society organisations, industry, academics, and the technical community, should be invited to speak at internet governance events. This inclusive approach ensures a well-rounded and diverse perspective in decision-making processes.

Evidence-based decision-making was also highlighted as a crucial factor in internet governance.

The speakers emphasised the importance of utilising expert analysis from organisations such as BEREC, telecom regulators, OECD, and the German Motor Police Commission, among others. This approach promotes informed decision-making that considers the implications and potential challenges related to internet governance.

In conclusion, the analysis highlights the need to enhance the open internet, extend connectivity to remote areas, recognise the contributions of content and application providers, improve regulatory frameworks, embrace market evolution, foster stakeholder inclusion, and prioritise evidence-based decision-making.

These actions will ultimately contribute to a more accessible, innovative, and inclusive internet ecosystem.

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The standard payroll rule implemented among internet service providers (ISPs) in South Korea has had several negative consequences. This rule has resulted in inflated internet access fees, which have put a financial strain on both ISPs and content providers. Content providers have been required to pay more as their host ISPs send more data to other ISPs.

Consequently, South Korea’s transit IP fees have become significantly higher than those in Frankfurt and London, reaching ten times and eight times the respective fees in those cities in 2021. As a result, public interest apps, such as the COVID location announcement system, have been unable to fully function due to the exorbitant internet transit fees.

Furthermore, the presence of paid peering has caused confusion and violated network neutrality.

A significant portion of internet traffic goes through paid peering points, which has led to concerns about unfair share violation and the lack of network neutrality. The confusion surrounding whether network share and unfair share violation are a result of paid peering persists.

Regulations from both the Federal Communications Commission (FCC) and the Body of European Regulators for Electronic Communications (BEREC) do not explicitly condemn paid peering, leaving room for uncertainty and complications in enforcing network neutrality.

The concept of mandatory paid peering is also met with negative sentiment.

Implementing mandatory paid peering would likely lead major companies such as Google and Netflix to disconnect from the network rather than pay access fees. If content providers burdened with peering fees disconnect, regulators would have limited options without fundamentally altering the nature of the internet.

Despite these issues, the principles of freedom to connect and not charging for data delivery remain positive aspects of the internet.

These principles are considered the foundation of the global product of the internet and enable users to connect freely without being burdened by data delivery charges.

On a positive note, despite a five-fold increase in data traffic, the cost of network maintenance and development has remained constant over the past five years due to technological advancements.

This demonstrates the efficiency and progress made in maintaining networks and supporting the growing demand for data.

Turning to the topic of 5G, Korean telecoms have faced challenges in delivering good connectivity despite forcing consumers to purchase 5G phones.

This has resulted in consumer dissatisfaction and the filing of class-action lawsuits against telecoms. Additionally, the government in Korea has taken away the 5G bandwidth license from certain telecoms, further complicating the situation.

European telcos, on the other hand, have managed to maintain profits despite falling revenues, thanks to the decreasing cost per unit of data.

They have been able to offset the declining revenues by reducing the cost of data delivery.

However, it’s important to note that declining profits of telcos do not guarantee the maintenance of privacy. The Korean case, for example, indicates that despite falling costs and sustained profits, privacy has not been adequately protected.

In conclusion, the standard payroll rule among ISPs in South Korea has had negative effects on both ISPs and content providers, causing financial strain.

The presence of paid peering has raised concerns about unfair share violation and violated network neutrality. Despite these challenges, the principles of freedom to connect and not charge for data delivery are key pillars of the internet. Technological advancements have enabled the cost of network maintenance and development to remain constant despite increased data traffic.

Challenges with 5G connectivity and lawsuits have arisen in Korean telecoms, while European telcos have maintained profits through reduced data delivery costs. However, the declining profits of telcos do not guarantee the protection of privacy.

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The issue of concern over internet fragmentation due to the practices of telecom companies and big tech companies is gaining significant attention. These practices have the potential to create a division between users and services, ultimately leading to increased inequality.

The original intention of the internet was to be an open and interconnected environment, but certain practices have disrupted this ideal.

Limited internet access poses a significant drawback, especially for economically disadvantaged individuals. In Brazil, for instance, many people rely on public Wi-Fi or have limited access to home Wi-Fi.

Towards the end of the month, when data allocations are nearing their limit, accessing the internet becomes challenging. As a result, individuals are left with restricted access to only a few apps or websites, exacerbating existing inequalities.

Additionally, limited internet access can contribute to the spread of misinformation.

When people are unable to verify the information they receive due to restricted access, it becomes easier for unverified or false information to circulate. This situation leads to an increase in disinformation, undermining the goal of an informed and educated society.

The practices of zero rating and fair share also adversely affect consumers, particularly in economically disadvantaged regions.

