Geoff Huston, APNIC
In November 1988, telephone companies from 178 nations sent their respective government representatives to the World Administrative Telegraph and Telephone Conference (WATTC) in Melbourne, Australia. At the time the generally cozy relationships between governments and their monopoly telephone companies often made it extremely difficult to see the difference between the government's representatives and those of the telephone company. The group resolved to agree to the rather grandly titled International Telecommunication Regulations (ITRs) .
At this meeting the companies' national representatives agreed to a set of additional regulations that supplemented the binding regulations of the International Telecommunication Convention. The goals of these regulations were rather grand; they aspired to promote the "harmonious development and efficient operation of technical facilities, as well as the efficiency, usefulness and availability to the public of international telecommunication services." More practically, these ITRs defined the general principles for the provision and operation of international telephony services among signatories to the ITRs.
At that time the Internet was little more than a somewhat obscure experiment in advanced data communication protocols undertaken by a small number of researchers in North America and to a far smaller extent in Europe. However, since 1988 the Internet—and the world in which the Internet has flourished—has changed dramatically. If we view the rise of the Internet over the past 25 years as a product of an appropriately liberalized international regulatory regime as much as it was a product of the titanic shifts in computing and communications technologies that also occurred over this period, then we can make the case that the Internet of today is a product of these ITRs. And what a prodigious product it has been!
In Dubai, between the 3rd and 14th of December 2012, the nations of the world will convene at the 2012 World Conference on International Telecommunications (WCIT) , and they intend to use this conference to review these 25-year-old ITRs and consider some proposed changes to this regulatory framework that underlie international telecommunications.
At the moment the international meeting cycle is ramping up to consider what aspects of the ITRs should be altered, what should stay the same, and what should be dropped. After all, much has happened in the past 25 years, and an argument could be made that the ITRs should be amended to better reflect today's world.
But the world is not exactly aligned at the moment about what should and what should not be folded into a new set of international regulatory obligations.
Some countries appear to be advocating for some quite specific measures to be added to the ITR to address what for them are characterized as otherwise unresolvable operational problems. Others are advocating a more general approach to have the ITRs explicitly embrace the Internet and fold references to the Internet in every place where specific carriage and service delivery technologies are referenced in the ITRs. It is when these two approaches intersect that the situation gets interesting.
In order to illustrate some of the underlying tensions that exist in this activity, I would like to take a specific example of a proposed amendment to the ITRs and consider in terms of the broader context of telephony and the Internet.
The proposal I want to examine here concerns the topic that has been called "number misuse." In telephony this term referred to an operating practice where a call to a dialed number is not routed to the destination subscriber who is located at that called number, but instead the call is re-routed to a different destination.
What we see in the "Number Misuse" proposal for a revision of the ITRs is an attempt to fold the concepts of "number misuse" and the Internet together, with a result that some countries want the ITRs to explicitly take on the concept of "IP Address and Routing Misuse" within the framework of national obligations through common regulatory action within the same scope as the telephony called number misuse. If successful, this effort would result in a regulatory obligation for governments to take necessary actions to investigate and prosecute such instances of so-called "number misuse." The intended scope of such enforcement of such obligations would encompass not only the telephone network but also the Internet. Surely we all desire a global public communications network that operates with integrity, and surely we would want to see countries take the necessary actions to ensure that it happens. So why is this idea not exactly the best idea to appear in the ITR negotiation process so far?
Let's look at the motivations behind number misuse in the world of telephone carriers and telephone services, and then look at how it could conceivably map in to the world of the Internet. To understand the telephone world and where this problem of number misuse is coming from, it may be useful to understand a little of how money circulates in the phone world.
Telephony: Sender Pays
In many ways the telephone leaned heavily on the telegraph service for its service model, which, in turn, leaned on the postal service, establishing a provenance for the telephone service model that stretched back over some centuries to at least the 1680s and London's Penny Post, if not earlier.
The postal service model that gained ascendency over the preceding centuries was one in which the original sender of the letter paid for the entire service of letter delivery. If the postal service that received the letter in the first place needed to use the services of a different postal service to complete the delivery, neither the sender nor the intended recipient were aware of it. The postal services were meant to divide the money received from the sender to deliver the letter, and apportion it between themselves to compensate each service provider for undertaking its part in the delivery of the letter.
