Transcript
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Internet Issues and the CRTC

A presentation to the University of Ottawa Law School

Timothy Denton, January 11, 2013

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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.

Notice

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An Internet-connected world requires Cheap, ubiquitous connectivity, Applications that are readily available from competitive

sourcesThe issue is: are carriers platforms on which others may innovate, 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 Internet

What should regulators do? How should they think about the role of the carrier?

The Big Issues

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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.

The constraints

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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

Background

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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

How the Commission decides

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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

Two contradictory mandates 1

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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

Two Contradictory Mandates 2

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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

Two Contradictory Mandates

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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).

What we have done so far

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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.

The Internet as “broadcasting” - 2009

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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.

Net Neutrality-Traffic Management

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Telecom Regulatory Policy 2009-657 established that traffic 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

Traffic management

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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.

Leased access to wholesale facilities

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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.

Usage Based Billing (UBB)

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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.

Sturm und Drang

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Minority government in a pre-election period

Social media http://www.stopthemeter.ca/ (see

membership) tweets Importance of the internet to Canadians Perception of higher prices in Canada?

factors

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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.

Outcomes

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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.

Is the carrier a platform?

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“Information has become exceptional as an industrial category even in relation to that industry’s 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.”

Master Wu

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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.

The debate has scarcely been engaged

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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”.

What might be done?

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Thank You