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Expert Opinion by Paul Budde: WCIT and the Tower of Babel

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A key reason for the heated debate in relation to the International Telecommunications Regulations (ITRs) at the next World Conference on International Telecommunications (WCIT) is the problem that different parties are talking about different elements while using the same words.

In the USA the internet is regarded as an ‘information service’ (and for regulatory purposes includes telecoms + content). This level of regulation keeps the ‘intertwined’ internet separate from other telecoms services in the country.

In the developed world outside the USA, however, the two are not integrated and from a government policy point of view the only element that is part of telecoms regulations is the infrastructure.  This means that the infrastructure used for the internet is simply telecoms infrastructure and that, as such, it forms part of the overall telecoms infrastructure environment and falls under the county’s telecoms regulatory regime – or for that matter under international telecoms regulations.

BuddeComm has always strongly opposed the American interpretation because it leads to a lack of competition, to broadband monopolies or duopolies and to the well-known problems of net neutrality; which are all far more prominent in the USA than in any other developed country.

Whatever rules apply to telecoms, very strong opposition exists – and not just from the USA – to any regulation that would increase the price of infrastructure usage. Such regulations would be completely unnecessary if the telcos were prepared to transform their organisation to better face the challenges and opportunities of the digital economy.

For this reason it is important to recognise the difference in interpretation between the USA and the rest of the world. Only when infrastructure is treated separately from services can a discussion take place about whether, and in what way, the burden of infrastructure investments can be solved.

Unfortunately this is only one part of WCIT’s Tower of Babel. When addressing international regulations regarding the internet each party is using its own interpretation in a different way – and sometimes the same party will use different interpretations for different parts of the internet. This particularly relates to governments. When they address the infrastructure elements as mentioned above they will perceive and interpret the internet as infrastructure. When they want to address cultural elements that they want to protect, or content they want to ban, they talk about content.

When they address intellectual property (also, confusingly, called IP) they use language put in front of them by the lawyers of copyright holders; legislation, language and concepts dating back to the 17th century.
The internet, however, suddenly becomes national interest if the discussion relates to cybercrime and cyber warfare.

It is hard not to conclude that some of the comments and positions taken in the WCIT debate are to some degree disingenuous. By creating ‘fear, uncertainty and doubt’ parties are trying to improve their bargaining position. This is a very typical occurrence in a monopolistic market and the telcos have long been masters of such behavior.

It would, of course, be far more productive if the parties involved were prepared to base their position on a more mature and well-informed state of affairs – e.g, the reality of the digital economy and the importance of infrastructure as a national utility that will deliver social and economic benefits beyond telco profits. But sadly they believe that to take such an informed approach would place them in a weaker negotiating position.

The best outcome for  the WCIT will be a clarification of language, clearly separating the various elements, putting fences around them, and making decisions as to who is going to discuss what – and also, importantly, once this clarification is established, what can be organised nationally and what needs to be addressed internationally. The ITU should take a leadership role in this as it is the international body that fully understands all the different elements of the internet and has a very clear view of the future, which is reflected in the ITU/UNESCO Broadband Commission for Digital Development. It could play a key role in assisting its member states to understand the different issues that need to be addressed in the transformation of the industry and how to best address each one of them.

Only when that is done can decisions be made, and can proper international telecommunications regulation take place.

Paul Budde focuses on the telecommunications market and its role within the digital economy, with strategic research and consultancy services to international agencies, governments and businesses. This article reprinted by permission from BuddeBlog at http://www.buddeblog.com.au/frompaulsdesk/telcos-cannot-wind-back-the-clock

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Dae-Keun Cho: Demystifying Interconnection and Cost Recovery in South Korea

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes.

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The author of this Expert Opinion is Advisor in Dae-Keun Cho, a member of the telecom, media and technology practice team at Lee & Ko.

South Korea is recognized as a leading broadband nation for network access, use and skills by the International Telecommunications Union and the Organisation for Economic Co-operation and Development.

South Korea exports content and produces platforms which compete with leading tech platforms from the US and China. Yet few know and understand the important elements of South Korean broadband policy, particularly its unique interconnection and cost recovery regime.

For example, most Western observers mischaracterize the relationship between broadband providers and content providers as a termination regime. There is no such concept in the South Korean broadband market. Content providers which want to connect to a broadband network pay an “access fee” like any other user.

International policy observers are paying attention to the IP interconnection system of IP powerhouse Korea and the lawsuit between SK Broadband (SKB) and Netflix. There are two important subjects. The first is the history and major regulations relating to internet protocol interconnection in South Korea. Regulating IP interconnection between internet service providers is considered a rare case overseas, and I explain why the Korean government adopted such a policy and how the policy has been developed and what it has accomplished.

