You are on page 1of 13

INTERNATIONAL INTERNET CONNECTIONS COSTS

Baher Esmat and Juan Fernndez


A pivotal issue that has been discussed through all the preparatory process for both phases of
the World Suit on the Inforation Society !WSIS" and in other international forus over
the last seven years is international Internet interconnection charges#
$
Since% the perception of
the developing countries on the issue is entirely different fro that of the developed ones% the
proble has yet to be resolved#
This chapter presents an overvie& of the ipact of the current odels of International Internet
Connectivity !IIC" costs on the developing countries% and of the debate as to &hether this
issue re'uires global governance or not# The chapter then presents a brief case study of Egypt%
a leading developing nation in the field of inforation and counication technology !ICT"#
The case study sho&s that IIC costs% despite having decreased rapidly over the past fe& years%
are still considered a a(or coponent in the pricing of Internet services in Egypt# In the
follo&ing sections% the chapter then suari)es the International Telecounication *nion+s
!IT*" efforts to advance solutions and e,plains &hy its Recoendation on the atter has
never been ipleented# Accordingly% the chapter proposes actions to be carried out by
international organi)ations in light of the WSIS -lan of Action and the Wor.ing /roup on
Internet /overnance !W/I/" Report% and raises the 'uestion of &hether IIC should not be
covered under the World Trade Organi)ation+s !WTO" frae&or.# 0inally% the chapter states
that the IIC proble needs a grand collaboration aong all sta.eholders fro developing and
developed countries in order to attain practical echaniss that &ould allo& for fair
distribution of cost aong all Internet providers#
Background
The debate on IIC is not as &idely .no&n outside the industry as soe other Internet issues as
spa and cybersecurity# Nevertheless% a proble e,ists in ensuring that each provider of
connectivity is fairly copensated for handling international traffic# This happens because
Internet service providers !IS-s" based in countries reote fro Internet bac.bones%
particularly in the developing countries% ust pay the full cost of the international circuits#
0or e,aple1 2When an end user in 3enya sends E45ail to a correspondent in the *SA it is
the 3enyan internet service providers !IS-" &ho is bearing the cost of the International
connectivity fro 3enya to the *SA# Conversely &hen an Aerican end user sends E45ail to
6
This is a resubission of a paper that the &as previously &ritten by the authors as
forer ebers of the W/I/ and &as presented in one of the ICT Tas. 0orce Series titled
2Reforing Internet /overnance 7 -erspectives fro the Wor.ing /roup on Internet
/overnance !W/I/"8# As per one of the authors% 9aher Esat% the opinions e,pressed are
solely those of the author% and ay not necessarily reflect the vie&s of the author:s
eployer% the Internet Corporation for Assigned Naes and Nubers 4 ICANN#
1
2International Internet Connectivity 4Are -oor Countries Subsidi)ing the Rich;8% IT*
Ne&s 5aga)ine% N< =>% April ?==@% &&&#itu#intAitune&sAanagerAain#asp;
langBenCiDearB?==@CiNuberB=>#
3enya% it is still the 3enyan IS- &ho is bearing the cost of the International connectivity% and
ultiately the 3enyan end user &ho bears the brunt by paying higher subscriptions#8
?
This contrasts &ith the traditional accounting and settleents syste in the
telecounication &orld% under &hich the operator in the country that originates the call has
traditionally ade a copensatory payent to the operator in the country that terinates the
call#
Significant Impact on Developing Countries
This state of affairs has a significant negative ipact on developing countries% &here the
payents fro the settleent echaniss that applied to international telephony have been a
source of revenue that helped to subsidi)e universal service andAor to finance investent in
telecounications infrastructure# The IT* estiates that% bet&een $EE> and $EEF% net flo&s
of telecounications settleent payents fro developed countries to developing ones
aounted to soe G*SH= billion#
>
As ore telecounication traffic is shifting to the Internet% this revenue is disappearing#
According to the World 9an.%
Iin ?==?% *S operators alone paid *SG??>#E to African operators for
terinating calls onto African net&or.s% and received *SG$H#J in return for
terinating calls fro Africa onto *S net&or.s and *S G?=#H for transit to
third countries# *nder protest fro *S carriers and &ith changes to the
international settleent regie this position has changed% eroding these
revenues# In $EEF *S carriers paid *SGH$>#F to African operators% &hilst
African operators paid *SGJK#> to *S carriers to terinate on their net&or.s
and *SG?J=#@ for transit traffic to third countries# The revenue earned fro
terinating calls fro the *S has nearly halved over this period#
H

Other research estiates that the global benefit derived by *nited States fro inbound
transission and transit costs &as *SG$#> billion in ?==>% and is e,pected to rise to *SG?#K
billion in ?==J#
@
?
