Later today, there will be an announcement from the FCC that will be much heralded by many who confuse political rhetoric for action. It will be a long process before the US has any kind of net neutrality regulation, let alone the proposed framework that will be articulated today by the FCC.
Keep in mind that there is big difference between an operational approved framework that was put in place by the CRTC yesterday and a notice of proposed rulemaking just going out for comment today south of the border. Even after a year-long consultation, the FCC action will attract litigation that could drag out implementation for years.
Let me say it again – no country in the world other than Canada has an internet traffic policy framework and rules in place to protect consumers and deal with discriminatory behaviours by all ISPs – incumbents and new entrants alike.
At paragraph 46 of yesterday’s network management policy framework, the CRTC continued to recognize the competitive alternatives available to consumers on a retail level:
Consistent with the current regulatory approach, under which the Commission has granted forbearance for retail Internet services, primary ISPs may continue to apply ITMPs to retail Internet services as they consider appropriate, with no requirement for prior Commission approval. This approach remains valid due in part to the large number of existing ISPs. A change in the approach would amount to interference with market forces and would result in inefficient regulation, which is contrary to the Policy Direction.
The CRTC, the competitive industry and Canadian consumers benefit from having generalized nondiscrimination rules enshrined in Section 27(2) the Telecom Act and a prohibition against interfering with content in Section 36.
However, there is a bit of a legal challenge for the CRTC in applying Section 27(2) of the Telecom Act directly to some service providers.
“Secondary ISPs” (defined as companies that don’t own the facilities) aren’t regulated. As a result, the CRTC needs to regulate indirectly, imposing a condition on “primary ISPs” to contractually obligate their wholesale clients (“secondary ISPs”) to agree to abide by 27(2).
There may need to be some clean-up by the CRTC in the language used to define these new primary and secondary terms. The current language of the rules has loopholes that could enable some secondary ISPs to escape regulation under the framework.
For example, while primary ISPs are defined to be carriers, the converse is not true: not all carriers are necessarily primary ISPs. It is unclear why paragraph 50 was a direction to “primary ISPs” and not to all “carriers”. A company operating as a wholesale carrier enabler may enable co-located DSLAMs for one or more ISPs, without the carrier ever becoming an ISP.
In addition, it is possible for secondary ISPs to purchase all of their underlying services from another secondary ISP (acting as an aggregator). As a result, the CRTC will need to try to ensure that contractual obligations to abide by 27(2) cascades appropriately.
Procedurally, it is already difficult to enforce indirect regulation through carrier contracts. It is not clear that there is a meaningful mechanism to enforce obligations on supplementary tiers.
Watch for amendments.