8 thoughts on “The New Economic Context of Internet Governance”

1. […] which had seen the halting of a long period of financial growth. You can find position papers by Jeanette Hofmann, Olivier MJ Crépin-Leblond, A. Michael Froomkin, David W. Maher, Kuo Wei Wu and Rafid A. […]

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2. Posted by Ida Persson on behalf of Rafid A. Fatani, University of Exter

   Position Paper on ‘the new economic context of Internet governance’

   It is clear that the development of the Internet is constantly ongoing, and is not a static process. The increase of online fraud and identity theft, privacy incursions, copyright infringements, domain name disputes, and spamming has fuelled debates and raised cross-border concerns regarding the Internet’s governance. These issues are a concern to citizens, interest groups, NGOs, civil society, as well as, governments. Many countries are now examining what national policies should govern the Internet in their own sovereignties, and some uncertainty exists over how global policy and governance should be tackled.

   Arguably, the current global financial crisis has brought about a larger call for tighter global regulation. These calls have questioned why we have seen limited international coordination on common frameworks for financial regulation, as the lack of it has driven the downturn and threatened the collapse of the wider global economy. This is questionably comparable in many ways to that of the Internet public policy issues that can only be dealt with on a global level such as spam electronic messages, the distribution of pornographic images of minors and many other issues. In my opinion, the current governance structure of the Internet necessitates a more direct system of international global cooperation in order to sustain a stable Internet system for the future. As the Internet faces more ethical and policy challenges, an extremely wide range of ethics codes and practices is essential.

   Some could argue that the status quo is tackling a lot of the global issues. However, a global approach to legislate and regulate, in a way that would be adhered to by all nation states and enforced by all in a uniform way, would solve many of the disputes surrounding Internet governance. However, although ideal, there is no universally legitimate body at present that can formulate and enforce these for all states. Furthermore, the dominance of the US over the technology (through ICANN and other means) and the national interests of other governments, make the idea of global cooperative Internet governance being an international treaty, established by an intergovernmental organisation unlikely. Instead of a comprehensive international framework governing the Internet globally, states have developed a complex mix of national regulation, sectoral international law, and areas where there is no regulation at all. It seems however that a majority of the current public policy issues that remain to be fully resolved, only represent “real time” (off line) concerns. The fact that they have not been fully resolved only reflects a lack of cooperation in the international arena on other global issues (UN conference in Geneva on racism last week only reflects how far some governments are willing to go in order to make the earth a nicer place).

   Some have criticised the attempts by traditional governing bodies to regulate the Internet. They believe that any regulation is useless and against the philosophy of the evolving borderless geography of the Internet in this globalised era. However, the fact that the Internet is the object of certain governance mechanisms (through self-regulation, co-regulation or even full state regulation), it remains under no influence of any official government. However, many have argued that the US right to veto at ICANN or even the current JPA contract, hinders the concept that the Internet is only governed by the social norms of its users, and by its technical architecture.

   Can we afford the collapse or fragmentation of the Internet before we start to act?
   I guess what I am trying to ask is: Can the current crisis of the global financial system be replicated on an Internet governance level? In simple terms, it is defiantly a possibility. The financial system failed to foresee the leeks (bad credit) in the global system, and thus failed to act in time. This failure to agree and act through global coherency is currently arguably present in the lack of multi-stakeholder decision making body. We must not forget that the Internet today plays a crucial role in the social and economic fabric of our society, and contributes immensely to economic infrastructures. Moreover, the macro-economic imbalances were at the core of this current financial crisis. These imbalances did not occur overnight, but have accelerated over the last 10-15 years, and weak international coordination at a global level neglected to act until it was too late. Equally, the Internet has been brewing macro imbalances, and the way the technology has been governed globally has only fuelled these imbalances (whether through the ICANN debate, China’s Alt root or simply being able to collectively deal with issues of global scale).

