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Comm'r. McDowell's Congressional Testimony 5-31-2012

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Released: May 31, 2012

STATEMENT

OF

COMMISSIONER ROBERT M. MCDOWELL

FEDERAL COMMUNICATIONS COMMISSION





BEFORE THE

UNITED STATES HOUSE OF REPRESENTATIVES

COMMITTEE ON ENERGY AND COMMERCE

SUBCOMMITTEE ON

COMMUNICATIONS AND TECHNOLOGY





INTERNATIONAL PROPOSALS TO REGULATE THE INTERNET










MAY 31, 2012


Thank you, Chairman Walden, Ranking Member Eshoo, and Members of the
Subcommittee for inviting me to join you today. Tomorrow will mark my sixth anniversary as
an FCC commissioner, and every day has been an honor and a privilege. I am pleased to be back
before you. As always, I look forward to answering any questions you may have.
It is a pleasure and an honor to testify beside my friend, Ambassador Phil Verveer. First,
please allow me to dispense quickly and emphatically any doubts about the bipartisan resolve of
the United States’ to resist efforts to expand the International Telecommunication Union’s
(“ITU”) authority over Internet matters. Some ITU officials have dismissed our concern over
this issue as mere “election year politics.” Nothing could be further from the truth as evidenced
by Ambassador Verveer’s testimony today as well as recent statements from the White House,
Executive Branch agencies, Democratic and Republican Members of Congress and my friend
and colleague, FCC Chairman Julius Genachowski. We are unified on the substantive arguments
and have always been so.
Second, it is important to define the challenge before us. The threats are real and not
imagined, although they admittedly sound like works of fiction at times. For many years now,
scores of countries led by China, Russia, Iran, Saudi Arabia, and many others, have pushed for,
as then-Russian Prime Minister Vladimir Putin said almost a year ago, “international control of
the Internet” through the ITU.1 I have tried to find a more concise way to express this issue, but
I can’t seem to improve upon now-President Putin’s crystallization of the effort that has been
afoot for quite some time. More importantly, I think we should take President Putin very
seriously.

1 Vladimir Putin, Prime Minister of the Russian Federation, Working Day, GOV’T OF THE RUSSIAN FED’N,
http://premier.gov.ru/eng/events/news/15601/ (June 15, 2011) (last visited May 14, 2012).

Six months separate us from the renegotiation of the 1988 treaty that led to insulating the
Internet from economic and technical regulation. What proponents of Internet freedom do or
don’t do between now and then will determine the fate of the Net, affect global economic growth
and determine whether political liberty can proliferate. During the treaty negotiations, the most
lethal threat to Internet freedom may not come from a full frontal assault, but through insidious
and seemingly innocuous expansions of intergovernmental powers.
This subterranean effort is already under way. While influential ITU Member States
have put forth proposals calling for overt legal expansions of United Nations’ or ITU authority
over the Net, ITU officials have publicly declared that the ITU does not intend to regulate
Internet governance while also saying that any regulations should be of the “light-touch”
variety.2 But which is it? It is not possible to insulate the Internet from new rules while also
establishing a new “light touch” regulatory regime. Either a new legal paradigm will emerge in
December or it won’t. The choice is binary.
Additionally, as a threshold matter, it is curious that ITU officials have been opining on
the outcome of the treaty negotiation. The ITU’s Member States determine the fate of any new
rules, not ITU leadership and staff. I remain hopeful that the diplomatic process will not be
subverted in this regard.
As a matter of process and substance, patient and persistent incrementalism is the Net’s
most dangerous enemy and it is the hallmark of many countries that are pushing the pro-
regulation agenda. Specifically, some ITU officials and Member States have been discussing an
alleged worldwide phone numbering “crisis.” It seems that the world may be running out of
phone numbers, over which the ITU does have some jurisdiction.

2 Speech by ITU Secretary-General Touré, The Challenges of Extending the Benefits of Mobile (May 1,
2012),http://www.itu.int/net/pressoffice/press_releases/index.aspx?lang=en (last visited May 29, 2012).

