Search Results for: unintended

As Canada continues to push forward on its Digital Charter, I noticed an interesting thread looking at Florida’s proposed “digital bill of rights”.

Ben Sperry, of the International Center for Law & Economics, writes:

While it bills itself a “Digital Bill of Rights,” the Florida Senate Bill 262 could actually harm consumers and businesses online by substantially raising the costs of targeted advertising.

For consumers, this would mean less “free” stuff online, as publishers switch from advertising-based to subscription-based models. For businesses, it would mean having less ability to target advertisements to consumers who actually want their products, resulting in less revenue.

Unintended consequences.

In Canada, we have countless examples of overly simplistic analysis of digital issues that fail to consider the logical responses (and counter-responses) of the marketplace to new legislation and regulations.

• Exhibit 1: CRTC regulations that effectively capped the amortization period for devices at 2 years. The Commission and consumer groups were warned that this would lead to higher monthly prices (how could it not?) but pressed ahead anyway. There were other options that could have permitted portability, but preserved the ability to pay for pricy smartphones over a longer period.
• Exhibit 2: CRTC banning Videotron’s Unlimited Music and Bell Mobile TV. These innovative services were competitive differentiators, offering new choices to consumers. Rather than letting the market place respond with either lower prices or competitive differentiators, the CRTC just said “no”.

It is worth noting that Canada has not yet tabled draft legislation that targets online harms and hate, which has been the subject of numerous posts on these pages (such as here, here, here, here, and here).

Last month, Canada’s Privacy Commissioner lost a high profile case against Facebook parent Meta arising from the Cambridge Analytica “incident”. In its review of the Federal Court’s decision, McCarthy’s law firm writes that the dismissal is “a monumental victory for Meta”, providing “important lessons for businesses about Canadian privacy law”. The note says, “The federal Personal Information Protection and Electronic Documents Act (“PIPEDA”) strikes a balance between individual and organizational interests, and should therefore be interpreted in a flexible, pragmatic, and common-sense way. This means that courts must consider not only the individual’s privacy interests, but also the organization’s legitimate interests in collecting, using, and disclosing personal information for commercial purposes.”

As Canada moves forward with examination of its Digital Charter, it will be critical to maintain this balance of interests. Policy would be more robustly crafted if it anticipates how different actors might respond to legislative and regulatory initiatives.

Will parliamentary review of Canada’s digital bill of rights anticipate potential consumer and commercial consequences arising from the legislation?

As governments increase intervention in internet content and services, I wonder if sufficient regulatory humility being applied.

A recent New York Times article noted, “As companies like Google and Facebook grew into giants in the early 21st century, regulators chose largely not to interfere in the still-young market for online services.” The concern was that regulatory intervention could restrict the development of innovative applications and new business models.

What has changed?

Many internet public intellectuals have long advocated for a free and open internet, which many interpreted as supporting a hands-off approach by governments. However, one of my first blog posts, way back in March 2006, looked at an article by Tom Evslin, in saying that he was another voice on “a lonely quest to try to partially tame the anarchy of the internet.a lonely quest to try to partially tame the anarchy of the internet.”

If the Internet is a law-free zone:

1. Governments can do whatever they want there including spying and blocking. It’s naïve and illogical to think that governments are governed by law in a free fire zone when no one else is.
2. Monopolies can do whatever they want including blocking competing services.
3. Malicious people are free to attack not only other sites but the structure of the Internet itself including its routers and domain name servers.
4. Threats, libel, and fraud gain immunity from investigation and prosecution by being carried out on the Internet.
5. The Internet becomes a river in which any conspirator can wade to avoid the bloodhounds of law enforcement.
6. There are no laws PROTECTING privacy in a law-free zone.
7. SPAM is as legitimate as any other activity.

The past decade and a half changed the way we look at the internet. We are more willing to have law enforcement in the digital world. As I have expressed before, my concern has been how we tailor new laws and how we define new standards of acceptable online behaviour.

We have laws developed for the analog world and a body of jurisprudence in their application. We have witnessed the failures of anti-spam and do not call legislation. Those laws curtailed activities by legitimate businesses but we continue to get nuisance calls and loads of unwanted emails. To an extent, instead of regulatory processes, we apply technology to suppress what the legislation was supposed to curtail. We target spam and malicious software with software in the networks and on our devices. Telecom networks are trying to target nuisance calls with technology.

Still, I wonder if the legislation suffers from over-reach. At the 2017 Canadian Telecom Summit, then FCC Chair Ajit Pai spoke about the need for regulatory humility:

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.

Every regulation, every piece of legislation risks creating harmful unintended consequences. Some regulations can serve as disincentives for investment, slowing down necessary expansion and upgrades to network infrastructure.

These days, it seems Canada’s Parliament never misses an opportunity to wade into some form of telecom regulation. Parliament crafted laws about somewhat trivial issues, apparently believing it can do better than the specialized independent regulator. As a result, there is legislation on the books mandating paper invoices in a digital world. Why isn’t that part of a regulator’s discretion?

A private member’s bill mandates service transparency that is already part of the the Minister’s policy direction. Recall, I recently wrote about risks arising from online harms legislation in various countries.

