Protecting the open Internet may require defunding the ITU. Here’s how to do it.

September 18, 2013

(Photo by Ashitaka San)

In the past week, two senior U.S. officials, FCC Commissioner Ajit Pai and
Republican Rep. Greg Walden (Ore.) were quoted as saying the United States should pull funding from the International Telecommunication Union (ITU), at least as a last resort, if the U.N. telecommunications body persists in its attempts to regulate the Internet.

What's the ITU? Why do people want to defund it? And what would it take to do so? Read on to find out.

What's the ITU?

The ITU was founded in 1865 as the International Telegraph Union, an organization that coordinated European telegraph standards. Over time it added telephone and radio standards to its remit, and in 1947 it became a specialized agency of the newly formed United Nations.

Today, the ITU continues to facilitate various treaties on international telecom issues. For example, countries that still have national telecom monopolies charge for international phone calls according to the terms of an ITU treaty. The organization also develops technical standards and provides a modicum of expertise to governments that seek it.

Why do some people in the United States want to defund it?

For years, governments unhappy with their limited influence over the governance of the Internet have gone to the ITU to air their grievances and seek relief. They have proposed to make the ITU the preeminent standards-setting and governance body for the Internet, pushing aside the non-governmental Internet Engineering Task Force (IETF) for standards and Internet Corporation for Assigned Names and Numbers (ICANN) for governing the Internet's domain name system. These changes would enable governments to have greater control over content on their "national Internet segments," as well as the ability to charge high rates for international Internet traffic, just as they do for telephone traffic.

For its part, the ITU Secretariat would love an expansion of authority because it would bring back some of the relevance the ITU lost in the rise of the Internet. The vast majority even of today's international telephone traffic is routed and billed according to a special loophole in the treaty that governs telecommunications, and 100 percent of Internet traffic is exempt from the treaty's provisions.

These issues came to a head last year at the World Conference on International Telecommunications (WCIT) in Dubai. Governments came together for the first time in 24 years to renegotiate the telecommunications treaty. A number of countries, including Russia, China, UAE and Saudi Arabia, proposed sweeping changes that would have created significant obligations for member states with respect to the Internet. While the liberal democracies were able to keep the worst provisions out of the final treaty, it still contained objectionable provisions, and it was bundled with a resolution giving the ITU all the excuse it needed to start working on Internet policy. The United States and 54 other countries refused to sign.

That sounds pretty bad! So why doesn't the U.S. just cancel its membership?

If all the ITU did was try to regulate the Internet, the United States would have pulled out of the organization a long time ago. But the ITU engages in other activities as well, most importantly in its radiocommunication or "R sector."

The ITU's R sector is in charge of internationally coordinating the allocation of orbital slots for satellites. Geostationary satellites must orbit Earth over the equator, and at a particular altitude, and therefore the number of high-quality orbital positions is limited. Furthermore, satellites must communicate with the ground using high-powered radio waves. Without some form of international coordination, satellite communications would interfere with each other.

Satellites are a 1950s technology, but they are still big business. Powerful American corporations and parts of the U.S. government are heavily invested in ensuring that they have access to valuable orbital resources. These interests push very strongly for a conciliatory American approach at the ITU, and it's unlikely that they would ever acquiesce to a complete American withdrawal, at least not until new technologies like high-altitude platforms displace orbital satellites.

Some U.S. telecom firms that operate internationally also fear the backlash that they would face if the U.S. suddenly left the ITU.

How much does the U.S. give to the ITU?

Each ITU member state self-assesses how much it wants to give to the organization. The Convention of the ITU establishes 24 different classes of dues based on the number of "contributory units" countries want to pay.

The U.S. currently is in the 30 unit class, along with Japan. No country is in a higher class. The lowest class available is the 1/16 class, which along with the 1/8 class is only available to countries listed by the U.N. as least developed countries and those specially exempted by the ITU Council.

