The Digital Economy: Not Everybody Seeking Enlightenment

Michael Hedges May 2, 2011 Follow on Twitter

The real mark of a product’s eminence is that moment when its kinks and goofs are mostly worked out and reality is at hand. For the internet, that moment arrived ten years after the dot com bubble burst. What was born as an inexpensive service interconnecting other services, its realm is truly universal. The speculators are, mostly, long gone and that reality is setting in.

“The Internet has contributed to 25% of our growth over the past two years and created over 700,000 jobs over the past 15 years,” observed French President Nicolas Sarkozy at a recent meeting with IT executives where he unveiled a new advisory council to tackle the weight of it all. “I want to bring together various French internet experts, mostly entrepreneurs, so that on any proposed legislation or regulation that could have an impact on the digital economy the government can have clarity from the private sector.”

The Conseil National du Numérique (National Digital Council - CNN) will primarily focus on economics. The full range of digital topics will be explored, explained President Sarkozy, from copyright to financing start-ups to terrorism.

He also reiterated his intention to tax the likes of Google and other foreign digital leaders. It’s “not normal,” he said, that foreign internet giants make a lot of money in France but take advantage of EU single market rules to domicile in countries with “the sole aim of maximizing tax efficiency.”  Noting the quandary now that the internet is at the heart of commerce he asked, “Can we not find a compromise?”

Internet service providers (ISPs) – many owned by major telecoms – revile the lack of cash-point possibilities with the Web as it’s currently operated. Recognizing the competitive disadvantage raising prices on the consumer side, big telecoms want to charge large content providers more for, well, being large content providers. Net neutrality is “a topic that everyone wants to take on,” said CNN member Nicolas Voisin, quoted by Le Point (April 27).

According to the Financial Times (April 26), France Telecom and Telefonica are “seeking new peering agreements between themselves and the online content providers that would enable the network operators to levy charges based on how much data traffic travels over their infrastructure.” Normally, when competitors meet to discuss charges anti-trust alarms bells peel like a Westminster wedding. But, these aren’t normal times.

While not the only head of state to take aim at the internet, President Sarkozy has led the way in attempts at controlling it. Last October while on a visit the Vatican to meet the Pope Benedict, he called for controls on the “immoral excesses” of the Web. All politicians seek to control all media. President Sarkozy has taken direct control of French public broadcasting leaving private sector television to his friends.

The hallmark of President Sarkozy’s digital agenda has been Creation and Internet Law, generally referred to as the Hadopi law, which proposed a “three-strikes” provision to frighten off illegal music and film downloading, to “civilize the internet,” he said. “The internet is a territory to conquer.”

After several revisions and review by the French Constitutional Council a watered-down version became law more than a year later. A tax on internet service providers (ISPs) to help fund French public broadcasting also wasn’t popular. Under pressure from the European Commission that particular innovation has been put on hold.

“I think if we had learned to communicate better,” said President Sarkozy to the internet people.

“The intuition that I had is that we could not abandon creators. Maybe the mistake was that we gave the feeling that you were attacked. We could have found another system.”

Adding to the skeptical French nature, the official publication of the CNN’s legal mandate (April 30) shows far more of a consultative role rather than policy making, reported French internet portal Numerama.com. The CNN has eighteen members, all appointed for two years by President Sarkozy. All the major telecoms and ISPs are represented along with executives from major portals. There are no consumer, publishing, broadcasting or cultural representatives.

“The National Council of Digital's mission is to enlighten the government and participate in public debate in the digital domain,” said the official document. “Accordingly, the CNN can be consulted by the government on any proposed legislative or regulatory provision that could have an impact on the digital economy.” The CNN will produce recommendations rather than “be systematically consulted by the government on any proposed legislation relative to the digital sector,” as recommended in an early draft from Minister for Industry, Energy and Digital Economy Éric Besson.

“From an economic point of view he may have become a digital convert,” said Quadrature du Net spokesperson Jérémie  Zimmermann to Nouvelobs.com (April 27). “The rest of his speech was clearly electioneering.”

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