regulation of internet commerceclass seven - january 11, 2013

professor michael geist

university of ottawa, faculty of law

What Role for the CRTC?• Broadcast + Telecom = Internet?

• Competition

• Content

• Scarcity vs. Abundance

where does crtc fit in the internet

broadcast world?

1998-99 CRTC New Media Hearings

• First major hearings into the role of the CRTC and new media/Internet regulation

• Relatively early days - some advocates for strong regulatory involvement; majority argue for hands-off approach (for both policy and practical reasons)

• Over 1,000 contributions, online forum held

• U.S. had attempted to regulate “obscene content” - Communications Decency Act

1998-99 CRTC New Media Hearings

• Can’t vs. Won’t - CRTC decides not to regulate (but not because it can’t)

• Text and graphic transmissions - alphanumeric text outside CRTC mandate

• Streaming webcasts and audiocasts - broadcasting (can be regulated) but no regulation required (insignificant)

– “will not contribute in a material manner to the implementation of the policy objectives set out in section 3(1) of the Act.”

1998-99 CRTC New Media Hearings

• December 1999 exemption order --“Commission exempts persons who carry on, in whole or in part in Canada, broadcasting undertakings of the class consisting of new media broadcasting undertakings, from any or all of the requirements of Part II of the Act...New media broadcasting undertakings provide broadcasting services delivered and accessed over the Internet…”

2009 hearings• thousands of public submissions

• two weeks of hearings

• two opposite views:

• “ISPs as Broadcasters”: end to new media exception; establish new fee on ISPs to fund Canadian content

• If isn’t broke, don’t fix it

2009 decision• re-affirms exemption order

• intervention gets in the way of innovation

• no evidence that additional support needed for creation of new media

• amendments for wireless - no undue preferences

• will review decision again in five years

• reference to courts re: ISPs under the Broadcasting Act; federal court sides with ISPs

2011 OTT Fact Finding• coalition of broadcasters call for CRTC action on over-the-top video (Netflix)

Google:

This Consultation is deja-vu all over again. The CRTC tackled this exact issue two years ago. It received submissions. It heard evidence. It made an important - and correct - decision to maintain and expand the exemption for New Media. The key facts on the ground underlying the CRTC’s current don’t-mess-with-a-good-thing policy are the same as the last time around. No new online audio-visual content regulation is warranted.

2011 OTT Fact FindingCreator coalition:

As consumers opt for non-contributory OTT services, we can conclude that a significant negative impact will occur on the Canadian content creation industries because of reduced funding for the CMF and independent production funds. Further, we can surmise that the availability of Canadian content to Canadians could be detrimentally impacted as those who opt for OTT services may have less such content available to them.

2011 OTT Fact FindingCRTC – “watching brief”

“it is best to allow the over-the-top market to continue evolving, better measurement tools to emerge and entities that contribute to the policy objectives of the Act to take advantage of the many opportunities in this new environment."

SCC – Broadcast Regulatory Policy

• ISPs under the Broadcasting Act

• Key issue: could they be subject to a fee-for-carriage/value-for-signal regime

Court says no:

- Outside the scope of the Broadcasting Act

- Conflicts with rights under the Copyright Act

How should the CRTC address Internet

services?

Net Neutrality• Definitions

• Why does this issue matter?

• U.S. experience

• Canadian experience

Definitions

Save the Internet Coalition

“Network Neutrality — or "Net Neutrality" for short — is the guiding principle that preserves the free and open Internet. Put simply, Net Neutrality means no discrimination. Net Neutrality prevents Internet providers from speeding up or slowing down Web content based on its source, ownership or destination.”

Definitions

Telecom Policy Review Panel (2005)"The Telecommunications Act should be amended to confirm the right of Canadian consumers to access publicly available Internet applications and content of their choice by means of all public telecommunications networks providing access to the Internet. This amendment should

(a) authorize the CRTC to administer and enforce these consumer access rights,

(b) take into account any reasonable technical constraints and efficiency considerations related to providing such access, and

(c) be subject to legal constraints on such access, such as those established in criminal, copyright and broadcasting laws."

Definitions

• Discrimination - treating equivalent content or applications in a different manner (often due to economic considerations)

• Transparency - consumer awareness about the service they are buying, what content may be altered

• Protection against limited competition in the market - potential for abuse due to limited consumer choice

• Maintaining a level playing field

Why Does This Issue Matter?• Importance of the Internet

– Communications– Commerce– Culture

• emergence of new players and new voices (Googles, eBays, bloggers, video)• Limited competition in Canada in broadband services

– 63% of market held by four ISPs – 96% of market held by incumbent telcos and cablecos

• Canadian perspective– Consolidation in the media market– Consolidation in the communications market– Deregulation of media and communications

• Implications of Internet discrimination

U.S. Experience• Actual cases - Madison River (VoIP), Verizon (text messages), Comcast (traffic

shaping)• Corporate Rhetoric - Verizon, BellSouth

“How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?”

- Ed Whitacre, SBC• Regulatory Interest

– FTC - AT&T/BellSouth merger– FCC - Comcast

• December 2010 - FCC releases Open Internet rules– Subject to challenge on jurisdictional grounds– Treats wired and wireless differently

Canadian Experience• Actual cases -

– Telus (Voices for Change)

– Shaw (VoIP surcharge)

– Rogers (traffic shaping)

– Bell, Videotron (support for new fees)

• Corporate Rhetoric - Videotron

“If the movie studio were to mail a DVD . . . they would expect to pay postage or courier fees. Why should they not expect a transmission tariff?”

- Robert Depatie, Videotron

Canadian Experience

• CAIP v. Bell– CAIP files complaint after Bell begins “throttling” traffic at the

wholesale level– Bell argues no violation of Canadian law, necessary to manage

network

– CRTC sides with Bell but calls for broader hearing on “Internet

Traffic Management Practices”

Canadian Experience

• ITMP Hearing– Most exhaustive hearing on traffic management in

Canada - presentations from all perspectives• ISPs - different approaches• Consumer groups - call for “Oakes” like test

– CRTC releases decision in October 2009

Canadian Experience

• Guidelines for Reviewing Traffic Management– Consumer can complain or CRTC investigate cases of discrimination– If consumer presents evidence, ISP must:

• 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.

Canadian Experience

• Guidelines for Reviewing Traffic Management– Other considerations:

• Economic over technical• traffic management that degrades or prefers one application

over another may warrant investigation under section 27(2) of the Act

• Throttling of time sensitive traffic with noticeable impact requires prior approval

• Deep packet inspection: "not to use for other purposes personal information collected for the purposes of traffic management and not to disclose such information."

Canadian Experience

• ISP Traffic Management Disclosure Requirements:

– why they are being introduced– who is affected– when it will occur– what Internet traffic is subject to the traffic

management– how it will affect an Internet user's experience,

including specific impact on speed

Canadian Experience

Canadian Experience

Enforcement

• 2011 ATIP reveals many complaints:– Rogers – throttling of World of Warcraft– Barrett Xplore

• Preference for own voice service• Insufficient disclosure

• 2012 – Rogers faces threats of action