Remarks at the Internet Governance, Internet Freedom, and Economics Conference on the Arab World after the Arab Spring

Philip L. Verveer
Coordinator for International Communications & Information Policy 
Washington, DC
January 20, 2012

The vagaries of history are such that in certain times and places, our human decisions and exertions are more important—sometimes much more important—than others. And so it is today for the government and business leaders of the Middle East and North Africa.

We find ourselves in the midst of history, much more evidently so than usual, at a time when, as President Obama has said, “the wheel of history has turned at a blinding pace … .” It is evident that this will be remembered as a year of momentous events—much like 1989, when new possibilities were realized for the peoples of Central and Eastern Europe. And this represents both a great privilege and a profound challenge—more for the citizens of the countries of the Arab Spring than for the rest of us.

What will eventuate from the momentous events of the last year is a matter for the people of the region. They will decide how and where history turns. As Secretary Clinton said, “This moment belongs to the people of the Middle East and North Africa. They have seized control of their destiny and will make the choices that determine how the future of the region unfolds.”

This is the great privilege that today belongs to the people of the Middle East and North Africa, to play a pivotal role in history. And it is a privilege that, to a lesser extent, we and your other friends share.

There are few more important issues in the world today than your success.

So what would define success in the ICT space? It is relatively easy to describe it in the abstract realm of ideas, and relatively difficult to achieve it in our complicated world of time and space.

There is no need to devote any great effort on the abstractions. They are well known.

The ideal involves the creation of a legal and regulatory milieu that is conducive to ICT investment. This prototypically consists of a stable, reliable rule of law that, among other things, assures that contractual commitments are honored. The ideal also involves an autonomous regulatory authority to oversee those ICT activities that warrant the imposition of social controls. The ICT sector’s costs tend to be high, fixed, and sunk. Where investments are irretrievable, the absence of a dependable rule of law administered by independent judges and regulators is an enormous handicap to attracting capital.

The ideal also involves the efficient production and consumption of ICT-related services. On the supply side this is best accomplished through a competitive industry structure consisting of private rather than government operators. On the demand side, enabling citizens to pursue their personal and commercial interests fully and freely, in cyberspace as well as three dimensional space, will bring substantial rewards. Here, the abstractions reflect something of surpassing importance—human rights, understood by the UN’s Universal Declaration of Human Rights to include the right of every person “to seek, receive, and impart information and ideas through any media and regardless of frontiers.”

The rewards will involve not only personal fulfillment, but also economic growth and innovation. This is the subject, economic growth, which I would like to pursue briefly this morning.

Let me begin by making an offer, focusing on the legal and regulatory institutions that are critical for national ICT development.

The starting point for every discussion about creating or changing ICT laws or rules is the recognition that every country is different. Each has its unique culture, history, jurisprudential and political traditions, demography, geography, and relative wealth. As Stephen Bell, my long time law partner and now colleague at the State Department has advised me, circumstances are critical in any effort to create or change the design of the laws and regulations governing ICT services. Each situation has to be understood and approached on its own terms.

That said, based on our experience in the United States, I believe that an industry structure of private, competitive providers overseen by an autonomous regulator ultimately produces the most economic progressiveness and dynamism.

As I said, for each country, how to get there has unique aspects even though the benefits of getting there are likely to be similar.

This is an area where we are happy to share our perspectives. Stephen Bell, who I mentioned a moment ago, has worked on these kinds of issues in numerous countries in Central Europe, the Middle East, and Africa. Not too long ago, it would have cost something approaching $1,000 an hour to discuss these matters with him. Now it’s free of charge. He would be happy to discuss his experiences and insights with any of you who would find it interesting, either today or in the future.

Now to turn briefly to certain economic aspects of Internet Governance and Internet Freedom.

The efficient production and consumption of ICT services is one important element in meeting an urgent challenge that we and most of the rest of the world share with the Arab world—that of securing employment opportunities for our people. A workably competitive milieu is one strong impetus to efficiency. But more is involved.

One very important consideration involves the preservation of the institutional environment surrounding the governance of the Internet. That environment, admittedly, has a disorderly appearance. But if it isn’t entirely pleasing from an aesthetic perspective, it has one very decided advantage—it works.

