17 December 2015

Why Brazil wants to ban the internet


I have said before that Uber really should not be the poster child for the sharing economy. All the squabbling over waiting times and hailing methods, though relevant, really does not make a fundamental difference to people’s lives on a regular basis. The more important point is that those who argue for extensive regulations to protect incumbents at the expense of consumers will not stop with Uber.

For a far more serious example of what protectionists are after, look to Brazil. Last night, a Brazilian judge ordered the messaging service WhatsApp to be shut down for 48 hours. Why? Because of months of lobbying from Brazil’s telecoms industry.

It’s not hard to see why the telecoms might feel threatened by WhatsApp. According to Julie Ruvolo at TechCrunch:

“WhatsApp is the single most used app in Brazil, with about 93 million users, or 93% of the country’s internet population. It’s a particularly useful service for Brazil’s youth and poor, many who cannot afford to pay the most expensive plans on the planet.”

A one-minute call in Brazil costs three times more than in the US and five times more than in Spain. WhatsApp, which began as an instant messaging service and was bought by Facebook last year, offers free voice calls via wifi and cellular internet. If I lived in Brazil, I’d be using WhatsApp or an equivalent instead of a traditional phone too.

Rather than cut their rates and become more competitive, Brazil’s telecoms companies have gone for the ‘ban it’ approach. They claim that, because WhatsApp is unregulated, it is (or should be) illegal. (Sound familiar, Uber-users?) And the socialist government seems to agree with them. Angelica Mari from ZDNet wrote in August that:

“Brazil’s Communications minister Ricardo Berzoini has recently said that services like WhatsApp ‘subtract jobs from the Brazilian market’, while failing to recognize that the laws that govern the provision of telecom services in Brazil are outdated and focus only on fixed line services – a model that has been surpassed by mobile services long ago.”

Of course, one might wonder why it is WhatsApp alone that is being singled out. The internet has radically disrupted (and in some cases destroyed) countless industries. Is the Brazilian government going to ban e-mail to save its postal service, or regulate Google Search to revive its libraries?

Maybe. Ruvolo goes on to describe the horrifying vision of internet-less Brazil the government is trying to impose:

“If Brazil’s conservative Congress gets its way, they’re going to take down the entire social web as we know it, with bills circulating through the legislature to criminalize posting social media content and to allow the government to spy on its citizens….

PL 215/15, which opponents are nicknaming the Big Spy (“O Espião”), is a surveillance law that would require Brazilians to enter their tax ID, home address and phone number to access any website or app on the internet, and require companies like Facebook and Google to store that information for up to three years and provide access to police with a court order. An earlier draft said “competent authorities” could request the data without a court order.”

This is terrifying. It’s not happening in North Korea, it’s happening in Brazil, which has the highest proportion of social media users in the world. How could this happen in a country where people in remote rural areas have a social media profile but not a government ID?

The answer is a toxic mix of state control and industry lobbying. The telecoms companies, by fighting to keep out any competition, have given the unstable government an excuse to regulate the communication of 200 million people.

Anyone who supports the regulators against Uber, claiming that there is something ‘unfair’ about the success of the sharing economy, should be watching Brazil right now and thinking about how they’d feel if the government suddenly took their internet away. For their own protection, of course.

Rachel Cunliffe is Deputy Editor of CapX.