The telephone service, for the most part, operates in a very similar fashion. The caller pays for the entire cost of the call, and the called party pays nothing.
When both the caller and the called party are connected to the same carrier, the process is straightforward. The carrier charges the caller for the cost of the call and, presumably, some small (often not so small) margin for profit.
However, when we apply the same model to, say, international phone calls, the model is not so simple. The common desire on the part of the telephone operators was to preserve the same simple model: the caller pays. Now in this case the caller pays the presumably higher price of establishing a voice circuit from a carrier in one country in one part of the world to another carrier in another country in another part of the world. But now the caller's carrier should not keep all the revenue associated with the call. The other end, the terminating carrier, has also incurred costs in servicing this call. The arrangement that the telephone industry developed was the concept of "intercarrier call accounting financial settlements."
To explain this concept it may be useful to introduce the unit of a call minute, which is commonly used as a means of measuring a telephone call. What carriers establish between themselves on a bilateral basis is the intercarrier settlement cost per call minute of a telephone call that originates in one carrier and is terminated by the other carrier.
Now if both carriers can establish a value of a call-minute settlement rate where in both directions the call-minute termination costs roughly equate to the call-minute settlement rate, then in theory, at any rate, neither party is relatively advantaged over the other, irrespective of whether the callers are predominately located in one carrier or in the other carrier. In theory, such an arrangement should be financially neutral to both carriers.
However, although in theory practice and theory should align, in practice it rarely happens. What happened in the telephone case was that we saw some carriers set a call-minute call-termination settlement rate that was well above cost, while at the same time set its international call tariffs such that outbound calls were prohibitively expensive for local subscribers.
The result was that the local customers of these carriers found it cheaper to request that the other party call them–the desired outcome. The local carrier then generated income not by charging local subscribers but by revenue generated as an outcome of the call accounting settlement payments that were generated by the net imbalance of called versus calling call minutes.
Carriers all over the world played this game. For example, in France in the early 1990s it was some 5–10 times more expensive to call a U.S. number from France than it was to make a call between the same two numbers in the other direction. If you add in a further consideration, namely that in the 1980s many carriers were part of the public administration and were in effect government-operated national monopolies whose profits contributed to national revenue, then you get an outcome that is described in Opinion No. 1 of the 1989 ITRs, under the heading "Special Telecommunication Arrangements," namely: "...considering further that, for many Members, revenues from international telecommunications are vital for their administrations."
Telephony Special Services and Number Misuse
It is often said that the only really major innovation in more than a century of the telephone service was the fax. Perhaps that is a little too unkind, but innovations in the delivered services industry were few and far between. However, there were many innovations that are important to this story, and the ones that are relevant here are number redirect and the so-called premium services.
The premium services attracted a higher call cost, and the carrier conventionally split the revenue from the service with the called service. These services traditionally included weather forecasts, sports results, new headlines (until the Internet became all but completely ubiquitous and decimated these services!), and so on. They also attracted the sex industry. However, in many countries such services were not permitted, so a conventional premium service was not an option for this industry.
As ever, we are naturally inventive, and some folks came up with a clever solution to use number redirect to redirect the call to this otherwise not-permitted premium service to another country. As part of this redirection, the premium service provider needed to reach an agreement with the new home carrier of the call-termination point to divide the international call accounting revenue provided by callers to this service between the carrier and the service provider. Not only did this arrangement effectively circumvent local regulations relating to locally provided premium services, it also leveraged off the international call accounting arrangements to the benefit of the premium service provider as well as the terminating carrier.
We may be inventive, but all too often we are greedy as well. The next step was to circumvent any arrangement with the destination carrier and redirect the call to an entirely different carrier.
One of the side effects of deregulation of the telephone industry in many countries was that in place of a single carrier that would receive all incoming international calls for a given country code there were numerous carriers that were ostensibly competing for the these incoming calls. Instead of routing calls based solely on the dialed country code, carriers now could route calls based on number blocks within the country code, and use different transit routes based on number-block rules. What if a premium service provider took a number block from a country code and specified that all incoming calls were to be routed by a third-party carrier? That all sounds innocent enough, but what if this third party did not actually route the calls through to the country in question, but instead terminated the calls and still charged the calling carrier the international call accounting settlement rate? No doubt the service provider has gotten a better deal, so the service provider is happy, and the carrier that terminates the call is receiving a portion of the call settlement rate, so the terminating carrier is happy. But happiness is not universal here. The carrier in the called country code is getting nothing from this arrangement, even though its country call code is being used for these premium service calls. From the carrier's perspective it is being defrauded of what it might claim is legitimate international call accounting revenue through the "misuse" of the number block drawn from its country code.