2The Lalf&ay -roposition%8 29ac.ground -aper on Reverse Subsidy of /F Countries
by African IS-s%8 Conference of African 5inisters of 0inance% -lanning and Econoic
Mevelopent% Nohannesburg% South Africa% October $E% ?==?%
&&&#afrispa#orgALalf&ayMocsALalf&ay-ropositionOMraftH#pdf#
>
See% Accounting Rate Refor underta.en by IT*4T Study /roup >% &&&#itu#intAIT*4
TAstudygroupsAco=>Aaccounting4rateA#
H
2Identifying 3ey Regulatory and -olicy Issues to Ensure Open Access to Regional
9ac.bone Infrastructure Initiatives in Africa%8 /lobal ICT -olicy Mivision% The World
9an.% Meceber E% ?==H%
http1AA&bln==$F#&orldban.#orgAictAresources#nsfAaJE>f@K@e=$ba@f>F@?@Jb@===J?af=@AKHc
HfKdbbcJd$FHHF@?@JfE@==J?c@cEAG0ILEAAfricaInfrastructure-olicyandRegulatoryReport#
pdf#
@
Nohn Libbard% et al% 2International Internet Connectivity and its Ipact on Australia8% 0inal
Report on an Investigation for the Mepartent of Counication Inforation Technology
and the Arts% !Canberra% Australia% 5ay >$% ?==H"%
To egulate or !ot to egulate
There is an ongoing debate bet&een those &ho allege ine'uitable and anti4copetitive
behavior by the Tier4$ carriers 4 soeties referred to as Internet 9ac.bone -roviders !I9-s"
4 at the e,pense of saller providers% and those &ho argue that the ar.et is &or.ing and that
any governent intervention is unnecessary and &ould ris. stifling Internet developent#
Although this debate is far fro being settled
J
% there is a gro&ing perception in any
'uarters% and particularly in the developing countries% that soe .ind of international
regulation is needed#
It has been said that in the coplete absence of rules protecting copetition% industries that
display strong net&or. effects% li.e I9- ar.et% have a tendency to drift to&ard
onopoli)ation% ost probably through the aggressive ta.eover of rivals# That is &hy soe
researchers have suggested that copetitive forces could use a hand fro governents1 2In
general% the ar.et outcoe cannot be relied upon to generate the greatest benefits for end
users# /overnents can intervene usefully to iprove on the ar.et outcoe# This is
precisely &hat the *S governent did for the early coercial Internet% despite a persistent
yth that the Internet developed because of non4intervention by governent#8
K
0or e,aple%
in a related area% the European *nion recently introduced soe regulation 2to stiulate the
eergence of a copetitive leased lines ar.et8
F
#
0inally soe observers are concerned that this issue could affect the stable functioning of the
Internet in the long run# As a recent study suggests1
I&ithout the adoption of a settleent regie that supports soe for of cost
distribution aong Internet providers% there are serious structural probles in
supporting a highly diverse and &ell populated provider industry sector# These
probles are e,acerbated by the additional observation that the Internet
transission and retail ar.ets both adit significant econoies of scale of
operation# The cobination of these t&o factors leads to the econoic
conclusion that the Internet ar.et is not a long ter sustainable open
&&&#dcita#gov#auAOOdataAassetsA&ordOdocA$JJ$JAIICOreportO4O&ebOversion#doc#
J
Maniel Rosean% 2The Migital Mivide and the Copetitive 9ehaviour of Internet 9ac.bone
-roviders1 A Way 0or&ard%8 paper presented at a special eeting of the IT* rapporteur+s
group dealing &ith international internet connectivity% 9russels% April ?==>%
&&&>#sypatico#caAdroseanARoseanIIS-aper#pdf#
K
Maniel C#L# 5ah % 2E,plaining Internet Connectivity1 Poluntary Interconnection Aong
Coercial Internet Service -roviders%8 paper presented at the >$st Research Conference
on Counication% Inforation and Internet -olicy% Arlington% PA% Septeber ?=% ?==>%
&eb#si#uich#eduAtprcApapersA?==>A$F$AE,plainingOInternetOConnectivityO5ar?J4
=>#MOC#pdf#
F
Coission of the European *nion% E,planatory 5eorandu of the Recoendation
on the -rovision of Leased Lines in the European *nion% C!?==@" $=>A?% !9russels%
Nanuary $% ?==@"%
Qhttp1AAeuropa#eu#intAinforationOsocietyApolicyAecoAdocAinfoOcentreAdocuentationAre
co OguidelinesAleasedOlinesAe,plOeoOen#pdfR
copetitive ar.et that is capable of supporting a &ide diversity of players
both large and sall#
E
Conversely% soe analysts have said that regulation is not needed because the reduction of the
revenues that developing countries receive fro international telephony settleents can be
copensated by the lo&er costs of the Internet based telecounication services# 9ut this
savings can occur only in countries &here the infrastructure is already in place% and this is not
the case for ost of the developing countries# And even if lo&er costs are ade available to
IS-s in developing countries% the fact reain that the flo& of revenue is reversing# As ore
telephone and fa, traffic shifts to the Internet% &hat &ill replace the yearly *SGK4$= billion
developing countries receive fro telecounications settleents;
This has created the parado, that in any developing countries% the use of ne&er and lo&er
cost technologies% li.e Poice over Internet -rotocol !PoI-"% are seen as ore as threats than as
beneficial# This is because they deprive national carriers of the revenue needed to oderni)e
infrastructure and to deploy &idely ne& technologies such as Internet# This applies regardless
of &hether a country has a liberali)ed copetitive regie or a traditional onopoly one#
The Case of Eg"pt
History of Internet in Egypt
The first Internet gate&ay in Egypt &as set up in October $EE> by the Egyptian *niversities
Net&or. !E*N" via a E#J 3bps lin. to the European Acadeic and Research Net&or.
