Apple, Google threatened by global Internet tax

Some mobile operators' complaints that over-the-top content providers are wrongly turning their networks into dumb pipes may get a hearing later this year at the United Nations, which is pondering an Internet tax designed to make the largest Web content providers pay up for the privilege of serving non-U.S. customers.

The tax, as envisioned, would ostensibly be used to fund broadband network buildouts worldwide, particularly in developing countries, and would largely be borne by leading U.S.-based Internet brands such as Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG) and Facebook.

The proposal is based on a global Internet tax suggested by European network operators, according to a CNET article. The plan is part of a set of proposals tentatively slated for review at the World Conference on International Telecommunications, which will be held this December in Dubai by the 193 members of the International Telecommunications Union, an agency of the UN.

The proposal "would amend an existing telecommunications treaty by imposing heavy costs on popular Web sites and their network providers for the privilege of serving non-U.S. users," said CNET. The draft proposal was created by the European Telecommunications Network Operators Association, or ETNO, a Brussels-based lobbying group representing companies in 35 nations.

ETNO's members, which unanimously approved the tax plan, include Deutsche Telekom, France Telecom, Telecom Italia, Swisscom and Spain's Telefonica.

ETNO contends its plan relies upon the "principle of sending-party network pays." CNET received a statement from ETNO in which the group said, "to ensure an adequate return on investment in high bandwidth infrastructures, operating agencies shall negotiate commercial agreements to achieve a sustainable system of fair compensation for telecommunications services."

The proposal could allow "governments to monitor and restrict content or impose economic costs upon international data flows," said Ambassador Philip Verveer, a U.S. deputy assistant secretary of state and the U.S. coordinator of international communications and information policy.

FCC Commissioner Robert McDowell has said foreign governments intend to "use international mandates to charge certain Web destinations on a 'per-click' basis to fund the build-out of broadband infrastructure across the globe."

The Obama administration as well as Democratic and Republican members of Congress recently began publicizing what they characterize as ITU secret negotiations that could seriously impact the ability of U.S.-based Internet companies to reach consumers in other nations. The proposed revisions to telecommunications treaties could also impact U.S.-based network providers, which might be required by international law to implement methods to track and charge for Internet website access.

At the Mobile World Congress held this past February in Barcelona, Spain, the concept of taxing or assessing fees on OTT providers and others was repeated with regularity by mobile operators based in Europe and elsewhere. The topic also frequently comes up in discussion with U.S. mobile network operators.

The CEO of Telecom Italia, Franco Bernabe, used his MWC keynote appearance to rally against over-the-top players, arguing that OTT vendors are sucking resources away from wireless operators. Bernabe's comments were given weight by his position as the chairman of the GSMA, the organization that conducts the MWC conference.

Also at MWC, Sunil Bharti Mittal, CEO of Indian carrier Bharti Airtel, said during a keynote address, "YouTube is consuming a massive amount of resources on our network. Somebody's got to pay for that."

Similarly, during the CTIA Wireless 2012 convention, Verizon Communications' CTO Tony Melone said the OTT phenomenon is one of the most important questions facing operators today. "What will the over the top model look like?" he asked during on CTIA panel, noting that Verizon is considering mechanisms that would allow content suppliers to pay for users' access fees.

For more:
- see this CNET article and this article

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