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[alac] E-commerce and development report 2004 - UNCTAD (DNS / Internet Governance)



Hi..
i send some paragraphs from the UNCTAD Report 2004, about DNS and Internet Governance.

Yours..

Erick Iriarte Ahon
Alfa-Redi
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Complete Version of Report
http://www.unctad.org/Templates/Webflyer.asp?docID=5633&intItemID=3356&mode=highlights&lang=1

In special:
Overview
1. Information and communication technologies for economic development: Issues
for international dialogue

(...)
B. The dialogue about ICT-fordevelopment: Some suggestions

The question of Internet governance

The discussions throughout the World Summit on the Information Society (WSIS) process made it clear that a majority of developing countries feel that the status quo in this matter does not serve their interests well and needs to be changed. The establishment of some sort of intergovernmental mechanism has been proposed. Concerns have been expressed, for instance, about the dominance by a small group of countries over core Internet resources. Legal mechanisms based on the enforcement of private contracts (to be carried out essentially by the national courts of one country) are not necessarily the optimal way to settle international public policy issues. Some view the Internet as a new kind international public utility in which they feel they are not playing the role that is legitimately theirs.

Once the need to respond to questions such as those outlined above is understood, it is also necessary to admit that there are not many examples of concrete policy areas in which such responses require the development of new Internet-specific international institutions, especially from the viewpoint of economic competitiveness. In fact, given the political will to tackle the issues, existing systems of international coordination, cooperation or rule-making could be sufficient to deal with many if not most of the governance problems posed by the development of the Internet. A crude device to categorize the public policy issues that need to be addressed and the responses that could be explored in each case could be to distinguish between the management of the Internet as a global utility and the international governance issues posed by the use which people make of that utility.

Concerning the group of issues that could fall into the second category, international governance instruments already exist or could easily be devised. The substantive character of the issue in question, rather than the fact that the Internet is the medium through which the problematic activity is conducted, should be the determining criterion as to what level of ?governance? (from consensus-building and cooperation to rule-making) and what instruments should be applied. Concerning the other group of issues, such as the management of the Domain Name System and the operation of the root server system, many developing countries are not at ease with the limited influence of Governments in the structures in which policies are developed and implemented. Reaching a common definition of the interests of the international community that must be served by the system of Internet governance, and agreement about the way in which Governments should be involved in it, probably constitutes the most important aspect of the work to be done. Although at this stage of the discussion it is too early to make concrete institutional proposals, some of the features that they should have can be distinguished.

First, for any reform proposal to be viable it must provide strong evidence that it will ensure the continued stability and quality of service of the Internet, prevent its fragmentation and maintain the ?bottom-up? processes through which standards and policies have been developed so far. Second, no one-size-fits-all solution is likely to emerge. Questions in which technological and policy issues are particularly intertwined are likely to be best treated within a network of international frameworks of cooperation and coordination. Third, evolution is more likely to produce results than a voluntaristic top-down approach. The current system is the result of a process that has taken place over a remarkably short time and has has not yet reached a stage of maturity that is acceptable to all its stakeholders.

Developing countries need to assess the implications of different Internet governance models, including in terms of their impact on the capacity of their economies to benefit from the adoption of e-commerce and e-business practices. A sustained capacity-building effort for Internet policy-making is also needed so that the majority of the developing countries can effectively participate in the management/governance systems that may emerge from the WSIS process.

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Complete Text
1. Information and communication technologies for economic development: Issues
for international dialogue

(...)
A. The reach of the Internet and the growth of e-commerce

1. How the net is spreading
(...)

In addition to this demographic approach, another way to look at the growth of the Internet is to consider the evolution of the number of hosts that are connected to it. According to a survey sponsored by the Internet Systems Consortium and produced by Network Wizards, the number of Internet hosts worldwide grew by 35.8 per cent between January 2003 and January 2004, reaching a total of over 233 million.3 This rate of growth is more than twice as rapid as that observed in 2002 and is similar to that of 2001 (see chart 1.3 for details of the growth over recent years).

Because the majority of existing hosts belong to generic top level domains (TLDs) such as .net or .com, which cannot be linked to a specific geographical location, and because even hosts using country code TLDs (ccTLDs), for example .ad for Andorra or .zw for Zimbabwe, are not necessarily located physically in the corresponding country,4 it is difficult to draw conclusions about the ranking and performance of countries in terms of their absolute and relative number of hosts. However, it is possible to detect some trends in terms of the growth in the use of particular ccTLDs that could be indicative of the attractiveness of a particular TLD. Such attractiveness may, at least in part, be indicative of the prevailing conditions for the spread of the Internet in the territory in question, although of course the regulatory and commercial environment under which a particular generic or country code TLD operates may be equally or even more significant.

