Mark Goldberg


www.mhgoldberg.com





Fox Group Dispatch

Regulating internet content

The CRTC announced the second phase of its “Let’s Talk TV: A Conversation with Canadians”, inviting Canadians to complete Choicebook, a 30 slide interactive questionnaire with a series of scenarios that reflect the realities of the television system.

Some of the questions appear to indicate the CRTC testing whether Canadians might accept taxing internet access, certifying online services or other forms of regulation of the internet.

For example, Slide 27 asks “Should online services be required to provide closed-captioning and adhere to programming standards?” As a follow-up, the CRTC asks if Canadians would be willing to pay a few additional cents per month for online services to meet these requirements. In the preamble to these questions, Netflix and YouTube are cited as examples of online programming.

The CRTC asks if respondents agree with a perspective that “online services like Netflix are getting a free ride by not contributing to the production of Canadian-made programming”, enabling more jobs to be created and allowing Canadian stories to be told on all platforms. If respondents agree with this perspective, they are asked if they would be willing to pay an additional $0.50 per month.

Another question in that section asks:

If streaming content from online services that meet the above requirements didn’t count against your Internet access data cap, would you be willing to pay a small flat fee of $5 per month to cover increased usage costs?

There are a lot of issues raised by this particular question. Exactly which “requirements” are meant? Is it all three of the requirements described two pages earlier in the Choicebook [closed captioning, adhere to broadcast standards, contribute to Canadian content production]? Is $5 really a “small flat fee”? Would this be mandatory for all internet access providers, or would it be a cap on excess data charges for “conforming” content providers.

The CRTC appears to be testing the concept of not all internet content being treated alike: streaming content that conforms to Canadian broadcast standards could be exempt from data metering; non-conforming streaming content would be charged. Is the CRTC considering a licensing process to certify internet content providers as conforming?

How might this work? Could the CRTC identify all internet service providers in Canada and impose a flat fee per subscriber to fund a streaming media fund? Content providers would be under no obligation to get licensed, but those that do might be able to draw from the fund. Still, there is a question of developing a good definition of who is an ISP, let alone identifying which subscribers would contribute. Does it include coffee shops? Internet cafes? Hotels? Airports? University dorms? Do smartphones with dataplans count as subscribers? What about data sticks and mobile hotspots? Business versus residence?

It will be interesting to see what emerges from this consultation. For the next three and a half weeks, through March 14, Canadians are invited to complete the CRTC’s questionnaire.

It’s about more than just TV.

The 2014 Canadian Telecom Summit, taking place June 16-18 in Toronto, will be looking at “The Continuing Evolution of TV: Content Anywhere, Any Screen, Anytime” in a panel discussion. Early Bird discounts are available for the next 10 days, through February 28. Have you registered yet?

Regulating the internet: what happened?

Eighteen years ago, I wrote that the CRTC became “one of the world’s first regulators to clearly enunciate a “hands off” policy toward the Internet.”

At that time, the Commission issued a Public Notice enumerated by codes under each of its Broadcast and Telecom sides: Broadcasting Public Notice CRTC 1999-84 and Telecom Public Notice CRTC 99-14, with a simple title: “New Media“. The decision makes for interesting reading.

It was a different time for internet content, 5 years before Facebook, 6 years before YouTube: “The Commission considers that the majority of services now available on the Internet consist predominantly of alphanumeric text, and, therefore, do not fall within the scope of the Broadcasting Act and are thus outside the Commission’s jurisdiction.”

At the time, the CRTC was confident about Canadian content development:

In the Commission’s view, there is no apparent shortage of Canadian content on the Internet today. Rather, market forces are providing a Canadian Internet presence that is also supported by a strong demand for Canadian product.

The Commission notes that a number of initiatives and funds have been developed in both the public and private sectors to help finance and support Canadian new media product.

For these reasons, the Commission concurs with the majority of participants that there is no reason for it to impose regulatory measures to stimulate the production and development of Canadian new media content.

