Search Results for: neutrality

I find it interesting to see how two of Canada’s most important telecom trading partners are approaching net neutrality.

Recall, earlier this year I wrote “Canada’s policy framework for net neutrality is among the most prescriptive and restrictive.” A month later, I asked if Canada should be considering a review of its network neutrality policy.

South of the border, we see the FCC looking at imposing network neutrality regulation through a recategorization of internet services under Title II. And the UK’s regulator, Ofcom, has recently concluded a year long review and it has announced that the UK is heading in the opposite direction, revising its network neutrality guidelines to relax earlier rules. Ofcom’s Director of Connectivity, Selina Chadha, is quoted saying:

The net neutrality rules are designed to constrain the activities of broadband and mobile providers, however, they could also be restricting their ability to develop new services and manage their networks efficiently.

We want to make sure they can also innovate, alongside those developing new content and services, and protect their networks when traffic levels might push networks to their limits. We believe consumers will benefit from all providers across the internet innovating and delivering services that better meet their needs.

In the UK, certain aspects of net neutrality are imposed under Parliamentary legislation. Ofcom is responsible for monitoring and ensuring compliance and cannot change the legislation itself.

Ofcom’s statement on the new guidelines sets out:

• ISPs can offer premium quality retail offers: Allowing ISPs to provide premium quality retail packages means they can better meet some consumers’ needs. For example, people who use high quality virtual reality applications may want to buy a premium quality service, while users who mainly stream and browse the internet can buy a cheaper package. Our updated guidance clarifies that ISPs can offer premium packages, for example offering low latency, as long as they are sufficiently clear to customers about what they can expect from the services they buy.
• ISPs can develop new ‘specialised services’: New 5G and full fibre networks offer the opportunity for ISPs to innovate and develop their services. Our updated guidance clarifies when they can provide ‘specialised services’ to deliver specific content and applications that need to be optimised, which might include real time communications, virtual reality and driverless vehicles.
• ISPs can use traffic management measures to manage their networks: Traffic management can be used by ISPs on their networks, so that a good quality of service is maintained for consumers. Our updated guidance clarifies when and how ISPs can use traffic management, including the different approaches they can take and how they can distinguish between different categories of traffic based on their technical requirements.
• Most zero-rating offers will be allowed: Zero-rating is where the data used by certain websites or apps is not counted towards a customer’s overall data allowance. Our updated guidance clarifies that we will generally allow these offers, while setting out the limited circumstances where we might have concerns.

Professor Mark Jamison of the University of Florida’s Public Utility Research Center writes that “net neutrality is a concept whose time has passed.” Instead of relying on rules tailored for the digital age, the FCC is planning to bring internet service providers under Title II. These were regulations originally developed for monopoly wireline telephone services. opens the door for all the old laws to apply.

Professor Jamison notes that the proposed regulations are introducing a ‘general conduct standard’ “that grants the FCC authority to prohibit anything it deems ‘unreasonable.'” He argues that in an era of such rapid technological advancements, regulators need to make decisions (based on sound evidence) and adopting a ‘light-handed regulatory approach.’

Should the CRTC undertake a review similar to that which was done by Ofcom? Like the UK, would Canada find that the current environment may be restricting the ability to develop new services and manage networks efficiently?

Does the CRTC have the resource capacity to take on yet another review as it implements the government’s Online Streaming and Online News Acts?

Last month, in “Net neutrality 20 years later”, I wrote “Canada’s policy framework for net neutrality is among the most prescriptive and restrictive.”

That led me to wonder: Is it time for that framework to be reviewed?

After all, the United States has operated without such regulations for more than half a decade and the sky has not fallen.

The UK regulator, Ofcom, has been reviewing submissions to its recent consultation on the subject, seeking a more nuanced approach. In its call for comments, the regulator observed:

because the net neutrality rules constrain the activities of the ISPs, they may be seen as restricting their ability to innovate, develop new services and manage their networks. This could lead to poor consumer outcomes, including consumers not benefiting from new services as quickly as they should, or at all. These potential downsides might become more pronounced in the future, as people’s use of online services expands, traffic increases, and more demands are placed on networks.

As Ofcom has noted, as technology evolves and we continue to move even more activities online, it is important for net neutrality regulations “to support innovation, investment and growth, by both content providers and ISPs. Getting this balance right will improve consumers’ experiences online, including through innovative new services and increased choice.”

