IGF 2023 – Day 4 – DCNN (Un)Fair Share and Zero Rating: Who Pays for the Internet? – RAW

>> LUCA BELLI: We will start in one minute. As soon as Konstantinos will be back froM the water.

All right. He kindly brought water for everyone. All right.

All right. Good morning to everyone. Let's start. We can start. So, let me welcome you to the (Un)Fair Share and Zero Rating: Who Pays for the Internet?. Fair or unfair. Thank you. And let me thank you for everyone working very hard to be here in this fair unfair timeslot at 8:30. You are very brave and you deserve a lot of appreciation for being here. let me welcome all the panelists. I am Luca Belli, FGV Law School, Rio de Janeiro.

And exactly 10 years ago, actually, together with some of the friends here we created this Coalition that evolved into more Internet openness dialogue. We have a website Internetinfo.org and the IGF website, of course. And let's start with the distinguished panelist. We will have Camila Leite, Brazilian Consumers Association, IDEC, and we will have Jean Jaques Sahel, Asia‑Pacific Information Policy Lead and Global Telecom Policy Lead at Google. And we will have ‑‑ and the Director of the Affairs and Thomas Lohninger, Executive Director, Epicenter.works. And last, but of course, not least, Konstantinos Komaitis, Non‑Resident Fellow, the Atlantic Council.

So, we will provide you a little context of why we are here, and what is the aim of the session. We want to discuss the emerging sanctions on the fair share, or (Un)Fair Share debate, and also which kind of connection exists with the previous base we have been discussing over the past years.

Over the past year‑and‑a‑half, especially, we have been witnessing the emergence of these debates on regulatory asymmetries, and there are some good arguments, on the one hand, of increased taxation of large ‑‑ and good arguments on the understand, the proposed solution may not be so effective.

So, the reason we have today such a diverse panel is to try to understand what are the different standpoints in this debate, and try to ideally come to common ground and maybe even suggestions for the future of policy.

Now, without further ado, I would like to give the Floor to our first speak, Camila Leite, Brazilian Consumers Association, IDEC. You have been working a lot on telecoms over the past ‑‑ I don't want to reveal your age ‑‑ but you have certain experience in this, so, please, the Floor is yours.

>> ARTUR COIMBRA: Thank you, Luca and good morning, everybody. Let me start by saying that as a so‑called unfair, fair share is an intended solution to a supposed problem we are still assessing.

I am not here ready to say whether it is fair or unfair, but I want to provoke some elements. The Intel, for example, just disclosed this night the results, the mapping results of the arguments of this call for subsidies, that it made three months ago. We had 627 individual contributions on this topic that were mapped, and disclosed.

Now we are going to dive into the arguments and provide an outcome of all the contributions we received.

Let me start by saying Internet architecture has changed a lot in the last 15 or 20 years.

So, the golden age of Internet, we had users, we had the accountant present in Data Centers, located in a few places in the world, and in between them the network itself, to IT transit contracts, bringing content to the user.

So, the point is that in the last 15 years data storage costs reduced by 98% or 99%, right? So, it was a great revolution on micro Data Centers, content delivery networks, cad cashing and all the other infrastructure that brought the culture to the user and changed the landscape of internet architecture.

So, today you do not necessarily need a full set IP transit transit contract to bring the content to the user. Instead, many provides are Greg the content just across the street in a micro Data Center and bringing it in. It is better for everyone because it is cheaper, the service is better, you save money on IP transit contracts. So everybody wins.

But alongside that phenomenon, we have seen that the growth of some gatekeepers that are gaining more and more relevance, and adding value to the network, in fact, and people want to access Internet to get to that specific content. That brings a lot of negotiating power over the big dish platforms.

So, when there is a city and the contents near the user, and the operator has to deploy its own network to get that content, nothing for the traffic, instead of an IP contract by which the operator used to receive the payment from the content provider and in the end, by the user, well, there was a two‑sided market that has become a one‑sided market, right? So, that is what it is.

There is another issue. The other issue is that in many cases, the telecom say they cannot charge the user for the consumption of a huge amount of data due to data restrictions and data cab to other market effectors.

So, in the end there is a two‑sided market by which you charge the content provider with the IP transit contract, and you also charge the user, of course, and the two‑sided market is becoming a no‑sided market. It is certainly negotiation pressure. This pressure raises the question, which is necessary to be answered, before we decide if the fair share is fair or not, and the question is, is this pressure that big tech, big platforms are putting on it a result of the bargain power or market power. This is the main issue. If it is bargain power, it is part of the game. Go ahead.

If it is market power, there is a struggle issue that must be tackled by regulators and so on. So, this is question to be answered before we decide what to do with it. And we are working on it.

But my final line here, and I think the great take‑away of this discussion is that they are both on the same side of the boat. Okay? Telecoms and big dish platforms depend on healthy, sustainable metrics, otherwise it is bad for everyone. So, that is an incentive for them to try to find a market solution which would be great for everyone. I really trust on that happening, and we hope for the best. So, thank you.

>> LUCA BELLI: Thank you veryish, Artur, for the initial points. Very well explained. Let's stay in Brazil for more. Camila, the Floor is yours.

>> CAMILA LEITE: We have a big context in Brazil in discussion of Brazil's rating and regulatories. For example, Zero Rating practices were already analyzed by the competition in the past, and now the Ministry of justice has been pressured also to analyze these practices in term of consumer law and the pressure was made by Civil Society.

So, myself, I am a specialist in digital rights and telecommunications in the Brazilian institute of Consumer Protection and a part of the network on digital rights including access to the Internet.

We are trying to raise the issues, and this is the biggest challenge. Talking fair, unfair, big techs, big Telecoms and the new companies, the telecompanies and the one that suffer Ms. The end are the consumers.

So, to answer the question, question for the most part of the Brazilian society, and the Coalition and networks in Brazil, it is an (Un)Fair Share if we have to feed companies to these kind of services.

We are very concerned of Internet fragmentation. And the reason the internet is successful is the Internet was created to be an open environment an interactive environment.

Once we do practices like this, we separate it, we create more of a second and first class users, first and second class services in the Internet.