The second subject is the issues over network usage fees between ISPs and content providers and the pros and cons. The author discusses issues that came to the surface during the legal proceedings between SKB and Netflix in the form of questions and answers. The following issues were identified during the process.

First, what Korean ISPs demand from global big tech companies is an access fee, not a termination fee. The termination fee does not exist in the broadband market, only in the market between ISPs.

In South Korea, content providers only pay for access, not termination

For example, Netflix’s Open Connect Appliance is a content delivery network. To deliver its content to end users in Korea, Netflix must purchase connectivity from a Korean ISP. The dispute arises because Netflix refuses to pay this connectivity fee. Charging CPs in the sending party network pay method, as discussed in Europe, suggests that the CPs already paid access fees to the originating ISPs and should thus pay the termination fee for their traffic delivery to the terminating ISPs. However in Korea, it is only access fees that CPs (also CDNs) pay ISPs.

In South Korea, IP interconnection between content providers and internet service providers is subject to negotiation

Second, although the IP interconnection between Korean ISPs is included in regulations, transactions between CPs and ISPs are still subject to negotiation. In Korea, a CP (including CDN) is a purchaser which pays a fee to a telecommunications service provider called an ISP and purchases a public internet network connection service, because the CP’s legal status is a “user” under the Telecommunications Business Act. Currently, a CP negotiates with an ISP and signs a contract setting out connection conditions and rates.

Access fees do not violate net neutrality

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes. The principle of net neutrality applies between the ISP and the consumer, e.g. the practice of blocking, throttling and paid prioritization (fast lane).

In South Korea, ISPs do not prioritize a specific CP’s traffic over other CP’s because they receive fees from the specific CP. To comply with the net neutrality principle, all ISPs in South Korea act on a first-in, first-out basis. That is, the ISP does not perform traffic management for specific CP traffic for various reasons (such as competition, money etc.). The Korean court did not accept the Netflix’s argument about net neutrality because SKB did not engage in traffic management.

There is no violation of net neutrality in the transaction between Netflix and SKB. There is no action by SKB to block or throttle the CP’s traffic (in this case, Netflix). In addition, SKB does not undertake any traffic management action to deliver the traffic of Netflix to the end user faster than other CPs in exchange for an additional fee from Netflix.

Therefore, the access fee that Korean ISPs request from CPs does not create a net neutrality problem.

Why the Korean model is not double billing

Korean law allows for access to broadband networks for all parties provided an access fee is paid. Foreign content providers incorrectly describe this as a double payment. That would mean that an end user is paying for the access of another party. There is no such notion. Each party pays for the requisite connectivity of the individual connection, nothing more. Each user pays for its own purpose, whether it is a human subscriber, a CP, or a CDN. No one user pays for the connectivity of another.

Dae-Keun Cho, PhD is is a member of the Telecom, Media and Technology practice team at Lee & Ko. He is a regulatory policy expert with more than 20 years of experience in telecommunications and ICT regulatory policies who also advises clients on online platform regulation policies, telecommunications competition policies, ICT user protection policies, and personal information protection. He earned a Ph.D. in Public Administration from the Graduate School of Public Administration in Seoul National University. This piece is reprinted with permission.

Request the FREE 58 page English language summary of Dr. Dae-Keun Cho’s book Nothing Is Free: An In-depth report to understand network usage disputes with Google and Netflix. Additionally see Strand Consult’s library of reports and research notes on the South Korea.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Unrealistic Fears About Chinese Tech Distract From Real Privacy Concerns, Panelists Say

Panelists argued that ethical concerns about digital privacy and AI are not unfounded, but rather unfairly targeted at certain countries.

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WASHINGTON, January 23, 2023 — The TikTok bans that have been implemented by several state governments and universities illustrate a misguided approach to tech policy that targets certain countries at the expense of addressing broadly applicable privacy concerns, said panelists at a Broadband Breakfast Live Online event on Wednesday.

Some of the often-discussed security threats coming from Chinese tech products “are being imagined in a way that is completely detached from reality,” said Yangyang Cheng, a research scholar and fellow at Yale Law School’s Paul Tsai China Center. This misdirected focus diverts attention away from other concrete risks presented by artificial intelligence and social media, she added.

In December, Rep. Mike Gallagher, R-WI, called for a national TikTok ban, calling the app “digital fentanyl” and claiming it was being utilized by the Chinese Communist Party to influence young Americans. Such allegations are unrealistic and xenophobic, Cheng said, but still have the power to broadly shape American society.