!EARN"# The Egyptian Cabinet Inforation and Mecision Support Center !IMSC" that used to
play a a(or role in introducing the Internet to the Egyptian society% &as also connected
through the sae gate&ay# Since that date% E*N started offering Internet access to the
research and education sector% &hereas IMSC providing Internet services to the governental
sector# In $EEH% IMSC leased for the first tie in Egypt a digital international Internet
connection and invested in another gate&ay to run parallel to the E*N# In order to encourage
the diffusion of Internet services all over the country% the governent allo&ed IMSC to offer
free Internet access not only to governent entities% but also to private sector% international
organi)ations as &ell as civil society#
In Meceber $EE@% a decision &as ta.en by the governent% in coordination &ith the
incubent carrier Teleco Egypt !TE"% to liberali)e the Internet ar.et and allo& private
sector IS-s to step in and offer coercial services to end4users# This &as in fact one of the
earliest landar.s in the ove to&ards liberali)ing telecounications services in the
Egyptian ar.et# The nuber of IS-s increased fro t&elve in $EEJ to alost forty five in
$EEE &hile the total nuber of Internet users has gro&n fro fe& thousands to ?==%===
during the sae period of tie#
$=
Telecommunication Reform and Internet Evolution
E
/eoff Luston% 2Where:s the 5oney; 4 Internet Interconnection and 0inancial Settleents%8
The IS- Colun% Internet Society !Nanuary ?==@"% Qhttp1AAispcolun#isoc#orgA?==@4
=$Ainterconns#pdfR
$=
5ohaed A# El4Na&a&y% S-rofiling Internet *sers in Egypt1 *nderstanding the -riary
Meterrent Against Their /ro&th in Nuber%S INET ?=== Conference -roceedings%
Qhttp1AA&&&#isoc#orgAinet?===AcdproceedingsAFdAFdO>#htR
0ollo&ing the establishent of the 5inistry of Counications and Inforation Technology
!5CIT" in October $EEE% the National Telecounication Regulatory Authority !NTRA" has
developed a ne& licensing frae&or. regarding Internet service provision in Egypt#
According to this ne& schee% there are three categories of service providers% classified as
Class A% 9 and C# 9oth Class A and 9 can build and o&n infrastructures% as &ell as co4locate
e'uipent &ithin TE e,changes# While Class A providers have an agreeent &ith TE to
ac'uire international band&idth capacity via one of the cable operators% Class 9 providers
have to go via one of their Class A counterparts to get international access# Another difference
bet&een Class A and Class 9 is that the forer offer services either to other providers
!&holesale" or to end4custoers !retail"% &hereas the latter can only sell to end4custoers#
9oth Class A and 9 are usually referred to as Net&or. Service -roviders !NS-s"# On the other
hand% Class C IS-s do not have the right to build infrastructures nor do they have direct access
to international band&idth# Instead% they lease ports and capacity fro NS-s and provide
services to end4custoers# It is ost li.ely that Class C providers &or. as resellers for NS-s
in reote areas &here the latter do not have a presence# To date there are four Class A
providers% five Class 9 !four of &hich are currently operational"% and around ?== Class C
providers#
$$
The nuber of Internet users in Egypt is no& estiated to be around @ illion#
$?