As far as regulation of illegal and offensive content, at the time the CRTC wrote:

The Commission notes that Internet Service Providers (ISPs) and their industry associations, in conjunction with government agencies and other organizations, have made efforts to develop codes of conduct to help combat the distribution of offensive material. It considers that more could be done for example, by establishing complaint lines and industry ombudsmen and developing international cooperation with law enforcement agencies. The Commission also notes that effective content filtering computer software is being developed. Such software will assist those who wish to control access to material that they feel is inappropriate.

And the Commission was as concerned about competitive ISPs having wholesale access to high speed facilities from the phone companies and cable companies:

The Commission considers that access by competitive providers of Internet services to the facilities they require to offer services is an important concern. In a 1998 decision (Telecom Decision CRTC 98-9), the Commission decided it would approve the rates and terms under which incumbent cable and telephone companies provide higher speed access to their telecommunications facilities to ISPs. The Commission will set out its general regulatory approach to rates and terms for such cable carrier higher speed access services in the near future.

The past 5 years have seen Canada apply an increasingly heavy regulatory hand. A search for “Regulating internet” on my blog turns up a number of posts expressing concern about government intervention.

Three years ago, already faced withe a list of areas in which the CRTC had intervened, I wrote: “Are we restricting the evolution of creative business models and innovation through regulation?”

Earlier this year, I asked “Will Canadians see greener Internet pastures in the USA?”, observing Orwellian euphemisms of “openness” and “choice” to characterize greater government control. Canada’s current approach to internet regulation contrasts diametrically with our neighbours to the south. As FCC Chair Ajit Pai told The 2017 Canadian Telecom Summit:

In short, America’s approach to broadband policy will be practical, not ideological. We’ll embrace what works, and dispense with what doesn’t. That means removing barriers to innovation and investment, instead of creating new ones. That means taking targeted action to address real problems in the marketplace, instead of imposing broad preemptive regulations. And that means respecting principles of economics, physics and law, and acting with humility as we regulate one of the most dynamic marketplaces history has ever known. This vision will unleash the massive investments that the digital world demands.

Eighteen years ago, Canada was among the first regulators to set out a light-touch approach to internet regulation. What happened?

Which path will the new Commission leadership follow?

Regulating the internet

Should we be concerned that the CRTC is co-hosting an event to explore “Discoverability: Content in the Age of Abundance”?

As I wrote last month, the current CRTC Chair continues to insist that the Commission regulates internet content. As he repeatedly told a witness in the Local TV hearing in January, streaming video on the internet (such as Netflix and YouTube, is considered to be unlicensed, not unregulated.

In the recent “Review of basic telecommunications services“, the Chair said he likes to look at outcomes:

when you set large national objectives you start off defining the outcomes and then you — which is the strategy — and then you define specific actions required. But you actually have to figure out what the outcome is and then work backwards.

So what is the outcome that is being sought through the Discoverability project? We have seen announcements that say “The Summit will be a forum for learning and creative discussions with respect to new strategies, tools and approaches to tackle the challenge of discoverability.”

Is that the outcome? Is the ultimate outcome to hold a forum and issue some kind of a report or strategy document? Or, is the outcome to develop new strategies for tackling the challenge of discoverability? If the latter, what is the outcome being sought? In the Chair’s own words, “you actually have to figure out what the outcome is and then work backwards.”

Was the intent for a “strategy” to be the outcome? It would fit what Terence Corcoran called Canada’s National Strategies Strategy:

A National Strategies Strategy would aim to bring together all Canadian stakeholders, perhaps at a foundational event or summit, for cross-disciplinary strategy-setting that would devise evidence-based intelligence on how Canada — as a diverse nation — can set up a system that would allow our best minds, institutions and diverse cultural communities to establish a national strategic hierarchy of strategies.

So, what is the outcome being sought through the Discoverability project? What is the role of the regulator in this process? Is “Content in the Age of Abundance” a euphemism for “Content in the age of the Internet”? Will the forum be an opportunity for Canada’s telecommunications and broadcast regulator to reinforce its assertion of authority to regulate internet content? Should we be concerned?

