Cybertelecom Federal Internet Law & Policy An Educational Project

Backbones :: ICAIS

Derived from The Digital Handshake: Connecting Internet Backbones by Michael Kende, Director of Internet Policy Analysis; September 2000. [ Text  | Word97  | Acrobat  | News Release ]

History: To understand the ICAIS controversy, one has to step backwards in history. In the early 1990s, NSF had built and was operating its new T3 backbone network. By design, NSF had solved one specific problem: long haul network traffic. Those regional networks that wanted to take advantage of the NSFNET would have to make their way to an NSFNET connection point, paying all the costs. It was the goal of NSF that NSFNET would by the paradigmatic "network of networks," glueing together the disparate regional networks that were forming at that time. NSF was therefore quite open to interconnecting networks --- including international networks. But again, what NSF was paying for was its backbone; if international networks wanted to take advantage of it, they would have to pay the full costs of getting to NSFNET. It is in this precedent and environment that the future ICAIS controversy would be born

Controversy: In recent years, a number of non-U.S. carriers have objected to the interconnection agreements governing the flows of Internet traffic between international points and the United States. Telstra, an Australian domestic and international carrier, has claimed that "to access U.S.-based Internet sites . U.S. carriers have insisted that foreign carriers pay for both of the required international half-circuits, i.e., for 100% of the cost of the international link." Telstra claims that roughly 30 percent of Internet traffic flowing between the United States and Australia is flowing from Australia to the United States, "due mainly to U.S. Internet users increasingly drawing on Australian Internet content." Because Telstra pays for the entire link between Australia and the United States, Telstra claims it is effectively subsidizing U.S. carriers and U.S. ISPs whose customers are accessing Australian content. In 1999, Telstra estimated that "Australian ISPs will incur costs of around $175 million to support provision of internet services by US ISPs to their US customers." Telstra also argued that the current pricing arrangements "appear to be unjust and unreasonable in violation of Section 201(b) of the Communications Act." Similarly, in January of 1999, a number of other Asia-Pacific carriers sent a letter on this subject to a number of U.S. backbone providers, and business, government, and Internet organizations, in which they claim that "the increasing demand for information from the [Asia-Pacific] region and the bi-directional traffic make the [ISPs] in the US in effect free-riding on the circuits and gateways/ports provided by the [Asia-Pacific] region ISPs."

As a remedy to their perceived problems with the current system, Telstra proposes that "under an equitable regime the cost-allocation of Internet capacity must reflect the traffic flows." Similarly, in their letter, the Asia-Pacific carriers requested that U.S. backbones" share the cost of international Internet backbone between the US and the AP region according to their usage or benefits" and urge a study of the "actual traffic as the basis of usage-based or cost-oriented charging and settlement arrangements."

A couple of international organizations are currently studying the international Internet cost-sharing issue raised by the non-U.S. carriers. The Asia Pacific Economic Cooperation (APEC) forum has raised this issue, under the rubric of international charging arrangements for Internet services (ICAIS), in 1998 at a Ministerial meeting on the Telecommunications and Information industry in Singapore. The Ministerial Declaration called for "the study, and, if and when appropriate, development, by the next APEC Ministerial Meeting on Telecommunications and Information Industry, of compatible and sustainable international charging arrangements for Internet services.." The Terms of Reference for this study solicited, "[i]f and when appropriate, and based on the findings of the study, proposals on the kinds of market and costbased commercial and/or regulatory responses necessary to create more compatible and sustainable international charging arrangements for Internet services to promote the further development of and access to the Asia-Pacific Information Infrastructure (APII)."129 The United States, in a background paper to the APEC Telecommunications Working Group, maintained that "there is no need for government intervention into relationships between Internet Service Providers." The United States further contended that "cost efficient arrangements for Internet traffic will continue to be worked out most quickly if the market is not hampered by government regulation."