For example, several universities have now banned the use of TikTok on the schools’ Wi-Fi and equipment. Access to a particular social media app is not itself a fundamental right, but “fundamental rights with regards to academic freedom, freedom of expression, government’s role in a society are being shaped, and some fundamental freedoms are being infringed on… in the name of banning TikTok,” Cheng said. “That is the concrete harm here.”

The rhetorical focus on a potential TikTok ban and other “combative” issues takes away from more important discussions, such as the fact that the U.S. lacks comprehensive privacy legislation, said Kate Kaye, an independent tech journalist. Unlike the U.S., China has legislation allowing people to opt out of algorithmic social media targeting, she added.

Attempts to establish “very minor ethical guidelines” in U.S. artificial intelligence research have been met with significant pushback from researchers who question whether it is their responsibility to consider ethical questions or data privacy, Kaye said.

Cheng argued that ethical concerns about digital privacy and artificial intelligence are not unfounded, but rather unfairly targeted at certain countries. For example, the U.S. government has placed certain restrictions on Chinese digital surveillance firms, citing potential human rights violations, but similar technologies are being developed and used in the U.S. and Europe.

The “rhetorical China threat umbrella” has even been used to argue against such ethical regulations, with U.S. tech companies claiming that such restrictions will impede their ability to compete with their Chinese counterparts, Cheng said.

Concerns about economic competition are ‘repackaged’ as security risks

Potential risks related to technology can be divided into three categories, which are sometimes improperly conflated, Cheng said. First, technical risks can entail built-in design flaws that make devices or software vulnerable to hacking. While these problems are still complicated, they are relatively straightforward to observe and define.

Another category is regulatory risks, referring to the guidelines and restrictions that are placed on data collection, storage and usage.

Risks in these two categories are “not specific to any individual country or political system,” Cheng said. While the security concerns raised by the U.S. government about Chinese tech companies like Huawei and TikTok are “not necessarily unfounded,” those same risks are present in products from several other countries, she added.

“There is an overemphasis on the policing or surveillance capabilities of the Chinese state, without seeing the reality that data is being commodified and basically packaged as capital, so it can just be bought and sold relatively freely by data brokers and other third parties,” Cheng said.

This potential overemphasis on certain countries’ companies falls into the third risk category, which Cheng termed geopolitical risks. One such geopolitical concern expressed by some U.S. lawmakers is that it is harmful for a Chinese company like TikTok to have such a large market share.

However, this concern is sometimes couched in language about data privacy or security, Cheng said. “What we are seeing is that actual concerns about geopolitics or economic competition are being repackaged and somehow hand-waved to the first two types — technical or regulatory risks.”

Many of the national security conversations taking place in the U.S., on a bipartisan basis, are propelled by “profit-driven motives,” Kaye said.

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. Watch the event on Broadband Breakfast, or REGISTER HERE to join the conversation.

Wednesday, January 18, 2023, 12 Noon ET – Welcoming the Chinese New Year, Navigating a High Tech Cold War

Tensions between the U.S. and China are continuing to grow, and the battle over information technology and policy often appears to be at the heart of the conflict. Chinese telecommunications equipment giant Huawei has been effectively barred from the U.S. market for over a year, and the Federal Communications Commission recently tightened restrictions with a new rule that will keep Huawei, ZTE and other companies from surveilling American citizens. Meanwhile, ByteDance’s TikTok has been banned from U.S. government devices, and some politicians argue that it also should be banned from the devices of its 100 million U.S. users. How will this power struggle play out over the coming year, and what are the implications of both countries’ decisions?

Panelists:

  • Dr. Yangyang Cheng, Research Scholar in Law and Fellow at Yale Law School’s Paul Tsai China Center
  • Kate Kaye, Independent Tech Journalist and Writer
  • Drew Clark (moderator), Editor and Publisher, Broadband Breakfast

Panelist resources:

Dr. Yangyang Cheng is a Research Scholar in Law and Fellow at Yale Law School’s Paul Tsai China Center, where her work focuses on the development of science and technology in China and US‒China relations. Her essays on these and related topics have appeared in The New York Times, The Guardian, The Atlantic, WIRED, MIT Technology Review, and many other publications. Trained as a particle physicist, she worked on the Large Hadron Collider (LHC) for over a decade, most recently at Cornell University and Fermi National Accelerator Laboratory.

Kate Kaye is a tech journalist who tells deeply-reported stories with words and sound. Her work has been published in ProtocolMIT Technology Review, CityLab, OneZero, Fast Company, and many other outlets, and it’s been heard on NPR, American Public Media’s Marketplace and other radio programs and podcasts. Kate covered AI and data as senior reporter for Protocol until the publication suddenly shut down in November 2022.

