In “Kindergarten Cop“, Arnold (“the Governator”) asks the kids “who is your daddy and what does he do?” It is a rather public investigation of the parentage – the ownership and control of the children in the classroom.
Triggered by interventions from TELUS and Shaw in relation to Globalive, the CRTC has opened a proceeding to determine whether a public or private process should be used to determine the ownership and control of a Canadian carrier. It is one of those delightful recursive public notices – a proceeding to determine the nature of a subsequent proceeding:
The Commission invites parties to comment on the circumstances under which it would be appropriate to hold a multi-party public process to review a common carrier’s compliance with the Canadian ownership and control requirements of the Act.
Industry Canada has already approved Globalive’s ownership for the purposes of radio licenses, but as a result of becoming a spectrum holder, Globalive is now subject to the CRTC’s jurisdiction over carriers under the Telecom Act.
The leaders of Globalive and Globalive Wireless will be speaking in our own version of a public proceeding – at The 2009 Canadian Telecom Summit. Have you registered yet?
How time flies. It was more than a year ago that the Canadian Association of Internet Providers (CAIP) first filed their application to the CRTC asking for Bell Canada to be ordered to provide their customers with preferential service at wholesale rates – or, in other words, to have their traffic exempted from Bell’s traffic management processes.
The application was denied in a Decision last November, and the CRTC opened a generalized proceeding to examine the state of the network management practices within the entire internet services industry.
Earlier this week, CAIP filed an application to have the CRTC review its November dismissal.
CAIP’s application appears flawed, perhaps because in the year that has passed, CAIP may have forgotten what it first asked for.
Why do I say that? Right up front, in paragraph 4 of its new application, CAIP says that troubled by the CRTC opening a new proceeding on the very day that it made its decision to reject the original application.
The fact that the Commission did so leads to troubling questions regarding the Commission’s understanding of the factual and legal issues at play in the CAIP proceeding and the adequacy of the record in that proceeding and hence the fairness of the process that led to Decision 2008‐108.
Let’s review.
CAIP’s original application [pdf, 1.03 MB] was already prime for splitting into two processes. It filed an application that specifically looked at Bell and only Bell. CAIP asked for immediate relief, but at the same time, CAIP sent a legislative alert by email that points to the broader industry importance of the issues being raised last year:
The “throttling” reduces speeds by as much as 90 percent – and marks an important milestone since the outcome will provide a clear answer on whether Canadian law currently protects net neutrality or if legislative reform is needed.
Broad issues call for a wider process; immediate relief requires a faster, narrower focus. CAIP’s original application was somewhat pre-ordained to be split into two processes. The Decision last November correctly dealt with the immediate issues in respect of whether Bell’s treatment of wholesale traffic was discriminatory; the network management proceeding launched the supplementary investigation to provide a review of the industry as a whole.
Paragraph 5 of the new application charges:
In particular, the public notice asks “whether any measures are required to ensure that such practices are in accordance with the Act” and, then, it re‐opens all of the central issues of fact and law raised in the CAIP proceeding and purportedly decided by the Commission in Decision 2008‐108
Not at all. It is almost as though the application was written without regard to the introductory paragraphs in Decision 2008-108:
The Commission’s determinations in this Decision relate solely to Bell Canada’s traffic-shaping practices in relation to its wholesale GAS, and are based on the evidence filed in this proceeding.
The Commission notes that parties to this proceeding have raised concerns related to existing and emerging Internet traffic management practices that are beyond the scope of this proceeding. In light of the importance of these concerns, in a Public Notice issued today, the Commission initiates a proceeding to review the current and potential Internet traffic management practices of Internet service providers with respect to both retail and wholesale services.
Decision 2008-108 looked at certain practices of Bell. The public notice looks at the broader issues and the industry as a whole.
The broader issues arose because of the public campaign to submit comments, many of which were outside the scope of the original application. If the CRTC had broadened the original proceeding, then it would have been unreasonable to deliver a timely ruling on the more immediate question.
We’ll get into a more substantial examination next week. It is a 66 page application with nearly 200 paragraphs. Today’s comments look just at the first 5 paragraphs.
CAIP has filed an application [pdf, 482 KB] seeking to have the CRTC review and vary its “traffic shaping decision” from last November.