The ICAIS study commissioned by APEC was recently completed; while the authors discuss various Internet charging mechanisms, they do not make recommendations or express opinions about the imposition of such charging mechanisms. However, they made several relevant findings. First, the authors found that "[t]rans-Pacific and intra-Asian capacity is more expensive and less competitive than is the case within North America, on trans-Atlantic routes, or within Europe."133 Second, they found that "North American and other backbone carriers are expanding rapidly in the Asia-Pacific region." Finally, they found that "the rapid deployment of new capacity will dramatically reduce the unit cost of international charges [for Internet services], irrespective of the structure of the charging arrangements."

Based on the instructions adopted at the 1998 APEC Ministerial Meeting, the ICAIS issue was again on the agenda at the APEC Ministerial Meeting on Telecommunications in Cancun, Mexico from May 24-26, 2000. At this meeting, the Ministers reaffirmed "the importance of mutually beneficial arrangements on [ICAIS], to allow a continued expansion of the Asia Pacific Information Infrastructure." The Cancun Ministerial Declaration stated that "Governments need not intervene in private business agreements on International Charging Agreements for Internet Services achieved in a competitive environment, but where there are dominant players or de facto monopolies, governments must play a role in promoting fair competition." However, the Programme of Action resulting from the Ministerial notes that the APEC Telecommunications Working Group (TEL) should continue to discuss charging arrangements, noting that these arrangements should account for traffic flow patterns.

Several reports on this issue have not supported any active government role in regulating international interconnection arrangements. The Organization for Economic Co-operation and Development (OECD) argued that "[a]t this stage, the best way forward is for industry to initiate discussion on the financing of Internet traffic exchange, for example, via the Asia-Pacific Internet Association's call for comments and other industry forums. The role of government is to stay abreast of these discussions and support industry-led solutions." In December 1999, the International Telecommunications Union (ITU) Telecommunications Sector Study Group 3 (ITU-T/SG3) issued a report arguing that "the PSTN costing model is inappropriate for the Internet," but the group was otherwise "unable to develop an agreed set of principles on the equitable cost compensation between circuit providers."

The first step towards changing the international Internet charging arrangement status quo came from the ITU-T/SG3 during a meeting in Geneva that concluded on April 18, 2000. The study group adopted a proposal, raised by the Asia and Oceania Region tariff group, recommending that "administrations involved in the provision of international Internet connection negotiate and agree bilateral commercial arrangements applying to direct international Internet connections whereby each administration will be compensated for the cost that it incurs in carrying traffic that is generated by the other administration." This draft recommendation will be submitted to the ITU World Telecommunications Standardization Assembly (WTSA) for approval. The WTSA meets in Montreal in September 2000. The recommendation did not explain its departure from contrary conclusions that emerged after two years of study by a rapporteur's group established by Study Group 3 itself. The United States has submitted to the WTSA meeting formal contributions in opposition to both the substance of this recommendation and the procedures used in its adoption.

--

In late September- early October 2000, the International Telecommunication Union (ITU) convened its quadrennial World Telecommunications Standardization Assembly (WTSA). The WTSA, among other activities, adopted -- with a U.S. reservation -- a policy approach (Recommendation D.50) on charging for international Internet traffic between carriers (ICAIS). This policy approach is representative of ITU member states' views on many related development issues. The new approach not only poses a threat to an unregulated Internet but also to numerous other U.S. international communications policy interests. After extensive debates on how to chart the future of ITU's Telecommunication Standardization Sector (ITU-T), agreement was reached on a work program for the next four years, which will promote interconnectivity and interoperability among networks, products and services in a multi-vendor, multi-platform competitive environment. In December, an ITU-T subgroup, Study Group 3, initiated activities to implement Recommendation D.50 on a global basis. NTIA has participated in all these bilateral and regional fora with several aims: to promote greater localized and regional Internet buildout (infrastructure and content) using competitive models; to connect as many people as possible to the Internet on an affordable basis; to ensure investment incentives remain for greater Internet development; to advocate domestic privatization of state-owned telecommunications entities that now provide Internet wholesale connections, and other competitive reforms to ensure greater affordability and supply channels; and to focus on solutions that do not lock in current traffic and network design asymmetries between the United States and points overseas.  NTIA Annual Report 2000