If the country-code carrier could discover this unauthorized number-block diversion, then presumably it could withdraw the number block and stop the international call diversion. Unfortunately it does not always work. The carrier can withdraw the number block, but at times—and under perhaps somewhat shady circumstances—the premium service provider, and potentially the transit carriers, might still be able to convince local carriers that the number-block diversion is still legitimate. Although the country-code carrier might see the problem, the carrier's ability to enforce carriers in other countries to respect its authority regarding the use of number blocks drawn from its country code is not always clear. At times the carrier is effectively powerless to enforce a remedy.
And the scheme can be further refined. Why even enter into any form of discussion with the international carrier for a number block? Why not pick one or more of the more obscure national country codes, generate some number blocks from these codes, and then get a cooperative transit carrier to enter a number-block diversion request into the local carrier? The number block is perhaps drawn from a country code that already makes extensive use of third-party transit arrangements, the local carrier may not question the request, and the carriers in the countries from which the number blocks have been drawn may not have the resources to even detect that this event has occurred.
At this point we have arrived at the situation that is motivating some of the proposals to augment the ITRs in this round of negotiation. The position of the nations that have been highlighting this problem as being an important problem in the world of international telephony is that the unauthorized use of phone numbers drawn from their E.164  telephone number block is, in their eyes, a case of "number misuse."
The reason why they want to identify this situation and write it into the ITRs at this time is that they would like to involve governments in the role of enforcers of conformance with the conventions of management of telephone country codes. It appears that they would like to obligate governments to adopt a policy, as a common convention, that calls made to a country's country code be directed such that the call request is sent to an authorized carrier located in the country, and to ensure that all authorized carriers essentially honor the integrity of the country codes of all other countries that use the E.164 country-code number plan.
It is also reasonable to ascribe the motivation for this measure as one that is intended to ameliorate the inexorable revenue leakage of the former rich money tap of international call accounting settlement payments. I am not sure that the various antics of the international premium service market are the true intended target of this measure. I suspect that the intended targets of this proposed regulatory measure are those carriers that have devised other methods to honor the intentions of their callers when they make an international phone call, and make the phone of the dialed number ring, yet at the same time bypass the traditional call accounting arrangements. Already Voice over IP (VoIP) trunking is commonplace, where the call is mapped into a VoIP call, and one way to bypass the conventional call accounting measures is to use a VoIP trunk to enter the dialed country, and then pass the call back into the Public Switched Telephone Network (PSTN) as a locally originated call, terminating it on the originally dialed number. The call is then subject to domestic intercarrier call-termination tariffs, which are generally far lower than their international counterparts.
The Internet and services such as Skype are exerting massive down-ward pressure on what carriers can charge for conventional phone services without encouraging all remaining customers to use Internet-based services. In an effort to retain some level of market share, it is now evidently more commonplace for carriers themselves to embrace IP-based approaches and bypass these imposed intercarrier international settlement charges. For many countries in the developing world, however, this shift represents a twofold financial blow. Not only are they seeing their foreign-sourced revenue stream disappear at the same rate as the call-termination minutes of conventional telephony vaporise, but they are also seeing this revenue stream being replaced by growing IP traffic volumes that represent a net cost to the national economy.
It should come as no surprise to see some countries attempt to advocate an international regulatory response that is intended to reverse this development, and restore the role of the international telephone network as a means of structural flow of monies from the business sector from the richer economies to the consolidated revenue stream of those poorer economies.
Internet Number Misuse
In and of itself, the previous discussion is by no means a novel discussion for the telephone world, and the tensions exposed by the continual erosion of the traditional telephone business through the onslaught of new technology is not at all surprising.
