One of the benefits of summertime is the opportunity to catch up on reading.

On Tuesday, I spoke of the FTC’s recent paper on Net Neutrality. One of my regular blog readers pointed me to an OECD overview of Internet Traffic Prioritisation that was prepared a year ago but only released to the public in April.

The OECD report identifies the following points in its executive summary:

A market-based solution is preferable to intervention in the market as a way to deal with issues regarding traffic prioritisation. However, it may be helpful for governments to publish a set of general principles for market participants. If problems occur, ex-post remedies can be used. The decision to apply ex-ante regulation will depend on whether regulators find evidence of persistent problems in the context of traffic prioritisation and if market forces or ex-post solutions are unable to sufficiently protect consumers. There is considerable debate about whether significant anti-competitive problems will appear in markets. There is little evidence of anti-competitive conduct to date and problems have typically been resolved quickly via market forces or through quick regulatory intervention in markets where they have appeared.

There are some recommended regulatory principles suggested by the OECD as steps that policy makers could take to reduce incentives for anti-competitive behaviour:

1. Reducing entry barriers that inhibit entry in the broadband Internet access market.
2. Re-examining existing competition laws to ensure they can address any abusive practices that could appear under a multi-tiered Internet structure.
3. Ensuring that subscribers can switch operators easily.
4. Improving disclosure to broadband consumers of how their broadband Internet service is affected by packet prioritisation.

The OECD paper suggests that it may be premature for governments to get involved in network-to-network traffic exchange, an issue raised in Canada by the Quebec ISPs. Further, many have expressed concern about neutral access for content providers which the paper suggests, along with the concerns of smaller, start-up firms, could be addressed through the pooling of demand for Internet access via a common ISP.

The paper seems to be another voice for a market forces approach for net neutrality.

The CRTC has announced its next steps in the introduction of Canada’s Do Not Call List (DNCL) registry to halt unsolicited telemarketing calls. Decision 2007-48 is a lengthy one, describing the creation of a database and starting the process to select the DNCL Operator, as well as the rules that will come into place, once the database is operational.

The next step will be for the CRTC to issue a Request for Proposal (RFP) later this month to solicit bids for the database creation and operator.

Once the operator is selected, Canadians will be able to add their numbers to the database, at no charge. To register or de-register on the National DNCL, the consumer will call a toll-free number (yet to be determined, but I understand that 1-800-PISS-OFF is available) from the telephone number that they wish to register or de-register. Registration will also be available online; Consumers will be able to register a maximum of three numbers at a time over the Internet.

Complaints? The national DNCL operator will make an initial determination about a violation, then refer the case over to the CRTC.

Telemarketers will be prohibited from calling consumers who are registered on the list and the penalties are quite severe: the Commission will decide whether to issue a notice of violation and impose monetary penalties per each violation of up to $1,500 for individuals and up to $15,000 for corporations.

There are certain exemptions to the list, most of which are provided for in legislative changes introduced to the Telecommunications Act last year. These include unsolicited calls made on behalf of:

• registered charities;
• political parties;
• nomination contestants, leadership contestants or candidates of a political party;
• opinion firms;
• general-circulation newspapers;
• organizations that have an existing business relationship with a consumer; and
• organizations to business consumers.

Warning to all school groups and clubs – stick to calling members, parents and students, or you will face fines of $15,000 per call. The CRTC did not grant more generous exemptions to groups that are simply affiliated with charitable work, or to extended ‘business relationships’. As a result, be careful calling that grumpy rich relative looking for donations.

The CRTC could have been more generous for school groups – it created a new exemption for calls to businesses – apparently thinking that small business owners have nothing better to do with their time.

All of this will be fodder for the three year review of the telemarketing rules coming up in 18 months, likely around the time of the database going operational.

Michael Geist has some more comments.

An associated decision, 2007-47, sets out the CRTC’s review of the recommendations of the DOWG – the DNCL Operations Working Group (don’t you love a nested four letter acronym?). Those rulings will be helpful for potential respondents to the upcoming RFP seeking bidders for the national DNCL operator.

The FTC has released a report on Broadband Connectivity Competition Policy which addresses the issue of net neutrality and the FTC’s views on whether government should intervene in the issue.

Having the FTC examine the issue is interesting in itself. In some ways, people have suggested that carriers can do what they like with certain communications services, but if they call it “Internet”, then there are certain neutrality characteristics that should apply. In its statement accompanying the release of the report, FTC Chair Deborah Platt Majoras says

This report recommends that policy makers proceed with caution in the evolving, dynamic industry of broadband Internet access, which generally is moving toward more – not less – competition. In the absence of significant market failure or demonstrated consumer harm, policy makers should be particularly hesitant to enact new regulation in this area.