Regulating the internet

Some of the things I have been thinking about this week. Perhaps they will percolate into a bigger post over the summer. Otherwise, I thought I would share these thoughts with you. Please feel free to comment.

Over the past few years, Canada has enacted a number of regulatory and legislative constraints on the delivery of content over the internet. Some have been proclaimed (with pride) as being first in the world, such as internet traffic management, or among the most protective, in the case of anti-spam laws.

It may be worthwhile for some academic researchers to take a look at the impact of regulating internet content in Canada, from an economic perspective, social policy, cultural issues, etc.

Are we restricting the evolution of creative business models and innovation through regulation?

  • Internet Traffic Management Regulatory Policy (Net Neutrality)
  • Canada’s Anti-Spam Law (CASL)
  • New Media Exemption Order
  • NFL Mobile Content Decision
  • Others? (such as digital copyright, lawful access, etc.?)

Will Canadians see greener Internet pastures in the USA?

This commentary appears on CARTT.ca

It is almost a defining characteristic for Canadians to distinguish ourselves from our neighbors to the south. The untrained ear may think we speak English somewhat similarly, but Canadians emphatically define ourselves as “not American” while we roll-up-the-rim-to-win.

That doesn’t keep us from wishing we had American prices for gasoline, milk, eggs, airfares, clothing and alcohol. It is springtime, and it is natural for us to look wistfully at greener grass growing on the other side of the border. We can add the USA’s unlimited mobile data plans to the list, prompted by one of the first acts by Federal Communications Commission (FCC) Chair Ajit Pai of dropping an investigation into zero rating practices by US carriers. The removal of that regulation resulted in every major carrier launching an offering of unlimited data plans.

Now, Chairman Pai has teed up the restoration of the free and open internet as he recently announced his plan to restore the light touch regulatory approach that helped make the Internet great.  Not a moment too soon. New research indicates that the misguided Title II regulation in the United States and the general pro-regulatory black cloud that has hung over the FCC in recent years, has deterred some $30-40 billion of internet investment annually in the US.

Canada’s current regulatory environment is reminiscent of the Obama administration’s FCC in which the Orwellian euphemisms of “openness” and “choice” characterized greater government control. Currently, there is an official telecom policy direction requiring the Canadian Radio-television and Telecommunications Commission (CRTC) to “rely on market forces to the maximum extent feasible” and “when relying on regulation, use measures that are efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary.”  Still, a growing number of CRTC regulations (including price controls on internet access and regulating the internet) have served to reduce differentiation between service providers, such as with mobile video services, such as NFL Mobile and Bell Mobility.

The CRTC claims that its increasingly heavy hand “relies on market forces to the maximum extent feasible, seeks to remove barriers to entry, and is a measure that is efficient and proportionate to its purpose.” But it is unclear that the CRTC’s policy would survive an independent audit of compliance to certify whether its direction is consistent with market-based policy. I have written before about the cost of regulation in Canada [here and here] and have often asked, how will we measure success? We don’t know. The CRTC offers no measurement.

As one long-time observer of the Canadian regulatory scene recently asked, should we expect capital to migrate to Canada because of our improved rules? If we look at the rate of startups in Canada versus the rate in the US, should we expect that rate improve in Canada relative to US? I think not. Investment is pouring into the US as a result of a return to its pro-competition and pro-consumer approach. In spite of the net neutrality policies meant to improve innovation in Canada, Canadian entrepreneurs continue to flock the US.

In general, the world is siding with the US, not Canada, on this issue. Courts in Netherlands, Sweden, and Slovenia have struck down heavy handed net neutrality regulation and price controls that restrict zero-rating and free data policies. With any luck, the bold and much-needed moves from the FCC in the US will provide the needed example to the CRTC in Canada and help us restore internet freedom again.

Internet Freedom is certain to be among the topics discussed at The 2017 Canadian Telecom Summit on June 5-7 in Toronto.

Join in the discussion.

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