   It is clear that the current economic climate has big implications on government spending. Moreover, as some governments have opted for the fiscal stimulus route out of this current crisis, more liquidity is been injected in the system. Therefore we might see heavy investment in the Internet, as it encourages long-term financial growth due to its current economic role. However, we will have to wait and see how high Internet infrastructure is on the agenda.

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3. Posted by Ida Persson on behalf of Kuo Wei Wu, CEO, NII Enterprise Promotion Association, Taiwan

   Internet Governance Mechanism: Achievements and Challenges

   In general, the existing Internet governance international bodies are functioning properly in their respective roles, however as Internet evolves with time, the current governance model may no longer support the changes.

   Status

   The current global Internet governance mechanism is composed of several international and regional organizations, and the most major ones and their respective responsibilities include:

   – Internet Corporation for Assigned Names and Addresses (ICANN), which coordinates technical administrations of Internet resources: IP, domain name and root servers.

   – Regional Internet Registries (RIRs), which organize the oversight of allocation and registration of Internet number resources within particular regions of the world. The policy development in five RIRs is mainly done by face-to-face Open Policy Meetings, which are held once or twice each year, and mailing list discussions.

   – Internet Governance Forum (IGF), which is a result of United Nation’s World Summit of Information Society and it serves as a global Internet public policy dialogue for multi-stakeholders. IGF meeting is held once a year.

   Challenges

   Below summarized my observed issues in each of the main Internet governance bodies mentioned in the previous paragraph and those issues may become obstacles for further organizational developments and need to be addressed.

   Strong Domain Name Registration Constituency within ICANN

   ICANN has positioned itself as a multi-stakeholder institution since launched, and it involves a wide variety of constituencies in different capacities and roles: national governments, business sectors, technical communities as well as Internet users. From the recent ICANN meeting participant type distribution, topics raised and source of incomes, the trends reveal that, the domain name constituency, such as registries and registrars, ICANN has become the main stakeholders.

   For example, new gTLD and IDN are the major concerns of ICANN these years, and other critical issues, such as IP address allocation and other security concerns, receive less attention or even are ignored. ICANN’s connection to the stakeholders in the area might be looser.

   It is very likely that, by the time when new gTLD and IDN issues are resolved, very few parties would be interested in ICANN activities. With less multi-stakeholder participation, ICANN’s governance legitimacy would be eliminated gradually.

   Weak Government Participation in RIRs

   The bottom-up public policy development process in RIRs is comprehensive and has worked effectively in the past years. Though the very little participation from national government representatives in the process minimizes the political interference, RIRs’ inexperience working with government bodies will become major obstacles for RIRs’ future operations. The argument is based on the stronger need of government’s involvement in the current severer IPv4 depletion and IPv6 promotion problems.

   No Decision Power in IGF

   IGF was designed as a dialogue platform for Internet multi-stakeholders rather than a policy maker, after three years of its inauguration, people started to argue the need to change. The world is in general expecting an appropriate mechanism for coordinating Internet governance policy and IGF owns that legitimacy power as it is part of the UN system. If IGF continues the approach it took in the past three years, it will no longer be needed.

   Summary

   It is suggested that, Internet governance related organizations should begin now to outline plans to resolve the future development problems. The plan should be a long-term one which identifies the challenges and action items shall be drafted and reviewed thoroughly before their implantations. Usually government and society look for “simple and easy” solution, but in most of case, it is not a good answer. Sometime it is a bad answer.

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4. Posted by Ida Persson on behalf on David W. Maher

   ICANN and its Responsibilities to the Global Public Interest

   David W. Maher, Senior Vice President – Law & Policy, The Public Interest Registry

   In 1998, the United States government might have taken a different path in asserting its control over the technical administration of the DNS. It might have asserted full U.S. governmental control, or it might have turned over the functions to an international body such as the International Telecommunications Union. Instead, it created a “private-public partnership”, incorporated as a California “nonprofit public benefit corporation”, with a charter giving the company a dual mission of quasi-governmental functions combined with responsibility for operational stability of the Internet.

