Mark Goldberg


Will regulation inhibit innovation?

I hate getting robo-calls as much as anyone. With all the phone lines I have, I can sometimes get bombarded by calls from “credit card services”, duct cleaners, Mexican resorts or agencies purporting to repair the viruses they detected on my computer. I have filed more than my fair share of Do Not Call List complaints (perhaps explaining why Ontario’s 61,000 filings represent nearly half of the DNCL complaint reports to the CRTC).

Last year, the CRTC spent more than $3M on the Do Not Call List, over and above the $2M spent on the database itself. The complaints continue to pour in (more than 130,000 last year), but enforcement resulted in just 5 warning letters, 8 citations and 20 notices of violations.

The current regulatory approach appears to be unable to make a dent. The CRTC and other jurisdictions have been considering technology-based solutions. Earlier this week, the Commission issued a public notice to “examine the development and implementation of technical solutions to (i) prevent spoofing of caller identification information, and (ii) trace and identify the source of a call.”

Some may ask why caller ID spoofing is even allowed in the standards. There are good reasons for the capability, such as enabling people to work from home but display their office number. Indeed, the CRTC’s unsolicited call rules leverage the ability for telemarketers to provide call number display of an alternate number where they can be reached.

As indicated in the Notice of Consultation, in the wake of a report from what the CRTC calls a “US telecommunications industry Robocall Strike Force” (the group actually included non-US service providers British Telecom and Rogers as well as global suppliers such as Blackberry, Nokia and Ericsson) some proposals have been put forward to authenticate the telephone number being presented as the caller ID, but these have not yet been adopted:

  1. The telecommunications industries in the United States (U.S.) and the United Kingdom (U.K.) have developed approaches and mechanisms to improve the accuracy and authenticity of caller ID information that could be introduced by TSPs in Canada and elsewhere to reduce caller ID spoofing.

  1. In this proceeding, the Commission is seeking information and comments on
    • the implementation, use, and effectiveness of technical solutions to authenticate caller ID information for wireline, wireless, and voice over Internet Protocol (VoIP) networks in Canada;
    • the implementation, use, and effectiveness of mechanisms to trace and identify the source of a call;
    • any barriers to implementation that would need to be addressed to facilitate these solutions and mechanisms; and
    • what regulatory measures, if any, should be established to ensure that Canadians have confidence in the caller ID information displayed.

That last bullet is key: “what regulatory measures, if any, should be established.”

Each time a regulatory measure is introduced, there are limits imposed on the degrees of freedom for innovation. It is not clear that the proposed caller ID authentication schemes would have permitted many of the innovative services that led to the precipitous collapse of prices for long distance calls globally. Early VoIP companies relied upon permission-less innovation and interconnection that circumvented traditional settlement schemes.

Regulators around the world examining proposals might ask if companies like Delta Three, Vonage or Skype could have or would have passed the authentication processes. Will regulatory measures inhibit innovation?

As frequent readers know, I think Canadians should get more comfortable with just hanging up.

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