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For the record: Dave to State Department on reducing Internet costs.
Monday, 30 April 2012 23:47

My comment: Time to get serious about reducing consumer costs, including royalty/patents. By apparent accident, I wound up on a U.S. State Department advisory committee dealing with ITU and international regulations. I was never told the proceedings were confidential or asked to keep them so, but I am treating them that way. However, I believe in the spirit of the FCC ex parte rules. Those advocating to government should do so publicly. I am not reporting on the committee, but am making public what I personally advocated.
   In the context of the ITU discussion of moving the Internet forward internationally, I advocated taking the lead in making it more affordable for all. In particular, I pointed to the high and controversial patent/royalty costs, which I believe look to raise the costs of wireless, especially LTE and LTE Advanced, brutally. A mobile phone now costs $25 and a low end smartphone/MiFi about $100, heading to $30-50 in a few years. If the royalties claimed by Motorola, Apple, and literally dozens of others were enforced, that would add $20-50 to the cost. Microsoft alone wants $5 from every Android connection despite an almost insignificant part of the “intellectual property.”
    Getting the poor of the world connected requires bringing down the price as far as possible. As hardware costs come down with Moore’s Law, making royalties truly “reasonable” is the single most important step to bringing down the cost of the gear. ITU leader Haolin Zhou once told me in Geneva “the best standards have no royalties.” A good interim goal is that the total royalties should be 5-10%. On something like LTE, with literally hundreds of patent claims, that means very, very few companies have contributed enough invention to justify more than a fraction of 1%.

   Bringing down the cost of broadband to make it more affordable is a primary goal of many of the leaders of the ITU and an important part of the agenda. I think the U.S. should take the lead, rather than being dragged kicking and screaming to living up to our principles.
   The U.S. is likely to lose, badly, as it fights for the status quo, I hear from Geneva. The BRICS - Brazil, Russia, India, China, and the South - believe the status quo is a U.S. dominated Internet. They are asserting the 4 billion people they represent deserve a stronger voice.
    The most visible part of the battle is the Internet Domain Name System. The U.S. chartered ICANN is conflict-ridden, with a chair and several other board members literally in the pay of private registrars. The hundreds of TLDs coming are going to be an annoyance and raise Internet routing costs for many years. Replacing the U.S. chartered ICANN with some kind of ITU-UN system is unlikely to improve things but is popular around the world.
    At ITU, the battle has already been joined on security.  Arkadiy Kremer of Russia is Chairman of ITU SG 17, actively expanding its role to cover nearly all aspects of security. Vice-Chairmen include Jianyong Chen (China), Mohamed Elhaj (Sudan, normally a Chinese ally), Antonio Guimaraes (Brazil) and Patrick Mwesigwa (Uganda.) Everyone knows the U.S. spends $tens of billions annually to monitor voice and data around the world. Most of the world hates that, and true international monitoring might interfere. Most of this has been behind closed doors so far, but may burst out into public debate.
   Who pays what for net traffic and voice calls is also at issue. A decade ago, “net settlements” were intensely controversial, because an international cartel led by MCI and AT&T were charging high fees to connect to the net. Their acknowledged “peers” paid nothing but other carriers faced heavy fees. But the international backbones business developed enough competition to bring “transit” rates down. They are still disproportionate and thought unfair, but the total is much lower so the issue faded into the background
   The European governments should support international involvement in roaming, where Nellie Kroes and other EU regulators have a major success in reduced rates. They’ve also reduced the (still too high) termination charges. In practice, ITU has strong corporate involvement that might overpower the EU regulators. Cross border payments are complicated. The U.S. wants them lowered, but many nations find international phone calls one of the most efficient taxes to collect.
   All of which makes U.S. positions designed to placate domestic politics but otherwise ineffective a very expensive mistake.


I also surprised a speaker by saying I was “horrified” he referenced the  U.N. Broadband Commission report as an authoritative source. http://www.broadbandcommission.org/Reports/Report_2.pdf The report is a piece of feel good propaganda mostly written by a well-meaning zealous advocate. In particular, it makes claims for employment and economic benefits that range from unproven to contradictory. I don’t say that casually; I’ve traced back the footnotes and sources. Broadband is a good thing, but nearly all the academic and independent research is clear the economic effects of additional broadband investment tend to be small. Some of the best work (looking at California) found the effects too small to measure. Wildly overstating the benefits pays off for companies wanting government favors and for politicians wanting to claim credit for producing development and jobs.
    Anyone who actually has looked at the data on broadband and development know the Commission Report stretches the truth. Using it as a primary source marks the advocate as uninformed about broadband and/or uninterested in facts. Not the right image for the U.S. government.