Since the Commission has talked a little about the consultation in Brazil, I would like them to focus on the (Un)Fair Share connects to Zero Rating. For this, in the last few years, we have been working so hard to present not only this critics and arguments against these kinds of practices, but also to bring data on that.

In Brazil we have a strong organisation that makes Internet connectivity research every year, which is related to the Internet Steering Committee, but we also have been developing a research and IDEC to bring this data. Nowadays we are also developing research with others.

But to focus on this research that IDEC conducted in 2021, we have been interviewing the Internet lower class users to find out how they use them and how it, more importantly, effects their lives.

We found that people with lower classes may have mobile phone Internet just for 21 days a month. So, 21 days of 30 days. What is this?

This means in the last days of the month, people are depending on WiFi, public WiFi, or home WiFi, which not everyone has, and people rely more on mobile phone access. And this kind of access is limited. It is not based on speed, it is based on data franchise.

Once the Internet is over, you have some kind of access, but which kind of access we have? You have access just to some limited companies, which in Brazil are the big techs in the end, especially meta.

It is important to say, when we are talking about telecom, access, we are also talking about other rights. So, this information is also a huge issue that is a consequence on all of that. Because once people do not have access to confirm the information, they receive some information, for example, on WhatsApp or Facebook, they share it without confirming it.

So, we have to talk about the issues, not only talking about net neutrality or Internet access, which is in the centre, but how this effects several other. Thank you. Luca?

>> LUCA BELLI: Thank you. We are looking at the connection between fair share and Zero Rating. And to add a little element of complexity, I think that maybe for people in the Global North, if we can say so, Zero Rating is not that common, this does not sound evidence, but in Global South countries, observers are a little bit puzzled when they hear this debate about platforms contributing more to network fees. Because platforms have been subsidized basically with Zero Rating for the past ten years.

I think we have been speaking about this issue several times in the past ten years, the fact Zero Rating would have created this kind of situation where large platforms are responsible for most of the traffic, precisely because they have been subsidized, sponsored for free, with Zero Rating in most robust south countries.

So, it is interesting to see that nowadays, after having offered this traffic, and as Camila was saying, in some parts, there is a new kind of poverty in main countries. You end, or you finish your data allowance, like you finish your money, and you don't have more money to go to the supermarket. You only have that allowance to have Social Media, basically.

But that is not something that has happened because the Internet is like that. It is the result of a specific business model, and many of us have questioned the business model, but now it is surprising to see that understand, we see raters that may claim errors when the large user of the matter is the precise result of the impact over the years by greater restrictions.

So, for more on the greater complexity, let me give the Floor to Jean Jaques Sahel. I don't want to reveal, again, your age. But thank you.

>> JEAN JAQUES SAHEL: Thank you, Luca. Good morning. I have been dealing with the Internet since I first tried the Internet in 1993, because it has always been open, although it was very, very slow, I have to admit in 1993, certainly where I connected at the time, like a 56K modem connection, linking free Universities. That was the only one connection. Now we have fantastic connectivity. I hear people say we have too many cables around the city, so, we need to know what we want. Anyway.

That is half the discussion, in a way. I think generally speaking, it is great to get the IGF in different Forums like this so we can look at the concerns there are, and try to look at the evidence, share ideas for what could be improved.

I think what we all care about here is, you know, at the end of the day, how can we get a good Internet tool. An Internet that is affordable, good speed, good capacity, and why do we want that? Because, well, it is enjoyable for people, hopefully, but it also supports Digital Transformation, it can help our societies, our economy and our people every day. That is really the end goal. So, connectivity as a means to support wider benefits to the economy and society. That is the end goal.

So, when we get to these debates of networks referred to in places, I think it is a forced debate. It was a forced debate when it with us first mentioned in 1999. You can see the quotes are pretty much the same as was said by the same people then. Effectively the same debate ten years ago. Not to say we shouldn't have the debate, but I think we need to move on.

I think the reality is ‑‑ and I think most of us in the room know this ‑‑ we are an ecosystem of the Internet, starting with the telecom operators and the content application providers. There is a virtuous dynamic where there is innovation, content and services and users and they subscribe to the Internet and it has been working well. That is what it is about. Innovation without permission that boosts the whole ecosystem and supports and benefits the Internet has been bringing us.

When we think about this from a business perspective, when we as a company look at STPs, telecom creators, we see them as essential partners. Both indirect partners in the sense we create content and applications for our users and they provide that connectivity that users want to access our content services. So there is a not indirect element, then we have direct relationships, dealing with telecom operators on a human amount of things and it has been that way for many years. We do that for commercial reasons, set our Cloud, have bundles of YouTube premium, for instance, perhaps in their own subscription packages.

But we also do infrastructure work. For instance, increasingly we help with storing some of the network aspects, elements in our Cloud. They use some of our Data Analytics to optimize their networks and network cost savings.

Indeed, we look at things, for instance, a joint 5G reception with a larger creator in Europe, so we have all sorts of direct options, as well. It is a very dynamic and generally very friendly and fruitful environment. That is sort of thing we would like to focus on, this virtual ecosystem.

So, to go back to the network fees, with the great points made, it has been shown already the introduction of the fees would be very unhelpful to the consumers, and the Internet rooting of Internet traffic. Many have said that, including  a number of compliments, telecom regulators and efforts.

We need to focus, instead, on real problems. Thinking about how we can get the Internet to really favor innovation and encourage users to use it to enjoy the Internet and support Digital Transformation. I think we need to join forces together and look at the genuine issues like how do we reach the 5% to 10% of users that live in hard to reach areas, deploying more structure, laying fiber, cables, or making more spectrum available so we can facilitate things like WiFi offload which takes a strain off the networks.

Basically, where is the diversity to connectivity and support the use of the open Internet for the good of society, the economy, and us as users. Thank you.

>> JARRELL JAMES: Thank you very much. Now I would like to give the Floor to KS spark, because South Korea is one of the only countries where it has been used so what is the result of the implementation of this model.

>> KS SPARK: So, the centre (?) works like a tax on the Internet, taxation on speaking online. To speak online, you have to push out data onto the network. So, the more you speak, the more you have to pay somebody, just like to send a letter out, you have to buy a stamp. To make a phone call, you have to pay the company.