I noted last fall that Ofcom was proposing:

• most zero-rating offers will be allowed;
• ISPs have flexibility to offer retail packages with different levels of quality;
• ISPs can use traffic management measures to manage networks;
• ISPs have more scope to develop specialised services, such as network slicing;
• Ofcom will not prioritise enforcement action where there is clear public benefit, in relation to:
  • the prioritisation and zero-rating of all communications with the emergency services;
  • traffic management of internet services provided on transport;
  • the use of parental controls and other content filters involving the blocking of traffic; and
  • blocking access to fraudulent or scam content.

Last week, I thought it was interesting that the CRTC itself chose a more nuanced approach to zero-rating in its determinations in TRP CRTC 2023-41: Mobile wireless service plans that meet the needs of Canadians with various disabilities. In that policy determination, the question of permitting (and even mandating) zero-rating was at issue for Video Relay Service (VRS). The CRTC found that “zero-rating VRS clearly benefits the public interest, with minimal associated harm, and would be consistent with the DPP (Differential Pricing Practices) framework”. Still, the CRTC did not consider it to be necessary to mandate zero-rating of VRS by all of the service providers, finding that consumers have access to competitive choice of providers that offer zero-rated VRS services and other suitable solutions.

Competitive choice, freedom to innovate and develop new services. Those might be clues that the CRTC should reassess its overly prescriptive approach to net neutrality.

Last week also saw President Biden renominate (for the third time) long-time net neutrality advocate Gigi Sohn to fill a seat on the Federal Communications Commission that has been open for 2 years. David McGarry writes “Should she gain the Senate’s approval, she will break the agency’s current 2–2 Democrat-Republican logjam and allow the agency to re-enact Obama-era net neutrality regulations, which are economically nonsensical and largely unnecessary.”

According to McGarry, “Mandated net neutrality was the worst sort of technocratic overreach. Bureaucrats dreamed up an overbroad market intervention to ameliorate an imagined crisis—to the detriment of innovation and consumers.”

In 2017, Ken Engelhart wrote about the natural experiment created when the the US got rid of its net neutrality regulations under previous FCC Chair Ajit Pai while Canada established its framework.

When Canada banned zero-rating, the United States didn’t. As a result, T-Mobile, an American cellphone company, started zero-rating video services. The other wireless carriers in the U.S. retaliated with unlimited data offers. Now, the U.S. has unlimited wireless offers and Canada doesn’t. Can I say definitively that this is a permanent difference or that it can be attributed to our zero-rating rules? No, but it is the kind of anti-consumer impact that happens when regulators regulate too much.

Two years later, he followed up saying, “You might have expected that as a result two very different internets would develop in the two countries.”

Of course, that didn’t happen. He noted that the US and Canada have similar internet services, with similar average speeds. Indeed, fixed broadband speeds in the US are now about 35% higher than Canada. The sky didn’t fall as predicted by US Senate Democrats.

As Engelhart wrote, “In the end, it seems that public interest groups and regulators were selling the public elephant repellant: a harmless, but useless spray, meant to defend against a threat that does not exist.”

In his 2017 primer on net neutrality, Professor Daniel Lyons wrote, “A small delay in packet delivery may be imperceptible to someone browsing the web but can erode the quality of a video stream or a telemedicine app. Prioritizing these packets could improve the experience for Netflix users or rural doctors, without adversely affecting users of congestion-insensitive services.”

I’ll give Professor Lyons the final word. “More generally, net neutrality discourages innovation by broadband providers. It assumes that the way broadband is currently delivered is the way it must always be, which limits providers’ ability to test new business models.”

Isn’t it time to review Canada’s net neutrality framework?

It was 20 years ago that Columbia University law professor Tim Wu published his seminal “Network Neutrality, Broadband Discrimination” [pdf, 1.4MB].

The subject of network neutrality has been part of more than 250 posts on this site, examining how regulatory authorities have dealt with the concept (or not) through the past 2 decades.

Last October, I wrote about how the UK regulator, Ofcom, was proposing a more nuanced approach to its regulations given the evolution of broadband technologies and the marketplace.

A recent article by University of South Africa professor Petrus Potgieter asks if it is time to take a break from the concept. “Twenty years of ‘network neutrality’ – time for a break? Consumers have a long-term interest in cost recovery and value sharing”.

He observes that “[network neutrality regulation] appears to be largely an affliction of the northern hemisphere as the rugby nations of Australia, South Africa and New Zealand have absolutely no network neutrality regulation, little discussion of the topic and no discernible shortage of any online content or service. In much of Latin America, regulators have had to create exceptions for zero rating to ‘network neutrality’ regulation because of strong popular demand.”