The
e,ponential increase in the nuber of users is a result of regulatory refors in this sector as
&ell as an unparalleled support offered by the governent# The regulatory refors &ere
partially addressed in the licensing frae&or.s in &hich the relation bet&een Teleco Egypt
and the NS-s are described and onitored by NTRA# Also% such refors &ere ostly
reflected in the Telecounication Act nuber $= of year ?==>% &hich defines in eighty
seven articles all regulations concerning the provisioning of any telecounication services
in Egypt#
At the sae tie% the governent+s support has been articulated through initiatives prooted
by the 5CIT# E,aples here include1 S0ree Internet%S &hich allo&s dial4up Internet access
&ith the cost of local phone call !*SG=#?$ per hour"T S-C for every hoeS and SLaptop for
every professional%S &hich provide affordable eans for individuals and businesses to ac'uire
coputers through onthly installent payentT SIT ClubsS that a.es basic coputer
training and Internet access available in rural and deprived areasT and S9roadband Access%S
&hich has brought asynchronous digital subscriber line prices do&n by fifty percent and
prooted broadband &ireless services as &ell#
Teleco Egypt% &hich is &holly o&ned by the governent% has also developed special pricing
schees for NS-s as regards local and international band&idth# Over the past five years% a
nuber of discounts have been applied on band&idth capacity% &hich cuulatively represents
seventy five percent and si,ty percent of local and international band&idth% respectively#
Egypt's International Telecommunications
Mue to its privileged geographical location% Egypt is considered an international
telecounication hub# A nuber of global and regional fiber optic cables have landing
$$
&&&#ntra#gov#egAenglishAM-agesOM-agesMetails#asp;IMB$?FC5enuB>
$?
http1AA&&&#cit#gov#egApublication#asp
points in Egypt% such as SEA45E4WE $% ?% > and H subarine cables that lin. the country to
the outside &orld across the 5editerranean% South East Asia and Western Europe# Egypt is
also lin.ed to the 0LA/ cable &ith t&o landing points in Ale,andria and Sue) that connect
Egypt and the &hole 5iddle East to Europe% as &ell as to the 0ar East# In addition% there are a
nuber of regional optical fiber cables that connect Egypt to countries li.e Italy% /reece%
Syria% Lebanon% Nordan and Sudan# Satellite counication has also been used e,tensively in
various applications but has recently becoe e,pensive for data and Internet access copared
to terrestrial solutions#
$>
Although Teleco Egypt has so far en(oyed a onopoly over international counications%
Egypt:s coitents under the WTO+s basic telecounications agreeent bring this to an
end as of Nanuary $st ?==J# -rices for international band&idth have e,perienced a nuber of
successive reductions during the last five years% sho&ing a clear sign of the governent+s
coitent to lin. the country to the global society# Accordingly% Egypt+s international
capacity to the Internet has e,perienced an e,ponential boost% attaining >#>H@ /bps at
present#
$H
At the I- level% local NS-s are getting transit services fro different global I-
carriers such as **Net% Teleglobe and 0LA/#
0urtherore% in Nuly ?===% TE signed an agreeent &ith 0LA/ for building a local -oint of
-resence !-o-" in Cairo in order to provide licensed NS-s &ith anaged band&idth services%
as &ell as I- transit# As deand for band&idth increases over tie% this agreeent has
resulted in ore reduction in prices since 0LA/ has so far been the only international carrier
in Egypt that offers one4stop4shop services !both transission and I- connectivity" &hich
gives it a copetitive edge over the others#
International Internet Connectivity
15
The cost of IIC coprises t&o eleents1 the transission lin. fro Egypt to the *nited
States% and the I- port# Although it is 'uite coon for an IS- to get the transission fro
one carrier and the I- port fro another one% ost of the Internet connections in Egypt% as
&ell as their I- peering ports% are offered via 0LA/ for the reasons e,plained in the above
paragraph#
Traditionally% Egyptian NS-s used to lease band&idth capacities via either 0LA/ or SEA4
5EWE ># 0our years ago% the leasing price for a H@ 5bps lin. &as *SG$@=%=== per onth
versus *SG?>=%=== for a $@@ 5bps one# T&o years later% the prices &ere reduced by alost
>=U to reach *SG$J@%H== per $@@ 5bps per onth# Today% the leasing price for a $@@ 5bps
lin. is around *SG$==%=== per onth#
9y early ?==>% 0LA/ and TE reached an agreeent &ith the local NS-s allo&ing the latter to
o&n the band&idth instead of leasing it# This odel is .no&n every&here as Indefeasible
Right of *se !IR*" &hich is a long4ter lease of a certain band&idth capacity of an
international cable# The IR* contract bet&een the local NS-s% TE and 0LA/ allo&s the NS-s
to lease the capacity for $@ years# *nder this odel% the NS- &as able to ac'uire a $@@ 5bps
$>
International Telecounication *nion% 2Internet on the Nile1 Egypt Case Study%8
5arch ?==$% Qhttp1AA&&&#itu#intAosgAspuA&tpfA&tpf?==$AcasestudiesAegypt$#pdfR
$H
http1AA&&&#cit#gov#egApublication#asp
$@
The inforation in this section coes fro intervie&s &ith carriers and service
providers that operate in Egypt#