What is perhaps a bit surprising are the recent moves within the ITR preparatory activities that see numerous national delegations advocating pulling Internet addressing and routing into the same category of telephone-number regulation and also fold these factors into this matter of number misuse in a manner that would apply to both E.164 numbers and IP addresses.
Now some things do not readily translate from telephony to the Internet: there is no "National IP Address Plan" as a counterpart to the E.164 number plan, because the IP address plan is aligned to networks, as distinct from countries. However, you could take a broad view and find some form of mapping from the proposed recommendations regarding the use of E.164 networks to IP addresses. It would appear that the application of the proposals regarding number misuse would see a regulation to the effect that IP packets should be routed to the destination address specified in the packet, and not rerouted and terminated elsewhere. Surely this scenario describes part of the way the Internet works in any case. For the network to actually function, packets need to be passed to their addressed destination. Or so you would think.
And that is indeed what happens much of the time within the Internet. But by no means all of the time. As part of the normal course of operation of IP networks, many operators deploy equipment that intercepts packets and forms a synthetic response using the address of the intended destination. And many national administrations either operate—or mandate the operation of—equipment that inspects packets in transit and discards packets addressed to certain number blocks.
What is going on? Why do network operators regularly "misuse" IP addresses by deliberately intercepting packets and generating a synthetic response?
The most prevalent reason is the use of proxies, and, in particular, web proxies. These devices sit "on the wire" and intercept web fetches and cache the downloaded data.
When another user requests the same URL, the proxy uses the cached version of the content rather than forwarding the request on to the original site. This caching is by no means unusual: it is typical for web browsers to cache the most recently visited webpages and when the user returns to the page, the local cached copy is used rather than re-performing the download. For the browser and the network operator the rationale for this form of "address misuse" is the same: it is both a desire to improve performance for the end user and a desire to increase the efficiency of the network by reducing the data volumes being shifted across the transit links. So the outcomes are, on the whole, positive outcomes; users see improved performance and potentially lower costs for the service, using an interception technique that is generally transparent.
Is the deployment of a web proxy an instance of fraud?
Here is where another critical difference between the Internet and the telephone world comes into play. In the Internet the sender does not "pay all the way" to get a packet from its source to its intended destination. In general, every IP packet could be thought of as being partially funded by both the sender and the receiver.
The user who generated the packet pays for an Internet Service Provider (ISP) service, and the ISP may, in turn, purchase transit services from another ISP, and so on for sequenced transit services. However, at a peering exchange point, or within a provider network, the sender's money runs out. The packet is not unfunded, however, for at this point the receiver's services take over, and the packet transits a path that is funded by the receiver's ISP's transit services, and there to the receiver's ISP and there to the receiver.
If a packet is diverted to a proxy, then who wins and who loses? Can we make the case that a party in this situation is being cheated?
As long as the proxy is a faithful proxy, then the user wins, insofar as the user experiences improved performance and the benefits of a more efficient network while still seeing precisely the same content. And the content provider wins, insofar as the content is delivered to the user without the incremental cost of packet handling at the content site. And the network service providers win, in so far as the amount of network traffic is reduced while the revenue levels remain constant. In this case there is no end-to-end service payment on the part of the user that would trigger an intercarrier settlement payment, so it is difficult to make the case that this action necessarily damages any party involved in the network transaction.
Given the widespread deployment of these proxy caching devices across the entire Internet, the beneficial outcomes of improved performance and network efficiency, and the option for content providers to use techniques that in effect mark content as not cacheable, it is extremely challenging to sustain a case that the use of proxies is a case of address misuse.
So the use of traffic diversion and intercepting proxies in the Internet is not generally regarded as an example of intentional fraud or even an accepted case of address misuse. It is just what we do today in the Internet.
What about the deliberate interception and discarding of packets in flight? Surely this case is one of "misuse" of IP addresses?
That is a very hard case to make when you consider that such actions are exactly how firewalls work, and almost every network uses firewalls in some manner or other. The action of a firewall is to intercept all packets, and discard those that match some predetermined set of rules relating to acceptable and unacceptable packets.
Many users run firewalls that deliberately block all incoming connection requests unless they match quite specific rules.
Many ISPs run firewalls that deliberately block access to ISPs' services from users who are not direct customers of the ISP.
