Is the U.N. Trying to Tax the Internet?

Earlier today, eyebrows were raised sharply when it was reported that the UN was considering a new internet tax on web content providers, including Google, Facebook, Apple and Netflix. The proposal, which was leaked today, has been allegedly introduced by ETNO, a Brussels-based group representing such companies as Belgacom, SwissCom, Cyta, Eircom and Deutsche Telecom, and will be officially discussed at the UN International Telecommunication Union in December.

The proposal

The proposal would allegedly amend an existing telecommunications treaty, the International Telecommunications Regulations, by imposing heavy costs on popular web sites and their network providers. The idea is that huge content providers like Apple and Google should be forced to pay fees linked to usage - data heavy sites like those tend to use lots of bandwidth. It's akin to the system used for international phone calls, where the recipient's network sets the pricing for calls; earlier the availability of voice over internet protocol like Skype, U.S. phone companies used to pay billions of dollars in fees for the privilege of facilitating calls abroad. In the world of the internet, the fear is that this kind of "pay as you go" system would restrict the availability of the internet to users in developing countries.

However, in spite of the reports, ETNO says that it is not asking the UN to tax the internet. During the ETNO does not deny that it believes that the way that content providers use the internet should be changed, it stopped short of calling for an actual tax, saying instead that it wants telecommunications network operators to consider making deals with content providers. Additionally, the ETNO has hinted that significant changes to the ITR are sure to come; the treaty has not been altered much in the near 25 years it has been in existence during the internet has as a matter of fact changed dramatically.

ETNO claims that changes would lead to a "new sustainable model for the internet", with its Executive Board Chair, Luigi Gambardella, saying:

The revised ITRs should acknowledge the challenges of the new Internet economy and the principles that fair compensation is received for carried traffic and operators' earnings should not be disconnected from the investment needs caused by rapid Internet traffic growth. The ITRs should be flexible enough so as to furthermore encourage future growth and sustainable development of telecoms markets, during respecting the guiding principles that led to the successful development of the Internet: private sector leadership, independent multi-stakeholder governance and commercial agreements.

The proposed changes

But not everyone is on board with the proposed changes. Google's Vinton Cerf has been vocal about the need to counter efforts to regulate the internet through the U.N., as countries gear up for the ITU. He worries that such regulations could restrict the freedom of the internet through such features as per-click taxes. Exactly, Cerf voiced concern that:

The open Internet has never been at higher risk than it is now A new international battle is brewing - a battle that will determine the future of the Internet.

It's clear that the explosive growth of the internet has both created challenges and opportunities for the private sector. How the intersection of government and the private sector might affect our use of the internet is worth watching. ETNO's proposal won't be officially discussed until December - however expect lots of chatter about it until at the time.

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Every so often, we read stories reporting that some governmental agency is trying to tax the Internet. Their attempts consistently fail. Why is that?

The Internet is constantly growing

The Internet is constantly growing and in a state of flux. New sites appear and old ones become stale. Regulators, by their nature, are always behind innovators. They write regulations that work on yesterday's assumptions nevertheless try applying them to tomorrow's Internet. It just does not work.

Yes yes yes, I know the Internet is an attractive target. Governments see an immeasurable pool of commerce nevertheless do not know how to regulate it. Conclusively, they cannot tax it. Research will always outpace regulation.