Table 1.6 compares the number of hosts advertised in the Domain Name System (DNS) in January 2003 and in January 2004 for domain names accounting for over 99 per cent of all the hosts counted by the Internet Systems Consortium.

Most of the top positions in the table are occupied by generic TLDs, under which the majority of hosts based in the United States and, increasingly, other countries operate. In January 2003, the only TLDs corresponding to developing countries that ranked among the first 40 by number of hosts were those of Brazil (.br), Taiwan Province of China (.tw), Mexico (.mx), Argentina (.ar), the Republic of Korea (.kr), Hong Kong (China) (.hk) and Singapore (.sg). By January 2004 the ccTLDs of Turkey (.tr) and South Africa (za) had joined the top 40 of the Internet Domain Name Survey of the Internet Software Consortium (ISC).

In terms of rates of growth, of the 26 TLDs that experienced above-average growth, 12 correspond to developing countries and another four to countries of Central and Eastern Europe. The ccTLDs of Peru (which more than tripled its host count) and Colombia (which doubled its host count) are among the top performers. At the other end of the ranking, of the five TLDs that recorded a decrease in the number of hosts in 2003, two correspond to developing countries (.kr of the Republic of Korea and .ph of the Philippines). The most likely explanation for these movements is a migration towards generic TLDs, as other indicators (such as the number of Internet users and of computers available) in these two countries continued to grow in 2003.

The difficulty of drawing conclusions about the geographical distribution of hosts is illustrated by table 1.7, which contains data from the ITU (which in turn uses in part data from the ISC survey) and shows numbers that are rather different in several respects, notably the total number of hosts (which would have declined in 2003 by almost two thirds). The most likely explanation of this apparent contradiction seems to be the elimination from the data of information concerning generic TLDs which had until now been attributed to the United States, leading to a 98 per cent decrease in the number of hosts in the North American region.

(...)
B. The dialogue about ICT-fordevelopment: Some suggestions

1. The question of Internet governance

Given the profound impact of the Internet on multiple aspects of society, the debate about its future evolution and the role that different social players should have in deciding the direction it will take is bound to be an intense one. In such a debate, the technological implications of the issues involved are likely to be interpreted, to some extent at least, in the light of the real or perceived conflicts of interests ? political, economic and cultural ? regarding the development of what has become a global resource.

Even though there is no agreement among the participants in the debate about the exact delimitation of the processes that the term ?Internet governance? designates, the discussions throughout the WSIS process made it clear that a majority of developing countries feel that the status quo does not serve their interests well and needs to be reformed. The establishment of some sort of intergovernmental mechanism has been proposed. Furthermore, the lack of satisfaction with current arrangements is not limited to the Governments of developing countries, although the analysis of what is not working and the solutions proposed may differ significantly among critics.

From another viewpoint, the rapid expansion of the Internet across the world, which is probably faster than that of previous technological revolutions, and the phenomenal growth of its commercial applications would support the view that the structures that underpin the development of the Internet serve their purpose well. According to this viewpoint, given the evolutionary nature of such structures and the extent to which they rely on coordination and cooperation among the members of the Internet community, the safest means to ensure the balanced growth of the Internet is to allow the evolutionary process to move on freely, avoiding as much as possible control that goes beyond monitoring and minimizing governmental involvement. From this viewpoint, some of the objections to the policy-making and coordination arrangements of the DNS and the root server system may concern more the processes through which these governance mechanisms operate than their outcome.

It may be true that there are not many examples of significant direct damage to developing-country economic interests caused by the operation of such systems as they stand today (a partial possible explanation being that most developing countries have so far had a shorter and narrower exposure to the Internet). However, in order to be effective in the long term, governance mechanisms must rely on their acceptance by the governed. Technical effectiveness alone does not necessarily provide legitimacy. While the very success of the Internet would point to the existence of a fundamental consensus among the original Internet community, such consensus is rapidly eroding. It is only a matter of time before a system lacking political support becomes a technically dysfunctional one. It is also important to keep in mind that the past is not always a reliable guide to the future and that changes in both the demand and the supply side of the market for Internet services may well render obsolete the arrangements that were so useful during the earlier phases of the emergence of the Internet.