Links

• CAIDA: 
  • Internet Measurement: Myths about Internet data (5 dec 01) Myth:  intra country traffic stays there - data:  significant asia <-> asia traffic goes through san jose
  • CAIDA Measurements of the Internet topology in the Asia-Pacific Region (INET 2000)
• ITU
  • ITU Recommendation on Internet International Settlements ICAIS
    • ITU-T Recommendation D.50
      •  US Reservation to D.50
      • China: Vientiane, 17-20 March 2003 REGIONAL TARIFF GROUP FOR ASIA AND OCEANIA DELAYED CONTRIBUTION 14 Source: CHINA Title: STUDY GROUP 3 QUESTIONNAIRE ON INTERNET CONNECTION
    • The international Internet Connectivity Discussions in the ITU  - Results of the Rapporteurs Group meeting in Brussels on 28-30 April 2000
    • ASIA-PACIFIC ECONOMIC COOPERATION (APEC) TEL Working Group
      • ICAIS Report May 2000
      • Task Group Document
      • Terms of Reference
      • Exec Summary
      • US Background Paper
      • AT&T Position Paper
      • Australia's Objectives for the Project
      • Internet Traffic Measurement - An Overview, Nevil Brownlee, University of Auckland
      • Internet Tomography
      • Agis Paper
      • Communications Daily reports that the Draft recommendation must be approved by the World Telecommunication Standardization Assembly (WTSA-2000) which will look at the issue in Sept 2000.
      • PROGRESS REPORT ICAIS DATA GATHERING MODULE September 1999
      • APEC Study of Compatible and Sustainable International Charging Arrangements for Internet Services (ICAIS)
    • WIA Reference Center on International Charging Arrangements for Internet Services (ICAIS)
    • Timothy Denton, James Savage, and Robert Frieden, International Charging Arrangements for Internet Services (ICAIS) Module 1, Module 2 PDFPDF w Notes , Module 3 and Final Report
    • Plano Editorial:  1st Seminar International Telecommunications:  Internet: Determining Price and Universal Access
      • Ben Alfa Petrazzini Conselheiro do Departamento de Estratégias e Política da Secretaria-Geral da União Internacional das Telecomunicações (UIT) ICAIS Powerpoint
      • Timothy Denton Sócio da T.M.Denton Consultants, escritório de advocacia canadense especializado em telecomunicações, Internet e broadcasting Why telephone settlements do not exist on the Internet Powerpoint
      • Purificación Carpinteyro - Vice-presidente e Gerente-geral da Unidade de Negócios de Serviço Local de Relações Externas da Embratel.  ACORDOS DE REMUNERAÇÃO NA INTERNET Powerpoint part 1, part 2
  • ITU Report of WGIG June 2005 para 16 (identified problems: "Internet service providers (ISPs) based in countries remote from Internet backbones, particularly in the developing countries, must pay the full cost of the international circuits.") See WGIG
  • ITU Activities Related to the Internet and IP-based Networks 2002
    • "ITU not only coordinates global telephony system, but also many other aspects of telecommunications, including spectrum, geostationary satellite orbit, as well as global Internet and IP networks services and technologies;
    • ITU-T Study Group 3
      . In 2000, SG 3 adopted draft recommendation "D.50" on the cost sharing of international Internet connection between administrations, and continues the study on applicability of principles contained in Recommendation;
      . Result of tensions over costs of full leased circuits to Internet "backbone" and lack of transparency over peering and interconnection rules;
      . Some regulators applying "interconnect" rules for national Internet interconnections.
• IOPS, Recent ITU Actions on ICAIS (10/00)
• Denton Savage Frieden Progress Report ICAIS Data Gathering Module Jan 2000
• ASIA-PACIFIC ECONOMIC COOPERATION (APEC) TEL WORKING GROUP Task Group Input Document
• Statement on the Cost Sharing of the International Internet Interconnection Link between the USA and Asia-Pacific Region, signed by The Communications Authority of Thailand, Chunghwa Telecom, Indonesia Satellite Corp, KDD Corp, Korea Telecom, Philippines Long Distance Telephone Company, Singapore Telecom, and Telekom Malaysia Berhad (Jan 26, 1999).
• APIA's presentationat 18th APEC Telecommunications  Working Group Meeting - 7 to 11 Sep 1998 in Papua New Guinea (power point saved in PDF)
• A STUDY OF COMPATIBLE AND SUSTAINABLE INTERNATIONAL  CHARGING ARRANGEMENTS FOR INTERNET SERVICES (ICAIS) TERMS OF REFERENCE
• THE THIRD APEC MINISTERIAL MEETING ON THE TELECOMMUNICATIONS AND INFORMATION INDUSTRY (TELMIN3) 3-5 JUNE 1998, SINGAPORE THE SINGAPORE DECLARATION
• In the matter of International Settlement Rates, IB docket No. 96-261
See particularly Telstra's comments
• Department of Commerce
  NTIA Annual Report 2000
  • Third Joint Status Report of the US-Japan Enhanced Initiative on Deregulation and Competition Policy July 22, 2000 " At the May 2000 APEC Telecommunications Ministerial, the Governments of the United States and Japan endorsed principles on ICAIS. The Government of the United States, along with the Government of Japan, confirms that "Internet connectivity is an essential element of the global information infrastructure"; "Internet charging arrangements between providers of network services should be commercially negotiated"; but "where there are dominant players or de facto monopolies, governments must play a role in promoting fair competition." In order for APEC to reach consensus on any appropriate recommendations regarding the issue of international charging arrangements for Internet services, the Government of the United States, along with the Government of Japan, will endeavor to make APEC's discussions meaningful."