So, this has made ‑‑ this created ‑‑ now, the rule was instituted only among ISPs. And using that as an excuse, the policymakers did not consult with the consumers and content providers so that applies only on the ‑‑ piece. But the impact of that, of course, triggers down to content providers. Because ISPs hosting content popular providers will end up pushing out users on other space will want to access the popular content. And, you know, accessing the content means data files made up of HTML will have to be pushed out to the users.

So, that creates these incentives across the board on ISPs to host popular content, or any content, and that has increased, you know ‑‑ that basically removed the competition along ISPs in selling their services to ‑‑ in hosting good content on their network.

And that has increased the Internet access piece, but, I mean, it didn't really increase. What happened, you know that because of the technical advancement that Artur talked about, the Internet access piece is filing by 20% every year.

But in Korea, it didn't happen. It continued for about ‑‑ the rule was instituted in 2016, and now it is almost seven years now. Over seven years ‑‑ well, actually, immediately, even 2017, the Internet access fees, or in technical terms IP trended fees in South Korea was clocked at ‑‑ was measured to be eight times that of Paris, five or six times Los Angeles or New York.

And the trend worsened in 2021. Internet access fees, or IP transit fees, became 10 times Frankfort, 8 times London. You can see the finance is a very hostile finance environment that start‑ups ‑‑ domestic start‑ups ‑‑ I say domestic because the domestic ones have to buy Internet access from local territories.

And by 2021, careers answered to Netflix called ‑‑ the video streaming service ‑‑ was paying 10% of the revenue in Internet access fees.

By 2020, public interest in COVID location announcement system, the operator complained because of high Internet transit fees, they cannot fully function. They cannot meet all the demand.

So, that is what is happening with the domestic content. And the overseas content providers, they also have a problem, because of this incentive, this incentive on ISPs from hosting popular content applies both overseas content, when they are on the cast servers. I mean, Artur talked about how data storage has been achieved and now the content is coming across the street.

So, a lot of content is being served through the cad servers on the network of the Korea IS Ps, but hosting a cash soar because they have to bear the centre burden. So, they are charging increasing, you know, essentially paid fees overseas content.

So, Twitch, a popular gaming platform, they could not continue making the payment, so, you know, they could do two things. They could charge the uploaders from Korea for uploading, right? Because it is because of ‑‑ or they could charge the condition tent popular among Korea eyeballs. It is that content generating more payment burden on Twitch. They couldn't do that because making people pay is ‑‑

They intentionally degraded the service. They lowered the Resolution to 750, only in Korea, you know, users are watching Twitch at a lower Resolution then other parts of the country.

So, a lot of users are leaving. And Korea gaming videos will be watched more by Korean eye ‑‑ and if Korea IGORs are getting lower Resolution, the Korean gamers will be.

We can extrapolate that to Netflix. You know, the Squid Game is popular, yes, world popular, but but initially popular with the Koreans. So, if Netflix is required to pay Korean ISPs for accessing Squid Game, they will have to reduce investment in Korean IGOR heavy content. So, that is situation in Korea.

I hope you guys don't learn the lesson, or learn the lesson, either way, and I hope ‑‑ I have a few minutes later to talk about some of the general, you know topics.

>> LUCA BELLI: I propose we finish with all the presentations, then we have a good moment for discussion, because I am sure there will be a lot of remarks, comments and occasions to discuss more on this.

Let's move now to Europe. Now has been the centre of attention over the past year at least from regulatory commission. So, Maarit Palovirta has been one of the main proponents of these fees, so, please, Maarit, the Floor is yours.

>> MAARIT PALOVIRTA: Thank you, Luca. In Europe we have been discussing this a lot, many amongst ourselves but I think it is also really fruitful to have the global exchange. So, to the title of the Workshop, many of you know Zero Rating is no longer a reality in Europe so I will focus on the contribution, as such.

Perhaps, for the sake of the audience today, maybe you haven't followed all the discussions in Europe, I will start with a few thoughts on how do we see the telecoms market at the moment in Europe? I already heard some of the keywords from the different interventions, namely the market structure and different dynamics related, regarding consumers, of course, and society as a whole, as well, so I will try to give you a bit of a background here as kind of starting point.

So, indeed, we do have ‑‑ have been now for nearly two years ‑‑ advocating and have tried to bring some ‑‑ well, to describe the context around this contribution issue from our perspective, and the market in Europe as we see today, and many of you saw the European Commission published the results of the consultation just two days ago so I will use some of the quotes from that reply, and it is in regard to the competition.

In Europe, when we look at the number of operators in the EU markets, the number of operators serving more than 500,000 customers ‑‑ so, more than half a million customers, in Europe is 38. In the US that is 7. In Japan that is 4.

So, the market structure in the EU is significantly different than it is in many other parts of the world that could be comparable to Europe. That means as we are an industry of heavy investment, so, digging fibers into the ground, building towers for 5G, et cetera, that requires a lot of money, a lot of effort by many people, and it means that simply this current market structure has not allowed for proper investment into these infrastructures. That actually our society wants, our consumers want that, our policymakers want that, and we want that, but the current market structure doesn't simply allow for that. The return on investment doesn't allow for the investment.

We have some regulatory specific circumstances in Europe. We have competition policy that restricts mergers. So telecom operators are not encouraged or allowed to really merge with each other for the moment, just to simplify things.

We still have some heavy sector‑specific regulation for the telecom sector, for example, on pricing. We have pricing regulation. You have all heard maybe about the roaming rules in Europe, the wholesale prices. So, flexibility to price services is limited.

Just to give you an idea that also the competition in the market, due to the fact that, well, there is this kind of sticky prices situation, but also the fact that there are so many players, is that despite the very heavy inflation that we also, I think in our Country last year, the telecom sector in Europe was the only industrial sector where the price growth was negative. So, the prices went down despite the inflation.

This is because of the heavy competition, the pressure on the industry, and the pricing elements that I just described.

So, there are some real pain points in the European telecom market that may not necessarily exist in other parts of the world.

Now, when we look at the consumer impact, of course, the main point of operators is to provide good services for the consumer. And affordability, certainly, is a key issue. I think I just provided some elements why Europe has the most affordable ‑‑ some of the most affordable Internet services in the world.

But, also, other important factors are things like quality.

