Illegal Internet Networks in the Developing World

Abstract:

Enabled by falling costs associated with constructing international voice and data networks, and motivated by high fees charged by incumbents for international telecom services, illegal Internet network operators are proliferating in many developing countries. Unlicensed international data networks are commonly used by competitive local Internet Service Providers (ISPs) who do not have the means to obtain an international gateway license, and by Internet Telephony Service Providers (ITSPs) that deliver international calling services utilizing Voice-over-Internet Protocol (VoIP) technology.

Incumbent telecom operators and regulatory authorities in countries where unlicensed international networks are prevalent claim that these networks deprive local governments of badly needed revenue. However, unlicensed international network operators also offer a new, market-oriented model for bringing the developing world online. This model is not without political, economic, and legal risks. For example, illegal Internet networks pose a potential global security hazard as data transmitted over these networks can be difficult to monitor by intelligence agencies. Voice calls made using Internet telephony technology over these networks can be doubly difficult to track using existing legal intercept technology.

As evinced by a recent WTO ruling, growing recognition of illegaltelecom networks may lead the international community to push governments of developing countries to adopt more liberal pricing and licensing policies and topressure governments of developed countries to crack down on companies in their jurisdiction that partner with illegal network operators.