The CRTC got it right yesterday with its Decision on Bell’s network management, but then everyone proceeded to mismanage the communications.

Let’s be clear.

Notwithstanding what you may have read elsewhere, the CRTC fully endorsed:

• the claims by Bell that its network is congested during peak periods (see paragraph 29);
• that intensive use of P2P file-sharing applications could “result in network congestion and degrade the performance of Internet services for other end-users” (paragraph 30);
• that it is reasonable to assume that CAIP’s members end-users would generate traffic in a similar fashion (paragraph 31); and,
• that Bell established that some network measures are required to prevent its customers from using, or permitting to be used, P2P file-sharing applications so as to prevent fair and proportionate use by others of its network (paragraph 32).

Focus on this last citation with an eye to the statement in today’s National Post:

The decision closes one chapter in a long-awaited ruling that industry observers saw as a judgment on how fair Canada’s Internet is for consumers.

The Decision is an endorsement for fair use of the internet. The CRTC said that shared internet resources should not be hijacked by a minority of users, using an application that is not sensitive to latency. The CRTC found that network measures were required to prevent P2P file-sharing from harming the fair use of the network by others.

While some ill-informed observers try to draw a parallel to a different outcome with the FCC and Comcast, they conveniently neglect to say that Comcast was blocking applications, with no evidence of their actions being tied to managing their network. No action was taken to target video streaming, other than to enhance it.

Let’s get the facts right. This decision was for a consumer friendly internet.

Technorati Tags:
CRTC, net neutrality

Yesterday’s forum on net neutrality in Ottawa brought together some of the voices on both sides of the issue from both sides of the border.

An important observation was that the Canadian legislative regime is very different from that in the United States.

One of the US-based net neutrality advocates said that Canada is “years ahead of the US from a regulatory perspective.” The American participants observed that the major Canadian ISPs are carriers as well and as such are subject to regulatory oversight. The luncheon speaker questioned why anyone would want to discourage experimentation in the way services are packaged for consumers – the implication being that this is a likely outcome with regulatory intervention.

Of course, there was some confusion in their terminology and some kept saying that in Canada, ISPs are considered to be common carriers – which is not true; only some of the ISPs happen to be carriers. Resellers are still ISPs, but are not carriers.

There were a few other areas that need to be examined further.

Some people bemoaned the lack of competitive choice of ISPs, suggesting that we cannot rely on market forces to discipline network misbehaviour by some ISPs. A specific question was asked if a carrier would accept net neutrality obligations in a monopoly situation, with a suggestion that this exists for 15-20% of all of Canada.

Of course, the premise is not sound. There are very, very few places where only one provider is an option. Satellite service is an alternative, as are the resellers. Further, we have a regime that enables ISPs and CLECs to lease loops and install their own DSLAMs.

I have written before about HSPA being used for fixed broadband applications. The current advertising campaigns and wireless data plans in the market seem to point to mobile becoming a genuine substitute for residential broadband.

How can we say that there are broadband service monopolies?

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