Internet Issues and the CRTC
A presentation to the University of Ottawa Law School
Timothy Denton, January 11, 2013
04/11/2023 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.
Notice
04/11/2023 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 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
04/11/2023 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.
The constraints
04/11/2023 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
Background
04/11/2023 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
How the Commission decides
04/11/2023 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
Two contradictory mandates 1
04/11/2023 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
Two Contradictory Mandates 2
04/11/2023 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
Two Contradictory Mandates
04/11/2023 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).
What we have done so far
04/11/2023 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.
The Internet as “broadcasting” - 2009
04/11/2023 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.
Net Neutrality-Traffic Management
04/11/2023 13
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
04/11/2023 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.
Leased access to wholesale facilities
04/11/2023 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.
Usage Based Billing (UBB)
04/11/2023 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.
Sturm und Drang
04/11/2023 17
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
04/11/2023 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.
Outcomes
04/11/2023 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.
Is the carrier a platform?
04/11/2023 20
“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
04/11/2023 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.
The debate has scarcely been engaged
04/11/2023 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”.
What might be done?
04/11/2023 23
Thank You