Almost echoing statements made by Canadian Competition Bureau chief Sheridan Scott at The 2007 Canadian Telecom Summit, the report says

The FTC’s statutory mission is to protect competition and consumers by safeguarding and encouraging the proper operation of the free market. … In evaluating whether new proscriptions are necessary, we advise proceeding with caution before enacting broad, ex ante restrictions in an unsettled, dynamic environment.

The FTC also advocates the ‘free markets’ approach favoured by Canadian Industry Minister Maxime Bernier. The report says:

Over time, competition produces the best results for consumers, providing them the lowest prices, the highest-quality products and services, and the most choices. Competition forces firms to lower their costs and prices and to improve quality, service, convenience, and other attributes that consumers value. Competition induces firms to produce the types and amounts of goods and services desired by consumers. Our freemarket system fosters innovation, creativity, and entrepreneurship that are unmatched around the world.

Similar to the situation in Canada, many claim that the broadband access market is a cozy duopoly between the telcos and cablecos. The FTC study disputes this:

While there is disagreement over the competitiveness of the broadband Internet access industry, there is evidence that it is moving in the right direction. Specifically, there is evidence at least on a national scale that:

1. consumer demand for broadband is growing quickly;
2. access speeds are increasing;
3. prices (particularly speed-adjusted or quality-adjusted prices) are falling; and
4. new entrants, deploying Wi-Fi, WiMAX, and other broadband technologies, are poised to challenge the incumbent cable and telephone companies.

Although this is merely a high-level snapshot of a dynamic, evolving marketplace, such evidence challenges the claims by many proponents of network neutrality regulation that the broadband Internet access market is a cable telephone duopoly that will exist for the foreseeable future and that the two primary broadband platforms do not compete meaningfully.

As I have written before, the FTC report notes that regulation, however well-intended, has associated costs, and may lead to unintended consequences, especially where the conduct for which regulation is intended has generally not yet occurred.

The reply comments for the AWS auction consultation have been submitted to Industry Canada and there is entertaining reading to be found – at least among the information that I have been sent. [Has anyone else been having trouble reaching the Industry Canada website?]

On Wednesday, I wondered how TELUS would respond. Well, it has re-engaged in the battle for an open auction process – its submission is feisty right from the opening quote that appears above the header on its executive summary:

One thing both TELUS and Quebecor agree on: AWS is not simply about wireless phone service. AWS represents an alternative information and entertainment content distribution platform. Small wonder that cable companies want to restrict entry by carriers like TELUS into that line of business. However, no matter how many ads Quebecor runs in their newspaper empire about wireless prices, a simple truth remains: wireless prices keep declining year over year while cable bills just keep going up.

Any doubts about its position? In my Wednesday post, I referred to Darren Entwistle’s comments that were contingent on TELUS moving forward on its BCE acquisition. Any support of new entrant incentives were tied to a condition: “Should Telus’ acquisition of BCE proceed, we believe…” The BCE deal is off the table. As a result:

In the current competitive environment, no justification exists for Industry Canada to abandon the department’s objective to rely on market forces to the greatest extent possible, in telecommunications generally and in this market in particular.

Quebecor isn’t withering from the argument. It issued a press release saying

the government should take measures to prevent the three large, current providers of wireless services from snapping up all the frequencies that will be put up for auction in the coming months. … The three main Canadian mobile telecommunications companies now have more spectrum than they need to serve their customers and supply advanced broadband mobile services. As an illustration, the three companies have an average of 60 MHz of spectrum to serve 1.1 million people in the Ottawa region, while six U.S. providers have an average of 45 MHz to serve 19 million people in New York City.

TELUS responds with:

These statements seek to throw up a smoke screen and obscure what is clear: namely that the AWS band is a new band that will create more competition and choice in the content space. New, innovative technology and services will be developed for this band that may or may not be available in the current PCS band.

MTS Allstream has also weighed in with a statement accompanying its submission:

Given recent developments in the industry, including the potential combination of the country’s two largest wireless carriers, the need for new entry to spur competition is more important than ever. Canada will benefit from more wireless competition, and a responsible AWS auction process is critical to helping Canadians get it.

The official paper file is in the hands of Industry Canada. Watch for political pressures and public advocacy over the summer months. As I sift through the filings, I’ll bring you some highlights.