• OECD
  • Internet Traffic Exchange and the Development of End to End International Telecommunication Competition, OECD 3/25/02
  • OECD, Internet Traffic Exchange and the Development of End-to-end International Telecommunication Competition (2002)
  • OECD Workshop on Internet Traffic Exchange June 2001
    • AGENDA
    • Intro
      • Ulrich Mohr, Head of Section, International Policy on Telecommunications and Posts, BMWI, Germany, Welcome
      • Sam Paltridge, OECD
    • TRAFFIC EXCHANGE IN THE NEW ENVIRONMENT: GLOBAL NETWORKS
      • Scott Marcus, Chief Technology Officer, Genuity, Global Traffic Exchange between ISPs
      • Jean-Claude Geha, Telia, Next Generation Traffic Exchange
      • Mathew Dovens, Senior Director, Cable and Wireless, Relationship Between Networks
      • Bill Scott, NOIE, Australian Government, Issues of Internet Charging from an Australian Perspective
      • Ricardo Rodriguez, Cofetel, Mexico
      • Richard Cawley, European Commission, Traffic Exchange, Global Networks
    • TRENDS IN GLOBAL CAPACITY AVAILABILITY AND TRADING
      • Jeremy Barnes, Director, IP Deployment, Level 3
      • Bruce Girdlestone, Vice President Network Trading, Band-X, Trends in Global Capacity Availability and Trading
      • Geoff Huston, Chief Scientist, Telstra Internet, The Changing Structure of the Internet
    • GLOBAL INTERNET CONNECTIVITY
      • Don Abelson, Chief, International Bureau, FCC, ICAIS: Myths Versus Reality
      • Tim Kelly, Chief, Strategy and Policy Unit, ITU, Global Internet Connectivity and the digital divide
      • Sam Paltridge, OECD
    • LOCAL INTERNET INTERCONNECTION
      • Simon Hampton, Director of European Public Affairs, AOL Europe. Local Internet interconnection
      • Barbara Dooley, President, Commercial Internet eXchange, Local Competition and ISPs:  The American Experience
      • Wolfgang Kopf, Vice President, Deutsche Telekom, Local Internet Interconnection:  The German Situation
      • Geoff Brighton and Priya Sinha,Compliance Directorate, Oftel, Friaco: Unmetered Internet Access in UK
• Bill Scott, National Office Information Economy, Australia, Issues in Internet Charging from an Australian Perspective, (June 7, 2001)

Federal Action

• The Digital Handshake: Connecting Internet Backbones by Michael Kende, Director of Internet Policy Analysis; September 2000. [ Text  | Word97  | Acrobat  | News Release ]