So, if we don't invest sufficiently, quality eventually will suffer.

Trust. If we don't invest in security and ensure we are bringing new layers into the networks, also this factor will suffer. And at the end we believe this will start making our consumers unhappy, as well. It is not only a question about prices in Europe, but it is about these other factors.

So we are looking at this from a more holistic perspective.

And maybe a third factor I would like to raise as we talk about societal welfare at the moment. Security is certainly one thing, but sustainability and environment of sustainability is also important.

We are now developing different kinds of KPIs in Europe to try and make sure that all industrial players, including operators and networks, are as sustainable as possible.

That means we not only measure but invest in networks to make them as sustainable as possible.

So, that is a little bit where we come from in Europe. So, you know, I will kind of ‑‑ we see that our hands are, at the moment, a little bit tied. I would like to maybe touch on the Net Neutrality point, as well.

You now that Europe is one of the very few countries in the world where we have open Net Neutrality regulation. We evaluated the regulation earlier this year, and asked many Stakeholders, including us, if we should reopen this regulation or, indeed, reconsider it, perhaps.

As the Commission has many times said publicly, no stakeholder came forward asking for reopening of the regulation. And, indeed, so, together with the GMSA, representing really 80‑90% of the European telecom market said we are happy with the openings and principles, the regulation to text, you may argue it is the best, as we kind of look at the developments in our industry today, but it is not worth opening it, because we still believe that the principles are valid.

And this, of course, from our perspective, also then ‑‑ I am going to add a little to the market asymmetry that we see related to the contribution, it means that we as operators have a must‑carry obligation, again, to simplify things. So, operators will carry any traffic, how big, how small, in whatever shape or form, coming from whoever, to the end‑user today in Europe. And if they don't, they, of course, risk going to the court, which some operators might want to do, but in general, I don't think this is the case.

So, there is a one‑sided obligation to deliver traffic. Again, this then gives us very limited possibilities to manage and try and optimize the data traffic, and this is, as we know, something that has, again, gone up quite a lot.

We are in a situation where we have pressure on investment, but we also have pressure on increasing digitalization of our society, which, of course, we all welcome, but we need to make sure that we have a balance between the networks that are supposed to deliver this, and are a key part of our ecosystem, and then this kind of services and content part.

So, maybe I will stop there. I am happy to then chip in later.

>> LUCA BELLI: Thank you, Maarit, for providing us a very good overview of the telecom market in Europe, and, speaking about the consultation, I know that also, Thomas, has been very active in participating in this, and might have, also, a different perspective on it. So, please, Thomas, the Floor is yours.

>> THOMAS LOHNINGER: Thank you, Luca. I also want to thank Maarit in particular for being here, especially in this round, it may not be easy. I think it is always a insure if we get to have this exchange, honest exchanges, that are necessary for moving the debate forward. Maarit and I had a similar debate last IGF in utopia, and I am a it will excited that we need to have these debates in other corners of the world. While they are network debates, maybe two or three happening every month in Brussels, it is rare that voices in Consumer Protection or consumer society are present there, so maybe that is a good reason for having the IGF, I think.

Anyway, I would also like to touch on the issue of Zero Rating and network fees, because, yes, we have no more Zero Rating in Europe, but, still, those two things are very much connected.

If you look at the Political Statements, Zero Rating was a very common practice happening in all but one Member State. And as Luca described, incentivizing the user to use more unlimited traffic from big tech companies.

So, the traffic we have been giving away for free is now becoming the problem, now cluttering up the pipes.

I also want to focus a little on why there is such a drastic shift that we are discussing here. Internet connection used to be something altruistic, something in which nerds put cables together to make Internet whole, to allow global Internet connectivity. That is usually done and optimized for Brazilians, for optimizing quality, and with this proposal we will drastically step away from that.

We would optimize for profit.

Maybe no longer have cash service, making far longer travel to get to the data we want, and it would become more expensive. Ultimately the prices we as consumers have to pay, or the quality of experience would have to suffer.

I want to briefly explain, because maybe it is not clear to everybody, why Net Neutrality is incompatible. You cannot have one right of way for everyone, and then a faster way where you have to pay in order to be on it.

In fact, my call system, the carrier, in effect, you only get good quality by the telecom, the German provider right now, if you pay them.

You will suffer every night, every peak hour with your service, if you don't have a paid connection into their level. And, yes, technically speaking, they are not slowing down the traffic within their network. They are just ensuring that the entrance to their network is a bottleneck that is always congested.

Funny enough, their prices to have these interconnections are 10, 20, 30‑times more expensive than everyone else's.

It is very important to make a pause here. We are now one‑and‑a‑half years into this debate, into the 2020 iteration of it. For the first time we have a public record from the consultations in Brazil and in Europe on what everybody has said.

I only had time to look at the European one, but I think it is interesting to just list the people who have contributed to the organisations and what they said.

We have the conglomerate body of all telecom regulators that say this violates Net Neutrality and the danger for the Internet ecosystem. We have the media regulators saying this is bad for media pluralism, again, South Korea, and similar regulations went into their statement.

It is not just the regulators but the public broadcasters, the private broadcasters and journalistic associations. We have the IGF downwards, the Internet exchange, the G6, the European world leader in this field, and they are also quite up‑front with their criticism.

Of course, the copyright industry. Disney is on the same side as Google, and as Consumer Protection Os. So, this is a condition of unlikely allies.

To conclude, maybe, I think actually we don't have a problem with the market structure in Europe. The competition is the success recipe of Europe when it comes to telecoms. We don't need more concentration. We are making profits, just not big enough profits. But if the Whole Society is complaining and saying stop this method as profit margins from telecom companies shouldn't be the deciding factor if everybody else gets heard by such a proposal.

Lastly, I also want to say that now almost five months after the consultation has concluded, we have this data in‑hand, since two days ago.

Funny enough, on the same day it was announced, the Commission Director is giving up on this proposal for this legislative term, to remind you, the Commissioner used to oversee the telecom and as a European, I have to say I am ashamed by the way he has broken every year and due‑process safeguard we have in Europe. I am not saying this as a Civil Society but several countries including Germany and Netherland issues letters to the Commission, saying the same thing. Peace upholds due diligence standards.

