 | Issue: | Latin America II 1999 |
| Article no.: | 4 | |
| Topic: | Internet: To Regulate or Not? | |
| Author: | Gustavo Pena-Quinones | |
| Title: | Senior Commissioner | |
| Organisation: | Regulatory Commission of Colombia | |
| PDF size: | 36KB |
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Article abstract
Almost every country in the world today has established a connection to the Internet and it has become a globalised system. Surveys show that the main concerns at the international level are privacy, quality and the service opportunities that the Internet offers. Here, Gustavo Pena-Quinones looks at the different aspects of the Internet and concludes that regulation can only result from an analysis of each proposed service, and that any regulatory initiative must be exercised within a clear framework.
Full Article
Almost every country in the world today has established a connection to the Internet and it has become a globalised system. However, more than 97% of the servers are concentrated in developed countries and used by 16% of the world’s population. Operation Costs Operational costs are the values that a normal user has to pay in order to permanently use an Internet service. The operation costs in the developing countries are higher compared to those in developed countries. Internet Service Providers (ISPs) charge different prices depending on the country: · US: US$20 (1% of monthly salary) · Finland: US$18 (1% of monthly salary) · Dominican Republic: US$26 (24% of monthly salary) · Argentina: US$50 (9% of monthly salary) · India: US$82 (308% of monthly salary) · Kenya: US$100 (413% of monthly salary) Traffic An important aspect is the differences in the flow of traffic in the developing countries and the developed world. It is higher in the latter due to higher salaries. Therefore the cost of paying for a connection to the Internet is small and does not affect one’s monthly income significantly. Internet International Transmission The big transmission highways have been established for obvious reasons in the developed countries, generating at the moment capability excesses and low prices. However, networks between less developed countries are usually limited in their capability and prices are therefore higher due to the limited service available. Cost Structure of Access to Internet Internet access is achieved through the use of the local telephone connection. The price structure in the developing countries is based on three types of charges: · connection charge; · fixed monthly charge; and, · variable charge based on minutes or seconds of use. In the developed countries, there is a low connection charge. Argentina lowered the variable price for the Internet service on the hired lines for the providers of this service in an attempt to promote Internet access. This invariably distorts local telephone prices. Other Internet Services Web The space created by the development of the Web within the Internet offers a wide range of alternatives to the management of any kind of information. In 1995 there were more than 30,000 Web sites, and it is doubling every second month. Some newspapers in the US for instance, have more readers through Internet subscriptions than the printed word. Ecommerce Ecommerce will be the most important application of the immediate future since it will establish big movements of money and transactions. It requires the establishment of clear game rules and jurisdictions and parameters that can offer security and trust to the users. Internet Telephony Intemet telephony is not a problem in the developed countries where they have opened their market to competition. However it has started to become a worry in the developing countries due to the cost structure and the ‘bypass’ for the traditional telephone systems. In Latin America some countries like Argentina have already introduced regulations in order to tackle this problem. International Operators Relationships The ISP in developing countries have to pay US service providers the total cost of the circuit. There is an important difference in terms of the direction of the Internet traffic: the volume from the US to Colombia is four times bigger than the volume from Colombia to the US. This means that the public telephone operators TPBC and US companies have to pay large amounts of money to the Colombian operators in order to sustain communication between the two countries. However, the Colombian operator that provides the Internet service has to pay the full cost of the connection and having more traffic from the US to Colombia, the payment to the US is respectively larger. It is an expensive service for a developing country and even more complicated for a country like Colombia that is currently opening up its market to competition in the long distance service. Transport Capability Another difference in accessibility between developing and developed countries is their ability to offer a quality service. For instance Houston has more capability in Gigabits for Internet than all of Latin America and the Caribbean together. Only Puerto Rico and Brazil have more than 100 Gigabits of connectivity for Internet. The ‘backbone’ for Latin America and the Caribbean is directed towards the US, and only a couple of 128 Kb per second of hired lines connects Brazil with Uruguay and Argentina, but this figure is minimal compared with the 450 Mb available in North America. Interconnection Interconnection is another aspect to consider, Colombian law only regulate interconnection between public telephone operators TPBC and mobile telephone operators