Euro ISPs defend new fees as 'business class' Internet (Q&A)

ASPEN, Colo.--Luigi Gambardella is an amiable, effusive Italian businessman, who seems almost bemused that anyone would object to his proposal to give a United Nations body more authority over how national governments may or may not regulate the Internet.

Gambardella is chairman of the executive board of the European Telecommunications Network Operators, or ETNO, which submitted a proposal to a U.N. body in June that would establish the principle of sender-party-pays for Internet traffic. Not-so-coincidentally, a lot of Internet traffic is sent to Europe from the United States.

"We believe that this situation is putting at risk our capacity to invest," Gambardella said last week at a conference here organized by a technology think tank. "We need to rethink together and to establish a new balance." (It's been in the works for a while: Bloomberg reported last December that France Telecom, Telecom Italia, and Vodafone Group want to "require content providers like Apple and Google to pay fees linked to usage.")

ETNO's proposal to the U.N.'s International Telecommunication Union to create a kind of multi-tiered Internet hasn't exactly been applauded outside Europe.

Verizon called it "dangerous." The Internet Society says "there is no need" for it. Google argues it "would harm Internet users in less developed countries." Steve Crocker, chairman of the Internet Corporation for Assigned Names and Numbers, or ICANN, said its "assumptions" don't work. And reining in the ITU seems like the only thing Democrats and Republicans can agree on during a presidential election year.

ETNO's proposal arrives against the backdrop of negotiations now beginning in earnest to rewrite the International Telecommunications Regulations (PDF), a multilateral treaty that governs international communications traffic.

Gambardella, currently a vice president at Telecom Italia and previously the regulatory and institutional affairs chief for Olivetti, sat down with CNET last week to elaborate on the ETNO's proposal, which he says has been misunderstood in the United States.

Q: How would this work? If someone in Europe rents a movie from a U.S.-based service, then part of that fee would go to ISPs in Europe? Isn't this pretty similar to a tax?
Gambardella: No. Because, first, as I said, we don't want to touch the Internet of today. We don't want to touch the services that are offered today.

But what can happen? A service provider -- can be European -- wants to sell a film, a movie. It wants to be sure the movie has a quality of service and has a certain kind of speed. So, therefore, we make an agreement and we allow them to offer this service. From the point of view of the service provider, he can have an additional revenue that he cannot have today because of the limitation of the network and best-effort. Sometimes the quality is not guaranteed. The customer has something that is today not yet offered. And we can add revenue.

But this is all based on commercial agreements. There is no obligation...

If it's just commercial agreements, you can enter into commercial agreements today without the ITU's involvement. Why do you need the ITU?
Gambardella: We don't want ITU to allow. We see ITRs as principles, very high level principles. We see ITR like a "constitution." We would like to put this principle: that the operators are free to negotiate commercial agreements beyond best effort. These commercial agreements are based on the value of the information, not the bits.

Because what could happen is that in one year time, or two year time, some member states would perhaps ask to introduce some new limitation on the Internet. So, basically, the paradox is that our proposal is to impede some member state to regulate further the Internet. So it's just the opposite of what's been said.

We don't want to see member states jump into the Internet and ask to regulate further because they don't want us to differentiate the traffic based on the quality. This is the aim.

With this proposal, the ITU will not gain any power. They will not have any power.

Then why don't you make your proposal a bit more straightforward? It seems like you're going to give the ITU more power -- you're giving them authority that they do not currently have.
Gambardella: We're open to improve our proposal. We have asked our U.S. friends: "Let's work on it, let's improve it. If you feel that we can express it in a better way, let's do that."

The problem is that, as you know... I understand their motivations: they see that they do not want to engage in a debate that is done in the ITU.

Yes.
Gambardella: My personal feeling, perhaps I'm wrong, but it's that there's a lot of sympathy for our proposal, the substance of our proposal, and disagreement that we're proposing this in the ITU context.

But I think that, in private, a lot of people tell me, "We have a lot of sympathy for what you're saying, and we agree." Because basically our proposal is very similar to what has been the position of AT&T and Verizon on the debate in Net neutrality in the United States.

The problem is the context of the proposal, which the U.S. industry does not like at all before the ITU.

Why not propose it somewhere else that's more neutral?
Gambardella: First, ICANN is not easy to work with. Second, ICANN is linked more to the Internet governance domain. They don't deal with such (topics).

The problem is that we want more choice. In the end, the customer will have more choice. It's like if you travel in economy. But why don't you also allow business class, a premium class, to differentiate the service? There is more choice. The customer decides what is better for him.

In any case, we'll not touch the Internet. Nothing will change. We'll just add new services that will be done with better quality.