At least when Europe influences a worldwide debate like India and Brazil, where everybody is referencing Europe, we should set ourselves to a higher standard. Thank you.

>> LUCA BELLI: Thank you very much, Thomas, for this. I want to pick up on one of the points you mentioned about the very large and diverse spectrum of Stakeholders that participated to this consultation, raising some concerns with the effectiveness of this proposal.

I think it is honestly, if we had the same consultation with regard to the idea of taxing more large platforms, they would all agree that it is the respect for Google, of course a need to have a maybe better and more effective regime of taxation. Maybe the way forward is not really to tax the traffic that is up Secretariated in the natural because of the consumer demand it, but maybe to tax the the bathe, the personal data harvested so the more big tech ways can be distributed socially.

So, I think everyone would agree some kind of fair share is not a bad idea, but maybe this type of fair share is not really the solution for the problem, right?

If you want a larger redistribution of wealth. I think that some additional elements, maybe also shared by Konstantinos has been working a lot on Internet policies and infrastructures for past decades.

Again, not revealing anyone's age here.

So, please, Konstantinos, the Floor is yours.

>> KONSTANTINOS KOMAITIS: Thank you, Luca. Good morning, everyone. Thank you for showing up. I really thought this would be an empty room.

I think one of the biggest challenges, at least for me in the past 20 years is that we have been attempting to think of the Internet, which is a new medium, by applying old rules, and Telecom's rules have been one such rules that we have been trying to apply.

We are the International Governance Forum and all of us are talking about supporting the open global internet. There is really no question if we apply this policy the open global internet will suffer in the way of connections.

The great thing about the Internet is really there is no network that is more important than the other network. The more networks that connect together, the bigger the value for themselves and also the customers.

This creates more resilience, because the more networks you have, the more centralized the system is and you are avoiding single points of failure.

So, we currently have an interconnection system that works, that doesn't require regulatory intervention, and, it, of course, has allowed to have low barriers to entry.

Of course, it has fostered all these very collaborative relationships, which I am sure collaboration is very challenging in the best of times, so I am sure that collaboration is challenging in this instance, but let's not forget that the Internet, the open Internet, is an outcome of collaboration amongst many different and diverse Actors.

So, that is my first point.

The second point is about the infrastructure and the idea that currently, or at least that is the way the policy has been framed, is that there is only one Actor in the infrastructure, and the Telecom operators. And this is not necessarily true, right?

The Telecom companies and telecommunication providers are contributing heavily into the ecosystem, infrastructure, cities and Cloud services being clear expenses. And it is actually working on the report that hopefully will be released next month, but the scoping paper made a really, really strong case about the diversity of infrastructure, and that it comes from the most unpredictable places that we can imagine.

Municipalities contribute in Internet and broadband infrastructure. Pension funds, hedge funds contribute in infrastructure. Of course, Telecom operators, technology companies, power companies ‑‑ so, we see a whole huge ecosystem where different players contribute to make sure that we have a reliable, secure, and sustainable infrastructure that can support the increasing demands of users, because the fact of the matter is there is increasing demand. Right now everyone wants to stream video and it is what it is.

But there is a collaboration that is happening, with people coming together in order to make sure networks can actually support this. The last point I want to make is about Net Neutrality. I appreciate that the Commission has been ‑‑ has tried to ease the concerns that this is not a Network Neutrality issue, but I would bet money if the case were to go before the SJ there would have been a very different outcome.

In Europe you know we have the open Internet regulation. Between 2020 and 2021, there have been four cases, and two of them actually said it is not just Net Neutrality but also economic discrimination. And two cases focused specifically on that. On the idea if you choose certain applications from providers to making those deals, and not apply those deals to everyone else, this is also against the regulation and Network Neutrality.

So, we have to be clear about this, that this is predominantly about Internet Neutrality. I appreciate the effort, trying to make it less so, but that is not really the case. And I will stop here.

>> LUCA BELLI: Thank you, Konstantinos. One of the cases was actually about Zero Rating and it is good to hear that Europe has now abandoned this policy that many of us have criticized over the past year and good to remind until the pandemic times in countries like Germany, there were modals like Binge On, like the name suggests, the invitation to Binge On video.

The fact that now the Telecom operators see the very same Telecom video traffic for free and encourage users to use it as much as they can, carelessly, actually, to binge on models.

I think we have had a lot of interesting suggestions so far.

I am very happy. We still have half an hour for debate. We can ensure there will be a lot of debates.

Let me start by opening the Floor, because I know that you are not only very brave to be here at half past 8:00 on the last day, but I see a lot of people that may be interested in sharing comments or ask questions. So, if you want to ask comments or share your ideas, please line up and use the mic, otherwise I think ‑‑ I am sure we will have reactions here from the panel.

If you have any questions, just raise your hand, or line up there, otherwise we can start with the reactions here.

>> KS SPARK: I think one confusion on whether network or fair share of Net Neutrality because of the presence of a paid pearing. Although it doesn't account for a lot of traffic, a lot of connections, most of connections, more than 99.99%, are set on paid peering, but even to do the small number of connections, a lot of traffic goes through that.

If you look at the data from the French regulator, although the number of connections is mostly a set fee, in terms of volume of traffic and going through certain points, that does not ‑‑ and then, you know, FCC has not clearly ‑‑ FCC in the US, or even direct, have not clearly said open‑ended egglation applies against paid peering.

So, what TELECOS is not really saying it, but to be a TELECOS advocate to make the arguments more reasonable, this is a paid appearing, is this before, and Google has paid peering fees and Netflix has paid peering fees before, so we want to make a rule to make it more fair.

This does not validate Net Neutrality. But what they are forgetting is that this will, number one, will not be enforceable. Actually, it is same point, this will not be enforceable, because there is a mandatory paid peering, but what has really supported the information revolution? Two rules.

The Freedom to Connect at Net Neutrality, okay? So, Freedom to Connect and no freedom to charge for data delivery.

These two rules are actually the two sides of the same coin. It is because the network participant, the ISPs are bound to this rule they cannot charge for data delivery. Only for connection capacity, not for data delivery. It is because of what Maarit called one‑sided obligation, although I don't think it is obligation. It is more like exchange of promises between ISPs to sell this global product to the Internet.

