[bestbits] Moving towards active development support in GLOBAL CONNECT

Dave Burstein daveb at dslprime.com
Tue Dec 1 05:56:25 EST 2015

Carolina, Manu and all

Like Carolina, I apologize for any cross posting.

With respect, I profoundly disagree with the U.S. approach. I will only
speak briefly on this call because there is an agenda to move. I do hope
you will consider a different approach, grounded in the economics and
technical requirements.

I'm writing about developing affordable networks for all. Human rights are
also important but I bring no special expertise to that subject.

Theme: *The role of Americans and I believe my government should be to
support the needs of poorer countries, not to drive the agenda in our
preferred paths.*

First. We should recognize that the folks who have built MTN to almost 200
million subscribers know a heck of a lot more about how to build affordable
networks than I do. That's true for virtually any of the other lawyers and
policy people working thousands of miles away. Bharti is serving more
customers than AT&T & Verizon combined. They have many peers of exceptional
ability. This is just being practical and honest. Most of the real experts
are not in New York or in Washington.

*We should concentrate on items in our power to change,* like the cost of
international transit and the taxes our giant companies do and don't pay.
We should not waste our efforts on factors primarily decided domestically,
like the level of taxes and subsidies or the structure of the national

(Africa will pass the U.S. in Internet users around 2018. With help from
Cisco, I reported that in 2012, one of the first reporters to notice. India
is also going to pass the U.S. in about two years. The BRICs already have
more Internet users than the U.S. and the rest of Europe combined. Every
quarter, the Global South is adding 10-20M more Internet users than the

Second. My personal belief is that *the U.S. and Americans should primarily
work on what we can do*,* not what we are urging others to do.* In
particular, we should change policies that divert funds from poorer
countries to richer ones. Our companies need to follow principles of fair
trade and dealings. They should support the economies in which they are
doing business.

These wouldn't seem to be particularly controversial but lead to very
different policies than our current ones.
For three years, I've been asking engineers and business people what are
the largest issues raising network costs and reduce Internet use. The
Africans have shown particular wisdom. This is what I've been learning.
Please add your suggestions. We need a Code of Conduct here.

   - *High backhaul/transit costs double or triple the cost of providing
   broadband in most of Africa. *A megabit costs $0.50-$3 in most of the
   U.S. and much of Europe. The same megabit in Lagos on 2014 cost $170, 100x
   as much. 50-90% of the difference is cartel pricing, based on undersea
   costs where there is more competition.
   ​ ​
   We should support national efforts for bargaining leverage. Our
   companies should not use their market power to gouge. (This is by far the
   largest factor driving up costs. It's the same issue the U.S. Broadband
   Plan discovered in most badly served rural areas. The Africans have already
   built dozens of IXC's. It's insulting to pretend they need us to educate
   them. Unfortunately, while they are generally a good tool, they rarely can
   solve more than 10%-20% of  cost problem here.)
   - ​​

   - *Multinational giants should pay reasonable taxes. *The U.S. should
   make i
   so. Facebook & Google tax avoidance is far higher than their "charitable
   endeavors." Most African leaders will tell you they don't need charity,
   just a fair deal on taxes and trade.  France and England can't get Google
   or Apple to pay taxes. What chance does Cameroon or Thailand have without
   strong support from the giant's home countries? Changes in telecom pricing
   have sucked hundreds of millions in taxes/fees and probably more from some
   of the poorest countries.
   - Columbia Professor Raul Katz just did an important study that
   concluded Internet companies are making enormous profits in middle income
   countries. The products have mostly been developed and paid off in richer
   countries and at most a skeleton staff does things like sellnig some
   advertising. In one example, Katz found a company like Facebook is probably
   earning an 80% return.
   - Multinationals should hire and invest in the countries in which they
   do business. In years gone past, companies like IBM made sure to invest
   where they sold. There are 130M? Facebook users in India. Many of them can
   code, sell and manage.

Looking a little further ahead, two enormous problems are developing.

   - *High royalties may soon double or triple the cost of a low end
   smartphone. * Hundreds of millions fewer people will connect. Carlos
   Slim of Telmex told me at the Broadband Commission the $50 smartphone will
   connect two billion more people. On a mass product like a smartphone, a
   "reasonable" royalty would be something like 5-10%. Intel calculates
   royalties may soon be $140 on a mid-priced phone. On inexpensive phones,
   Microsoft, Qualcomm and similar royalties may be more than the total cost
   to build it. Every international agreement calls for "reasonable" royalties
   and it's time to make that so.

   - *Some companies have** developed enormous market power. *We all hate
   unnecessary regulation but also learned in our first economics class how
   damaging a monopoly can be. Columbia Professors Eli Noam and Raul Katz are
   doing seminal work on how Internet companies with scale have enormous cost
   advantages and have often developed "monopoly-like" pricing power. That
   scale will continue to make it hard or impossible for new companies to
   succeed. Google has a reported 90% market share in search in Europe.
   Facebook has more active users in India than there are broadband
   connections including wireless. How many substantial competitors have
   developed to Google and Facebook the last five years? Almost none.


While the American proposals place importance on human rights, the Core
Principles do almost nothing practical for development. They need to be
made concrete and clear.

​Let's look at the proposals​

> *III - Core Principles*
>>> The core principles of this initiative are:
>>> 1)   Countries integrate Internet connectivity as a key part of their
>>> national development strategy and budget process and consult with all
>>> stakeholders in doing so;
​Nearly every country has produced broadband plans doing just this. ICT is
an enormous part of the government strategy from Rewanda​ to India tp
Mexico. Ho Hum

 2) International financial institutions and international development
organizations prioritize digital access, including in the projects they

​The World Bank has done just that for over a decade.​ HoHum

 3)  All stakeholders promote the linkage between the use of technology,
expression, transparency and innovation; and the overall social, economic,
and political benefits reaped from connectivity;

​To the extent this relates to human rights, I defer to those with greater

4) All stakeholders promote dialogue and action on how to harness, deploy,
and enable innovative technologies to support quality, affordable and
sustainable connectivity for the unconnected, particularly in
power-deficient communities.

The last thing we need is more dialogue. From the Internet Society to WSIS
to the ITU, everybod

​has ​talked and talked.
We do need action, but neither here nor in the longer version did I find
anything concrete or new likely to make much of a difference.
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