Politicians looking to score points with intervention in the digital marketplace should carefully reflect on whether new laws are actually needed. What problems are we trying to fix?

A little more regulatory humility goes a long way to minimize unintended consequences.

The story of the government engaging an anti-racism consultant with a history of “disturbing comments” has been chronicled here for more than a year (see: July 2021: Funding Hate; April 2022: Purveying hate on the public dime; and, Government funded hate speech). Thanks to amplification from Jonathan Kay’s twitter feed, the story has made its way into the mainstream media, leading (at last) to a government response.

As I wrote last week, the government (and even some opposition members) knew about the problem much earlier, but did not act until the matter became a more public priority. The reasons for this inaction can be the subject of further investigation by the Parliamentary Heritage Committee, or others.

While the focus these past couple weeks has been on the Anti-racism Action Program funding, some may want to explore the ease by which “public interest” groups, such as the one under the microscope, can feed at various troughs of cash in Ottawa.

I raised questions in July of 2021 about a CRTC award of $16,815.10 to CMAC in May of that year. The CRTC awarded an additional $15,332.48 a few months later (October 2021), paring back CMAC’s original request by $2000 “in order to be considered reasonable and necessarily incurred”. In each case, all but $2069.55 (paid to another CMAC consultant) was claimed by Laith Marouf.

In addition, the Broadcast Participation Fund (BPF) represents a pot of cash available to groups since its establishment by the CRTC in 2012. According to the CRTC, the mandate of the BPF is:

• provide costs support to public interest groups and consumer groups representing non-commercial user interests and the public interest before the CRTC in broadcasting matters under the Broadcasting Act;
• support research, analysis and advocacy in both official languages directly related to ongoing CRTC broadcasting proceedings under the Broadcasting Act;
• retain an independent costing officer who shall be responsible for the day-to-day operations of the BPF subject to the overriding authority of the Board; and
• do all things which are in furtherance of the foregoing.

The BPF hands out a lot of cash to public interest groups, totalling just under $900,000 in 2021 alone. Of that total, CMAC received $144,480.44 or more than 15% of the 2021 allocations. There was another $57K granted in 2020; $89K in 2019; $41K in 2018; $88K in 2017; and, $98K in 2016.

That is more than half a million dollars to CMAC over the last 6 years, just from one Ottawa-based fund doling out your money.

The same groups show up on the lists year after year, similar to names of organizations receiving cost awards directly from the CRTC in telecom proceedings.

Who qualifies for funding?

In Telecom and Broadcasting Notice of Consultation 2020-124-2, the Commission stated the following:

15. […] Eligibility for a share of these funds will be evaluated according to the criteria set out in section 68 of the Rules of Procedure, namely

• whether the applicant had, or was the representative of a group or a class of subscribers that had, an interest in the outcome of the proceeding;
• the extent to which the applicant assisted the Commission in developing a better understanding of the matters that were considered; and
• whether the applicant participated in the proceeding in a responsible way.

Should the third criteria, “participating in a responsible way”, include an examination of the character and behaviour of the people involved in the applicant? Is the credibility of the applicant impacted by their character and does that impact the ability to participate in a responsible way?

To whom do these public interest groups answer? Who do these groups actually represent? What due diligence is performed by the guardians of the public funds?

As I highlighted last year, in one set of cost awards, the CRTC didn’t even allow people to provide comments about the cost applications, comments that might have helped inform the Commission of concerns about the recipients of these funds; “the Commission considered that such responses were unnecessary.”

It turns out, that was a bad call.

These various programs and funds have been established with the best of intentions. Unfortunately, there are often unintended consequences that arise from opportunities to access “other people’s money”.

Are the people distributing public funds exercising sufficient checks before disbursing money from these troughs of cash?

The partisan antics during the review of Bill C-11 in Canada’s Parliamentary Heritage Committee was embarrassing to watch. The bill has now passed in the House and moves to the Senate for review. Sadly, I’m not convinced the Chamber of Sober Second Thought will restore my faith in constructive democracy in action.

It is as though some of our politicians are portraying caricatures of themselves in a poorly acted dramatization of Parliamentary affairs – somewhat ironic since Bill is fundamentally for capturing more sources of funding for Canadian media production.

Two months ago, I wrote “Re-Engineering Canada’s digital legislation”, observing that successive Canadian governments have funded certain social objectives “off the books”, without touching the federal treasury. Since its inception, Canada’s communications regulator has been charged with operating a system of cross-subsidies in telecom and broadcasting, outside of the Federal budget process, such as urban phone rates subsidizing rural, broadcasters subsidizing creation of content.

As long as telecom and broadcast distribution were somewhat universal, monopoly services, what difference did it make? Sure, the subsidizing services were priced higher than necessary, but it was all in the national interest. And the public would get upset at phone companies and cable companies for over-priced services, rather than raise taxes and getting the voters upset.

But, competitive forces started to get in the way. Those services could avoid the costs of the hidden taxes and offer lower prices. As fewer households subscribe to the former monopoly services, the funding would either shrink, or rates would need to increase for the remaining subscribers. That could only lead to an bigger arbitrage spread, increasing the incentive to leave the “system”.

