Different Regulations, Different Regulators: Behind Canada’s Net Neutrality Advantage

By Michael Geist

Last week, many in the Internet community were outraged by a U.S. Federal Communications Commission proposal that would significantly undermine net neutrality. The commentary on the (still unpublished) U.S. proposal says it all – The FCC’s New Net Neutrality Proposal is Even Worse Than You Think, Is Net Neutrality Dying, How Open Will the FCC’s ‘Open Internet’ Really Be?, Goodbye, Net Neutrality: Hello, Net Discrimination, and Net Neutrality Dead for Good?. The FCC responded with its own post that did little to assuage the concerns, stating that the U.S. rules will propose:

1.    That all ISPs must transparently disclose to their subscribers and users all relevant information as to the policies that govern their network;
2.    That no legal content may be blocked; and
3.    That ISPs may not act in a commercially unreasonable manner to harm the Internet, including favoring the traffic from an affiliated entity.

Transparency and no legal blocking are hold overs from the earlier Open Internet order. The third issue is where net neutrality would be harmed as the FCC is proposing to shift toward a “commercially unreasonable” standard for treating similar content in different ways. That approach would certainly permit paid prioritization, where deep pocketed content owners could pay to have their content sent on a fast lane, while everyone else is stuck on the slow lane.  Moreover, given that the earlier Open Internet order was struck down by a U.S. court, even transparency and content blocking presently fall through the cracks.

Given the widespread attention to the U.S. developments, many have been asking about the impact in Canada.

While some speculate that Canada won’t escape the FCC approach, there are ongoing questions about the CRTC net neutrality case involving mobile video, and lingering concerns about CRTC enforcement, the reality is that Canada’s net neutrality rules are broader in scope than the U.S. proposal.  The Canadian net neutrality rules and their enforcement are certainly not perfect, but the Canadian rules (called Internet traffic management practices or ITMPs) are better than those found in the U.S. and may provide a competitive advantage for Internet companies seeking a market without paid prioritization.

Compare the U.S. FCC three rules with the equivalent in Canada. First, the CRTC policy requires transparency about how ISPs manage traffic on their networks:

the Commission directs all primary ISPs, as a condition of providing retail Internet services, to disclose to their retail customers, clearly and prominently on their websites, information related to their technical ITMPs. The ISP must also reference its online disclosures in relevant marketing materials, customer contracts, and terms of service. Online disclosure should include the following information:

  • why ITMPs are being introduced;
  • who is affected by the ITMP;
  • when the Internet traffic management will occur;
  • what type of Internet traffic (e.g. application, class of application, protocol) is subject to management; and
  • how the ITMP will affect a user’s Internet experience, including the specific impact on speeds.

Second, the CRTC policy and the law make it clear that content blocking is unlikely to ever be approved:

The Commission notes that the majority of parties are in agreement that actions by ISPs that result in outright blocking of access to content would be prohibited under section 36 unless prior approval was obtained from the Commission. The Commission finds that where an ITMP would lead to blocking the delivery of content to an end-user, it cannot be implemented without prior Commission approval. Approval under section 36 would only be granted if it would further the telecommunications policy objectives set out in section 7 of the Act. Interpreted in light of these policy objectives, ITMPs that result in blocking Internet traffic would only be approved in exceptional circumstances, as they involve denying access to telecommunications services.

Third, paid prioritization – which would result in two-tier speeds based on payment – would face a very tough regulatory road in Canada. Section 27(2) of the Telecommunications Act provides that:

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.

The CRTC has confirmed that this provision applies to Internet services. The statutory language, which incorporates unjust discrimination, undue preferences, and unreasonable prefrences is clearly broader in scope than the proposed FCC Open Internet order. As for its application to net neutrality issues, the CRTC’s ITMPs note that:

Where an ITMP does result in discrimination or preference, the Commission considers that establishing that the ITMP is carefully designed and narrowly tailored is important in an evaluation of whether or not the discrimination or preference is unjust or undue.

The framework for analysis requires the ISP to:

Describe the ITMP being employed, as well as the need for it and its purpose and effect, and identify whether or not the ITMP results in discrimination or preference. In the case of an ITMP that results in any degree of discrimination or preference:

  • demonstrate that the ITMP is designed to address the need and achieve the purpose and effect in question, and nothing else;
  • establish that the ITMP results in discrimination or preference as little as reasonably possible;
  • demonstrate that any harm to a secondary ISP, end-user, or any other person is as little as reasonably possible; and
  • explain why, in the case of a technical ITMP, network investment or economic approaches alone would not reasonably address the need and effectively achieve the same purpose as the ITMP.

Paid prioritization would face an uphill battle under this analysis. Moreover, the slow lane of Internet traffic might also face regulatory challenges were an ISP to slow down content in order to create a difference between the two delivery speeds.  The Commission has ruled that:

In the case of time-sensitive audio or video traffic (i.e. real-time audio or video such as video conferencing and voice over Internet Protocol (VoIP) services), ITMPs that introduce delays or jitter15 are likely to cause degradation to the service. The Commission considers that when noticeable degradation occurs, it amounts to controlling the content and influencing the meaning and purpose of the telecommunications in question. Accordingly, the Commission finds that use of an ITMP resulting in the noticeable degradation of time-sensitive Internet traffic will require prior Commission approval under section 36 of the Act.

While Canadian businesses operating in the U.S. market will be affected by the potential loss of net neutrality (creating a potential trade barrier), the Canadian Internet market remains subject to CRTC rules, not the proposed FCC Open Internet order.  Canadian ISPs might always try test the CRTC rules with paid prioritization (much like they are testing mobile video), but for the moment the CRTC’s net neutrality rules are stronger than those in the U.S.

The CRTC has also left no doubt that it has the power to regulate net neutrality. By contrast,  in the U.S., the FCC has botched the issue by treating the Internet as an information service rather than as a communication service. With that statutory background, the Commission adopting a consumer-oriented perspective, and the government seemingly willing to continue its battle against the major telecom companies, Canada may have a competitive advantage when it comes to net neutrality.

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