One of the great virtues of the present arrangement is that it protects the dynamism of the Internet. It gives all of the actors who use the Internet the ability to adjust rapidly to opportunities produced, for example, by technological improvements and changes in customer requirements. We want to continue to enable producers to create both new, lower cost curves and innovations in products and services. We do not want either prior approval mechanisms that would slow the pace of innovation or opportunities to manipulate regulations as an aid to rent seeking. To continue to enable efficiency, we should keep the Internet as it is, free of inter-governmental controls.

In this regard, the recently adopted OECD Recommendations for Internet Policy Making provide a very valuable guide to preserving and extending what is best about our Internet arrangements.

To address the issue of employment more directly, we should consider the case of cloud computing. As is generally the case with the Internet, most of the value of cloud computing accrues to the users of the services rather than the producers. And here, the availability to individuals and small and medium size enterprises of state-of-the-art computing services recently only available to the largest corporations and governments offers a vehicle for every country’s entrepreneurs. It lowers one of the principal barriers to computer-related innovation and business start-ups. Employment comes not from the huge data centers inherent in cloud architecture, but from the use that customers make of the cloud.

My friend and colleague Alec Ross will address issues of Internet Freedom in the next few minutes. Before he does, I would like to offer a few preliminary thoughts on the economic case for Internet Freedom.

There is a strong and widely held belief that Internet Freedom produces economic benefits. But at least as far as I am aware, this hasn’t yet been the object of careful scholarship. What confirms this intuition of economic benefit? One possibility is that we have seen this before. At the risk of intruding on the prerogatives of the tenured, I would like to propose one approach to the question based on an historical analogy. This follows the suggestion of Dr. Thomas Spavins, a valued colleague who has been providing his expert advice on all things related to the Internet.

Economic historians have addressed the question of why over the last five centuries Western Europe has experienced a great increase in wealth. One of the most prominent academicians, Joel Mokyr of Northwestern University, has produced very important insights. Professor Mokyr identifies several relevant factors. One is especially intriguing for these purposes. It involves the freedom of individuals to pursue their ideas as they wished, free from the strictures of authority. To quote Professor Mokyr, it is

the Enlightenment notion of freedom of expression. In our age, we think of technological change as natural and obvious; indeed, we consider its absence a source of concern. Not so in the past: inventors were seen as disrespectful, rebelling against the existing order, threatening the stability of the regime and the Church, and jeopardizing employment. In the eighteenth century, this notion slowly began to give way to tolerance, to the belief that those with odd notions should be allowed to subject them to a market test. … Words like “heretic” to describe innovators began to disappear.

This insight, it seems to me, provides an entirely plausible basis for the belief that Internet Freedom leads to innovation and economic growth. Or, stated differently, that the absence of Internet Freedom diminishes a society’s economic growth. In any event, scholars would perform a material service to all of us interested in information and communications technologies if they would take up the study of Internet Freedom, either in the manner of Professor Mokyr or otherwise.

There’s one more thing, as Steve Jobs was known to say. The Enlightenment experience had another feature that is self-evidently relevant to the Age of the Internet and the freedom to spread of its benefits. To quote Professor Mokyr again:

To bring about the progress that they envisioned—to solve pragmatic problems of industry, agriculture, medicine, and navigation—European scientists realized that they needed to accumulate a solid body of knowledge and that this required, above all, reliable communications. They churned out encyclopedias, compendiums, dictionaries, and technical volumes—the search engines of their day—in which useful knowledge was organized, cataloged, classified, and made as available as possible. … The age of Enlightenment was also the age of the “Republic of Science,” a transnational, informal community in which European scientists relied on an epistolary network to read, critique, translate, and sometimes plagiarize one another’s ideas and work. Nationality mattered little, it seemed, compared with the shared goal of human progress.[1]

“The shared goal of human progress” seems like an appropriate way to end my speculations. I appreciate the opportunity to join you and wish you great success with your historically important work in the Arab World.

[1] Mokyr, “Enlightened and Enriched,” City Journal (Summer, 2010).