for *SG>#JK@ illion# With continuous support fro the governent as &ell as the rollout of
nation&ide broadband services% deand for international band&idth increases% hence prices
have rapidly decreased over the past couple of years reaching *SG$#?@ illion% &hich is the
present IR* price for a $@@ 5bps lin.#
Although the IR* odel puts a lot of burden on the cash flo& of the NS-s% &hich need to pay
the full aount up front% it sees to be ore econoic copared to the leasing odel# On the
other hand% the IR* odel is 'uite re&arding to 0LA/% not only because it collects the &hole
payent upfront% but also because it retains its custoers for 'uite a long tie# So% the odel
sees tepting for both sides and therefore all Egypt:s international Internet band&idth today
has been contracted based on the IR* schee#
9y depreciating the IR* nubers over a fifteen year contract period% it turns out that the
onthly charge for a $@@ 5bps lin. is around *SGK%===# Lo&ever% this is a theoretical
calculation because the band&idth value decreases over tie so linear depreciation does not
&or. in this case# Therefore% operators either do depreciation over a shorter period of tie
such as H years% or calculate the depreciation value in a descending anner#
In addition% the cost of the I- port for a $@@ 5bps lin. is in the range of *SGK%=== to
*SG$=%=== per onth based on the negotiations bet&een the local NS- and the I- provider
!0LA/ in ost cases% **NET and Teleglobe in fe& cases"# As a atter of fact% the NS-s
usually negotiate &ith their I- providers for better peering prices according to the ratio of the
inbound versus the outbound traffic# Lo&ever% in soe cases the ratio is around $#H1$ though
the iniu price that an NS- can get for peering is *SGK%=== per $@@ 5bps per onth
&hich is 'uite a considerable aount#
To calculate the total value paid in *SG by Egyptian NS-s for international Internet
band&idth% the follo&ing assuptions are ta.en into account1
The current IR* price for a $@@ 5bps &hich is *SG$#?@ illion
An average price for a $@@ 5bps I- port &hich could be *SGF%=== a onth
Mepreciating the IR* nuber over four years
The results are as follo&s1
The IR* price per 5bps per onth is *SG$JF
The I- port price per 5bps per onth is *SG@?
This gives a total of *SG??= paid per 5bps per onth
Since the international capacity is currently >#>H@ /bps% it turns out that the total aount paid
in international band&idth is *S GK>@%E== per onth# Needless to say that this figure is
calculated based on a best case scenario in &hich the iniu prices of the present tie are
ta.en into account% &hile ost of the capacities &ere ac'uired in the past for uch higher
prices#
Why are NSPs Paying ll This!
Actually% Egyptian NS-s% li.e any other non4Tier4$ carriers% have no choice but to pay the full
aount of the transission as &ell as of the peering or precisely the transit# This is because
they cannot fulfill any of the Tier4$ carriers: polices for settleent4free interconnection# Such
policies are by all eans ipossible for any of the NS-s to achieve#
As an e,aple of such Tier4$ policies% 5CI re'uires any operator see.ing settleent4free
interconnection &ith its net&or. to have coverage in at least fifty percent of the geographical
region in &hich 5CI has facilities# The policy also asserts that the ratio of traffic e,change
shall not e,ceed $#F1$# It further entails certain re'uireents in the bac.bone net&or. of the
re'uester such as full redundancy% iniu capacities of ?#H /bps for interconnection &ith
5CI4*S% J?? 5bps &ith 5CI4Europe and $@@ 5bps &ith 5CI4Asia -acific#
$J
Therefore% it
coes at no surprise that &ith the current nors of the Tier4$ carriers% Egyptian NS-s &ill
al&ays be deeed as custoers to such carriers and hence bear the &hole cost for both the
band&idth as &ell as the peering#
There are a nuber of arguents that have been raised over the past fe& years describing the
IIC issue fro a business perspective% and putting for&ard solutions that ay help operators
fro developing countries overcoe this proble and in soe cases be in a stronger position
&hile negotiating &ith Tier4$ carriers#
A &ell4.no&n debate is the lac. of national peering in ost of the developing nations:
net&or.s# The arguent here is if operators in such countries anage to build national
e,change points and aggregate local traffic% they can save in their international capacities
because local traffic &ill stay local rather than traveling oversees% thus the overall aount
paid in international band&idth &ill be less# The sae arguent is used on a regional level%
that if a nuber of countries in a certain region &ere connected via soe regional e,change
point% again this &ill .eep regional traffic regional and ay as &ell attract other e,change
points of Tier4$:s to peer &ith#
5ore iportantly% building local and regional Internet E,change -oints !IV-s" shall help
operators of the developing &orld to attract content fro developed countries to be irrored
and hosted in such IV-s% thus lessen the asyetry in the traffic e,changed bet&een
developed and developing nations# Lo&ever% building IV-s in itself does not change a
fundaental aspect in the current odel of IIC% &hich is the fact that operators fro