   In all its deliberations, the ICANN Board must maintain a balance in its mission of lessening the burdens of government and promoting the global public interest in the operational stability of the Internet. ICANN’s responsibility is to find the fine line dividing two contrasting areas, one where it should not go, and the other where it is not doing enough. On the one hand, ICANN cannot become involved in areas such as content control and rule making in areas unrelated to operational stability. On the other hand, ICANN’s self image as technical coordinator has at times constrained it from taking action necessary to discharge its public interest obligations.

   ICANN’s recent attempts to find a way to insert new top level domains in the root zone file illustrate the difficulties of achieving this balance. From a purely technical point of view there is room for an almost unlimited number of new gTLDs in ASCII and in IDN.IDN versions. There will very likely be multiple applicants for some popular strings, and ICANN has the job of selecting from among the competitors. There will also likely be applicants for strings that are obscenities or phrases intended to inflame social or religious conflict. From the standpoint of ICANN’s obligation to serve the “global public interest in the operational stability of the Internet”, ICANN cannot allow these into the root.

   In addition, there is the continuing problem of minimizing trademark infringement opportunities. For better or worse, the United States government demanded in 1998 that ICANN become the enforcer of a global system of trademark rights. This quasi-governmental function, in the form of the UDRP, became part of the otherwise more technical duties assigned to ICANN.

   ICANN’s Draft Application Guidebook (the ‘DAG”) for new gTLDs attempts to find the appropriate mechanisms for taking into account the sometimes conflicting responsibilities described above. The first and second drafts, issued in October 2008 and February 2009, respectively, are not successful. They demonstrate, all too clearly, ICANN’s reluctance to face its public interest responsibilities. ICANN proposes to create a system of independent decision makers to decide such questions as likelihood of confusion between different proposed strings for new gTLDs, alleged infringement of legal rights by a proposed string, and objections based on morality, public order and community objections. Of these, the first and second are probably amenable to objective determinations based on internationally recognized principles of trademark law, as the UDRP has shown. However, questions of morality, public order and community objections can only be tested against conceptions of the public interest. ICANN apparently believes that getting a third party to do this work relieves ICANN of its responsibilities, but there is nothing to indicate that any third party has either the expertise or authority to make these judgments better than ICANN.

   Further, ICANN apparently hopes that its self-serving requirement that all gTLD applicants waive all legal claims against ICANN will insulate it from litigation. ICANN is certainly justified in its fear of litigation. As a creature of California law and subject to US federal law, this risk is always present. However, attempts to pass off to third parties ICANN’s obligations to make judgments about the public interest will not lessen this risk, and may in fact increase it. The waiver of legal claims applies only to applicants for new TLDs, not to third parties that may be adversely affected by the process. ICANN has apparently forgotten that, in the UDRP, there is a legal escape valve that provides the justification for making ICANN an enforcer of global trademark rights. Any party to a UDRP proceeding can go to court if dissatisfied with a UDRP decision.

   As another example of ICANN’s failure to face up to its responsibilities, ICANN proposes to create independent evaluation panels to choose from among conflicting applicants for the same new gTLD string. The call for expressions of interest states that evaluators must be capable of exercising subjective judgment. Again, there is no evidence that a third party’s subjective judgment would give better results than ICANN’s exercise of its expertise.

   To ICANN’s credit, it has finally realized that creation of unlimited numbers of new gTLDs has the potential for a vast increase in cybersquatting and the spread of fraudulent practices. The first two drafts of the DAG neglected to deal this issue in any serious way. At the end of its recent Mexico City conference, the ICANN Board announced the establishment of an “Implementation Recommendation Team (IRT) comprised of an internationally diverse group of people to develop and propose solutions to the over-arching issue of trademark protection…” The Chairman of the Board stated: “The Board has clearly heard and believes strongly that the concerns of trademark holders must be addressed before this process is opened for applications”.