The concerns of developing countries

The weaknesses of some of the governance structures of core aspects of the Internet are not merely a matter of principle or perception. The dominance by one or a few countries of core Internet resources can generate concerns about the potential for discriminatory treatment of other countries. For instance, it has been pointed out that some universities in the developed world hold more Internet Protocol (IP) addresses than many developing countries (and earn money renting them out). Legal mechanisms based on the enforcement of private contracts (to be carried out essentially by the national courts of one country) are not necessarily the optimal way to settle international public policy issues. As the Internet penetrates almost every aspect of social life, Governments are justified in seeing it as a type of vital international public utility, which cannot be managed without regard to internationally accepted principles such as the sovereign equality of States.

Also, measures intended to achieve desirable aims, such as the empowerment of private players and the reduction of undue governmental control, can go too far and result in the extension of neo-corporatist approaches and the predominance of special interest groups that may seriously undermine transparency, openness and the democratic process. Since the Internet plays a growing role in the implementation of national development strategies, Governments as the only players in the development process that enjoy full democratic legitimacy have a clear interest in ensuring that the Internet evolves in a direction that is compatible with their development strategies and the protection of the public interest, for which ? unlike any other actors ? they are accountable to their populations. Unless globally endorsed responses are provided to these questions, societies that feel that their political, economic or cultural interests are not considered or are even at risk might develop their own individual responses, thus jeopardizing the greatest potential of the Internet as a tool for development, namely its universal reach.

The first step that needs to be taken in order to move the discussion forward is to ensure that all participants share some fundamental understanding of the nature of the arrangements being discussed, and of the interests at stake. In this regard, it is important that the position of the proponents of change be articulated beyond matters of principle and process, so that a discussion can be started in terms of specific interests, problems and impact on the ground, and a practical work programme. The fundamental interest of developing countries is to ensure that their specific needs and concerns are taken into consideration in any decision-making that will affect the evolution of the Internet and in particular its application to development problems, including those that may impact on the supply capacity and the competitiveness of their economies.

Governance ?of ? the Internet versus governance ?on? the Internet

Once it is recognized that a political answer to these questions needs to be found, it is also necessary to admit that there are not many examples of concrete policy areas in which responses require the development of new Internet-specific international institutions, especially from the viewpoint of economic competitiveness. In fact, if there is the political will to tackle the issues, existing systems of international coordination, cooperation or rule-making appear to be sufficient to deal with many if not most of the governance problems posed by the development of the Internet. In this regard, a distinction has been suggested between ?governance of the Internet? (that involves the physical and logical infrastructure of the Internet, and would probably be more appropriately referred to as the management of the core resources of the Internet) and ?governance on the Internet? (which concerns the activities that take place over the Internet, particularly the exchange of information, goods and services).

Of course, it is not possible to establish a clear-cut separation between all infrastructural/technological matters on one hand and political and socioeconomic questions on the other. Policy decisions very often have technological implications, and vice versa. A crude device to categorize the public policy issues that need to be addressed and the responses that could be explored in each case could be to distinguish between the management of the Internet as a global utility and the international governance issues posed by the use that people make of that utility.

Concerning the group of issues that could fall into the ?governance on the Internet? category, the most commonly quoted include matters such as content regulation, intellectual property (although these are also affected by the operation of the Internet Corporation for Assigned Names and Numbers (ICANN)), jurisdiction, competition policy (particularly in connection with the question of Internet interconnection costs and the imbalances in the relationship between tier 1 backbone operators and developing country Internet service providers (ISP) and smaller backbone operators), e-commerce taxation, consumer protection, security and spam. For most of these examples, international governance instruments already exist or could easily be devised. For example, the United Nations Commission on International Trade Law (UNCITRAL) and the Hague Conference on Private International Law provide forums that are suitable for addressing legal issues raised by the conducting of commercial or private transactions on the Internet. In other cases, efforts have already been undertaken at the regional level (for example, the Convention on Cybercrime of the Council of Europe), and if they are built on, a global international framework could be devised without major conceptual difficulties. In other cases, the nature of the problems is such that the optimal solution may involve a mixture of international law-enforcement cooperation and enduser awareness and action (for example, with regard to spam). In all these cases, the substantive character of the issue in question, rather than the fact that the Internet is the medium through which the problematic activity is conducted, should be the determinant criterion as to what level of ?governance? (from consensus building and cooperation to rule-making) and what instruments should be applied.

