Regulation and Government

FCC adopts new network neutrality rules on unstable jurisdictional ground

After months of consultation and over 100 000 submissions, the Federal Communications Commission has adopted an order which requires providers of a “broadband internet access service” to comply with its three principles of network neutrality:

The Commission adopts three basic protections that are grounded in broadly accepted Internet norms, as well as our own prior decisions.

First, transparency: fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and commercial terms of their broadband services. Second, no blocking: fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services. Third, no unreasonable discrimination: fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.

The big change in the final order is that it now partially encompasses mobile broadband providers, which the order prohibits from blocking competitor voice services, such as Skype or Google Voice. Of course, the rules seem to permit throttling under the guise of “reasonable network management”, which in practice could serve to render the competing services all but useless. Transparency obligations apply across the board, which can only be a good thing for consumer choice and effective competition. As carriers continue along the path of vertical integration, neutrality will only become a bigger regulatory issue.  Read more »

Guardian interview with Professor Tim Wu: the Internet as a teenager

The Guardian is running an interview with Professor Tim Wu, who recently published The Master Switch: The Rise and Fall of Information Empires . I’m about three quarters of the way through the book, which offers a refreshingly detailed comparison between regulation of early communications networks in the 19th and 20th centuries and the future of the internet. The interview offers a good summary:  Read more »

European Electronic Communications Package moves closer to UK transposition

The UK government is preparing to transpose Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (the Framework) into UK law. The Framework is a new regulatory package that will affect how service providers supply email, telecommunications and internet access services, but it seems to have received very little attention.

The Framework consists of five related Directives:

  • the “Framework” Directive (2002/21/EC);
  • the “Access” Directive (2002/19/EC);
  • the “Authorisation” Directive (2002/20/EC);
  • the “Universal Service” Directive (2002/22/EC); and
  • the “E-Privacy” Directive (2002/58/EC).

Several provisions from the Framework are worth noting briefly. (Further detail can be found in a recent discussion paper of the Department for Business Innovation & Skills, entitled Implementing the Revised EU Electronic Communications Framework.)

Security and integrity of computer networks

First, the Access Directive includes a number of provisions which impose new obligations on service providers to meet security and availability standards, and to notify certain network breaches to competent authorities. Article 13a provides as follows:

Article 13a Security and integrity  Read more »

WikiLeaks roundup: a selection of the best analysis

The WikiLeaks controversy continues to capture headlines and provoke vitriol from governments around the world. Most reactions, however, have been surprisingly unsophisticated. Commentators repeatedly conflate WIkiLeaks the platform with its spokesperson, Julian Assange (who is, whatever your opinion of the man, largely irrelevant), assume the platform’s actions are unlawful (probably not — and this is the very question to be determined), or believe that shutting down WikiLeaks will stop the leaks (it won’t).

US Senators have called for pressure to be placed on American companies to abandon WIkiLeaks, and for media outlets to be criminally investigated, while others have called for Assange’s prosecution and even assassination. France has called for the site to be banned from French servers (good luck). Assange has been detained on what will probably turn out to be trumped-up sex charges. Geoffrey Robertson QC and a specialist team from Doughty Chambers have stepped in to fight extradition.  Read more »

British ISPs to face regulatory pressure over internet pornography

Representatives of the Her Majesty’s government will meet with ISPs and lobbyists to discuss whether, and how, access to internet pornography should be controlled.

The meeting comes days after Tory backbencher Claire Perry said the availability of such materials is like ‘a fire is burning out of control’. The Member wants mandatory access controls on 18+ material, and called upon ISPs to provide them. Although details were unclear, it looks like some kind of mandatory ISP-level blocking system, subject to an opt-in after age verification.

Assuming, for sake of argument, that this is justified (and it may not be), who should implement the access controls? Ed Vaizey commented that he had ‘a huge amount of sympathy’ for Perry’s request. Does this signal a new era of content regulation in the United Kingdom? Sadly, it would not be at all unprecedented.

In other censorship-related news, a copy of the so-called ‘Google blacklist’ (keywords that will not autocomplete in the main search box) has been leaked (NSFW).

Ed Vaizey clarifies UK government's position on net neutrality

The recent controversy about Ed Vaizey’s purported abandonment of network neutrality was probably overhyped. In Parliament today, Andrew Smith (Labor MP, East Oxford) asked the following question:

To ask the Secretary of State for Business, Innovation and Skills if he will make it his policy to ensure that internet service providers do not discriminate against competitors and new entrants in the speed at which websites and services reach their customers.

