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US Policy May Cause Trade War with Chinese Internet Companies


21 January, 2018

Americans are still talking about a decision by the government to overturn its policy of net neutrality.

The Federal Communications Commission, or FCC, voted to end rules meant to prevent telecommunications companies from blocking or slowing the operation of some websites.

Observers say the decision may lead to a trade war with Chinese telecom and internet companies, some of which are interested in reaching the U.S. market.

FILE - Sammi LeMaster, left, and Katherine Fuchs, right, carry the top of an alarm clock display that reads
FILE - Sammi LeMaster, left, and Katherine Fuchs, right, carry the top of an alarm clock display that reads "Net Neutrality" down 12th Street SW to their truck after a protest at the Federal Communications Commission (FCC) in Washington, Thursday, Dec. 14, 2017. (AP Photo/Carolyn Kaster)

China has banned hundreds of websites and never believed in net neutrality.

The FCC ruling will free American telecom service providers to charge different prices for different products or services. Those providers will even be able to examine the data of their customers.

Many Americans dislike the loss of net neutrality and the idea that telecoms can "watch" them. But experts say the situation in the U.S. is far different from the realities facing Chinese consumers.

"In China, the government is monitoring and controlling ... (telecom) networks, whereas [in the U.S.] it is, at least so far, it is telecommunication companies," said Aija Leiponen.

Leiponen is a professor at Cornell University's Dyson School of Applied Economics and Management. She added that the U.S. government does not have the ability to control internet content.

The FCC decision could help U.S. telecom service providers offer high-priced services, since those who pay more would get a stronger signal.

But this would also enable U.S. service providers to raise rates for foreign customers.

Under net neutrality, foreign companies can easily access the U.S. market without facing the kind of resistance American companies are facing in China.

Benjamin Cavender is with the Shanghai-based China Market Research Group. He thinks the FCC decision could have an effect on Chinese technology companies that want to do business in the United States.

"You are asking about companies like Alibaba or Tencent -- what this means for them in the U.S. markets -- and I could very possibly see this being used as a trade war tool." He also said that the U.S. government could force Chinese companies to pay a lot more to American internet service providers.

U.S. telecom companies are working with or in some cases becoming content providers by creating television shows, films or websites to advertise products.

Cavendar thinks those companies might look at foreign players as competition. He said they could block large Chinese internet companies in an effort to force China to open its market to American companies.

"They (Chinese Internet companies) just get completely blocked because of the U.S. using this more as a trade tool, trying to get more access to the Chinese market. Because if you are a U.S. technology company, you are working at a great disadvantage in the Chinese market. I do see this being used as a trade tool," Cavender said.

The end of net neutrality means that American companies can say to China ‘let us in to your market or we will block you from ours.' While the United States has avoided such behavior in the past, observers say, the situation may be changing during the presidency of Donald Trump.

"I could see that happening," Cavender said.

"Even democracies are beginning to think about the need to regulate content. So the Chinese, you know, might take a little comfort in that," noted James Lewis of the Center for Strategic and International Studies in Washington, D.C.

"When you look at Europeans talking about blocking each other's content, when you look at the U.S. talking about blocking Russian political warfare, the Internet cannot be the wild west that it's been for a couple of decades," he added.

In related news, China is protesting a new bill proposed in the U.S. Congress. The measure would prevent parts of the U.S. government from working with service providers that use any equipment from two Chinese companies, Huawei and ZTE, for security reasons.

"This seems like a problem that can't be solved, at least not in the short term," said Liu Xingliang, head of the Data Center of China Internet.

Liu spoke to the Global Times newspaper in Beijing.

At the same time, "Chinese firms can't give up the U.S. market and just focus on smaller countries," Liu Dingding told the Global Times. The tech expert added that Chinese companies need access to the American market to meet their international goals.

I'm Susan Shand.

And I'm Caty Weaver.

This story was reported by VOA's Saibal Dasgupta. It was adapted by Susan Shand and edited by George Grow.

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Words in This Story

net neutralityn. idea that Internet service providers must treat all data on the Internet the same and cannot block or slow down any website due to its content, language or users, etc.

datan. information that is produced or stored by a computer

customern. one that buys a product or service

monitorv. to watch, observe, listen to, or check (something) for a special purpose over a period of time

contentn. something contained; the amount of material or information contained

access – v. permission or the right to enter, get near, or make use of something

disadvantage – n. loss to image or credit; something that causes difficulty

sovereigntyn. a country's independent authority and the right to govern itself

regulate v. to make rules or laws that control (something)

Wild Westn. the western United States in the past when there were few laws

mr007