developing countries &ill .eep paying the full aount no atter ho& uch this aount is#
As per the Class A and 9 licenses in Egypt% local peering is andatory for all NS-s# Lo&ever%
not all NS-s are connected to the e,change point and even those &ho are connected do not
see uch of a benefit# Establishing a peering point in Egypt has never been technically
challenging for the NS-s# The challenge coes priarily fro the copetition bet&een
NS-s% agreeent on a certain peering criteria as &ell as the inability to recogni)e a utual
benefit obtained fro such a local connectivity# Nevertheless% it is e,pected that &ith the
continuous developent and increase in local content% NS-s &ill be ore eager to effectively
interconnect and hopefully save soe of their international band&idth costs#
On the other hand% regional peering bet&een Egyptian NS-s and other operators fro Africa
and the Arab World has even been ore challenging# There have been soe negotiations
$J
25CI -olicy for Settleent40ree Interconnection &ith Internet Net&or.s8%
Qhttp1AAglobal#ci#coAuunetApeeringAR#
bet&een ore than one NS- and other counterparts fro the Arab region% yet nothing has
been ateriali)ed# According to NS-s% Egypt has a lot ore Arabic content than any other
neighbor country does% and that:s &hy operators fro such countries have e,pressed interest
in peering &ith the# 9ut those operators &ant to e'ually share the peering cost &ith the
NS-s% &hich does not convince the latter because they have larger custoer base as &ell as
ore content# So% as &ith local peering% the proble is not technical% it is rather the lac. of a
business odel that loo.s appealing and satisfactory for both sides#
Another possible scenario that ay help Egyptian NS-s itigate the burden of their
international costs involves having ore international cable providers in Egypt% either &ith
their o&n landing points installed or at least &ith perission to use TE:s landing points# As
indicated earlier in this chapter% there are currently 0LA/ as &ell as the SEA45E4WE > C H
international cable systes that pass through Egypt serving ost of its current as &ell as its
prospect international telecounication services# Lo&ever% the SEA45E4WE syste has so
far not been able to copete &ith 0LA/ as far as Egypt:s Internet international business in
concerned# Therefore% the 'uestion is &hat if a ne& cable syste is laid do&n across the
5editerranean lin.ing Egypt &ith Europe; Would this create ore copetition and help the
NS-s get better offerings for international band&idth; Although prices have been falling
rapidly follo&ing the 0LA/ agreeent &ith TE to provide NS-s &ith IR*4based band&idth%
soe NS-s do envisage that having an alternative to 0LA/ &ould allo& the to get ore
copetitive offerings#
The last odel is the one led by Australian and Asian operators &ho have invested in their
infrastructures and built -o-s around the &orld in order to co4locate &ith Teir4$ carriers%
hence be able to negotiate better deals &ith the# It is not deeed ipossible that an Egyptian
operator could ta.e the sae approach% despite the fact that the si)e of any of the e,isting
NS-s is yet too sall copared &ith any giant teleco carrier# Also% the nuber of Internet
subscribers in Egypt% five illion% is uch less than that in any developed countries on the
Asian4-acific side% &hich conse'uently reflects on uch less traffic volues as &ell#
IT#$T ecommendation D%&'
In $EEF% IT*4T Study /roup > started discussing the issue of 2International Internet
Connectivity !IIC"8#
$K
In October ?=== the IT* World Telecounications Standards
Assebly approved the IT*4T Recoendation M#@= regarding 2-eering8 or 2Transit8
arrangeents bet&een IS-s and Internet bac.bone providers#
The purpose of the Recoendation &as to set out the principle for negotiating agreeents
to transit international Internet traffic# The possible need for copensation bet&een the
providers carrying the traffic &as also recogni)ed in the recoendation# When providers
install Internet circuits% they generally have a choice bet&een on one hand the Ssender4.eeps4
allS or peering syste of bilateral connections &hen traffic is ore or less balanced% and on
the other hand an asyetrical syste &hereby the initiating provider pays for the &hole
connection &ith the other country !full4circuit cost"# The latter is the case today for ost of
the developing countries# The Recoendation called for arrangeents to be negotiated and
agreed upon on a coercial basis &hen direct Internet lin.s are established internationally#
It re'uired only that the t&o providers involved reach a utual agreeent#
$F
$K
See% IT*4T Study /roup >% Qhttp1AA&&&#itu#intAIT*4TAstudygroupsAco=>Ainde,#aspR#
$F
A Landboo. on Internet -rotocol !I-"49ased Net&or.s and Related Topics and Issues
Recoendation M#@= also said that the parties involved could ta.e into account the possible
need for copensation for eleents such as traffic flo&% nuber of routes% geographical
coverage and the cost of international transission &hen negotiating such coercial
arrangeents# Although the Recoendation M#@= is voluntary% it has been hotly contested
and is not being ipleented% ost notably by .ey industriali)ed countries and eleents of
the global private sector#
