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Internet Issues and the CRTC

A presentation to the Canadian Internet forumTimothy Denton, February 28, 2013

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This is a talk prepared for the Canadian Internet Forum in February 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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How should they think about the role of the carrier?

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

The Big Issue

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We do not regulate the Internet, we regulate carriers and broadcasters◦ Existing legislation was not designed for the

Internet As well, cable and telcos grew up under

different rules at different times (1890s versus 1970s)

They have different obligations ◦ To allow interconnection,◦ To protect Canadian culture,

Different network architecture

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)

The CRTC

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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◦ 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’ revenue is not regulated

Two Contradictory Mandates 2

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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 we can never be sure our pricing decisions are right;

We adopted usage-based billing (UBB) and then retreated to a choice of capacity based billing (CBB) or flat rate billing.

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

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 services based on the access to the central office or the cable head end (access-only interconnection)

Leased access to wholesale facilities

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In the decision (January 2011), we decided on a 15% discount should apply between wholesale rates available to ISPs and the retail rates of the large carriers

But, we imposed bit caps on all the customers of the smaller ISPs instead of one big bit cap on the ISP.

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.

Sturm und Drang

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We came back with capacity based billing◦ Carriers have a choice of CBB or flat rate pricing

We continue to face the problem of setting appropriate wholesale prices that will◦ Encourage larger carriers to build out networks

and◦ Maintain vigorous competition in services from

all sizes of ISP

Capacity Based Billing

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Is there good reason to treat networks differently from, say, the propane distribution business? Or automobiles? Producers of things?

Yes. ◦ Networks enable of social and economic transactions

No. Networks should be treated like other businesses◦ Competition between a few large networks is

sufficient to protect the consumer and the public interest

The big issue: are networks special?

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Canada has affirmed a vigorous policy of wholesale access.◦ third-party access is a legitimate, if temporary, feature.

US policy has unambiguously rejected a leased competition strategy.

Other countries have gone much further to separate carriers from content providers

Carriers insist that to be a platform would turn them into a public utility.

The debate is never finally settled.

Is the carrier a platform?

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There models of communications coexist: broadcasting, telecommunications, and the Internet

The Internet increasingly dominates We are not merely passive recipients We are all potentially creators, collaborators, free

agents Our job at the CRTC is to ensure that the gains

allowed by the Internet are not lost. It is the old Republic of Letters, this time in full

motion video, if we choose.

Three models