It is not really an obligation, of course, externally. But it is because of this one‑sided obligation that all ISPs have the Freedom to Connect, or not connect.

And if mandatory paid peering is enforced, what will happen, Netflix will say we don't want to pay fees to access customers in your network, and just not connect.

And the IGORs in that country will no longer access Google.

If all the content providers are burdened with the peering fees, don't connect, what are the regulators going to do? I mean, there is really not much you can do if you want to keep the Internet as it is.

I think it is unenforceable, and I think it is really pulling the rug under the fundamentals of the Internet architecture, which is the Freedom to Connect or Not Connect, and the removal of the data delivery piece.

While I have the mic, Maarit talking about how prices are falling, but are your costs falling, also? The price of technology, putting together Kay picks and OPIX, the traffic five times, the network maintenance and development costs have remained the same in the past five years.

>> LUCA BELLI: Thank you very much for the very extensive points. Now, Maarit, please, the Floor is yours to reply.

>> MAARIT PALOVIRTA: Yes. No, they are not falling. If you read carefully the summary of the consultation, actually, there was some general language on that, as well. They are not able to quote numbers because they are sensitive.

I wanted to comment on the IP interconnection market, because there is this, in Europe and much globally, as well, still this very old‑fashioned way to think that IP interconnection means peering and transit. And that is the market and that is the base for competition.

In the last years we have seen reports, including analyzing and direct that in fact CBNs should now be considered a substitute to transit and peering. So, impact the market definition has effectively changes and the owners and operators sell capacity as a price, whoever needs capacity, So, whoever needs their content to be delivered.

The prices, because they are proprietary networks are not publicly known, they are not considered in a market analysis when we look at the pairing markets, and with are very happy to see that Barrick now, in the programme for next year have an ambitious task of taking into account the role of CDNs and how have they contributed to the IP interconnection market. The last assessment that Barrick did was five years ago. So we look at this one example of asymmetry.

If you look at the Internet ecosystem a bit more widely, we were recently talking about submarine cables, undersea connectivity, and they would see a little bit the same phenomenon.

So, we have these public cables, the sell capacity to others. Some are in consortium with European operators and some of the big tech companies, but there is a substantial among cables that are purely private.

We hear now 70% of the traffic between the US and EU goes through these private cables, so, not actually being in the public best‑effort Internet.

We again, here are observing that the Telecoms in consortium now operating these cables that are publicly available and sell capacity, we should think about what does that do to neutrality. Some content gets real highway in a proprietary network, and other content has to go through the publicly available channels at best‑effort level.

We really applaud ‑‑ I think this is great. This is not a regulated market, so I think it is great that companies find that you invest and those good things.

But, again, going back to the regulatory asymmetry, when we look at the positions of how this traffic then comes into, in our case Europe, and then divided and goes through the national networks, we need to look at the market power, what does it do in this kind of bigger picture.

Helps, we are also welcoming the Barrick's up coming work on this. They will do work on the entry of caps in the ECN market, in European language for the intercom providers into the Telecom markets.

They will also be analyzing the role of cloud computing in this context, and doing a holistic maps of the submarine connectivity scenario. So, I think that will give us a bigger picture, and I understand that, you know, the fair contribution, it is a very difficult thing sometimes to define, because it is a very specific point in the ecosystem. So, this goes to the intercom connection in Europe firefighters thank you. Barrick could develop this in a way that could be used and exported globally. I am sure that Jean Jaques has a reaction to your reaction, so please, Jean Jaques.

>> JEAN JAQUES SAHEL: Yes. I want to pick up on those points and I want to start by thanking Maarit's debate. We have the accusations about fair contributions saying content providers do not contribute, but asthma rit explained very extensively, there are the content application providers that help the ecosystem without which no one would pay the Telecom operators for Internet subscription.

The only representative the Telecom operator would make if not for what we invested would be telephony and SMS. If they want to go back to that, that is fine. They don't have must‑carry obligations for the Internet. They can stop being Internet providers, because the Internet is about a network of network. Once you connect to one end‑point, you have access to the global network. That is what the internet is about.

You can provide private networks to a profitable business, or, indeed, invest in new technologies related like new Telecom operators. A lot of them have great CDN services that make a lot of money on them.

So going back to the telean content application providers, there is a lot to be made in creating products that would delight customers and encouraging them to subscribe to Internet Service Provider services and upgrade their services to 5G, for instance, or fiber.

And CDNs. I think that is important. Yes, there are CDNs. What do they do? They help to transport traffic more easily so that is another payment providers can make to deliver better quality. Another form of contribution.

And you mention things sub cables. Whether they are a mix of public and private, or private and public networks, they help to bring traffic much faster, more efficiently and save costs for ISPs, so instead of ISPs fetching the content from another part of the world, they are brought by the 99% of providers that can do the last mile. That is a huge cost savings for the operators.

It allows services the same way. When we look at how the Cloud and associated services, some of the Data Analytics can help to optimize network support operate officers, again, it is setting costs for ISPs and providing new avenues for the Telecoms.

So, as a summary, we are in a situation where there is absolutely zero point in claim that there is no contribution that a content application provider sectors, because there is enormous contribution. Let's just exposing my merit.

More importantly, we should look at the future, new technologies, the evolution of the market as Maarit and others are doing, and look at the positives of how we can move forward together.

There are improvements we can make to the framework in Europe, Brazil, etc. As an ecosystem, focus on that rather than those instigating fake battles when there is, in fact, none, and it does a disservice to everyone.

>> LUCA BELLI: Thank you. I see there are questions, at least one from the audience. Let's start with a question from the online ‑‑ he wants to ‑‑ let he is a start with the question on‑site, and if we can have the online participants speaking. We can do it otherwise we will only stay with the online participant that can type the question and we will read it.

>> Thank you, Luca and everybody. I will Raul from the Internet association. This is ‑‑ I don't know if you know, but everything discussed in Europe has a huge impact in the policy in Latin America. This is not an exception.

So, it would be very fine that Europe abandon the idea of moving ahead with this and we will have some policy decisions in some countries in the region.

Some years ago, the Internet connection between ISPs and content providers used to happen in Miami. In the last few years the InterTelecom community has done a huge effort to complete positive access for people.

