Hey, Govs – leave those ISPs alone! (2)

Part II: What is the way to Internet regulation?

“In managing, promoting and protecting the Internet presence in our lives, we need to be no less creative than those who invented it.” Kofi Annan, UN Secretary General, 2004

So if we don’t shoot the messengers, then what?

What is the key to the Internet regulation? Innovation!

Remember Kofi Annan’s words: in managing the Internet we need to be creative! The world as we knew it has changed due to the digital revolution; markets and societal relations have changed – and so should regulatory approaches and outdated business concepts.

New regulatory/governance approaches

Governments and regulators need to understand how the Internet works and what its major driving concepts are – openness, diversity, and inclusive governance (read a message to US Congress). If we are to preserve the potential of the Internet for development, there is no easy way to deal with its challenges (including that of illegal content). Instead, there is a need for lots of innovation in regulatory approaches, based on informed and inclusive policy discussions.

The major change is introducing open and inclusive policy-shaping processes. The reason is simple: governments don’t drive the progress of the Internet – business and user communities do. Governments are late-comers to the digital world, and they often don’t understand the basic principles of this complex and fast-changing environment that they wish to regulate (or at least to curb somewhat). This is in no way to say that someone else should become the decision-maker; instead, this is to underline that rigid regulations might not be needed at all, while those policies that might be needed should be brought about based on broad consultation with all stakeholders. In such a process, all interested parties would make sure their interests are counted:

• User communities would ensure that human rights (such as privacy, access to and sharing of knowledge, freedom of speech, rights of people with disabilities, etc) are being protected.
• Content providers would ensure that openness is preserved, and thereby innovative new services may emerge.
• ISPs would ensure that the Net remains resilient with space for further innovations and investments.
• The quality content and IPR industry would ensure that a model is found to protect IPR.
• Governments would ensure that national interests, rules of law, and security are respected.
• Politicians would ensure that no potential support from any industry would be lost – both traditional industry like quality content and telecoms, and emerging industry like content providers.

In an inclusive policy-shaping process, innovative approaches will emerge easily as an alternative to rigid conventional regulations: cooperative agreements and soft laws (such as on content management); geo-location techniques, if there is a need; clear yet not too restrictive legal grounds and roles of juridical institutions in content policies, instead of liability of intermediaries; public-private partnerships such as for infrastructure improvements; new services for e-government, e-literacy, or e-business; capacity building for judges, parliamentarians, and state officials, etc. Not least, only Internet policies owned by all stakeholders would eventually be implemented.

New business concepts

Instead of throttling the innovative work of Internet intermediaries – and thereby stalling their further economic investments – by using excessive rigid regulatory approaches for the sake of protecting outdated business concepts, governments should create a policy environment in which new business models are encouraged. For instance, the openness of the Internet has enabled content providers such as Google, Facebook, or even MegaUpload to emerge and to create a business model in which they earn from advertisement rather than from user subscriptions. The liberalised telecom markets have made telecoms and ISPs be more innovative with their business models: besides constantly experimenting with all you can eat (flat rate), pay for what you eat, and data-caps subscription models, they are also thinking aloud about how to take parts of the ‘big cake’ earned by content providers (follow the network neutrality debate).

An important example is related to the area of intellectual property rights. Apple’s iTunes has created a revolution in sharing digital content based on micro-payments, while respecting authors’ rights. At the same time, however, the powerful quality content industry (like Hollywood) is pushing the regulators to protect its outdated business models. Governments should instead stimulate the quality content industry (for instance through enabling a policy environment for reliable e-payments) to innovate its own business models and adapt to the digital world.

Keeping the messenger alive requires an understanding of the complex multidisciplinary area of Internet governance, but it saves the major emerging economies (ISPs and content providers) – which are quickly overtaking the giants of old (e.g. Hollywood) in terms of financial importance to political establishments. In the long run it also preserves the openness of the Internet and thereby creates space for further development of societal and business innovation and investment. Isn’t that what we all want? Well…perhaps not all of us.

[Previously: Part I: What is wrong with governments forcing liability on Internet intermediaries?]