With all of the members of the coalition represented in CAIP’s application, regulatory strategy must have become muddled.
In its new application, CAIP says:
The Commission should have waited until it had a more complete understanding of the issues at hand before making such significant determinations. The Commission ought to have issued a Public Notice, similar to PN 2008‐19, in response to the CAIP application, in order to gather a sufficient record to determine the issues raised by CAIP’s application.
CAIP’s original application [pdf, 1.03 MB] looked at Bell and only Bell [refer to the 10 requests listed in paragraph 11 of the original application]. CAIP asked for immediate relief and an expedited process. At the same time, outside the regulatory arena, CAIP spoke of broader industry importance of the issues being raised and smaller ISPs called for individuals to submit their own comments.
You can’t have it both ways.
CAIP’s application last year determined the need for a narrow process to deal with the Bell case. CAIP’s advocacy efforts to solicit an examination of broader issues helped create the supplementary proceeding. On these two points, CAIP was successful. Unfortunately, CAIP was not happy with the outcome.
I’ll have more on this tomorrow.
PIAC is involved in the new CAIP application and it will be a part of the Regulatory Blockbuster at The 2009 Canadian Telecom Summit next month. Have you registered yet?
Update [May 21, 12:50 pm] See other observations on Michael Geist’s blog here.
DSL Extreme is an ISP operating in the US with a business model that is not unlike many of the members of CAIP. In fact, the director of the Canadian operations of its parent company (Ikano) is a signatory to the CAIP answer [pdf, 555KB] to the high speed Cabinet appeals.
DSL Extreme is especially noteworthy because it has succeeded in negotiating wholesale access to Verizon’s FiOS network.
It is important to consider that in the US, next generation carrier networks are not regulated by the FCC. So, DSL Extreme didn’t get access to Verizon’s network because of a regulatory order; it was good ol’ fashioned negotiations across the table.
So let’s take a look at what Ikano said [pdf, 78KB] in signing the coalition submission, opposing Bell and TELUS asking for the government to back off regulation of investment in next generation access facilities:
If granted, the Bell and Telus petitions will limit competition and customer choice for residential customers of high speed Internet services as well as various bundled voice and data services (including video and IPTV services) to, at best, the duopoly that exists today between the phone companies and the cable companies.
It is interesting to reconcile this statement against what Ikano’s US affiliate has found to be true: that it is quite possible to negotiate access to even better facilities than what is being sought in the Canadian regulatory arena. DSL Extreme is able to serve all-fibre customers.
The OECD broadband numbers [Excel, 47 KB]released today show that Canada continues to lead the world in cable broadband penetration, with 15.59 subscribers per 100 people, as of December 2008, and cable broadband in Canada is increasing its lead over telco DSL.
The numbers show that Canada maintained its OECD rank at number 10 and increased its lead over the UK (at number 11) by adding more broadband subscribers per capita (11 per thousand pop). The UK only added 9 subscribers per 1000 pop in the six months ending December 2008.
In the appeals before cabinet, some analysts and consultants have called for Canada to adopt British, French or German unbundling rules for DSL, failing to recognize two key facts: Canada’s high speed internet market is led by cable (not telco) broadband services; and, Canada’s market for broadband continues to outperform these European peers.
The OECD also released a report [pdf, 457 KB] on the use of stimulus funds for broadband
This paper argues that policy makers need to evaluate the costs and benefits of any public investment in telecommunication infrastructure and select projects which can stimulate current demand but simultaneously expand the productive capacity of the economy in the longer term. All public investments in telecommunications should balance four key items – connectivity, competition, innovation/growth and social benefit.
On the issue of government intervention in a competitive marketplace, the report says:
Government investment in telecommunication networks must be used to foster competition and not to entrench existing operators at the expense of potential new entrants. One risk of governments investing in telecommunications is that they tend to have to choose winners in the market. Once one network is built or strengthened there is a relatively low chance of another infrastructure-based provider entering the market given the financial advantage already awarded to the incumbent via government funding.
We have a panel looking at Building Broadband at The 2009 Canadian Telecom Summit. The panel features a diverse group of leaders from Google, Barrett Xplore, Motorola, TeraGo Networks and Sasktel.
Prices for the event go up on June 1. Have you registered yet?