The amount of the contributory unit is currently 318,000 Swiss francs per year. The U.S. therefore contributes 9.54 million Swiss francs, or around $10.3 million, to the ITU each year, plus occasional additional funds to defray particular ITU expenditures.

This amount is 120 times the minimum amount (1/4 of a contributory unit) that non-poor member states are required to give. Some seem to regard America's generosity toward the ITU as a relatively cheap way of buying influence: ensuring that the U.S. is always a member of the ITU Council, that an American is always on the Radio Regulations Board, and so on.

In contrast to the U.S.'s 30 contributory units, Russia donates 15, Saudi Arabia 13, China 12 and Brazil 3. However, it seems likely that some of these countries will increase their contribution levels at the ITU Plenipotentiary (Plenipot) Conference next year.

What does the U.S. need to do to reduce its contributions?

Every four years, the ITU has a Plenipot at which it holds elections, modifies its governing documents and does financial housekeeping. That is the only time that countries are allowed to reduce their class of contribution.

Furthermore, countries are only allowed to reduce their contribution by 15 percent at each Plenipotentiary Conference. For example, the U.S. is currently in the 30-unit class. Subtracting 15 percent from 30 gives 25.5. So for the upcoming Plenipot, it could select the 25- or 28-unit class, but it couldn't reduce its contribution to the 23-unit class.

The fact that countries can only go down by 15 percent every four years means that by current rules it would take the U.S. 56 years to decrease its contribution to the minimum level.

Can the U.S. at least direct its funding to the ITU activities it values?

Under current rules, membership dues cannot be earmarked toward particular purposes or specific ITU sectors. It would be great, for instance, if the U.S. could steer money away from the T sector, which develops telecommunication standards, and toward ITU-R and ITU-D (the latter aims to provide telecom resources to the developing world).

One way for the U.S. to gain more control over the way its contributions are spent is for it to reduce its membership dues by the maximum amount, but to offset that reduction with directed donations. By contributing in the form of voluntary contributions, the U.S. could gain more leverage over the organization because such contributions could be quickly withdrawn.

Alternatively, the U.S. could reduce its contributions to the ITU and offset them with donations to better U.N. organizations. For example, the Internet Governance Forum is an open, transparent U.N. organization devoted to discussions of Internet issues among governments, the private sector, civil society and academia, and it is perennially short of funds. The U.S. State Department gave the IGF a one-time contribution of $350,000 this month so that the organization would have enough money to hold its annual meeting in Indonesia in October.

Institutionalizing support for the IGF at the expense of the ITU has one downside, however. No one who supports the IGF wants the organization to be seen as dependent on the United States. This alternative works best if several other countries likewise decide to transfer support from the ITU to the IGF.

When do we have to make a decision?

If the United States is going to defund the ITU, it has less than a year to act. The next Plenipotentiary Conference will be held in October and November 2014, but member states are required to notify the Secretariat of changes in their contribution levels by Aug. 7.

While this may seem like some time away, unfortunately we won't get a lot of new information about other countries' intentions before then. There is an ITU development conference in March, and the council meets every year in June.

The next big battle for the Internet will be the Plenipot itself. Russia and Brazil, the two most vocal opponents of the status quo of Internet governance, are likely to push for changes in the ITU's governing documents to give it an explicit role with respect to the Internet. But if the U.S. waits until the assault comes to reduce its contributions to the ITU, it will have to wait another four years before it can cut its ITU dues.

Eli Dourado is a research fellow with the Technology Policy Program at the Mercatus Center at George Mason University. He is the co-creator of WCITLeaks, a project to bring transparency to the ITU, and was a member of the U.S. delegation to the 2012 World Conference on International Telecommunications. You can follow him on Twitter.

Correction: At the time this article was written, the ITU website stated that a country could reduce its contribution by no more than two levels every four years. But rules adopted in 2010, and not posted to the ITU website, are slightly different, limiting a member to reducing its contribution by 15 percent at each 4-year Plenipot. That means that it would take the United States 56 years, rather than the 40 years originally stated, to reach the lowest contribution level. We regret the error.

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