Study /roup > agreed in Nune ?==$ to pursue further studies on IIC% and established t&o
Rapporteur /roups% one for developing further guidelines to facilitate the ipleentation of
Recoendation M#@=% and the other for e,aining the possibility of using traffic flo& as a
ain factor of negotiation for IIC#
The search for ob(ective% fair and cost4oriented charging rules received an ipulse in late
?==? &hen China subitted a proposal to odify the Recoendation M#@=# China proposed
to consider bul. traffic flo& as a costing eleent to be ta.en into account in coercially
negotiated connection arrangeents# In Nune ?==H% Study /roup > adopted Aendent $% on
2/eneral considerations for charging criteria and options for international Internet
connectivity8% &hich copleents Recoendation M#@=# Lo&ever% the study on the traffic
flo& ethodology &as not concluded and &or. continues during a ne& study period ?==@4
?==F#
ecommendations for Future (ction
Since the first phase of WSIS any recoendations have been put for&ard to advance in
the solution of this issue# The WSIS has stated1
$E
2Internet transit and interconnection costs should be oriented to&ards ob(ective%
transparent and non4discriinatory paraeters% ta.ing into account ongoing &or. on this
sub(ect#8
2The creation and developent of regional ICT bac.bones and Internet e,change points%
to reduce interconnection costs and broaden net&or. access#8
The W/I/ ade the follo&ing recoendations on interconnection costs1
?=
Invite international agencies and the donor counity to intensify their studies in this
area% in particular to e,aine alternative solutions% such as the developent of regional I-
bac.bones and the establishent of local and regional access points#
Call on the groups studying Internet governance issues to ta.e note of the WSIS
Meclaration of -rinciples% i#e#% to be ultilateral% transparent and deocratic and to have
!/eneva1 IT*% ?==@"% Qhttp1AA&&&#itu#intAIT*4TAspecial4pro(ectsAip4policyAfinalAI-
U?=-olicyU?=Landboo.40INALU?=PERSION#pdfR#
$E
2WSIS -lan of Action%8 paragraph C?# E# !/eneva% Meceber $?% ?==>"%
Qhttp1AA&&&#itu#intAdsOpubAitu4sAdA=>A&sisAdocAS=>4WSIS4MOC4===@WW-M04E#pdfR#
?=
Report of the Wor.ing /roup on Internet /overnance% !/eneva1 *nited Nations% Nune
?==@" &&&#&gig#orgAdocsAW/I/RE-ORT#pdf#
the capacity to address Internet governance in a coordinated anner% based on a ulti4
sta.eholder approach#
Invite relevant international organi)ations to report on these atters to &hatever foru%
body or echanis!s" that the WSIS &ill create for issues related to Internet governance
and global coordination#
Encourage donor progras and other developental financing echaniss to ta.e note of
the need to provide funding for initiatives that advance connectivity% IV-s and local
content for developing countries#
9uild on current international agreeents% encourage interested parties to continue and
intensify &or. in relevant international organi)ations on international Internet
connectivity issues#
Other recoendations that have been ade are in the course of the global debate include the
follo&ing1
-roote the establishent of national and regional IV-s and hubs to provide a better
utili)ation of international capacities by .eeping localAregional traffic localAregional#
?$
This aggregation &ill also give saller net&or.s and IS-s in developing countries greater
bargaining po&er &hen negotiating international interconnection arrangeents#
Additionally% content providers of developed countries should be encouraged to irror
their content in those regional e,changes#
-roote the creation of local content in developing countries that can be of interest to
Internet users in developed countries# Then the indirect net&or. benefits provided by
content providers in developing countries to the bac.bone operators could be ta.en into
consideration in the interconnection prices offered to developing countries IS-s#
Encourage national authorities to ta.e steps to open ar.ets to copetitive entry and
proote increased copetition in the ar.et place% to create an enabling environent that
encourages investent andAor international infrastructure assistance#
Include provisions fro the IT*4T Recoendation M#@= in a treaty4level instruent% for
e,aple the International Telecounication Regulations% so as to give the binding
force# It has also been suggested that there should be a binding international dispute
resolution echanis siilar perhaps to &hat e,ists in the WTO% to deal &ith these
atters#
Include Internet services under the WTO agreeent on basic telecounications services
because it offers a suitable frae&or. &ithin &hich access to Internet bac.bone services
&ould be ensured in cases &here these services are supplied by doinating suppliers#
?$
2Pia Africa1 Creating local and regional IV-s to save oney and band&idth%8 Miscussion
paper prepared for IMRC and IT* for the ?==H /lobal Syposiu for Regulators% !IT*%
/eneva% ?==@"% Qhttp1AA&&&#itu#intAIT*4MAtregApublicationsAAfricaIV-Rep#pdf R#
Encourage developing countries to associate the IIC issue &ith other issues that ight be
of interest to developed countries% such as enforceent of intellectual property rights%
liberali)ation of services% etc# That is% uch as the developed countries lin.