   ICANN has done most of the right things it was created to do and it continues to deserve our support. It is very unlikely that a single government or international organization could better fulfill the obligations undertaken by ICANN. However, a lot of work remains to be done, and ICANN must pay a great deal more attention to its global public interest responsibilities.

   APPENDIX A

   The Legal Framework in which ICANN Operates

   ICANN is incorporated as a “nonprofit public benefit corporation” under the laws of the state of California, and is subject to both state and federal law in the United States. Typically for a corporation operating in the United States, its charter enumerates specific powers and also contains some broad general language:
   “The Corporation shall operate for the benefit of the Internet community as a whole, carrying out its activities in conformity with relevant principles of international law and applicable international conventions and local law and, to the extent appropriate and consistent with these Articles and its Bylaws, through open and transparent processes that enable competition and open entry in Internet-related markets. To this effect, the Corporation shall cooperate as appropriate with relevant international organizations.”
   The language quoted, together with ICANN’s bylaws and the series of agreements with the United States Department of Commerce , provides the basic legal framework for ICANN’s activities. Although the charter appears to give ICANN extremely broad powers, there are significant limitations imposed both externally and internally.
   The agreements with the Department of Commerce limit ICANN’s powers over the technical management of the domain name system. In a pleading filed by ICANN before a U.S. District Court in 2000, the General Counsel of ICANN said: “ICANN cannot, and has no legal authority to, implement new top level domain names; that authority currently resides in the Department of Commerce, . . . .”
   Internally, ICANN’s Bylaws include its “Mission and Core Values” that require ICANN to coordinate “policy development reasonably and appropriately related to [ICANN’s] technical functions” and “[t]o the extent feasible and appropriate, [to delegate] coordination functions to or recognizing the policy role of other responsible entities that reflect the interests of affected parties.” The Core Values further include:
   ”Seeking and supporting broad, informed participation reflecting the functional, geographic, and cultural diversity of the Internet at all levels of policy development and decision-making” and
   “While remaining rooted in the private sector, recognizing that governments and public authorities are responsible for public policy and duly taking into account governments’ or public authorities’ recommendations.”
   In a Fact Sheet on ICANN’s web site, there is a further explanation of ICANN’s policy making procedures:
   “As a private-public partnership, ICANN is dedicated to preserving the operational stability of the Internet; to promoting competition; to achieving broad representation of global Internet communities; and to developing policy appropriate to its mission through bottom-up, consensus-based processes.”
   This legal framework distinguishes ICANN from governmental regulatory agencies. Although ICANN is charged with lessening certain governmental burdens, that is a basis for exemption from U.S. federal income taxes, not an excuse to engage in regulatory activities. ICANN’s Bylaws appropriately link its policy development activities to its technical functions.
   For the generic top level domains, the Bylaws provide that ICANN’s Generic Names Supporting Organization (GNSO) Council “is responsible for managing the policy development process of the GNSO.” The process is governed by Annex A to the Bylaws.
   Within this legal framework, ICANN has undertaken policy development for some highly controversial issues, including:
   • The creation of new generic top-level domains (gTLDs), including domains that are identified in scripts other than Roman letters (internationalized domain names or IDNs) ;
   • The adoption of the Uniform Domain Name Dispute Resolution Policy (UDRP);
   • The consideration of policies, technical and legal, to deal with fraudulent practices that involve the content of Internet messages (e.g., identity theft, or “phishing” and various forms of malware)
   • The adoption of a policy to deal with the publication of personal data pursuant to the WHOIS protocol and the ensuing issues of protection of personal privacy.
   These activities clearly go beyond purely technical administrative functions relating to the domain name system. For example, consider the creation of new gTLDs and the assignment of registry operators. This is in many ways analogous to the selection of licensees from among multiple applicants for the assignment of frequencies for broadcast and telecommunication purposes. Just as domain names must be unique identifiers in order to achieve global interoperability, frequency assignments within a given area must, in general, be unique in order to avoid interference of signals. In the United States, the function of frequency assignment is performed by a federal administrative agency, the Federal Communications Commission.
   As another example, the UDRP determines rights that are normally subject to determination by national courts enforcing national law. It is a policy, enforced by ICANN, that has the practical effect of adjudicating the rights of trademark owners vis-à-vis domain name registrants,
   In the areas of IDNs, fraudulent practices, registrar compliance and privacy, ICANN is making policy judgments and taking actions that go beyond coordinating Internet identifiers. If ICANN did not exist, these activities would be subject to the active jurisdiction of the agencies or courts of national governments. Alternatively, if national governments could agree, the activities could be put under the jurisdiction of intergovernmental organizations.
   There are two aspects of United States law of particular importance to ICANN’s mission:

