Keynote Address at ISOC-DC Internet "Is the Internet Fragmenting" Panel Event

Ambassador Daniel A. Sepulveda
Deputy Assistant Secretary and U.S. Coordinator for International Communications and Information Policy, Bureau of Economic and Business Affairs
Washington, DC
May 10, 2016

As prepared

Thank you very much for the introduction. Before I start my remarks, I want to thank our hosts, Microsoft and ISOC-DC, for convening the discussion that we are having here today and for inviting me to participate.

The open, global, interconnected internet is the backbone of the global digital economy. Its ability to enable the transfer of data and information across borders and between people and things is our best hope for global economic and social development. Its fragmentation would constitute a grave threat to innovation, productivity, democratic discourse, and the public good.

I think most of us, if not all of us, in this room would agree with that presumption. And we all work hard to guard against opposing forces. I wish that we could say there was only one threat or one place or one event where we could face and defeat those that seek to control, plan, and divide the internet for the purposes of forcing its users and developers to comply with either parochial political or economic interests.

But Internet fragmentation, if it occurs, will not occur because of a single moment and there won’t be a single, definitive action that results in its fragmentation. Rather, if we are not vigilant, it will happen bit by bit, market by market, as the product of law and regulation constructed through a collusion between governments and incumbent interests that seek to reverse and contain the democratic force of the Internet.

For those of us lucky enough to be among the more than three billion people connected to the Internet today, its myriad benefits are vividly apparent in our daily lives: it makes information easier to access, it makes business easier to conduct, it makes it easier for us to express ourselves freely and associate with others as we wish, and it shrinks social distances by easing our ability to communicate with friends and relatives. It allows small entrepreneurs to challenge and disrupt markets, enables improvements and innovation in the operations of large firms that were previously slow to change, and from a social perspective, it allows any one of us to speak to and with all the rest of us.

This is a development worth preserving. This is an opportunity worth spreading.

From its conception in the 1970’s, the Internet was designed to connect disparate local networks. Researchers had already been building small computer networks for years, but the key Internet insight was that different individual computer networks could make their own local decisions about protocols and operation, yet still communicate with each other through a meta-level “Internetworking Architecture.” Openness to individual design differences and local choice is still an integral part of the Internet DNA today—both in technology and in its culture. And this openness is not a key, but rather THE key, to supporting the Internet’s nimble adaptability and broad use. That is why the concept of openness is prominent across the full range of international agreements and documents that drive cooperation in this space.

Although the Internet originally connected just a handful of nodes, its technical foundations have been highly adaptable, allowing the Internet to grow to its current scale – now connecting billions of devices worldwide, far beyond anything its original creators ever envisioned. The data on the resulting economic benefits of this kind of Internet connectivity are clear and compelling. By 2016, the Internet economy will have expanded to $4.2 trillion in the G-20 economies. If it were a national economy, it would rank as one of the world’s top five, behind only the U.S., China, Japan, and India, and ahead of Germany. Overall, the Internet contributes 5 to 9 percent to total GDP in developed markets; and in developing markets, the Internet economy is growing at 15 to 25 percent per year. And unlike technologies built for a single purpose, the Internet is a general-purpose technology that adds value to many other industries. A 2011 McKinsey & Co. report predicts that 75% of the Internet’s value added will actually be in traditional industries. As a function of design and operation, the global Internet economy can respond to new technology and business opportunities fluidly and quickly.

In addition to the Internet’s economic role, ICT technology has catalyzed a wide range of social benefits. Over recent years, the world has seen ICTs help people earn a living and pull themselves from poverty via mobile-phone based businesses. It has helped governments improve their transparency and fight against corruption using Internet-searchable land records and e-payments. And it has helped capture and communicate social media messages, videos and news coverage, allowing individuals to speak out publicly for change and demand justice from their governments.