Many countries have content regulations that block access to certain content, enforced either through government-operated facilities or through obligations imposed through the conditions associated with the carrier license within that country. The country I live in, Australia, imposes such constraints on its carriers for certain types of content, as does China through its much-reported national firewall facilities.
Users, service providers and carriers, and governments all use various forms of packet interception. Are we all guilty of number misuse? Should we support changes to the ITRs to obligate governments to stop this practice completely?
Aside from many other motivations for firewalls, security is a continuing concern in the Internet, and there is little doubt that although firewalls have not eradicated all forms of toxic traffic and associated abuse and attack, they are an important part of a larger story about securing the Internet. Irrespective of the various views that are expressed at a national level about censorship, intellectual property rights, and the position of common carriers and users, it seems counterintuitive to me that we would want to obligate governments to pull down our firewalls and filters as a necessary consequence of a revised set of ITRs.
What this example illustrates is that the two networks—the traditional telephone network and the Internet—operate in very distinct and different ways. It not only encompasses differences between circuit and packet switching, but also reaches into the differences in the concepts of a network transaction, differences in the tariff structures, and, critically, differences in the way in which financial settlements are undertaken between service providers on the Internet.
Consider what could readily be acknowledged as an operating practice that defrauds operators in the world of telephony and negatively affects the services provided to telephone subscriber—that same practice in the Internet can result in positive outcomes used to enhance performance, reduce costs, and improve the operational efficiency of the service delivered to end users.
This case of attempting to regulate "number misuse" illustrates the fact that to take a stance of "one size fits all" when considering the topic of international regulation of telecommunications is a stance that has considerable risks of generating outcomes that are entirely inappropriate when translating a particular situation from telephony to the Internet.
WCIT and the ITRs–Where to Go from Here?
The international call accounting arrangements used by the telephone world, and the use of structurally embedded imbalances in call accounting settlement rates, are still major factors in the ITR discussions. This accounting imbalance is sanctioned in the resolutions of the 1988 World Administrative Telegraph and Telephone Conference, where Resolution 3, concerning the apportionment of revenue, provided for structural cross-subsidization of the developing world through asymmetric fixing of call accounting rates between the so-called developed and developing economies.
But in an increasing commercial world of telecommunications, where it is no longer a relatively exclusive collection of publicly funded monopolies that were an integral part of public utility service providers that in effect were an instrument of national governments, pushing the onus of an international developmental agenda onto an increasingly privatized commercial activity has been a less-than-comfortable fit. Private operators see this situation in a more dispassionate light as a business cost input, and seek to find ways to minimize this cost in order to improve the competitive positions of their businesses.
However, the changes in this industry over the past 25 years are so much larger than even this significant broad-scale shift in the onus of capital injection and operation from the public to the private sector. At the same time, we are seeing an even more fundamental shift in technology foundations, from circuits to packets with the introduction of the Internet into the picture. This shift has brought about profound shifts in the engineering of communications infrastructure and, as we have seen, it also has triggered profound shifts in the pricing of the consumer service, shifting from transactional pricing to a "connection rental" model where packet transit costs are bundled into the service. This bundling, in turn, has led to profound shifts in the manner in which money moves between the network operators themselves.
And perhaps of even greater and more lasting significance in this industry is the decoupling of carriage and content. We have now seen the rise of highly valuable content-centric enterprises that have business models that rely on a ubiquitous and abundant underlying communications infrastructure but are not financially beholden to the infrastructure operators. They have been able to forge direct relationships with consumers without having to deal with any form of mediation or brokerage imposed by carriage providers. The current values of these content enterprises dwarf the residual value of the carriage service sector, and the outlook for this sector is one of continuing shift in value away from carriage service providers and into the areas of content-based services.
Given the sheer scale of these changes in this industry over the past quarter century, it seems to me that the view that you can simply fold the Internet transparently into the current framework of the ITRs by the prolific insertion of "and the Internet" into the text of the regulations is simply not viable.
