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16 November 2006

Information Economy Report 2006 says Government regulation that stifles innovation could hurt prospects in developing countries

The contents of this press release and the related Report must not be quoted or
summarized in the print, broadcast or electronic
media before 16 November 2006, 17:00 GMT

The anarchic and freewheeling Internet has grown to the point where some governance is necessary, but national and international steps to regulate it should be designed so that innovation is not stifled and measures do not cut disruptively across the "layers" on which the Internet is based, a new UNCTAD report recommends.

To the extent possible, the Information Economy Report 2006 (1) recommends, Government intervention with the Internet should apply at the same layer at which it has its effect. Policies that go against the layers principle introduce technological rigidities that make it more difficult and costly to develop and implement the new innovations that constantly improve and expand the Internet, the report contends -- and that can hurt development opportunities in the world´s poorer countries.

Internet layers can be divided into the physical network layer (the wires and optical cables); the logical layer (the software that enables data to travel across the physical network - a combination of software and protocols); the application layer (the actual online technologies employed by e commerce websites, browsers, e-mail clients, streaming media players, etc.); and the content layer - the actual material delivered and exchanged, such as text, statistics, audio, and video content.

According to the layers principle, if a governance issue occurs at a certain layer, it should be dealt with through policy that works within that layer. If crossing layers is absolutely unavoidable, policy solutions for governance issues should be implemented as near as possible to the layer where they occur. An example of Internet governance that should be discouraged, the report says, is censorship imposed at the physical network layer -- the "lowest" of the four conceptual layers of the Internet -- affecting access at the content level, the "highest" layer. To the extent that censorship is deemed the only option, the IER argues, it should be applied at the content layer.

The openness and accessibility of Internet-based communication and commerce provide great opportunities for developing countries, and these attributes should be protected as a matter of practicality and principle, the report says. Policies that increase rigidity decrease the likelihood that any globally important Internet application will emerge from tech-savvy entrepreneurs and youth in developing countries.

The 2005 World Summit on the Information Society observed that the Internet has expanded so much and has become a channel for so many social and economic activities that Governments cannot avoid exerting some level of supervision over it. But as governance functions migrate from technologists to Government authorities and policymakers, there should be a clear agreement on general principles that respect the technical architecture of the Internet and allow it to keep its strengths of constant innovation and equal access to knowledge and commercial opportunity, the report says. These characteristics are especially important to developing countries, where the infusion of new ideas and knowledge is highly valuable for economic progress and for empowering new entrepreneurs.

The Internet Governance Forum -- the formal follow-up to the World Summit -- should carefully establish and develop a consensus on such principles, the report says.

Chapter 7 of the report -- titled "The layered Internet architecture: Governance principles and policies" -- proposes the layers principle as a policy base, while also suggesting that it may be useful to link the layers issue to other Internet governance principles, such as network neutrality. It says that policy makers need to understand thoroughly the technological underpinnings of the Internet before they go about setting up governance policies, and points out, in turn, that technologists should appreciate the need for transparent governance and legitimacy for the Internet. The two cultures have to talk to each other.

In addition to devoting a chapter to Internet governance, this year´s Information Economy Report reviews global trends in information and communication technology (ICT), discusses the role of ICT in poverty reduction, presents a model by which developing countries can measure the effectiveness of their ICT policies, and studies the application of ICT to oil production, distribution, and marketing.

Downloads [PDF]:
Full Report [PDF, 346pp., 12576KB]
Overview [PDF, 13pp., 276KB] Also available in:  Arabic  Chinese  French  Russian  Spanish
Preface, Acknowledgements & Overview [PDF, 32pp., 382KB]
Chapter 1 part a [PDF, 27pp., 1332KB]
Chapter 1 part b [PDF, 21pp., 2755KB]
Chapter 1 part c [PDF, 89pp., 1009KB]
Chapter 2 [PDF, 37pp., 1466KB]
Chapter 3 [PDF, 37pp., 3316KB]
Chapter 4 [PDF, 27pp., 1240KB]
Chapter 5 [PDF, 21pp., 1153KB]
Chapter 6 [PDF, 25pp., 391KB]
Chapter 7 [PDF, 25pp., 1380KB]
Chapter 8 [PDF, 17pp., 302KB]


1. The Information Economy Report 2006 (Sales No. E.06.II.D.8, ISBN 92-1-112700-9) may be obtained from UN sales offices at the addresses below or from UN sales agents in many countries. Price US$ 50.00, and at a special price of US$ 18.00 in developing countries, South-East Europe and CIS countries. Please send orders or enquiries for Europe, Africa and Western Asia to United Nations Publication/Sales Section, Palais des Nations, CH-1211 Geneva 10, Switzerland, fax: +41 22 917 0027, e-mail: unpubli@un.org ; and for the Americas and Eastern Asia, to United Nations Publications, Two UN Plaza, DC2-853, New York, NY 10017, USA, tel: +1 212 963 8302 or +1 800 253 9646, fax: +1 212 963 3489, e-mail: publications@un.org . Internet: http://www.un.org/publications

For more information, please contact:
UNCTAD Press Office
T: +41 22 917 5828
E: unctadpress@unctad.org
Web: www.unctad.org/press


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