Although we know that the Internet’s benefits are due to its scale and openness, there are many sources of tension that are causing fragmentation in the Internet along national, commercial, and technological boundaries. At the State Department, we are particularly focused on the actions of governments in this regard. A McKinsey & Company analysis indicates that a GDP growth of $250 billion and $450 billion annually accrues from the free flow of data. At the global level, citing both national security needs and a desire for more quote-unquote democratic Internet governance processes, some countries are advocating for intergovernmental control of the Internet, rather than the multi-stakeholder model that has worked so well thus far. At the United Nations, we have pushed back strongly against ardent attempts by authoritarian regimes seeking a greater role for governments in Internet governance, including the management of critical Internet resources. We are also seeing a push for prematurely mandated technology convergence, particularly in emerging areas like the Internet of Things, which we fear would inadvertently restrict rather than foster innovation.

At the national level, we are seeing some governments adopt policies and regulations that restrict trans-border data flows and impose market access barriers such as data localization and “duty of care” requirements for the importation of ICT goods and services. In extreme instances, we are seeing countries create their own rules for governing their “national Internet” separate from long-standing global processes that have proven effective.

But where governments choose to reduce friction in the digital economy, a Boston Consulting Group study showed that, compared to other similar markets, open markets experienced a real difference of 1% in GDP growth. Closed countries, those which deny their people the freedom to engage in commerce and discourse, are falling behind. We must celebrate, champion, and work with those who want to break down barriers to the growth of the digital economy and engage those who wish to create digital walls in respectful discourse and debate.

So, how do we win that debate and bring more public and private leaders into our coalition?

One of our primary challenges is closing the digital divide. It is both an economic and moral imperative that the development and deployment of ICTs reduces inequality and spreads opportunity everywhere. The Internet can only be an engine for growth if it is available. Roughly three out of every five people in the world remain without Internet access, and in the poorest countries that figure can top 95 percent. As we seek to connect the next four billion people to the Internet, it is key that they are being connected to the global Internet, and not one that is segregated or censored. With that in mind, the State Department has launched its Global Connect Initiative, an effort to bring an additional 1.5 billion people online worldwide by 2020. Since Under Novelli launched GCI last fall, which followed on Secretary Kerry’s preview last May, the Global Connect Initiative has highlighted over 65 new and existing connectivity initiatives totaling over $20 billion. Last month, the World Bank co-hosted with us a high-level event in which Finance Ministers, technology CEOs, NGO leaders and heads of major multilateral development banks joined together to discuss next steps in this important issue.

Diplomatically, we have increased the political, bureaucratic, and financial resources committed to bilateral and multilateral cyber engagement. We are engaged in an increasing number of productive bilateral relationships and dialogues, we are facilitating training and capacity building, and we are building multilateral coalitions of likeminded countries, such as the Freedom Online Coalition, to shore up cross-regional support for the principles of openness and interoperability.

We must also focus our attention on making Internet policy discussions more inclusive and accessible to stakeholders from around the world. We need to find ways to engage with diverse voices on Internet governance and enable increased participation from the developing world in both multistakeholder and multilateral processes. And in every country, we need to identify and engage young people, entrepreneurs, start-up communities, and the technologically engaged so that they can become internal advocates for the preservation of the global, open Internet.

Finally, we have plenty of stories that support the linkage between Internet openness and economic and social benefits. But what we don’t have are sufficient numbers to back them up. More quantitative data and sharper definitions would help us advocate for a free and open Internet. The Internet has served us well as a platform to provide anyone connected to it with an opportunity to contribute to political, economic, and social discourse, and we believe that is a very good and important thing, worthy of preserving. Key to the Internet’s preservation is our ability to retain its both cultural and technological openness and interoperability. These qualities help project to the world many of the freedoms and values that the United States holds as central beliefs. That is why it is so important for all of us to engage in the global debates and to be mindful, choice-by-choice, of how through our many decisions and discussions around Internet governance we steer it on a path that avoids fragmentation and preserves openness.

The benefits of each engagement and every conference and debate attended is not readily measurable on any one company’s profit and loss ledger. The benefits of the advocacy for the preservation of the Internet as a tool for the exercise of basic human rights is not felt immediately in each of our lives. But our collective work, every week and every month, across forums and conferences, in the media and in legislatures, in large halls and small classrooms, is the best hope we have for the future of the Internet and its potential to make all of our lives, and our world, better.

Thank you.