TMC. There is no clear defined regulation of the interconnection between basic telephone operators, cellular and aggregated value operators. Most of the Internet users access the aggregated value service provider via PBX. There are very few barriers to Internet access. The costs to establish an Internet service are lower than the ones needed to establish a basic telecommunications business. The Internet provider can offer more services than providers of basic telephone services. Internet services are also relatively cheap. For example in Europe, there are offers of US$0.10 per minute for voice communication over Internet, from the computer (Net 2 Phone). Internet Regulation Surveys show that the main concerns at the international level are privacy, quality and the service opportunities that the Internet offers. In Europe and in the US the concerns are related to censorship, privacy, difficulties of navigation, taxes etc. There are international regulations which individual countries cannot intervene with. The only way they can participate in the Regulatory process is through the different regulatory organisations in the US or through the different committees of the ITU. What to Regulate It is important to have a notion of what aspects of the Internet needs regulating – access, price, access conditions etc. Also, any regulatory initiative must be exercised within a ‘clear’ framework. A regulatory framework has been established by the national constitution in terms of laws, resolutions and decrees and there is a structure or institutional framework in which the whole regulatory aspects are based. Within this framework there are regulations on how to access the Internet, these are clearly established for the aggregated value operator who needs to hold an aggregated value license, and outlines how they can obtain their licence and what kind of services they can offer. Content In Europe and the US there are increasing concerns about Internet content. Some countries have tried to established measures to regulate the content of the Internet but practically very few could achieve a good result. On the other hand some are reluctant to regulate Internet content, fearing that it can hinder development. Intellectual Property Intellectual Property is regulated by the US who is quite ‘demanding’ in this area of Internet regulation. Its Constitution provides that Congress has the power to “promote the progress of Science and useful Arts, by securing for limited times to authors and investors the exclusive right to their respective writings and discoveries”. Names and Directions Names and directories are regulated by organisations dedicated to this task. They follow clear parameters in terms of defining names and domains. Privacy The Internet is used to commercialise products and therefore, privacy becomes important, because it breaks the structure of independence of the individual. The growth in transactional and communicative records may weaken ones ability to control information about oneself although there are a combination of programs available to combat this problem. The Internet can potentially become an ocean of information available to all. Jurisdiction Jurisdiction is bound to become a problem in the near future due to the global nature of the Internet and the way its services are offered. For instance, in the case of an Internet user buying his product in a country different to that of where his service provider is installed a number of taxes may be applied to the purchased product. Competence It is important to note that the market is concentrated in the US. Server providers such as WorldCom and MCI (which have merged) currently provide for 70% of the world market. Due to the US concentration, the number of servers on offer are limited. This concentration will in the near future restrict access in countries without a ‘backbone’ and/or direct access to servers and complex Internet networks. Promotion Promotion is an important aspect in the further expansion of the Internet. In Argentina for instance, the government has produced a presidential edict, which establishes the Internet as a national interest industry. They have also developed measures to reduce tariffs for the telephone connections needed to use the Internet. Digital Transactions In the next years, huge amounts of money will flow through the Internet in various forms: networks acquisitions, servers, hardware, software; services acquisitions and through trade. There will be excess for some companies and deficit for others. The trade generated through the Internet must be regulated and will be a concern for most countries. For instance national governments are likely to be concerned about digital cash, which can potentially facilitate illicit transactions which in terms will make it easier to launder money. This problem only arises in the transaction of anonymous digital cash as the non-anonymous variety leaves records that are easy to trace. Conclusion Regulation can only result from an analysis of each proposed service. The Colombian Telecommunications Regulation Commission (CRT) will apply the criteria sustained by the European Commission (EC) in the sense that it will not demand the same of access providers or service providers applying for an individual license as what is being asked of other providers. This is because it is an aggregated value service included in the global access to Internet. However, within the normative and regulatory framework the service could substitute the local telephone service. This Commission will review and address the issues and challenges.
