Internet Governance in Hard Times

I was invited to an interesting seminar in London, sonsored by the Oxford Internet Institute, The New Economic Context of Internet Governance. It was being held only a few steps away from where I used to work when I lived in London. And all they wanted was a two-page position paper.

Unfortunately, the travel budget doesn't really stretch to a day trip to London, and they didn't include a ticket with the invitation.

But what the heck, I wrote a position paper anyway, and I've appended it here. I'd appreciate comments. Virtual seminar, anyone?

Internet Governance in Hard Times

Internet governance (which I shall take to mean national and trans-national regulation of the Internet, something that is increasingly but not solely governmental) could play a very significant role in the worldwide diffusion and utilization of the Internet – although whether this role is likely to be positive or negative hangs in the balance.

At present, despite and in some cases because of the global economic contraction, we can expect continuation and probably acceleration of current trends of Internet penetration and importance. More people will have access to the internet. They will use it for a greater volume and variety of economic activity, displacing traditional intermediaries and merchants. (As regards consumer transactions we are likely to see continued convergence between telecoms and internet.) Lower costs will enable new markets, and empower the remote or disempowered to take part in existing markets. New information-based products, and old products enhanced with information technology will create value. Service jobs in select industries (not least mine) will migrate to low-cost producer nations whose citizens will tele-commute. Governments, if not necessarily all private participants in the sector, will look to PRHs and other IT-based innovations for substantial savings in health care. In sum, while on the one hand current financial conditions create a slowdown in investment in some sectors, the need to reduce costs may also force greater reliance on IT-enabled solutions that will present as lower cost substitutes for previously entrenched practices and sources of supply.

Equally importantly, and driven by similar cost-saving goals, nascent moves to expand the role of 'e-government' will pick up speed despite and in some cases because of the economic crisis.

And perhaps more importantly, the role of internet-empowered citizens, of 'civil society' online, should continue to grow. In more developed countries this may partly fill the voids being created by the demise of newspapers and other traditional watchdog groups whose resource base has been undermined. A similar dynamic is emerging in non-OECD nations, although the key democratizing and organizing tools are more likely to be telecoms-based rather than internet-based in the short run.

So long as they remain subject to ordinary market regulation (including most notably competition law) each of these three trends shows signs of resilience. Internet governance – both global and national – can nurture these trends, or it can undermine them. Agreements that harmonize rules for international trade or increase the standardization of telecommunications tend to drive growth. So does effective enforcement of competition law. On the other hand, to date, international internet governance has rarely been considered a driver of economic growth, save perhaps for policies to increase access (e.g. “digital divide” measures) and build new infrastructure. Intergovernmental agreements have introduced rules for data retention and sharing that may serve national security, but they also impose costs on those who must build and maintain the infrastructure. Indeed, to the extent that Internet governance has been identified with ICANN, it has more reasonably been seen as a barrier to the development of new uses of the DNS and a barrier to competition among registries and even among registrants who might have equally legitimate claims to descriptive and generic domain names. There are real dangers, however, that in the future ICANN's effects could be dwarfed by those of other trans-national actors.

The least likely, but most destructive, threat model follows from an intensification of the current economic crisis. Responding to political pressure, governments raise trade barriers, and treat communications policies as an arm of protectionism and, in the worst case, a medium that must be controlled either to contain domestic unrest or prevent foreign intervention in domestic affairs. The commons becomes Balkanized.

A more likely threat model begins with intellectual property owners succeeding in their attempts to convince governments to band together to require that IT and/or computer hardware be optimized to protect intellectual property rights. There are many different versions of this scenario, ranging from traffic shaping to deep packet inspection to hardware based so-called 'Trusted Computing'. While each of these scenarios produces some winners, they do so at a great social cost. The winners will tend to be established players. Building in technical limitations to limit users (whether at the edges or at the center) will inhibit innovation. And to the extent that national communication policies permit or encourage deprioritizing marginal voices, they risk setting back efforts by civil society groups and ordinary citizens to use the Internet as a tool of political monitoring and organization – ironically, due to their different pricing policies mobile telephony (and text messaging) are less likely to be affected in the short run.

The most likely threat model, one that is already a partial reality, is that Internet governance prioritizes security over privacy and in so doing makes citizens unwilling to take advantage of the full range of opportunities that IT offers. Numerous US government studies suggested that lack of consumer confidence was a major brake on the take-up of e-commerce in the US: people were afraid that their credit card details or other personal information were not safe online. As international agreements, or governments acting alone, increasingly require that traffic data or even actual communications be routinely archived by intermediaries in order that law enforcement may examine them at leisure, there is a significant danger that even in free and democratic countries people will be reluctant to rely on IT for any matters that they fear might be used against them. Worse, even if architecting the Internet to make it easy to monitor and trace has most positive effects in free and democratic countries, there is a severe spill-over effect to less-free and less-democratic nations. The opportunity cost to non-governmental organizations, and to spontaneous and popular opposition movements will be great; in the worst cases the direct costs may be fatal.

The IT sector is reaching a point of maturity where it needs less and less special regulation, and needs more and more to be treated like an ordinary business – except in one respect: moves to enhance the economic benefits flowing from the deployment of IT must be tied to a freedom agenda – or at least a do-no-harm liberty agenda – or ultimately we risk being seen to have retarded long run human flourishing for quite short-run benefits.

A. Michael Froomkin
Professor
University of Miami School of Law