Zero rating is often presented as a way to provide free and unlimited access to specific apps or services. However, in practice, it can restrict individuals’ choices and tie them to specific apps. Furthermore, fair share practices, aimed at increasing revenue for telecom companies, may result in increased prices and reduced service quality.

These practices further disadvantage consumers, especially those in economically vulnerable communities.

When discussing open internet access and methods to expand access, it is crucial to prioritize the well-being of consumers. The focus should be on finding solutions that ensure equal access to the internet for all individuals, irrespective of their socioeconomic status.

Addressing the distortion of the telecom market, whether through existing or potential practices, is essential to prevent further inequality.

To summarize, the concern over internet fragmentation and limited access resulting from the practices of telecom companies and big tech companies is of growing importance.

These practices can lead to a digital divide and increased inequality among users and services. Limited internet access exacerbates this inequality and hampers individuals’ ability to verify information, facilitating the spread of misinformation. The practices of zero rating and fair share also harm consumers, particularly in economically disadvantaged areas.

It is crucial to prioritize consumers’ welfare when discussing open internet access and explore equitable approaches to expand access for all.

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Applying old telecoms rules to the internet is widely regarded as detrimental, as it would result in unanticipated barriers to entry. This approach is seen as nonsensical, considering that telecoms rules operate under the pretext of the Internet Governance Forum.

The argument against these rules is based on the belief that they would hinder competition and impede innovation in unpredictable ways.

It is also argued that the internet infrastructure is not solely dependent on telecom operators. A diverse range of actors, including technology companies, contribute significantly to the development and maintenance of the internet ecosystem.

Content and application providers play a vital role in supporting internet infrastructure, as exemplified by their contributions through CDNs, data centers, and cloud services. Therefore, portraying only telecom operators as the sole contributors to internet infrastructure is inaccurate.

The issue at hand also revolves around network neutrality, and concerns have been raised regarding the potential discrimination against certain applications and counterproviders.

These cases highlight the violation of network neutrality principles, not only from a technological standpoint but also in terms of economic fairness.

The debate around Universal Service Funds (USFs) has garnered criticism from various perspectives. Telefonica, for instance, suggests that Europe should not replicate the USA’s approach to USFs and instead advocates for direct payments as a more suitable solution.

Additionally, Komaitis questions whether telecom companies genuinely desire a discussion centered on USFs, suggesting a misalignment of interests.

Criticism is also directed towards Europe’s telecom model, which is deemed as setting a poor example. Komaitis specifically points out flaws in Europe’s approach and highlights the need for a more effective model.

Notably, over 20 organizations globally, including Brazil, India, Europe, and the United States, express similar concerns about the infrastructure issue, indicating a widespread and significant global concern.

This highlights the need for a global dialogue and deliberation on infrastructure, led by civil society organizations.

Komaitis stands firmly against the current method of discussing infrastructure and believes that it needs fundamental changes. He argues that the current conversation around infrastructure is primarily driven by telecom operators, neglecting the perspectives and interests of other stakeholders.

In conclusion, applying outdated telecoms rules to the internet is widely seen as detrimental and likely to create unforeseen barriers.

The internet ecosystem relies on diverse actors, including technology companies, and portraying only telecom operators as contributors to infrastructure is misleading. The issue at hand encompasses concerns over network neutrality, technological and economic discrimination, universal service funds, Europe’s telecom model, and the need for a more inclusive and global discussion on infrastructure.

Komaitis takes a stance against the current infrastructure dialogue and calls for a change in approach.

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The analysis examines three perspectives on zero rating and the increase in internet traffic. The first perspective asserts that zero rating is less common in the global north, but prevalent in the global south. In the global south, large platforms have been subsidised through zero rating for the past 10 years, resulting in these platforms generating most of the internet traffic.

This prevalence of zero rating has created a new kind of poverty known as “data poverty,” whereby users quickly exhaust their data allowances, similar to running out of money. This perspective presents a negative sentiment towards zero rating and its impact on internet access and digital rights, thereby emphasising the need for fair share.

The second perspective critically examines operators who claim to promote fair share.

It argues that these operators are responsible for implementing business models that have led to the exponential increase in internet traffic. Therefore, their assertion of fair share appears self-serving and contradictory to their own actions. This viewpoint highlights the negative consequences of these business models and expresses a critical sentiment towards operators’ claims of fair share.

The third perspective focuses on the shift in telecom operators’ perspectives on increasing internet traffic.

It points out that, until the pandemic, telecom operators, especially in countries like Germany, encouraged high video consumption through schemes like BingeOn. However, it is now intriguing that these very operators consider the increase in traffic problematic. This observation indicates a change in their perception and raises questions about their motivations and inconsistencies in their approach.

Overall, the analysis emphasises the negative impact of zero rating on internet access and digital rights, highlighting disparities between the global north and south.

