As reported in the Globe and Mail on Thursday, with follow-up in yesterday’s National Post, the Federal Court of Appeal ordered [ pdf 104K] eBay to turn over records related to Canada Revenue Agency tax investigations.

At question in the appeal was whether section 231.2 of The Income Tax Act required eBay to produce the information about Power Sellers despite it being “foreign-based information”, housed in servers located outside of Canada. “Foreign-based information” is the subject of a comprehensive code in section 231.6.

The principal question to be decided in this appeal is whether the information sought by the Minister is “foreign-based” because it is “available or located outside Canada” for the purpose of subsection 231.6, despite the fact that the appellants, Canadian corporations, have been authorized to access it in Canada for use in their business, but do not download it to their computers.

The Court held that the information sought was not “foreign-based information” because even though it is stored on servers outside Canada, the Court considered that the information was also located in Canada because of its “accessibility to and use by the appellants.”

While this case focused on the Income Tax Act definition of “foreign-based information,” I wonder to what extent the Court’s thinking may be applied to issues associated with Canadian law being applied to internet content that is housed on foreign servers.

What other types of content are located off-shore and have been presumed to be beyond the reach of Canada’s legal system?

Technorati Tags:
eBay, offshore

TELUS has announced a $100M investment to create TELUS Health Solutions. The company is tagged as “backed by Emergis” and it appears to be the next phase of the company’s integration under the TELUS banner.

The idea is to bring together a portfolio of technology, expertise and resources to transform information management in the healthcare industry. When the Emergis deal was announced last December, I recall writing about such a fit.

Later, following my own close encounter with the Ontario medical system in January, I wrote:

Talk about an industry that is long overdue for efficiency improvements. What can the telecom industry do to help deliver better health care service at lower cost?

A problem with our government accounting systems is an inability to deal with capital investments that may require more than a “same budget year” payback. As such, outsourcing solutions may be a perfect fit to help modernize the way our hospitals and medical delivery specialists manage records and images.

Given the size of our national expenditures in this sector, the potential benefits are immense from even a marginal improvement in the effective use of information management.

Our taxes need such a break!

In the form of a regulatory application, Public Works has fired the latest salvo in the battle between Bell and TELUS over the network for Canada’s Department of National Defense (DND).

The Globe and Mail has a write-up on the case, which is apparently one of a number of customer network for which Bell is less than sympathetic to the challenges faced by its competitors in transitioning circuits.

Recall that back in September, I wrote about a TELUS application in front of the CRTC. TELUS sought a ruling from the Commission on two separate issues. On September 22, the CRTC agreed with TELUS that there was no obligation for the customer to have to enter into a renewal of the old deal with Bell.

But the Commission declined to rule on the second request, a declaration that

Bell Canada is not entitled to require the customer to agree to a minimum contract period or minimum revenue guarantee as part of the terms upon which Bell Canada will continue to provide such services/circuits as required by the customer after that date to complete the transition

The CRTC said that it did not have sufficient information to consider all of the relevant circumstances.

Now, Public Works has filed an application that provides some of the additional context.

The application confirms suspicions that the customer in question is DND. The root of the dispute appears to be that TELUS has been unable to migrate the network as aggressively as it planned. The application asks the CRTC for a determination under Section 27 of the Telecom Act, the section that refers to just and reasonable rates and discriminatory practices.

The rates for most of these services are forborne, so it is even more of a challenge to see how the CRTC will wade in on the issue of the rates themselves.

In any case, negotiating through the regulator can’t be good for any of the parties: Bell, TELUS or the customer. The letters in the appendices demonstrate that customers have long memories. There is a lot of ill will being generated by a customer account that is worth in the order of $20M annually.

As I suggested in September, both carriers need to put the customer first.

And customers with sophisticated networks are going to need to take a really good look at their contracts to ensure that there are adequate provisions for transitions at the front end and at contract termination.

It takes time to switch carriers; enterprise customers need to make sure their interests are properly covered.

OK, so how often do you think you will find the CRTC dropping the “f-bomb” together with a list of 6 other words that you wouldn’t say in front of your grandmother.

They appear collected in a government document in a way that George Carlin could only dream about.

Broadcasting Decision CRTC 2008-311 takes a look at three separate complaints filed against Much Music. Bottom line was that Much was found guilty of broadcasting mature content outside the 9pm-6am “adult” window.

I was surprised by the explicit nature of the CRTC’s narrative describing the programming that was the subject of the complaint.

In a previous life, when preparing regulatory submissions, a few of us would slip certain language into drafts of our filings. We were continually trying to see if our boss was actually concentrating on reviewing the draft. On one occasion, we actually thought that “bodacious” was going to slip by.

I wonder if someone in the Commission’s decision writing group collected a $5 bet on whether this one would make it through final review!

I think the Commission may want to put its own warning from the CBSC on the top of this Decision. If I wanted to hear that kind of language at 11 am, I’d go back to working for my old boss!

Technorati Tags:
MuchMusic, CBSC, CRTC

I was having trouble understanding Michael Geist’s article that appeared in various papers this past week [Toronto Star version, Geist web version].

On Wednesday, I pointed out the problem with his allegation that “many Canadian ISPs” are fiddling around with customers’ traffic on the basis of the content.

I have read the article a few times and I was not sure if I understood the proposal. At first blush, it seemed that he is calling for a deeper level of deep packet inspection than anything employed by carriers today. He seemed to be proposing that, if traffic shaping is to become a fact of life, then ISPs should agree to give Canadian content a free pass to un-managed bandwidth as their “Internet equivalent of cultural funding.”

As ISPs move toward tiered access that grants preferential treatment (such as faster speeds) to their own content or to premium content promoted by deep-pocketed interests, an equal opportunity approach to new media content would effectively bring Cancon into the Internet era by asking for nothing more than a fair shake.

The implementation of a regime that might need to examine all new media content for a Canadian content flag in order to be awarded ‘safe passage’ is of great concern and was the subject of some of the comments on his blog. So he provided a clarification by way of a reply comment:

I am an advocate of net neutrality and this is a call for net neutrality. The piece argues for the promotion of the Canadian content by treating all content equally.

So, there must have been a hidden meaning to the article.

With this clarification, he seems to be suggesting that net neutrality would be the solution to providing incentives to stimulate access to Canadian content, as if providing unfettered access to all content is enough of an incentive to promote Canadian content.

How does net neutrality provide a promotion of Canadian content?

Is the root of this proposal the unfounded presumption that any ISP is treating traffic differently on the basis of content?

Professor Geist will be speaking at the Public Policy Forum session on net neutrality in Ottawa next week. I suspect we will hear more about this proposal there.