2

Today, many phone numbers are used for voice over Internet protocol services such as
Skype or Google Voice. To function properly, the software supporting these services translate
traditional phone numbers into IP addresses. The Russian Federation has proposed that the ITU
be given jurisdiction over IP addresses to remedy the phone number shortage.3 What is left
unsaid, however, is that potential ITU jurisdiction over IP addresses would enable it to regulate
Internet services and devices with abandon. IP addresses are a fundamental and essential
component to the inner workings of the Net. Taking their administration away from the bottom-
up, non-governmental, multi-stakeholder model and placing it into the hands of international
bureaucrats would be a grave mistake.
Other efforts to expand the ITU’s reach into the Internet are seemingly small but are
tectonic in scope. Take for example the Arab States’ submission from February that would
change the rules’ definition of “telecommunications” to include “processing” or computer
functions.4 This change would essentially swallow the Internet’s functions with only a tiny edit
to existing rules.5
When ITU leadership claims that no Member States have proposed absorbing Internet
governance into the ITU or other intergovernmental entities, the Arab States’ submission
demonstrates that nothing could be further from the truth. An infinite number of avenues exist to

3 Further Directions for Revision of the ITRs, Russian Federation, CWG-WCIT12 Contribution 40, at 3 (2011),
http://www.itu.int/md/T09-CWG.WCIT12-C-0040/en (last visited May 29, 2012) (“To oblige ITU to
allocate/distribute some part of IPv6 addresses (as same way/principle as for telephone numbering, simultaneously
existing of many operators/numbers distributors inside unified numbers space for both fixed and mobile phone
services) and determination of necessary requirements.”).
4 Proposed Revisions, Arab States, CWG-WCIT12 Contribution 67, at 3 (2012), http://www.itu.int/md/T09-
CWG.WCIT12-C-0067/en (last visited May 29, 2012).
5 And Iran argues that the current definition already includes the Internet. Contribution from Iran, The Islamic
Republic of Iran, CWG-WCIT12 Contribution 48, Attachment 2 (2011), http://www.itu.int/md/T09-CWG.WCIT12-
C-0048/en (last visited May 29, 2012).

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accomplish the same goal and it is camouflaged subterfuge that proponents of Internet freedom
should watch for most vigilantly.
Other examples come from China. China would like to see the creation of a system
whereby Internet users are registered using their IP addresses. In fact, last year, China teamed up
with Russia, Tajikistan and Uzbekistan to propose to the UN General Assembly that it create an
“International Code of Conduct for Information Security” to mandate “international norms and
rules standardizing the behavior of countries concerning information and cyberspace.”6 Does
anyone here today believe that these countries’ proposals would encourage the continued
proliferation of an open and freedom-enhancing Internet? Or would such constructs make it
easier for authoritarian regimes to identify and silence political dissidents? These proposals may
not technically be part of the WCIT negotiations, but they give a sense of where some of the
ITU’s Member States would like to go.
Still other proposals that have been made personally to me by foreign government
officials include the creation of an international universal service fund of sorts whereby foreign –
usually state-owned – telecom companies would use international mandates to charge certain
Web destinations on a “per-click” basis to fund the build-out of broadband infrastructure across
the globe. Google, iTunes, Facebook and Netflix are mentioned most often as prime sources of
funding.
In short, the U.S. and like-minded proponents of Internet freedom and prosperity across
the globe should resist efforts to expand the powers of intergovernmental bodies over the Internet

6 Letter dated 12 September 2011 from the Permanent Representatives of China, the Russian Federation, Tajikistan,
and Uzbekistan to the United Nations addressed to the Secretary-General, Item 93 of the provisional agenda -
Developments in the field of information and telecommunications in the context of international security, 66th
Session of the United Nations General Assembly, Annex (Sep. 14, 2011),
http://www.cs.brown.edu/courses/csci1800/sources/2012_UN_Russia_and_China_Code_o_Conduct.pdf (last visited
May 29, 2012).

4

even in the smallest of ways. As my supplemental statement and analysis explains in more detail
below, such a scenario would be devastating to global economic activity, but it would hurt the
developing world the most.
Thank you for the opportunity to appear before you today and I look forward to your
questions.

* * *

5

FCC Commissioner Robert M. McDowell
Supplemental Statement and Analysis
May 31, 2012


Thank you, Chairman Walden and Ranking Member Eshoo, for holding this
hearing. Its topic is among the most important public policy issues affecting global
commerce and political freedom: namely, whether the International Telecommunication
Union (ITU), or any other intergovernmental body, should be allowed to expand its
jurisdiction into the operational and economic affairs of the Internet.


As we head toward the treaty negotiations at the World Conference on
International Telecommunications (WCIT) in Dubai in December, I urge governments
around the world to avoid the temptation to tamper with the Internet. Since its
privatization in the early 1990s, the Internet has flourished across the world under the
current deregulatory framework. In fact, the long-standing international consensus has
been to keep governments from regulating core functions of the Internet’s ecosystem.


