I wrote a flash update on the CRTC’s Decision this morning from the middle of the Public Policy Forum conference looking at Net Neutrality.

The CRTC denied CAIP’s application – looking at the narrow set of issues raised, without looking at the broader issue of net neutrality and traffic management practices of ISPs at a wholesale and retail level.

CRTC chair Konrad von Finckenstein said:

Based on the evidence before us, we found that the measures employed by Bell Canada to manage its network were not discriminatory. Bell Canada applied the same traffic-shaping practices to wholesale customers as it did to its own retail customers.

I think it important to look at this decision in the very narrow scope of that was used by the CRTC.

The proceeding did not examine the broad issue of “Net Neutrality”, but rather, examined whether the nature of management of wholesale customers’ traffic traversing the Bell network was consistent with the provisions of the Telecom Act.

The Commission looked at 5 points:

1. Was Bell’s traffic shaping in violation of their tariffs?
2. Was Bell’s traffic shaping in violation of non-discrimination provisions of the Act?
3. Did Bell’s action control the content or influence the meaning or purpose of the telecommunications?
4. Was Bell’s traffic shaping in violation of CRTC privacy rules?
5. Did Bell act in violation of the “notice of network change” rules?

“No” was the answer on all counts.

We’ll want to discuss further what all of this means. I’ll save that for another day.

Technorati Tags:
net neutrality, CAIP

I have been troubled by the assertion by some advocate that net neutrality regulations are required in order to maintain the conditions that would allow the next great innovations to emerge. Other than emotional outbursts, there is little in the way of evidence to back up this view.

Conversely, we know that specific net neutrality regulations have never to date existed and so all the great internet applications we love have emerged in an era of unregulated internet service.

This has allowed market-based competition to flourish and fail among ISPs, providing choices for applications, content delivery as well as their consumers. Choices in network architecture and choices in pricing models.

Some spread fear about the idea that companies might deliver different quality for different payment schemes, as if every other product delivered in the world was on the basis of communal equivalence.

We may wish to give some thought to a proposition that a priority access service from some ISPs may actually facilitate a “new or poorly funded provider” (in the words of one of my commenters) to more effectively compete against more entrenched applications providers.

Some existing application providers own their own backbone facilities and directly interconnect with ISPs around the world, yielding outstanding network performance world-wide. How can a new entrant compete against such a well established application provider?

A start-up (say, with an application that needs low latency) that can’t replicate such a global reach may wish to buy a service on a flexible payment plan (such as % of revenues, number of simultaneous streams, etc.) which an ISP may sell to help them get exposed to a global audience faster.

Cisco is suggesting that half of all internet traffic will be video by the year 2012 compared to 22% in 2007. Streaming and interactive gaming services won’t tolerate average network latency. Add in the laws of physics that come into play if a user in Asia tries to connect to a server located in Canada.

Why would we want legislation that prevents innovators from buying network access to cost effectively compete the global reach of the entrenched software giants?

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.