The problem of the imbalances in the distribution of the cost of international Internet interconnection systems exemplifies the situations in which existing frameworks may not be fully satisfactory, while the creation of specific Internet-focused governance instruments may not be a better option. The case for intervention in this area rests on the possible existence of restrictive business practices (RBP) by large backbone operators, resulting in unfairly high costs for developing country ISP and developing country Internet users, which thus aggravate the international digital divide. The problem being essentially one of international competition policy, its treatment presents wellknown difficulties, particularly when it is developing countries that suffer the effects of the RBP and therefore stand little chance of benefiting from the activity of the competition authorities of the major players. In any event, an improvement in this situation is more likely to result from measures that address the general trade and development issues connected with competition policy in a manner that is consistent with the interests of developing countries than from the establishment of a comprehensive Internet regulatory system. The issue in the case of this example is therefore not so much the need for a new intergovernmental organization to deal with the issues raised by the Internet as the inadequacy of some aspects of the multilateral trade framework for dealing with the concerns of developing countries.

Reform, stability and performance

The management of the DNS that is performed by ICANN and the operation of the root server system that is in the hands of a small group of public and private sector entities are at the core of the ?governance of the Internet? in the narrow sense. Equally important are a number of mainly membership-based organizations that support the development of many of the standards and policies that provide the ?logical? infrastructure of the Internet. Setting out their strengths and weaknesses, and in particular those of ICANN, is beyond the scope of this section; but the fact that many developing countries are not at ease with the limited influence of Governments in ICANN and in particular with the purely advisory role of the Governmental Advisory Committee (GAC), must be recognized and addressed. In this regard, reaching a common definition of the interests of the international community that must be served by the system of Internet governance, and agreement about the way in which Governments should be involved in it, is probably the most important aspect of the work to be done before the second phase of WSIS. Although at this stage of the discussion it is too early to make concrete institutional proposals, some of the features that they should have can be distinguished.

First, it must be recognized that whatever the merits of the case for their reform, the loose constellation of organizations that have so far underpinned the development of the Internet have achieved remarkable success in ensuring the stability and unity of a highly decentralized network of networks, with no centre and no strong rule-making authority. For any reform proposal to be viable, not just technically but also politically, it must provide strong evidence that it will ensure the continued stability and quality of service of the Internet, prevent its fragmentation and maintain the ?bottom-up? processes through which standards and policies have been developed so far. Second, no one-size-fits-all solution is likely to emerge. In addition to the management of core resources (IP addresses, DNS, root servers, protocols), a number of questions in which technological and policy issues are particularly intertwined are likely to be best treated within an network of international frameworks (as opposed to a unified, structured organization) of cooperation and coordination for the development of the Internet.

These include, for example, the regulation of the Whois database (in connection in particular with privacy protection concerns), security (from the viewpoint of the network and from the viewpoint of the user, which may sometimes enter into conflict), the dispute resolution system and the problem of multilingualism. In such a cooperative framework, flexibility should be a paramount consideration. For instance, not all stakeholders need to play an equally relevant role in addressing every matter, and some problems may require hard-and-fast rules and formal structures while others may not. Structural flexibility and lightness are also needed in order to prevent governance solutions from being rendered obsolete by technological evolution.

Third, evolution is more likely to produce results than a voluntarist top-down approach. The current system of management of core Internet resources is the result of a process that has taken place over a remarkably short time. It is clear that this evolution has not yet reached a stage of maturity that is acceptable to all its stakeholders. Also, it must complete a process of genuine internationalization (which is not necessarily equivalent to full-fledged intergovernmentalization, but implies representativeness requirements beyond the participation of individuals/organizations of various nationalities). In the completion of that process it is essential to reconcile demands for change with the need to ensure the continued delivery of the critical services that ICANN and the root server system provide to the Internet community. If, as argued above, technical effectiveness alone does not confer legitimacy, ineffectiveness can ruin it.

Supporting the dialogue

The evolution of the governance framework towards a system that is more developmentfriendly would be facilitated if developing country players (both governmental and non-governmental) would identify concrete policy issues (as opposed to broad policy areas) in which their concerns and interests are not being considered adequately. Developing countries need to assess the implications of different Internet governance models, including in terms of their impact on the capacity of their economies to benefit from the adoption of e-commerce and e-business practices. This is an undertaking to which UNCTAD could contribute within the limits of its mandate in the trade and development area.

A sustained capacity-building effort of for Internet policy-making is needed so that the majority of the developing countries can effectively participate in the management/governance systems that may emerge from the WSIS process. This is another area in which UNCTAD can make a contribution within an international framework in which the United Nations ICT Task Force could play an important coordination role.
(...)