Packets are not circuits, and the mechanisms used to engineer packet networks are entirely different from those used with the circuit switches that supported traditional telephony services. This difference encompasses far more than engineering. The ways in which users pay for services differ, and this shift in the retail tariff structure of the Internet service implies a forced change in the way in which carriers interact to support a cohesive framework of network interconnection. The concept of a "call" really has no direct counterpart in the Internet. To extend this thought further into the area of "call accounting" and "caller pays" is again an extension that does not clearly map into the Internet. So when the existing ITRs refer to intercarrier call accounting financial settlements, there is no clear translation of such a concept into the Internet. When we extend this intercarrier interconnection framework into structural imbalances in call accounting settlement rates, and extend this framework further into the concepts of number misuse, all forms of connection between traditional telephony and the Internet are completely lost.
However, this conclusion should not imply that the ITRs are now an historic relic, completely overtaken by comprehensive shifts in both the technology and service models of today's global communications network. Irrespective of the fine level of detail in these 25-year-old documents, the ideals behind the ITRs are indeed worthy ideals, and they should not be discarded lightly.
Ultimately, what we are dealing with here is the role of individual nation states with respect to a public communications service for the entire world. In setting forth a framework for supporting an efficient, effective, and capable global communications system, the obligations stated in the current ITRs relating to the promotion of international telecommunications services, and the endeavours to make such services generally available to the public, all remain thoroughly worthwhile objectives.
The concept that widely respected technology standards are critical to worldwide technical interoperability of any telecommunications service is also an important aspect, and again the recognition of this factor in the ITRs is a worthwhile consideration.
But, as we both review the changes of the past quarter century and try to peer into what may emerge over the next quarter century, perhaps less is best in this area of regulatory measures.
Rather than seeking to explicitly add various regulations that attempt to address specific incidents of number misuse, and instead of making rather clumsy efforts to include the Internet into the already detailed provisions relating to intercarrier settlement models of the increasingly historic traditional telephone network, perhaps the best set of ITRs we could have for tomorrow's world are national obligations that support a lightweight common regulatory framework.
This framework should be both more minimal with respect to describing or relying on particular technologies and service frameworks and more encompassing in scope in stating the overall objectives and common aspirations all nations share in supporting this unique, incredibly valuable common resource of a common communications service that truly embraces the entire world.
Postscript: "It's All Just Telecoms"
I received a comment soon after I wrote an early draft article that I thought would provide some further insight to the WCIT process, so here is the comment and some further thoughts on the topic:
The comment was in the form of a report from a preparatory meeting for WCIT earlier in 2012. Evidently there is a mood within certain parts of the ITR drafting process to simply say: "The ITRs should apply to the Internet in full, because the Internet is nothing more than a telecom service and should be treated that way."
In one sense it is true that the Internet is nothing more than a telecommunications service, but in the same way that the post, radio, television, and of course the telephone are also all just telecommunications services. But the nature of the particular service has many consequences, and the attempt to lump telephony and the Internet into the same form of regulatory handling is at best a somewhat misguided effort.
I truly wonder if, more than a century ago, the counterparts of today's government delegates, in a meeting of that august body, the Universal Postal Union (UPU), would have argued that a telephone conversation was just an exchange of letters without the artifice of paper, and that the telephone was indeed just a part of the postal service, because it is just "a communications service."
Indeed I am pretty sure their counterparts did precisely that, and for the next 80 years or more in many countries the Postmaster General operated the telephone service, and operated the wireless spectrum administration and regulated radio and television broadcasts, as well as operating the national postal service, the telegraph service, and telex services, all because "it's all just communications."
But, ultimately we changed this paradigm. We created distinct entities to administer different communications media and services because it is actually not "all just communications"—nor is it "all just telecoms." Effective regulatory handling of these different communications mechanisms, using distinct forms of investment and finances, and at times entirely distinct regulatory frameworks and often distinct organizations and associated participatory arrangements, allows us to realize the true potential of these various services and do so efficiently and effectively. This recognition of a need for distinction in the regulatory frameworks for various services avoids the unfortunate situation of the stultifying dead hand of history misapplying one form of regulation on an entirely distinct and very different medium.
I suspect the best thing the postal folks, in the form of the UPU, ever did was to tell the telephone folks "hail and farewell" and let them get on with their role using an organization specifically designed to meet their collective needs in supporting telephony.
It may be well and truly time for the telephone folks, in the form of the International Telecommunications Union (ITU), to come to a similar arrangement in its dealings with the Internet!
These views do not necessarily represent the views or positions of the Asia Pacific Network Information Centre.