   The public interest standard:

   The public interest standard has a history relevant to ICANN’s activities. In the United States, it first appears in statutory law as the “public interest, convenience or necessity” . The phrase was used in an 1887 Illinois railroad statute , and in 1920 became part of United States federal law as part of the Interstate Commerce Act. As early as 1876, the U.S. Supreme Court recognized the standard when it held that state governments may regulate the use of private property when the use was “affected with the public interest.” In 1927, it became the standard by which the U.S. Federal Radio Commission (predecessor of the Federal Communications Commission) determined which applicants would receive licenses to operate broadcast stations.
   The history of the application of a public interest standard to the regulation of developing technologies is instructive to those dealing with the issues confronting the Internet and ICANN. Frequency spectrum assignments must be coordinated to avoid interference. The domain name system requires technical coordination in order to achieve global interoperability. If there were no global coordination in the assignment of IP addresses and domain names, the result would be as chaotic as the static resulting from unregulated broadcast frequency usage in the 1920’s. To use another analogy, just as the telephone system relies on the assignment of unique telephone numbers globally, the Internet relies on its unique assignments. These necessities – global interoperability and unique assignments – arising from the technology of the Internet, justify ICANN’s undertaking the promotion of “the global public interest in the operational stability of the Internet.”

   Lessening the burdens of government:

   This concept comes from United States federal tax law, and specifically from Internal Revenue Code Section 501(c)(3), the provision for exemption from payment of federal income taxes by nonprofit organizations in the United States. ICANN has 501(c)(3) status, and has passed the tests imposed by the Internal Revenue Service to determine whether ICANN is lessening the burdens of government. What this means is that ICANN is doing things that government (in this case, the U.S. government) would otherwise be doing.

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5. Posted by Ida Persson on behalf on A. Michael Froomkin, Professor, University of Miami School of Law

   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 internetbased 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.

   (c) A. Michael Froomkin 2009. Licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 License.

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6. Posted by Ida Persson on behalf of Dr. Olivier MJ Crépin-Leblond

   Author: Dr. Olivier MJ Crépin-Leblond – http://www.gih.com/ocl.html
   Affiliation: ISOC England / ICANN European At-Large Organisation (EURALO) Board member – given for identification purposes only.
   In this statement, the author represents solely himself.

   Given that:

   – The Internet economy, by its very nature linked to other activities, is affected by the current context of the global economy;
   – The IT industry in the wider sense (i.e. including any kind of telecom service provider, whether infrastructure, commercial and residential, as well as computers and other electronic goods) is also being impacted by the current context of the global economy;
   – Following on the US example, national broadband plans are being put in place by some governments around the globe, as a component of national infrastructure projects designed by governments to inject stimulus in the economy;
   – Internet governance has traditionally often been seen as more of a reactive than a proactive discipline;
   – The Internet pipework’s traditional commercial growth has been reactive rather than proactive. For instance, barring early internet research funded by public money, as soon as commercial utilisation of the network became clear, services have been made available in a purely commercial way, by meeting demand with offer;
   – The Internet’s technical evolution has been undertaken through the Internet Engineering Task Force (IETF), a pro-bono non-profit group of engineers collaborating on new Internet standards, but with no ability to impose a standard in any other way than to propose it and hope that the standard will be taken up by the majority;
   – The Internet is gaining increased importance in everybody’s life thanks to new online services replacing physical services with online services – an example of which being the pre-registration for travellers to the United States – thus strengthening the importance of Internet Governance.

