The CRTC hearing into internet traffic management practices was asked a number of times to presume that ISPs would break the law. The independent film producers led off the discussions on Wednesday complaining that throttling of Torrent traffic discriminates against their low-cost content delivery system.

An example was given of an low-budget documentary recorded by an independent and made available by BitTorrent having to compete against a big-budget, high-def production that does a deal with iTunes for distribution. The allegation was that ISPs throttling Torrents are discriminating against the independent producers who couldn’t strike a deal for iTunes distribution.

One of the commenters on the National Post live blog raised an insightful point: are the ISPs discriminating or is it iTunes that is practicing discrimination? The ISPs don’t care if it is a big budget production house (such as the experience of CBC’s Next Great Prime Minister program) or an amateur video of dogs dancing.

The traffic management isn’t discriminating between legal and pirated material.

Where is the discrimination?

On Monday, at the CRTC’s network management proceedings, Juniper raised the idea of users defining which applications they want to receive priority in times of congestion. Some follow-up discussions on Tuesday indicated an interest from other parties in this area.

But many reports glossed over the concept that only some of the network management could be achieved in this manner, not all.

For applications that consume all of the available bandwidth in a shared network environment, it doesn’t appear to be sufficient for customers to set their own prioritization – the network would still need to reserve an allocation for those customers that don’t share the same focus.

Bell Aliant and the government of New Brunswick have announced plans to fibre the homes of Saint John and Fredericton.

It is a $60M project for 70,000 homes and businesses – roughly $850 per site.

In addition to bringing the most advanced technology to our customers, it makes economic sense for Bell Aliant in these markets because of the cost advantages associated with our virtually 100 per cent aerial (above ground) network infrastructure and low population density.

Bell Aliant is coming out swinging in the competitive battle for selling broadband bundles. How will the cable companies respond?

One of the key concepts in yesterday’s opening session at the CRTC’s network management hearings was Sandvine’s statement that an unmanaged network is not neutral. I preferred that quote to a Commissioner comment about drowning cats.

Since the transcripts are not yet available, let me paraphrase: In the early days of the internet, all participants had similar, shared interests in the operation of the network. That is not the case today, where some actors placed their selfish interests ahead of the common good of all users and all applications.

So managing traffic restores the balance of neutrality.

John Lawford, representing a variety of consumers groups in the hearings, is quoted asking rhetorically:

If three per cent is causing a problem, how finely tuned is your network?

But as I mentioned last week, peer-to-peer doesn’t require a high percentage of capacity consumption to have its bad behaviour impact the network.

Picture a wide-load truck driving down the highway blocking all the lanes. The truck isn’t using a significant percentage of the road’s capacity; it doesn’t represent a measurable amount of total traffic.

You can follow the hearings with live audio from the CRTC website, or for play-by-play, check out the National Post live blog.

I noticed a story about Joost having trouble maintaining its model of offering free content and it takes us over to a debate between Malcolm Gladwell and Chris Anderson over the evolution of Free in a digital world.

Gladwell’s review of Anderson’s Free: The Future of a Radical Price includes the following quote from the book:

Distribution is now close enough to free to round down. Today, it costs about $0.25 to stream one hour of video to one person. Next year, it will be $0.15. A year later it will be less than a dime. Which is why YouTube’s founders decided to give it away. . . . The result is both messy and runs counter to every instinct of a television professional, but this is what abundance both requires and demands.

However, as all of the major ISPs understand so well, there is a big difference between “free” and “close enough to free to round down”. Gladwell puts it eloquently:

Although the magic of Free technology means that the cost of serving up each video is “close enough to free to round down,” “close enough to free” multiplied by seventy-five billion is still a very large number. A recent report by Credit Suisse estimates that YouTube’s bandwidth costs in 2009 will be three hundred and sixty million dollars.

As we head into the CRTC’s network management proceedings this week, these principles are worth keeping in mind. There is a significant difference between absorbing costs that are “close to free” as a small company and taking these up to mass market scale.