It also critiques operators for claiming fair share while implementing business models that contribute to the surge in traffic. The shifting perspectives of telecom operators further highlight the need to scrutinise their motives and actions. These insights underscore the importance of addressing the issue of zero rating, promoting responsible consumption and production, and reducing inequalities in global internet access.

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The telecommunications market in Europe faces limitations in investment for infrastructure due to its unique market structure and intense competition. Compared to the United States and Japan, Europe has a more fragmented market with 38 telecom operators serving over 500,000 customers, creating challenges in securing investment for vital infrastructure like 5G networks.

Additionally, heavy sector-specific regulations and restrictions on mergers hinder the growth of European telecom operators.

Pricing regulation further limits their flexibility in pricing services. Limited investment in telecommunication infrastructure impacts service quality, trust, and sustainability, leading to decreased customer satisfaction. Efforts are being made to measure the environmental sustainability of the sector.

Despite these challenges, the European Commission deems the existing open internet principles valid and not in need of revisiting.

However, operators in Europe face a one-sided obligation to deliver any traffic regardless of size or form, limiting their ability to manage data traffic.

Investments in private networks are applauded, despite creating regulatory asymmetry. The impact of these investments needs evaluation in relation to access network investment.

Addressing the lack of coverage and capacity in some areas requires investment and enhancement.

The European Commission aims to deliver a new regulatory framework to tackle industry challenges and supports open discussions with stakeholders. They advocate for a check-up of the internet ecosystem and regulation framework.

In conclusion, the telecommunications market in Europe faces limitations in infrastructure investment due to its unique market structure and competition. Sector-specific regulations and pricing restrictions further hinder operator growth. Limited investment affects service quality, trust, and sustainability. However, the existing open internet principles are deemed valid.

Investments in private networks are praised, and efforts are being made to address coverage and capacity issues. The Commission aims to deliver a new regulatory framework and supports open discussions to address challenges in the industry. A comprehensive evaluation of the internet ecosystem and regulation framework is advocated.

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In the discussion surrounding the telecom industry, several key points emerge. Firstly, the practice of zero-rating, which allows users to access certain online content without incurring data charges, is prevalent in many nations. This practice controls how users experience the internet by incentivising them to use certain services for free.

Concerns have also been raised about the shift in the telecom industry towards prioritising profit over quality.

Some argue that this focus on profit optimisation may lead to a deterioration in the overall user experience. Critics suggest that this approach could result in the elimination of local caching services, potentially increasing costs for consumers.

The concept of net neutrality is also a contentious issue.

It is argued that network fees are inherently incompatible with the principles of net neutrality. Those who support net neutrality argue that all users should have equal access to the internet, without any discrimination or preferential treatment based on payment.

Opponents of a proposition that violates net neutrality predict that it would be harmful to society and the internet ecosystem as a whole.

They argue that such a proposition would violate the principle of net neutrality and would primarily serve the profit margins of telecom companies. Instead, they suggest that the concerns and needs of society should be the deciding factor, rather than simply focusing on telecom companies’ profits.

Commissioner Thierry Breton has faced criticism for not upholding due diligence standards.

His previous role as CEO of France Telecom has led to accusations that he broke his promise in the European Parliament. In response, some countries, such as Germany and the Netherlands, have issued letters to the European Commission, urging it to uphold due diligence standards.

Furthermore, when it comes to network investment, there is evidence suggesting that simply investing more money in improving the network infrastructure may not necessarily result in better quality for users.

This challenges the notion that money is the main bottleneck in network rollout.

The influence of corporate interests on the decision-making process within the European Commission is also a point of concern. The appointment of the former CEO of France Telecom to the commission is seen by critics as an example of corporate capture.

This has led to the promotion of potentially damaging ideas that have been rejected by stakeholders other than telecom companies.

Additionally, the creation of a major telecommunication oligopoly in Europe is viewed by some as an unfavorable outcome.

Instead, it is argued that a more desirable model for the telecom industry would involve competition and cooperation among multiple players, rather than domination by a few.

There are also diverging opinions regarding the nature of telecommunications. Some argue that it should be treated as a public utility, prioritising public access and welfare.

On the other hand, there are those who disapprove of market deregulation in the industry, likely due to concerns about inequality and the integrity of the market.

In conclusion, the telecom industry has sparked various debates and concerns.

The practice of zero-rating, the shift towards profit optimisation, net neutrality, corporate influence, network investment, market deregulation, and the nature of telecommunications as either public utilities or market-driven entities are all key topics of contention. Clear arguments have been presented from different perspectives, each supported by specific evidence and rationales.

The discussions highlight the complex challenges faced by the telecom industry and the importance of carefully considering the potential consequences of various policy decisions.