So what is happening, we are discussing this now in Brazil and also the Caribbean. It is very interesting. Brazil is probably the country that has invested more in exchanging points in the world maybe.

And the Caribbean is one of the places who needs more improved Internet connection, so it doesn't make sense that those are the two places we are discussing this.

But, so, what will happen? As our colleague pointed out, 99% of the people not for free? Why this is?  Because the content providers are ISPs and Telecoms are stupid? No. It is because all of them understand they have a barrier to each other. So the market already spoke.

So, what will happen with that? What will happen, in my view, is that a country like Brazil adopt a policy on this, and obviously paying what they have to pay and follow the law, they will not have incentives to bring their cashes into the infrastructure. So, they will say, okay, we will pay what we have to pay, but now you have to pick our contents in Miami.

So, now we are going 15 years back. And they will say, but don't forget, priority will be ‑‑ now we have to sign some contract and we have to burden the legal departments and it will have one year to have the contracts in place.

And, it will not be for free. We will have to negotiate that. At the end of the day the situation will be the same as now. They will pay certainly for this to share, to have us share in the elements. So, there will not be winners, but there will be losers. Who are the losers? Is small space, the small content providers, the small platforms, the small Internet companies. That will be, at the end of the day, at the time of starting negotiations with the other parties.

So, I think that is the disruption. It will be huge, and at the end of the day the result for content providers will probably be the same.

>> LUCA BELLI: Thank you, Raul, for providing these additional points. Do we have remote participants? Can he or she speak?

I don't see any satisfactory reaction from the Internet team? Oh, Gonzalo, we meet again.

>> GONZALO LOPEZ: I work for Telephonique and I have been present in Europe. I want to introduce some of the comments in the session with regard to the cost of the networks going down related to revenues, and also related to how this mutual circle is benefiting all of us.

I would like to stress that the Telecom revenues have been decreasing for the European Telecom sector, 13% since 2011. For example in the US the same have been increasing 18% in revenue.

At the same time, the return of investment and capital which actually takes into account the revenues and cost of investment has been lower to 6% in Europe, where in the US, for example, that is 11 to 14.

Actually, that means in Europe the returns of are lower than the cost of capital so the money we have to pay for that investment is costing us more than the returns that we make on those investments.

So, that means that this is not really a situation where we all benefit. In fact, it was the case at the very beginning of the Internet, but it is not the case anymore.

It seems that when Telecoms returns are lower and the cost of capital, we are losing money on every investment that we do.

So, basically, what we aim with Fair Share is trying to foster investments and keep up the investment for the quality of the net worth of the European needs.

For example, you can see that even though investments have been at the levels of 20% of revenues, which are similar to the rest of the world, in terms of investment per capita, in Europe there has been a lower level of 100 Euros where in US it is 200 Euros per capita.

For example, the coverage of privacy networks, privacy in Europe is 15%. Whereas in Korea it is 50% and in the US it is 40%. So in Europe it is already falling behind in the development of networks and that is how we want to change the situation.

And the comment from Mr. Raton, I think it is a different situation we are seeing. To say you want to go with a certain network act I have not seen it is delayed until 2025. It is impossible to implement process in one or two‑year terms. So, actually, even though the process may be starting and the proposal might be coming up in early 2024, it is impossible to have this pass the European Parliament before the general elections of the Parliament take place.

So, actually, I don't see any delay there, but I am being realistic and taking into account the logistic processes in Europe take two years at least, and in some cases as you have seen with prior cases, it takes even three or four times. Thank you.

>> LUCA BELLI: Thank you sorry much, Gonzalo, for these elements. I think we have less than ten minutes left, so, I would ask all the panelists the last chance to provide your final remark, some food for thought, because we have already had a lot of very interesting comments and discussions. Sorry?

This was not the question. There is another question ‑‑ what is the question? Maybe it is a question from the ‑‑ let me thank Shilpa Jaswant, our remote Moderator. We have a question from the online participant. Can you take a mic, pass a mic? Inspire your last thoughts? Yes. Please, Shilpa.

>> SHILPA JASWANT: Yes, my very rough understanding from contribution is to recelebrate the money. My question is to share what in the previous session that this person organised, this person shared the same opinion, and is it okay if it is treated as this particular money is used as a universal service fund for rural areas to improve the whole Balance Sheet to Telecom is not adequate, in her opinion.

>> LUCA BELLI: Okay. Excellent. I think the question is whether this money would be used to improve universal service funds or other users. You can reflect on this question while you think about your final thoughts.

So, I would like to start maybe with Camila. Let's say one minute per person.

>> CAMILA LEITE: I will be quick. Beyond the arguments, although they are focused to understand, we are focusing more on the Global North and I understand that Europe has a different context.

We are talking about two practices that have consumers. Zero Rating, which continues to effect the Global South favoring tech, free Internet access. And Fair Share. And potentially increases the prices and reduces quality as you talked about in Korea. So in both cases you talk about the distortion of the Telecom market, present and future practices.

But in the end we are talking about, we are not focusing on how this effects consumers in the end, but not only imperNating companies but increasing access. Thank you.

>> MAARIT PALOVIRTA: From the question we said, yes, from our point of view the funs would be going to investment, especially in areas with no coverage but also in capacity.

But going to my final comment, I would like to say, some of us were saying it might be difficult for us to be here, but I would like to say it is actually a real American.

We took a decision early on in the discussion, before we published the very first report, that we wanted to have is discussion with everybody, all Stakeholders openly, ourselves, and not hiding behind think tanks and consultants. I think we are trying to live true to the intention that we had.

I think I will provide one personal thought and one political thought.

Personal thought:  I think this is a very healthy checkup of the Internet ecosystem to see where we are today, and in the case of Europe, where we have kind of an intense regulatory framework, to see what needs to be done there.

And a political message:  From our friend, all of our friends, who in the LinkedIn post two days ago says that we need quote, a bold, future‑oriented, game‑changing digital network to redefine the DNA of the Telecom regulation, unquote.

So, I am really pleased and we put a statement out that, the Commission has this ambition to actually deliver a new regulatory, kind of framing for us. This, we hope, means there will be contributions, and we also hope very much that they will address some of the pain points on competition, on scale, on sector‑specific regulation that I was describing earlier. So, thank you.

