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Tim Denton - Internet issues and the crtc

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  • 1. A presentation to the University of Ottawa Law School Timothy Denton, January 11, 2013
  • 2. This is a talk prepared for University of Ottawa law students of Professor Michael Geist in January of 2013. It does not represent the official views of either the Canadian Radio-television and Telecommunications Commission, or the American Registry of Internet Numbers. 1/13/2013 2
  • 3. An Internet-connected world requires Cheap, ubiquitous connectivity, Applications that are readily available from competitive sourcesThe issue is: are carriers platforms on which others mayinnovate, or are they in command of what is carried? Carriers have the means and motives to vertically integrate: to link the provision of services to certain carriers and not others, and to gather the economic surplus created by the InternetWhat should regulators do? How should they thinkabout the role of the carrier? 1/13/2013 3
  • 4. Existing legislation was not designed for the Internet Cable and telcos grew up under different rules Common carrier versus contract carrier Different obligations to allow interconnection No structural separation of carriage and content As has occurred in the UK Third party access to facilities is treated as the ugly step-child of real facilities based competition. Leased access to facilities is always contested and more controversial not considered real competition. 1/13/2013 4
  • 5. The CRTC dates from 1968, and is the successor to predecessor regulatory agencies It has two principal statutes, and a new one Broadcasting Act 1991, basically a rewrite of 1968 legislation Telecommunications Act 1993 Canadian Anti-Spam Law 2012 (not yet implemented) There are 9 Commissioners (down from 13) and 400 staff The Chairman is the chief executive officer, and manages the work of the organization Appoints panels 1/13/2013 5
  • 6. Commissioners meet monthly (full commission) and weekly in telecom and broadcast committees Staff speak directly to commissioners on the basis of powerpoint decks (with supporting documents) The Chairman directs the staff and organizes the workload Regional and national representation: the CRTC is a mini-parliament 1/13/2013 6
  • 7. Broadcasting Act: Grants privileges to Canadian signals, and to licence holders, as well as obligations Wholly oriented to the producer of Canadian content No mention of the word consumer in the Act More policy objectives than there are letters in the alphabet Strong cultural nationalist bias Comprehensive scheme of regulation, covers the cable industry when it acts as carrier of broadcasting Predicated on ideas deriving from over-the-air broadcasting 1/13/2013 7
  • 8. Telecommunications Act Some national-development objectives some consumer objectives Market forces are encouraged Covers the cable industry when it acts as a carrier No unjust discrimination and no undue preference in tariffs Extensive powers of forbearance in relation to services Exemption in relation to geographic markets Policy Directive of 2006 strengthened tendency to deregulate where appropriate 97% of telecom carriers revenues are not regulated 1/13/2013 8
  • 9. Telecommunications thou shalt not discriminate 27. (1) Every rate charged by a Canadian carrier for a telecommunications service shall be just and reasonable. (2) No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.Broadcasting - thou shalt discriminate 3(e) each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming; And sundry other objectives to same effect 1/13/2013 9
  • 10. We have not tried to regulate the Internet as if it were broadcasting; We have sorted out the problem of net neutrality- traffic management measures, in principle; We have continued to foster leased access, but our decisions on the details take years to make; We have engendered a revolt (and then a review) of our policies on usage-based billing (UBB). 1/13/2013 10
  • 11. Unless we had decided against the Broadcasting Act, every Canadian website would have been licensed as a broadcaster or else exempted under an exemption order; The conditions of the exemption order would have amounted to regulation (speech or content controls); The Federal Court of Appeal was asked to look at the liability of ISPs as broadcasters (2010): result they are not, if they act in a content-neutral way Jaron Lanier saved the day. 1/13/2013 11
  • 12. The decision (Oct 2009) laid down a framework for how the Commission would consider traffic management practices [TMPs] All measures to protect network security and integrity are okay, do not need pre-approval as a general rule The burden is always on the carrier to justify departures from neutrality. Economic (price) TMPs are preferred to others. Least discrimination, least harm are preferred. Implementation required follow-up. 1/13/2013 12
  • 13. Telecom Regulatory Policy 2009-657 established thattraffic management measures were to be Transparent to the end user Focused on specific needs Not unjustly discriminatory or unduly preferential Approved in advance if they affected wholesale suppliers especially Preferably to be economic rather than technical 1/13/2013 13
  • 14. The CRTC continued to require the incumbents (cable and telco) to wholesale access at matching speeds; Evened out the access requirements on cable and telcos, by increasing the obligations of the cable industry; Declined to approve new access services based on the central office or the cable head end (access- only interconnection) on the basis that disallowing it would not decrease competition I dissented on this portion of the decision. 1/13/2013 14
  • 15. The Commission started a proceeding in October 2010 to see whether the the UBB components and excessive usage charges of cable and telco wholesale services should be set at levels below the incumbents comparable retail UBB rates and, if so, to what extent. In the decision that followed (January 2011), we decided that a 15% discount should apply But, we imposed bit caps on all the customers of the smaller ISPs instead of one big bit cap on the ISP traffic as a whole. 1/13/2013 15
  • 16. Despite that UBB had been imposed on the residential customers of large carriers long before, applying UBB to the customers of smaller ISPs caused a revolt. Over 470,000 signed the digital petition The Minister of Industry tweeted his displeasure The CRTC announced a reconsideration of the UBB decision would take place. Among other faults, our decision required the ISP to police the consumption of his customers without having access to their usage records. 1/13/2013 16
  • 17. Minority government in a pre-election period Social media (see membership) tweets Importance of the internet to Canadians Perception of higher prices in Canada? 1/13/2013 17
  • 18. The CRTC seems at last to have accepted wholesale lease of underlying facilities as a legitimate form of competition. More effort has been put into evening the burden of wholesale lease between cable and telco. Our pricing decisions still take too long. Improved implementation processes are required, once a decision in principle has been made. 1/13/2013 18
  • 19. The issue of leasing wholesale services has not been settled in Canada. US policy has unambiguously rejected a leased competition strategy. Canada has established that third-party access is a legitimate, if temporary, feature. Essential services decision will be up for review again in 18 months Carriers insist that to be a platform would turn them into a public utility. 1/13/2013 19
  • 20. Information has become exceptional as an industrial category even in relation to that industrys own history The disposition of firms and industries is, if anything, more critical than the actions of the state in controlling who gets heard. It is industrial structure that determines the limits of free speech. A separations principle would mean the creation of a salutary distance between each of the major functions or layers of the information economy. 1/13/2013 20
  • 21. The kinds of ideas proposed by Tim Wu and others must strive against a view of networks constantly advocated by carriers: To the victor goes the spoils We need profits to build out the networks How can we do so if our networks are nationalized? There is too little discussion of the role of networks in the larger public domain. Competition policy is largely silent and ex-post-facto. Regulators need to understand more clearly what is at stake in the role of carriers. 1/13/2013 21
  • 22. Does the appointments process evaluate candidates for their views on network issues? No Does the Commission engage in deliberate policy development about network issues? Seldom Does Industry Canada develop policy about network issues? Yes, and their last directive is imbued with the idea that real competition occurs only between networks, and not between services and apps on a neutral network. Network policy will continue to be accidental until a conscious decision is made. The occasion is the next review of essential services. 1/13/2013 22
  • 23. 1/13/2013 23