ETNO’s Ideas of the Future of Telecoms the Modern Equivalent of “Beggar thy Neighbour” Trade Policies

BY Ali Sternburg
October 19, 2012

CCIA was glad to see that the telecommunications regulators of Europe chose to reject the proposals of the European Telecommunications Network Operators’ Association (ETNO) at their meeting in Istanbul yesterday. It was the right choice for Europe but it also demonstrates Europe’s commitment to looking for solutions for today’s issues today, rather than harking back to the business models of the past.

While yesterday’s step was important, unfortunately we understand that ETNO’s proposals do have some interest, especially in the Arab world and amongst some African countries.

ETNO’s proposals have been evaluated by technical experts and been found impractical. Internet freedom experts have demonstrated why they would cause serious harm to the availability of information. The Center for Democracy and Technology, for example, released an excellent analysis of ETNO’s proposal in June of this year. Similarly, many of the various ISOC chapters signed a letter to ETNO, describing their opposition to the proposals.

The heart of ETNO’s proposals are to enshrine in international treaty law telecoms firms’ right to charge to send data from one country to another, just like we used to pay to make long distance calls.

If you apply this concept to the bricks-and-mortar world, it would be as if each country were to create a tariff on the export of goods. This is a discredited concept that is widely known to be harmful as it reduces your export competitiveness. It is only used now as a temporary, extreme measure when, for example, there’s a shortage of food for domestic consumption and the price of that commodity is high on export markets, so a government puts an export tariff on the commodity to make export unprofitable – keeping food at home to prevent scarcity for citizens.

In the Great Depression, countries tried to create tariff walls to protect domestic production and encourage domestic consumption of domestic products. Economists famously called this a “beggar thy neighbour”# policy, arguing it would not work and would hurt everyone. They were right – and the result was the concerted effort over the last several decades to reduce tariffs and make trade fairer.

Even advocates of protectionism today would never in a million years advocate that countries should create export tariffs – making all the goods produced by their countries more expensive for export. Yet this is exactly what ETNO is proposing with regards to all data.

ETNO’s proposals are the modern equivalent of “beggar thy neighbour” policies for the Internet, on steroids. We learnt from the Great Depression, though, that if you beggar your neighbour, you beggar yourself.

1) 1) An example of this is a Chinese temporary export tariff on grains in 2008 – see : http://www.chinadaily.com.cn/china/2008-01/02/content_6365352.htm

2) Wikipedia has a good explanation: http://en.wikipedia.org/wiki/Beggar_thy_neighbour

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