>> ARTUR COIMBRA: Thank you. My final message will be, as a regulator in Brazil, that we really should assess and define precisely the disease that we want to heal before prescribing the medication. So, you have a commitment of regulation Brazil, of having an evidence‑based approach.

If the problem is lack of money for investment in networks we should design a model that will bring in more money for network investment. You may or may not reach that objective.

So, if there is a competition between prices and you create a Fair Share, there is a great chance the money runs away by lowering more and more the prices, versus competition over pricing for the user, so no money is left for investment.

So, this should be designed in a way to get what we really want, which is money for investment, so that is the final message that I bring, the commitment of the Brazilian regulator that we will make all the effort to gather evidence, to try to find the disease before prescribing the medication.

>> LUCA BELLI: Excellent. Thank you. Indeed evidence‑based policy should be based on evidence, so we are very happy that this panel is providing a lot of very good thoughts on how to collect this evidence.

>> JEAN JAQUES SAHEL: Thank you. And thank you again for having us. We have been trying to organise a Workshop with the IGF but the panel wasn't accepted so I am really glad that Luca and the team organised this. I am glad we were able to get together. As a representative of all the Stakeholders groups. That is one of the things being out here. All Stakeholders should be invited to speak. I hope we can see that across all the discussions, and have consumer organisations alongside industry academics, technical teams regularly invited to speak at these events in Brussels, Brazil and elsewhere. I think it would be fantastic.

And to be clear, it is quite clear that there are massive investments, contributions by content application providers, including the network infrastructure, so CAPs contribute fairly. I think that is a clear contribution here.

I think going back to what Artur was rightly saying, this should be about evidence. I think that is a lot of lobbying arguments flying around, quotes from this and that. ‑‑ so we look at what has been produced and what they are already starting to work on next.

Just to for which up, I think, really, important what we heard already starting with the Global South perspective. Let's remind ourselves what this is all about.

This is about access to information at the end of the day.

We did not have such amazing access globally 20 years ago, even 15 or 10 years ago in many parts of the world, and it is thanks to the works of many, Telecom providers, providers, local communities and the technical committee in this room and venue are to be thanked for all of that.

So, let's be really careful in these events that we don't tinker with the foundational, open nature of the Internet. That means we have access to all this information and it is good for consumers, for us as users and has and will continue to boost those economies and benefit our societies in the future.

And let's not tinker with that and end up with information winners and losers, and risking the Global South or north. This is about the global Internet, whether it is north, south, west or east, and we should not tinker with the basic open foundations.

>> KS SPARK: Correction, I think somebody said the Korea market are profiting so they can afford the 5G coverage 50%. That is only because Korean territories as a whole on the market, told the new phones only with the 5G features, so consumers are forced to buy 5G phones.

But the connectivity is so bad that there are consumers filing lawsuits against companies and Telecoms right now, so bad the bandwidth has been taken away by the Government. So, no rose petal there.

And this answers the last question that came in. The use of the new revenues from modernizing, developing more network? I don't think so. I mean, monopoly, when it becomes profitable, it becomes self‑perpetuating. They want more profit. History shows that is not the case. In Japan, the Internet rate, Japan and Korea at the top. Where the Internet is. In terms of connectivity, if you use ‑‑ I have never used WiFi this fast in Korea.

The difference between Japan and Korea, big telecompanies in Korea are not participating in internet exchanges. There is no Internet exchange in Korea. Big tele‑cos in Korea are all participating in Japan. When I say cost is falling, I mean cost of unit of megabyte delivers. Somebody is lying if they are saying it is not falling.

Thereafter, despite the falling revenues, because of the falling cost, that is why the profit is being Manhattanned by European tele‑cos.

When Google put it out, Yahoo, on the market, we never talked about what is fair and unfair, right? So, if it is so unprofitable that you cannot maintain cost, maybe we should talk the Telecoms into public utilities.

>> THOMAS LOHNINGER: I hear applause in the room. I want to go back to the question again. Even if that money were to be invested in the network, the quality the users would experience would still be worse than we have today. And there are also ample studies and evidence that money is not the porn part of the network rollout. Very often there are other factors at play.

Typically in Europe, it would not help solve the problems in the rural areas we may have.

To me, I want to close on what I deem to be the same sort of thing as a European here, talking about this issue of the lewd unanimous idea picked up in regions, there is one reason for that, corporate capture or the European Commission.

A former Korea of Datacom has managed to make his way into the Commission of a 10‑year‑old idea that its face is crazy for everyone, and now we have a public consultation with everybody's voices proving that it is crazy, proving that it is refused by everyone accept the tele‑cos, and what is the response we hear from Telephonique, oh, we don't make enough money. Sorry.

Ultimately the digital network Actors, whatever it is called, there will be something, delivering something in a will deregulate the market. I fear that, again, this will go against the success recipe for Telecoms which is competition and cooperation. We don't need like the US, a few very big, Mafia‑like Telecom companies, and I will leave it at that.

>> LUCA BELLI: A final word, Konstantinos.

>> KONSTANTINOS KOMAITIS: Sure. Great. Thank you so much. Very quickly, the last question about this because we were having this conversation yesterday. We were discussing the access but I don't think it is what the Telecom want, why Europe shouldn't copy the USA universal response. And why the direct payments is actually a better option.

And Europe really is having a very bad example. This is why, and will be sort of a piece, there is a global concern from Civil Society. There was a statement that was released yesterday, more than 20 organisations from around the world, Civil Society Organisations, co‑signed it. Brazil, India, in Europe, the United States, they expressed the same concerns about the same issue.

I think that it is time that if we want to have a conversation about infrastructure, let's have it. But this is not the way to do it. Because obviously no one really wants this conversation to happen apart from the Telecom operators law enforcement all right. I think we demonstrated today there are also other ways to have the conversation. I am happy we had a lot of different views represented.

I would like to thank everyone for their effort not only to be here at half past 8:00, to fly here, and even to contribute as Gonzalo did while in Europe. A lot of very good ideas. So now I think everyone has sufficient information to form their own opinion independently. So, thank you, everyone and have an excellent IGF.

(Applause)