ipleentation of the WTO TRI-s provisions to other trade provisions of interest to
developing countries% developing countries could% at least in principle% lin. resolution of
the IIC costs issue to ongoing negotiations on other trade liberali)ation atters#
Conclusions
After seven years of discussion in international forus% publication of research papers and
even soe liited press coverage
??
% the fact reains that the IIC costs issue reains as an
iportant obstacle to the disseination of Internet access at affordable prices throughout the
developing countries#
It is 'uite evident fro the above analysis that the current cost odels of IIC are based on
ar.et po&er &ithout considering any public policy ob(ectives related to Internet
developent# 9usinesses of the developed &orld have fre'uently argued that ar.et
copetition% local peering and infrastructure e,pansions shall help developing nations
overcoe this proble# On the other hand% Egypt:s case study has sho&n that such factors are
reasonably achieved in Egypt and yet the cost odel of IIC reains unchanged#
This proves the need to seriously conteplate the IIC issue% not only through the forus
&here it has been discussed for 'uite a long tie% but through soe high level international
Internet governance echaniss that needs to be created# The ain challenge here is to coe
up &ith an innovative solution that on one hand aintains the dynais and efficiency of the
Internet% &hile on the other hand allo& operators in developing nations to provide better%
&idespread and cost4effective services for all# And this is ost li.ely to entail the concerted
political &ill of governents and the decisive participation of the rest of the sta.eholders#
OOOOOOOOOOOOOOOOOOOO
()out the (uthors
Baher Esmatis the Middle East Liaison of the Internet Corporation for
Assigned Names and Numbers (ICANN). He joined ICANN in ebruar! "##$
from the Eg!ptian Ministr! of Communi%ations and Information &e%hnolog!
(MCI&)' (here he ser)ed sin%e "##"' most re%entl! as &ele%om *lanning
Manager' (here his responsibilities in%luded proje%ts relating to
%ommuni%ations infrastru%ture and ser)i%e de)elopment (ithin the
frame(or+ of building Eg!pt,s Information -o%iet!. He started his %areer in
1../ as a -!stems Engineer at Eg!pt,s Cabinet Information and 0e%ision
-upport Center before mo)ing to Ne(bridge Net(or+s In%. in 1... as a
-!stems Consultant. 1aher is a former member of the 2-I- 2or+ing 3roup
on Internet 3o)ernan%e (23I3)' and ser)ed as Chair of the Eg!ptian I*)$
&as+ or%e until his joining ICANN.
??
2The /reat African Internet Robbery%8 99C Ne&s% !April $@% ?==?"%
Qhttp1AAne&s#bbc#co#u.A$AhiA&orldAafricaA$E>$$?=#stR#
Juan Fernndez is a Senior Advisor in the 5inistry of Inforatics and Counication of
Cuba and the Coordinator of the Cuban Coission for Electronic Coerce# Le also is a
eber of the *nited Nations ICT Tas. 0orce# -reviously he has been the CIO of SI5E% an
industrial group of ore than ?== enterprisesT and a Senior Researcher and -rofessor in the
5icroelectronics Research Center at Lavana -olytechnic Institute# Lis current interests
include the use of ICTs for developent% and the organi)ation of the soft&are industry in
developing countries# Le has a -hysics Megree fro Lavana *niversity and an 5Sc in
5icroelectronics fro Lavana -olytechnic Institute# Le is a 0IME International Chess 5aster#
Le &as a eber of the Wor.ing /roup on Internet /overnance#

You might also like