Yet, some nations, such as China, Russia, India, Iran and Saudi Arabia, have been
pushing to reverse this course by giving the ITU or the United Nations itself, regulatory
jurisdiction over Internet governance. The ITU is a treaty-based organization under the
auspices of the United Nations.1 Don’t take my word for it, however. As Russian Prime
Minister Vladimir Putin said almost one year ago, the goal of this well-organized and
energetic effort is to establish “international control over the Internet using the
monitoring and supervisory capabilities of the [ITU].”2

Motivations of some ITU Member states vary. Some of the arguments in support
of such actions may stem from frustrations with the operations of Internet Corporation for
Assigned Names and Numbers (ICANN). Any concerns regarding ICANN, however,
should not be used as a pretext to end the multi-stakeholder model that has served all
nations – especially the developing world – so well. Any reforms to ICANN should take
place through the bottom-up multi-stakeholder process and should not arise through the
WCIT’s examination of the International Telecommunication Regulations (ITR)s.

Constructive reform of the ITRs may be needed. If so, the scope of any review
should be limited to traditional telecommunications services and not expanded to include
information services or any form of Internet services. Modification of the current multi-
stakeholder Internet governance model may be necessary as well, but we should all work
together to ensure no intergovernmental regulatory overlays are placed into this sphere.
Not only would nations surrender some of their national sovereignty in such a pursuit, but
they would suffocate their own economies as well, while politically paralyzing
engineering and business decisions within a global regulatory body.


1 History, IThttp://www.itu.int/en/about/Pages/history.aspx">U, http://www.itu.int/en/about/Pages/history.aspx (last visited May 14, 2012).
2 Vladimir Putin, Prime Minister of the Russian Federation, Working Day, GOV’T OF THE RUSSIAN FED’N,
http://premier.gov.ru/eng/events/news/15601/ (June 15, 2011) (last visited May 14, 2012).

Every day headlines tell us about industrialized and developing nations alike that
are awash in debt, facing flat growth curves, or worse, shrinking GDPs. Not only must
governments, including our own, tighten their fiscal belts, but they must also spur
economic expansion. An unfettered Internet offers the brightest ray of hope for growth
during this dark time of economic uncertainty, not more regulation.

Indeed, we are at a crossroads for the Internet’s future. One path holds great
promise, while the other path is fraught with peril. The promise, of course, lies with
keeping what works, namely maintaining a freedom-enhancing and open Internet while
insulating it from legacy regulations. The peril lies with changes that would ultimately
sweep up Internet services into decades-old ITU paradigms. If successful, these efforts
would merely imprison the future in the regulatory dungeon of the past.

The future of global growth and political freedom lies with an unfettered Internet.
Shortly after the Internet was privatized in 1995, a mere 16 million people were online
worldwide.3 As of early 2012, approximately 2.3 billion people were using the Net.4
Internet connectivity quickly evolved from being a novelty in industrialized countries to
becoming an essential tool for commerce – and sometimes even basic survival – in all
nations, but especially in the developing world. Such explosive growth was helped, not
hindered, by a deregulatory construct. Developing nations stand to gain the most from
the rapid pace of deployment and adoption of Internet technologies brought forth by an
Internet free from intergovernmental regulation.

By way of illustration, a McKinsey report released in January examined the Net’s
effect on the developing world, or “aspiring countries.”5 In 30 specific aspiring countries
studied, including Malaysia, Mexico, Morocco, Nigeria, Turkey and Vietnam,6 Internet
penetration has grown 25 percent per year for the past five years, compared to only five
percent per year in developed nations.7 Obviously, broadband penetration is lower in
aspiring countries than in the developed world, but that is quickly changing thanks to
mobile Internet access technologies. Mobile subscriptions in developing countries have
risen from 53 percent of the global market in 2005 to 73 percent in 2010.8


3 Internet Growth Statistics, INTERNET WORLD STATS, http://www.internetworldstats.com/emarketing.htm">http://www.internetworldstats.com/emarketing.htm
(last visited Feb. 21, 2012).
4 Id.
5 See McKinsey High Tech Practice, Online and upcoming: The Internet’s impact on aspiring countries,
MCKINSEY & CO. (Jan. 2012) (“McKinsey Aspiring Countries Report”),
http://www.mckinsey.com/Client_Service/High_Tech/Latest_thinking/Impact_of_the_internet_on_aspiring
_countries (last visited May 24, 2012).
6 Id. at 22 (categorizing the following as aspiring countries: Algeria, Argentina, Brazil, Chile, China,
Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Iran, Kazakhstan, Malaysia, Mexico,
Morocco, Nigeria, Pakistan, the Philippines, Poland, Romania, the Russian Federation, Saudi Arabia, South
Africa, Taiwan, Thailand, Turkey, Ukraine, Venezuela, and Vietnam).
7 Id. at 1, 3-4, 23.
8 Id. at 1.

