ICC Warns of Harmful Regulatory Proposals for Internet Backbone

Market-based incentives are fostering investment in local network capabilities that reduce the need for higher-cost international traffic
Market-based incentives are fostering investment in local network capabilities that reduce the need for higher-cost international traffic

The International Chamber of Commerce (ICC), USCIB’s affiliate, today released a Discussion Paper highlighting how a commercially-driven framework has allowed Internet Backbone Interconnection Agreements to fuel the massive growth of the Internet across the globe.

The paper, written by the ICC Task Force on Internet and Telecoms Infrastructure and Services (ITIS), highlights data from various sources. This includes a 2011 Analysis Mason study that shows how commercial interconnection agreements negotiated in a market-based regulatory environment have resulted in more efficient global network usage, improved network performance, international expansion and investment growth.

One important example analyzed in the paper, is the evolution of Internet Exchange Points (IXPs) locations. From international Internet traffic originally being routed through IXPs located primarily in the US 15 years ago, the deployment of large numbers of IXPs quickly spread to OECD countries. Today, IXPs are increasingly being established and expanded in emerging markets.

Despite the huge success of the private-sector driven commercial model for Internet Backbone Interconnection Agreements, there have been proposals to regulate these agreements. Proposals appear to be based on the assumption that regulation would promote further investment within particular countries. The ICC paper explains that this view ignores the pertinent facts and policy options. In turn, the paper demonstrates that the desired new investments are actually being enabled and stimulated by the existing commercially-driven framework. In particular, although current proposals to regulate Internet infrastructure agreements would aim to shift costs between countries, the commercial model already is adapting to, and even enabling, the more fundamental shift in the underlying traffic flows that result in those costs. That is, market-based incentives are fostering investment in local network capabilities that reduce the need for higher-cost international traffic.

More on USCIB’s Information, Communications & Technology (ICT) Committee

ICC website

Staff Contact:   Barbara Wanner

VP, ICT Policy
Tel: 202.617.3155

Barbara Wanner directs USCIB’s work on information, communications and technology issues. She works with members and government officials on a wide range of international business issue that include advocating for the continuation of the multi-stakeholder model of Internet governance and for policies aimed at promoting the stability, openness and innovative flexibility of the Internet. She represents USCIB members’ interests in several international forums, including the UN, APEC and the OECD.
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