This post was written by Joelle E.K. Laszlo.

What if you issued a general license and no one used it? The Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) has faced such a conundrum since March 2010, when it published a final rule amending U.S. regulations on Cuba, Iran, and the Sudan to permit the license-free export of certain services and software incident to the exchange of personal communications over the Internet. But the rule did not have quite the impact that was intended – in particular, the “electronic curtain” around Iran never fell. Thus, OFAC recently issued new interpretive guidance and a policy statement on Internet freedom in Iran. While on its face this is a nice gesture, a closer look confirms that the only Internet services and software free from regulation are those free of charge; fee-based products and services essentially remain subject to the strictest controls on exports to Iran.

OFAC’s interpretive guidance on the personal communications general license for Iran includes the following “illustrative list” of free services and software that fall within the scope of the license:

  • Personal Communications (e.g., Yahoo Messenger, Google Talk, Microsoft Live, Skype (non-fee based))
  • Updates to Personal Communications Software
  • Personal Data Storage (e.g., Dropbox)
  • Browsers/Updates (e.g., Google Chrome, Firefox, Internet Explorer)
  • Plug-ins (e.g., Flashplayer, Shockwave, Java)
  • Document Readers (e.g., Acrobat Readers)
  • Free Mobile Apps Related to Personal Communications
  • RSS Feed Readers and Aggregators (e.g., Google Feed Burner)

As long as they are made publicly available at no cost to the user (and provided the user is not the Iranian government or an agent thereof), such services and their associated software may be exported to Iran from the United States or by a U.S. person, wherever located, without a specific license.

OFAC’s statement of its “favorable” licensing policy on Internet freedom in Iran similarly provides a non-exhaustive list of fee-based services and software eligible for specific licensing, including web hosting, online advertising, fee-based mobile applications, and fee-based Internet communications services. What the statement neglects to mention, however (and what commentators besides us have noticed), is that any specific license issued to provide fee-based personal communications services in Iran will not permit the U.S. service provider to accept payments made through a designated Iranian bank. Unfortunately, these are the very banks likely to be used by most Iranian citizens, who are precisely the anticipated customers of fee-based personal communications services. Thus, while OFAC’s intention may be to approve licenses to provide fee-based personal communications services in Iran, such licenses may not be so readily used.

The result under OFAC’s Iran policy is that freedom’s just another word for Internet you didn’t pay for – at least if it comes from a U.S. provider. If history is any gauge, further developments in this area will not come soon, but we (and Bobby McGee) will be watching for them.