   I believe that:

   – The current cost reduction programme of corporations will involve a streamlining of their telecommunication needs. Internet being seen as a cost-killer, internet-related businesses are likely to benefit, or at least, be less affected than other types of businesses. That, in turn, will speed up the rate at which companies and organisations increase their reliance on Internet technologies, and will therefore strengthen the importance of Internet Governance;
   – National broadband plans are high-level initiatives, one of many proposals which should be promoted and funded by governments to improve telecommunication infrastructure. In order to be effective, several schemes should focus in particular on:
   o IPv6, the next generation of Internet Addressing Protocol, which allows for so many IP addresses that every electronic device in the office or at home can be addressed directly, and can therefore correspond directly with the other devices, thus promoting:
    An economy of scale through the manufacturing of standard communication devices;
    A new innovative market for embedded communication devices which can talk to each other, thus a significant step towards the Internet of things;
    An opportunity to create jobs in an expanded, revitalised, e-economy. Owners of older products will desire upgrading to a newer device due to its ease of use, added features and inter-connectivity;
    An opportunity for new services, unknown of today – an analogy of which could be taken as the Internet’s services (e-commerce, search engines, after-sales service) being unknown of in the early nineties and generating a new e-economy. The new services will create more jobs and more wealth than any of the services currently found on the Internet. This e-economy Version 2.0 is only possible if it can be sustained technically, and this means adoption of IPv6 as soon as possible;
    A blurring of lines between Internet, Telecommunications, White Goods (refrigerators and other appliances), consumer electronics, media and entertainment thanks to a harmonising of protocols. The impact on Internet Governance is the requirement for more inter-constituency, cross-platform collaboration;
   o Cloud Networking: this new technical architecture replaces the client-server system with a client simultaneously accessing a cloud of servers, without pinpointing which server is accessed. This is likely to produce new opportunities for data computation and telecommunication centres. It also introduces new opportunities for Cloud Computing services & ancillary services. (billing, etc.) Whilst this will have an impact on the Internet’s technical infrastructure, it will also introduce new business models which will require an extension to Internet Governance;
   o Green Networking – with Carbon reclamation schemes likely to be set-up and formalised by governments in a manner analogous to other industries.
   – The above plans have to be government-sponsored but will in many cases be privately controlled, and will thus all require increased Internet governance, in a blurring of the lines between Internet and real world Governance
   o I expect that with time, politicians and diplomats will become increasingly Net-savvy, especially after the more frequent debating of Internet Governance issues in Parliament and with their constituencies; this will bring a new influx of people on the Internet Governance stage.
   – Just like transition to IPv6 requires preparation, we need to get ready for Internet Governance Version 2.0, since the current economic conditions will catalyse change.

   Bottom line: the current economic climate will bring a lot of new people in the Internet Governance Arena. How they integrate (or not) in the current governance structures will be key to the future of Internet governance. This is the challenge that we have to work on now.

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7. Posted by Ida Persson on behalf of Jeanette Hofmann.

   Jeanette Hofmann, LSE, 21.04.09

   Reconsidering regulatory arrangements for financial sector and Internet governance

   There a few things that financial sector regulation and Internet governance seem to have in common. Reconsideration of such aspects in one field could therefore spill over to the other field. One of the aspects both sectors seem to share is a continuous tension between public and private regulation; and the border between private authority and public authority has been shifting over the years. Throughout the past two decades, self-regulation in the shadow of the state enjoyed clearly more public support than regulation by the state. Self-regulation came to be associated with expertise and efficiency while public regulation seemed to reek of command and bureaucratic control. The cross-border structure of both sectors, too, seemed to speak in favor of self-regulatory models.

