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Toward an Open and Innovative Internet: What Lies Behind Canada’s Net Neutrality Success Story
is net neutrality day of action in the United States, a day of advocacy and awareness that brings together hundreds of leading Internet companies and public interest groups. It is an important reminder that the principle of an open, neutral Internet is under threat there due to dramatic shifts in policy driven by the Trump Administration and changes at the Federal Communications Commission. While U.S. rules undoubtedly have an impact on Canada – the viability of new innovative Internet businesses that might enter the Canadian market is linked to rules that ensure that Internet providers do not use their privileged position to favour some applications and services over others – the political and regulatory situation between the two countries is dramatically different.
The Liberal government has been a staunch supporter of net neutrality, regularly citing its importance. For example, Budget 2017 referenced the need to “benefit from an open and innovative Internet” and Innovation, Science and Economic Development Minister Navdeep Bains has emphasized the value of an open Internet in discussing telecom policy. When the Province of Quebec’s unveiled plans to mandate blocking of unlicensed gambling websites, Canadian Heritage Minister Melanie Joly responded by focusing on the need for net neutrality and the equal treatment of Internet content.
The government’s support for net neutrality is consistent with the regulatory framework crafted by the CRTC that features safeguards against unjust discrimination, undue preferences or controlling the content of communications. The foundation of Canadian policy lies in four CRTC decisions that address practices such as managing Internet traffic to limit speeds for some applications or creating pricing plans that “zero rate” certain content that does not count as part of monthly data consumption caps.
The CRTC’s first net neutrality policy response in 2009 on Internet traffic management practices restrict content blocking or slowdowns and require ISPs to disclose how they manage their networks. The issue expanded into zero rating in 2013 when Ben Klass, a graduate student in telecommunications, filed a complaint with the CRTC over how Bell approach to its Mobile TV product. In January 2015, the CRTC released its decision in the case, siding with Klass. The Commission expressed concern that the service “may end up inhibiting the introduction and growth of other mobile TV services accessed over the Internet, which reduces innovation and consumer choice.”
Earlier this year, the CRTC largely completed the process by establishing a framework for examining future zero rating or preferential pricing cases (and rejecting Videotron’s music service plan in an accompanying decision). The Commission concluded that zero rating raises concerns regarding preferences or disadvantages:
differential pricing practices, generally speaking, result in (a) a preference toward certain subscribers over others, (b) a preference toward certain content providers over others, (c) a disadvantage to subscribers who are not eligible for, or interested in, a differential pricing practice offering, and (d) a disadvantage to content providers that are not eligible for, or included in, an offering.
The CRTC noted that differential pricing practices that favour particular services, technology, content would generally negatively affect innovation. Further, the Commission was mindful of what consumer groups and pro-net neutrality advocates warned about the impact on consumer choice:
The Commission considers that any short-term benefits of differential pricing practices would be greatly outweighed by the negative long-term impacts on consumer choice if ISPs were to act as gatekeepers of content through their use of such practices
The CRTC proceeded to establish a framework that bears considerable similarity to its 2009 ITMP approach. It features a complaints-based mechanism that can lead to an evaluation of whether the differential pricing is compliant with the law. The evaluation criteria involves four issues: agnostic treatment of data, exclusiveness of the offering, impact on Internet openness and innovation, and whether financial compensation is involved.
Soon after the decision, Videotron announced that it would respond in a manner consistent with what net neutrality advocates predicted: it would increase the amount of data available to subscribers of its zero rated music service. That approach reflects the European experience which shows that providers that do not zero rate offer better prices and larger data allowances.
The Canadian net neutrality success story is notable for how the government, regulator, many companies (including more recently larger providers such as Rogers and TekSavvy), and the public have supported net neutrality policies. Yet what lies behind the policies are also the real-world net neutrality threats that have emerged over the past decade. Indeed, claims that the policies are a solution in search of a problem ignore the many incidents that have required regulatory or political intervention. Whether website blocking (Telus’ infamous blocking of the Voices for Change site, Quebec’s online gambling blocking legislation), traffic throttling (including Rogers and World of Warcraft, Xplornet slowing speeds on Google Play store), zero rating plans with potential negative competitive effects (Bell, Videotron), or creator groups musing about prioritizing Cancon on the Internet, defending net neutrality principles has required active monitoring by Internet users and vigilance at the regulator.
Canadians should take pride in the evolution of our regulatory framework but also use net neutrality day of action as a reminder that in a market marked by insufficient competition, the pressure to relax or reverse net neutrality safeguards could resurface, particularly with the upcoming appointment of a new CRTC chair or with the planned reform of the Broadcasting and Telecommunications Acts.