Unlike many opponents of the digital bills (C-11 and C-18), I don’t dispute the need to fund Canadian cultural activities and media development. However, I do have concerns about the potential for unintended consequences arising from many of the measures set out in the legislation.

Have we considered cutting the Gordian knot – boldly restructuring the system of subsidies and regulatory measures imposed on legacy businesses?

Recognizing the political risks of different priorities for different governments, why aren’t we funding these important social objectives from the federal treasury? Isn’t that properly the mandate of elected governments, not an expanded regulator operating an off-the-books tax system?

As former CRTC Chair Konrad von Finckenstein told the Senate Committee, the issue of “discoverability” is very different for online content compared to traditional broadcasting. In traditional broadcasting, we impose certain content requirements for airing during various times of the day. But the regulator can’t make people watch those programs. In the case of streaming, the viewer is in front of the screen and has made a selection to watch what they want when they want to. I suspect that offering additional Canadian choices means interfering with the services’ algorithms. But, the core message is that at the end of the day, the viewer will watch what they want to watch.

To date, there has been a measure of naivete on display on both sides of the debate, and an unwillingness to listen to opposing viewpoints, regardless of how condescendingly they may have been expressed. Perhaps we can remain optimistic that the Senate review will be more productive and enable a more complete evidentiary record to be established.

The digital economy is based on complex global forces, operating with unprecedented freedoms that promote innovation. There are certain to be unintended consequences from the proposed legislation. That is at the root of my concern.

As I have said before, shouldn’t Canada approach internet regulation with a greater sense of humility?

I was struck by a story on CNN saying “Texas has declared open season on Facebook, Twitter and YouTube with censorship law”.

It wasn’t that Texas has introduced legislation that impacts the technology giants; Canada has a series of legislative proposals being considered to control online content. Indeed, we are seeing a wide variety of democracies around the world place restrictions or consider legislation to rein in, tax, and impose limits on some of the freedoms under which internet applications operated.

At the core of Texas House Bill 20 is a section examining discourse on social media platforms:

(a) A social media platform may not censor a user, a user’s expression, or a user’s ability to receive the expression of another person based on:

1. the viewpoint of the user or another person;
2. the viewpoint represented in the user’s expression or another person’s expression; or
3. a user’s geographic location in this state or any part of this state.

The term “censor” is defined in the legislation as “to block, ban, remove, deplatform, demonetize, de-boost, restrict, deny equal access or visibility to, or otherwise discriminate against expression”

I understand the intent behind the law. Whether true or not, many conservative voices believe their views are unfairly targeted by platforms.

I was more disturbed by a failure to understand the technology and an apparent lack of consideration of the potential unintended consequences arising from the law. For example, if a social media platform may not “censor a user”, what does that mean for efforts to limit spam-bots on social media feeds?

As described by CNN, “in oral arguments at the Fifth Circuit Court of Appeals, a three-judge panel confused social media platforms with internet service providers; disputed that Facebook and Twitter are websites; and expressed surprise that a service such as Twitter could “just decide” what content appears on its platform as a matter of course.”

The preamble of the bill says “social media platforms function as common carriers, are affected with a public interest, are central public forums for public debate, and have enjoyed governmental support in the United States”. What are the implications of such a definition?

While other commentators will certainly discuss the legislation and its further legal challenges, I’d like to look at how legislators and judges get so confused by some basic technology concepts.

It’s actually quite understandable. It’s impossible for them to be experts on every segment of the economy. They need to rely on advice from advisors. In most cases, legislation is drafted with the assistance of subject matter experts.

Sometimes, polemics from activist campaigns can overwhelm the filters of legislative debate. Clicktivist campaigns, based on barely a passing fidelity to the truth, can drive misinformation among legislators. A recent campaign from Canada’s OpenMedia organization claims “The copyright extension would block the works of dozens of established authors including Marshall McLuhan, Gabrielle Roy, and Margaret Laurence. Their works would be buried for generations.”

Extending copyright doesn’t block or bury any of these works. The campaign is simply not true.

Committee appearances by academics are also not immune from deeply flawed understandings of complex business, regulatory, and technology issues. Academics and legislators alike continue to be unaware that foreign ownership of telecommunications was liberalized a decade ago. A number of academics have confused “EBITDA” (Earnings Before Interest, Tax, Depreciation and Amortization) with “Profit”, and that has found its way into some legislative committee discussions, not recognizing that in capital intensive businesses, such as facilities-based telecommunications carriers, the interest, depreciation, and amortization amounts are substantial and require strong EBITDA to support continued investment.

Ten weeks ago, I wrote about misunderstandings and disinformation impacting debates of Parliament Committees in “Truthiness and Canada’s Telecom Industry” and I have published a few blog posts [such as here, here, and here] trying to dispel common myths surrounding Canada’s telecommunications industry.

I have written before that “Sometimes it’s easiest to simply respond to the loudest voices. There are lots of instances where we see government bodies respond to groups, large and small, making lots of noise.”

It’s even more important to ensure polemics don’t infect legislators abilities to filter fact from fiction.