To which the Honourable Member replied:

The Government expect all internet service providers (ISPs) providing an internet access service-both fixed and mobile-to offer all legal content. Consumers should always be able to access any legal content or service they want to and content providers and applications should be able to access consumers. ISPs should not be able to discriminate unfairly against services or users. That means no blocking or discriminatory degradation of services or applications for commercial reasons.

There is not yet any evidence that discriminatory practices are emerging, or that there is a problem with regards to how ISPs or networks manage the traffic that flows over them (something they all engage in for technical reasons to deliver the best possible service to consumers). And this is enforced by the initial responses to Ofcom’s recent consultation on the issue.  Read more »

Network neutrality dead in the UK?

Ed Vaizey, the Secretary of State for Business, Innovation and Skills, has made comments in a speech which suggest that he favours abandonment of the neutrality (non-discrimination) principle in internet traffic management. The comments have, perhaps rightly, triggered an avalanche of vitriolic abuse.

It is worth setting out the Minister’s remarks in full:

The issues here are complex. People don’t even agree what is meant by net neutrality. It is a term which means different things to different people.

At the heart of this debate, however, is the extent to which traffic should be managed on the Internet, and more
specifically whether ISPs should ever have the right to favour one content provider over another, particularly for commercial reasons.

That seems a fair, if simplistic summary of the central issue. Vaizey went on to identify three principles that he thinks should ‘guide the debate’:

First, openness — Consumers should always have the ability to access any legal content or service. Content and service providers should have the ability to innovate and, most importantly, to reach end users.

Secondly, transparency — This is a fundamental principle … [P]roviders must present information about their
service, including the nature and extent of their traffic management policies and their impact on service quality in a
clear, visible and easy to understand form for all their customers.  Read more »

Information monopolists as cyclic products of network effects: Tim Wu

Tim Wu’s excellent new book, The Master Switch: The Rise and Fall of Information Empires, chronicles a history of communications policy and the long-term behaviour of firms in information industries. His basic thesis is that such firms acquire market power by a combination of network effects and industry consolidation, then exert a form of regulatory capture that allows them to alter the rules of the game so as to drive out competitors and extract rents from their monopoly infrastructure.

A recent piece published in The Wall Street Journal provides a neat summary of these ideas and serves as a kind of postscript to the book itself:

Today’s Internet borders will probably change eventually, especially as new markets appear. But it’s hard to avoid the conclusion that we are living in an age of large information monopolies. Could it be that the free market on the Internet actually tends toward monopolies? Could it even be that demand, of all things, is actually winnowing the online free market — that Americans, so diverse and individualistic, actually love these monopolies?

The article goes on to examine how information monopolies develop. Wu’s basic method is historical, examining how similar patterns emerged in the telegraphy and telephony industries during the late 19th century:  Read more »

Saudi Arabia blocks Facebook

First Pakistan, then Bangladesh, Iran and — if anecdotal reports are to be believed — China. Now Saudi Arabia has reportedly blocked Facebook, on the basis that the website “crossed a line” in not conforming to the “values” of the country. It could turn out to be just another Mohammed-cartoon incident, but this raises a question: how are non-democratic states to engage with Western intermediary platforms that, if allowed to be accessed, cannot easily be regulated, monitored or controlled? So far, the answer seems to be an all-or-nothing approach: full access, or no access. What’s a social network to do?

The official says Saudi’s Communications and Information Technology Commission blocked the site Saturday and an error message shows up when Internet users try to access it. He says Facebook’s content had “crossed a line” with the kingdom’s conservative morals, but that blocking the site is a temporary measure. The official spoke on condition of anonymity because he wasn’t authorized to speak to the media.

Google's "Double Irish" and "Dutch Sandwich" tax strategies under the microscope

Fascinating article on the strategies employed by Google and other multinational technology firms to minimise corporate income taxation by funneling income into tax havens:

Google’s income shifting - involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” - helped reduce its overseas tax rate to 2.4 per cent, the lowest of the top five US technology companies by market capitalisation, according to regulatory filings in six countries.

Income shifting commonly begins when companies like Google sell or license the foreign rights to intellectual property developed in the US to a subsidiary in a low-tax country. That means foreign profits based on the technology get attributed to the offshore unit, not the parent. Under US tax rules, subsidiaries must pay “arm’s length” prices for the rights - or the amount an unrelated company would.

In Google’s case, the US-developed tech is licensed to Google Ireland Holdings Ltd, which sublicenses to Google Ireland Ltd, where 88 per cent of its global advertising income is derived. But 99 per cent of that income is shifted into Bermuda, where the holding co’s “effective centre of management” (two nominee directors out of a Bermuda law firm) is located.

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