2

In fact, Cisco estimates that the number of mobile-connected devices will exceed
the world’s population sometime this year.9 Increasingly, Internet users in these
countries use only mobile devices for their Internet access.10 This trend has resulted in
developing countries growing their global share of Internet users from 33 percent in
2005, to 52 percent in 2010, with a projected 61 percent share by 2015.11 The 30
aspiring countries discussed earlier are home to one billion Internet users, half of all
global Internet us
12
ers.

The effect that rapidly growing Internet connectivity is having on aspiring
countries’ economies is tremendous. The Net is an economic growth accelerator. It
contributed an average 1.9 percent of GDP growth in aspiring countries for an estimated
total of $366 billion in 2010.13 In some developing economies, Internet connectivity has
contributed up to 13 percent of GDP growth over the past five years.14 In six aspiring
countries alone, 1.9 million jobs were associated with the Internet.15 And in other
countries, the Internet creates 2.6 new jobs for each job it disrupts.16 I expect that we
would all agree that these positive trends must continue. The best path forward is the one
that has served the global economy so well, that of a multi-stakeholder governed Internet.

One potential outcome that could develop if pro-regulation nations are successful
in granting the ITU authority over Internet governance would be a partitioned Internet.
In particular, fault lines could be drawn between countries that will choose to continue to
live under the current successful model and those Member States who decide to opt out to
place themselves under an intergovernmental regulatory regime. A balkanized Internet
would not promote global free trade or increase living standards. At a minimum, it
would create extreme uncertainty and raise costs for all users across the globe by
rendering an engineering, operational and financial morass.

For instance, Harvard and the Massachusetts Institute of Technology (MIT)
recently announced placing many of their courses online for free – for anyone to use.
The uncertainty and economic and engineering chaos associated with a newly politicized

9 Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011-2016, CISCO, at 3
(Feb. 14, 2012),
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-
520862.pdf (last visited May 24, 2012).
10 McKinsey Aspiring Countries Report at 1.
11 Id. at 3-4, 23.
12 Id. at iv, 4, 23. And 73 percent of Internet users do not speak English as a first language. Id. at iv.
13 Id. at 2, 8-9, 26-27.
14 Id. at 2.
15 Id. at v.
16 McKinsey Global Institute, Internet Matters: The Nets Sweeping Impact on Growth, Jobs, and
Prosperity
, MCKINSEY & CO., at 3, 21 (May 2011),
http://www.mckinsey.com/Insights/MGI/Research/Technology_and_Innovation/Internet_matters (last
visited May 24, 2012).

3

intergovernmental legal regime would inevitably drive up costs as cross border traffic and
cloud computing become more complicated and vulnerable to regulatory arbitrage. Such
costs are always passed on to the end user consumers and may very well negate the
ability of content and application providers such as Harvard and MIT to offer first-rate
educational content for free.

Nations that value freedom and prosperity should draw a line in the sand against
new regulations while welcoming reform that could include a non-regulatory role for the
ITU. Venturing into the uncertainty of a new regulatory quagmire will only undermine
developing nations the most.

As evidenced by today’s panels, attempts to regulate the Internet sphere have
rallied opposition here in the U.S. and internationally on a bipartisan basis. I am grateful
that my friend, Ambassador Phil Verveer, is here with me today. I am encouraged by his
recent indication that the Administration will name a head of the U.S. delegation to the
WCIT in June. Furthermore, my friend and colleague, FCC Chairman Genachowski, also
has been working to raise awareness of this important issue as have other key members of
the Obama Administration.

I am further buoyed by the leading role played by the private sector, both for-
profit and non-profit, not only domestically, but abroad as well. I am pleased to report
that there are many entities of all stripes, including public interest groups,
telecommunications companies, content providers, think tanks, Internet access service
providers, non-profit Internet governance entitites and network manufacturers standing
together to help spread the message and educate policymakers across the globe. A solid
diverse “coalition of coalitions” is starting to grow, which will help the soon-to-be named
leader of our delegation begin on a positive note.

Finally, it is worth noting that even if this effort is unsuccessful in December, we
must continue to be vigilant. Given the high profile, not to mention the dedicated efforts
by some countries, I cannot imagine that this matter will disappear. Similarly, I urge
skepticism for the “minor tweak” or “light touch.” As we all know, every regulatory
action has consequences. Put another way, when tended with care and patience, even a
mustard seed can grow into Jack’s Beanstalk. We must remain vigilant for years to
come.

For your convenience, I have attached a copy of a recent Wall Street Journal op-
ed that I wrote which provides more detail on the issue. See Exhibit A.

Thank you again for the opportunity to appear before you today. I look forward
to your questions.

4

Exhibit A

Robert M. McDowell, The UN Threat to Internet Freedom, WALL ST. J., Feb. 21, 2012, at A19, available
at
http://online.wsj.com/article/SB10001424052970204792404577229074023195322.html.


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