The Internet Society discusses potential changes to the International Telecommunications Regulations and how it can stifle businesses, particularly small and medium enterprises, employing Internet-based systems in emerging markets like the Philippines


The open Internet has been quite the nuisance. It has not only acted as a platform for the Egyptian nation to overthrow its dictator, and even exposed the plagiaristic tendencies of a certain Filipino politician, but it has also enabled innovation, economic development and social progress for people around the world.

It really depends on how you want to look at it, but, sarcasm aside, the underlying fact remains that the Internet has provided everyone with a level playing field as it flows through unregulated commercial agreements. From a business standpoint, what this means is that a small business in the Philippines has the same level of access to the global marketplace as a company as big as IBM or GE. Built from the ground up, the Internet has been powered by people, technical experts, civil society groups and governments, all of whom have joined together in a multi-stakeholder model to write an amazing narrative.

It is exactly this “open” aspect of the Internet that global cause-driven organization Internet Society (ISOC) seeks to protect. Backed by more than 55,000 members and nearly 90 chapters around the world, ISOC ensures that the Internet and the web that is built on it “continues to develop as an open platform that empowers people to share ideas and connect in new and innovative ways; and that it serves the economic, social and educational needs of individuals throughout the world today and in the future.”

The World Versus The Web

In a short period of time, the open system of the Internet has had an amazing impact on almost every facet of people’s lives. It has enabled access to new ideas and information, and increased the ways people interact and do business.

However, according to Rajnesh Singh, ISOC regional director, Asia-Pacific, proposals to change the current structure of International Telecommunications Regulations (ITRs) spell “potentially hazardous implications for the future of the Internet and all its users.”

From December 3 to 14, the International Telecommunications Union (ITU) will convene a treaty conference in Dubai, which will discuss whether the Internet should now be brought within the scope of its regulations (ITRs) instead of the open, voluntary and multi-stakeholder model that has served it so well. “Based on leaked documents, countries like China and Russia are proposing sweeping changes that would give governments greater control over the Internet, and change the commercial model of the Internet,” asserts Singh. Winthrop Yu, a trustee of the Philippine chapter of the ISOC, says that if these proposals are passed, “they could lead to increased costs for Philippine businesses, which would stifle economic and social growth.”

According to the Department of Trade and Industry, 99.6 percent of businesses in the country are categorized under micro, small and medium enterprises (MSMEs). A significant number of these MSMEs utilize the power of the Internet. “The Internet has become a 21st-century trading route,” says Dondi Mapa, president of the Infocomm Technology Association of the Philippines (ITAP). “Regulating the Internet’s openness may take away the innovation, creativity and dynamic growth that has contributed immensely to the global economy, and has helped shape the economies of developing countries like India and the Philippines,” he adds.

Connecting The Dots

When a communication is sent over an IP (Internet Protocol) network, it is broken up into packets across a series of interconnected networks as it journeys to the recipient. A single communication packet could route through networks hosted in a number of countries before landing at the receiver’s computer.

However, some countries such as the Arab states, Egypt and Russia want countries to have the right to know how traffic is routed. “If this were applied to Internet communications, this would require tremendous and extensive engineering changes. This not only creates massive new costs, but also threaten the performance benefits and network efficiency of the Internet,” explains Singh.

The Internet is a network of networks, and a range of entities from the private sector and government operate the networks through independent commercial agreements. But some parties such as the European Telecommunications Network Operators Association (ETNO) are proposing to replace this with a new “sending party network pays” system wherein the sending network pays for the transmission of data.

This would result in unwelcome consequences. Yu says, “Carriers around the world, including PLDT and Globe, would be required to build and maintain detailed accounting mechanisms to determine who will pay for traffic that flows between networks. This would entail further complexity and cost, which will be passed on to consumers.” He adds that, “local entrepreneurs will have a disincentive to go online since a key benefit of the Internet is that it makes it possible for anyone in the world to create a business with worldwide reach.”

The ITU’s proposals could also broaden the digital divide between developed and developing countries worldwide. “To avoid unnecessary fees, many companies would decline to offer services in countries that are not key to their business strategy,” says Singh. “Award-winning educational platforms like the Khan Academy,” he cites as an example, “may stop offering videos to the Philippines because of the high cost associated with sending videos through networks to a school in, say, the Visayas. Internet users in smaller and less developed countries could lose access to valuable Internet content and services, and get even more cut out of the global economy.”

Bridge, Not Broaden, The Digital Divide

If adapting the ITR treaty to the Internet is a solution in search of a problem, what, then, is the Philippines’ role in all this? According to Yu, the 193 member-nations of the ITU will decide and vote on the proposals as part of an update to the ITRs that were last reviewed in 1988. Each member gets one vote and a majority can enforce changes. The Philippines has been a Council Member of the ITU for over 10 years.

“It’s important that policymakers see how this treaty impacts the Philippines. The question is how will the Philippines vote? The fact is we don’t have a firm position yet,” Yu says. “Early this year,” he adds, “there was a motion to affirm freedom of expression on the Internet. China intervened. Some countries sided with China, including Russia, the Arab states…and the Philippines. We signed on that.”

This time, ISOC and ITAP is urging the government to not just go with the popular vote: “The Philippine economy has been enjoying healthy growth over the past few years and investments have been flowing in, particularly in the ICT sector. Let us ensure we protect these gains—a free and open Internet that allows innovation and creativity to flourish is the only way to do this and keep us globally competitive.”

Published September 24, 2012 in the Business Agenda section of Manila Bulletin