   The current financial crisis has not only sapped public confidence in the superiority of private self-regulation, it has also challenged the oversight capacity of regulatory agencies. After all, the financial crisis happened despite the fact that the banking system is one of the most regulated sectors of modern economies. One of the lessons that might result from the crisis and that could also have an impact on Internet governance refers to the regulatory arrangement, i.e. the roles, responsibilities and relationships among the actors involved.

   One of the ironic insights we owe to the “principal agent” literature is that the information and expertise required to exercise effective external oversight is typically under control of those being regulated (the agent) rather than the regulator (principal). Regulators thus depend to some extent on the regulatees’ willingness to cooperate. Research into accountability relationships confirms this somewhat reversed power constellation between regulators and regulatees. Rules designed to foster transparency and accountability turn out to be in practice subject to negotiation and re-interpretation, not necessarily to circumvent or dilute rules but sometimes simply to make them work. The implementation of regulatory rules and standards and the relationship between oversight bodies and regulated entities require frequent interpretation and adjustments, and thus are likely to change over time.

   Regulators and regulatees therefore tend to establish close relationships over time. Rather than assuming them to be independent, or even opposed, actors they are perhaps better described as co-authors of regulatory arrangements. In this sense, regulatory authority could be understood as the outcome of collaboration rather than an exclusive and stable resource for government action. In such collaborative arrangements, regulatory rules themselves may not be very powerful tools; they are effective only to the degree that both sides embrace and support them. Without a sense of ownership on the part of the regulated, stronger regulation might simply lead to more of the same, i.e. to new strategies of creative evasion – with the regulator’s connivance.

   Taking into account the elastic nature of regulatory rules and the collaborative practice in regulatory arrangements, the question arises: How can regulatory arrangements be prevented from becoming too collaborative and thus slack, in other words, who supervises the regulatory arrangement? A lesson to be learnt from the financial crisis that might also be applicable to other policy fields such as Internet governance suggests that better regulation cannot be achieved by simply readjusting the boundary between private and the public authority in favor of the latter. Stronger public control is no guarantee for better regulation.

   Another avenue for improving regulatory arrangements might be the formal integration of a new type of watchdogs. NGOs such as consumer organizations or user groups would add another voice in the making and remaking of regulatory rules, and they would certainly bring additional views of the public interest to the table. The so-called multi-stakeholder approach opens up the process of regulatory rule making for public scrutiny, it helps to form social networks and could thus spread policy responsibility across regulatory environments. Sustained public attention through media coverage and civil society involvement might have a long term effect on the dynamics and accountability of transnational regulatory arrangements.

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8. This morning’s The Times (10 April 2009) covered the continuing debate over proposals in France to ban individuals from the Internet who download copyrighted music. It appeared in an article called ‘Three Hits and You’re Out, France Warns Internet Pop Pirates’ by Adam Sage. A recent overview of the initiative is provided in the New York Times. This particular proposal has not been accepted by the French Parliament, but it is expected to be reintroduced by the Government.

   It strikes me that this case illustrates the new context that is underpinning efforts to protect music and other industries from threats to their revenues enabled by the Internet. This is far from efforts to encourage Internet use, such as by not imposing sales taxes on Internet commerce. And such measures could indeed undermine the utilization of the Internet, as well as creative uses of the Internet for producing new digital content, while seeking to protect content creators. It is not only the production of information and communication technologies, but also their utilization, that is tied to social and economic development. Will France undermine its own economic development, while seeking to protect particular industries?

   This is but one case, which you may well view differently, but it would be useful to surface other cases at point that might provide a concrete sense of the implications of this new economic context.

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