Drew Clark (moderator) is CEO of Breakfast Media LLC. He has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

Graphic by Adobe Stock

WATCH HERE, or on YouTubeTwitter and Facebook.

As with all Broadband Breakfast Live Online events, the FREE webcasts will take place at 12 Noon ET on Wednesday.

SUBSCRIBE to the Broadband Breakfast YouTube channel. That way, you will be notified when events go live. Watch on YouTubeTwitter and Facebook

See a complete list of upcoming and past Broadband Breakfast Live Online events.

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Semiconductor Supply Chain Control is Critical, But Export Restrictions May Hurt U.S. Companies, Event Hears

The CHIPS and Science Act, while a good step, should not preclude developing a secure supply chain with other countries.

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Screenshot of Hudson Institute event panelists

WASHINGTON, January 12, 2023 — Gaps in the domestic microelectronics supply chain both expose potential U.S. vulnerabilities and highlight the importance of a multilateral approach with international allies, according to speakers at a Hudson Institute panel on Wednesday.

Semiconductors and microelectronics play a key role in computing, healthcare, military systems and countless other critical applications. But their manufacturing process is extremely complex and relies on a tenuous supply chain with several potential points of failure.

For example, 70 percent of the world’s capacity for photoresist — a light-sensitive polymer that plays an important role in the electronics industry — is concentrated in just four companies, all of which have operations in the same part of Japan, said Neal Anderson, strategy lead for the semiconductor market at chemicals company Chemours.

This is “not necessarily a single point of failure, but when you look at it from a geographic perspective, it presents the same amount of risk,” Anderson explained.

Chemours is the only U.S.-based manufacturer of PFA, a fluoropolymer that is “used pretty ubiquitously across the semiconductor infrastructure and semiconductor fabrication facilities,” Anderson said.

“Earlier this year we became aware of a $35 gasket that was holding up an $80 million tool that was holding up the opening of a semiconductor fab[rication plant]… It just really illustrated the challenges and how one simple piece like that can create fragility across that supply chain.”

In addressing this problem, the U.S. government should refine its priorities for domestic manufacturing and focus on developing “end segments” for critical industries, said Travis Kelly, president and CEO of Isola Group. “Once we define ‘Hey, these are the critical end segments that we want to have a resilient and secure supply chain for,’ we need to figure out what that demand signal is.”

Kelly, who also serves as chairman for the Printed Circuit Board Association of America, noted that recent legislative activity — including last summer’s passing into law of the CHIPS and Science Act, which subsidizes domestic semiconductor manufacturing — is a good step forward. 

However, it could be a mistake to prioritize domestic manufacturing at the expense of developing a secure supply chain between countries with distinct resources and technological advantages, he added. “You can’t bring everything back to the U.S. because that’s too much of a myopic view — it’s a global economy.”

New export restrictions may do more harm than good

An argument often raised in debates about the microelectronics supply chain is that the U.S. has lost its lead, but this applies only in very limited circumstances, said Rich Ashooh, vice president for global government affairs at Lam Research. While the volume manufacturing of chips has largely moved overseas, the U.S. maintains a lead in the tool industry, building the machines for chip fabrication facilities.

“It’s a very small number of companies that integrate these very complex technologies, and that does make for a fragile system, but the system has worked and the US is in the lead,” Ashooh said. “Now… U.S. policymakers have decided to change the system under which that lead was achieved.”

Ashooh was referring to export restrictions announced by the U.S. Commerce Department in October, prohibiting U.S. companies from exporting chip production technology and equipment to China. Industry leaders have warned that these restrictions risk making American companies less competitive in global markets.

“Everyone agrees that semiconductor leadership is a national security concern,” Ashooh said. “But if that’s the case, we need to ask ourselves seriously about whether or not the government is aware that they changed the system overnight and there is no clear replacement for it.”

If the U.S. puts excessive bilateral sanctions on China, this could have the “unintended consequence” of driving innovation in China and causing future problems for the U.S. market, Anderson said. A better approach would be multilateral, with the U.S. working alongside a “regional like-minded coalition.”

The importance of a multilateral approach was echoed by other panelists, including Bryan Clark, senior fellow at the Hudson Institute and director of the Center for Defense Concepts and Technology.

If the supply chain is examined “from just the U.S. lens, it gets really complicated… but if you look at this instead as the lens of the U.S. and its allied countries, that seems like a coalition of both customers and providers that may be relatively self-contained,” Clark said.

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