Professor Potgieter talks about 3 phases of internet commercialization (to date).

It is worth reflecting on the differences between phase II and phase III. In phase II, the ISP delivers ad content for which the content provider charges the advertiser and which traffic is therefore not directly monetised by the ISP. However, this is nuisance traffic for the end-user and the websites carrying the advertising have an incentive not to overdo it, lest they lose ‘eyeballs’. Since the end-user pays only the ISP, the broadband provider monetises the full value of the traffic to the end-user. The fact that this traffic also has value for the content provider (and the advertiser) is of secondary importance.

We are now in phase III where the bulk of the traffic is of subscription content for which the end-user pays the content provider (for example, Netlix) directly. The ISP delivers traffic to the end-user, the value of which (to the end-user) it cannot fully capture since the end-user has already paid the content provider. Furthermore, the traffic volumes are enormous and growing at a crisp rate through (a) increased time spend in front of a networked screen and (b) steadily higher resolution/quality of content.

He argues that Phase III is characterized by relatively few, identifiable originators of traffic, making it natural for internet service providers to explore partnerships with the content providers. “The dogma of network neutrality makes both cost recovery and value sharing impossible. Although this is to the short-term benefit of content providers, it is detrimental in the medium term to the development of end-user broadband infrastructure.”

He suggests that a cost recovery debate, exemplified by the legal battle between Netflix and South Korea’s SK Broadband, might provide a catalyst for for a fresh look at restrictive net neutrality regulation.

The Potgieter article argues that network neutrality regulations ultimately harm consumers by restricting choice. Canada’s policy framework for net neutrality is among the most prescriptive and restrictive. Twenty years later, is it time to review whether the regulations are still “efficient and proportionate to their purpose”.

The UK telecom regulator, Ofcom, has proposed to revise its guidance on how ‘net neutrality’ rules should apply, indicating that a more nuanced approach may be appropriate given the evolution of broadband technologies and the marketplace.

Since the current rules were put in place in 2016, there have been significant developments in the online world – including a surge in demand for capacity, the emergence of several large content providers such as Netflix and Amazon Prime, and evolving technology including the rollout of 5G. So Ofcom has carried out this review to ensure net neutrality continues to serve everyone’s interests.

Ofcom indicated that “the [current] net neutrality rules constrain the activities of the ISPs, [and] may be seen as restricting their ability to innovate, develop new services and manage their networks.” The regulator considered that this could lead to poor consumer outcomes, “including consumers not benefiting from new services as quickly as they should, or at all. These potential downsides might become more pronounced in the future, as people’s use of online services expands, traffic increases, and more demands are placed on networks.”

The consultation document [pdf, 1.5MB] is 139 pages long, plus an additional 62-page set of annexes [pdf, 917KB].

Ofcom is proposing:

• most zero-rating offers will be allowed;
• ISPs have flexibility to offer retail packages with different levels of quality;
• ISPs can use traffic management measures to manage networks;
• ISPs have more scope to develop specialised services, such as network slicing;
• Ofcom will not prioritise enforcement action where there is clear public benefit, in relation to:
  • the prioritisation and zero-rating of all communications with the emergency services;
  • traffic management of internet services provided on transport;
  • the use of parental controls and other content filters involving the blocking of traffic; and
  • blocking access to fraudulent or scam content.

Ofcom has also proposed additional reporting from ISPs to allow monitoring the effects of the increased flexibility being provided.

Ofcom is also seeking comment on providing greater flexibility for ISPs in certain areas that could generate positive consumer outcomes, but are not permitted under the current legislation, including: allowing zero-rated content to be accessed after a customer’s data allowance has been exhausted; allowing retail offers which guarantee different quality levels for traffic associated with specific content; and allowing greater flexibility to apply traffic management to specific content to address congestion.

Finally, Ofcom has provided views on “the possibility of allowing ISPs to charge content providers for carrying traffic that might lead to more efficient use of networks.”

We acknowledge that in principle there could be benefits to a charging regime, particularly in improving the incentives on CAPs to deliver traffic efficiently. However, we also recognise the difficulties that designing an effective scheme raises, the risks and uncertainty such a change could create, and the unclear impact on consumers. A charging regime would be a significant step and we have not yet seen sufficient evidence that such an approach would support our objectives at this time. We also consider our other proposals provide flexibility that should help mitigate several issues identified by ISPs.

Comments are due January 13, 2023. Ofcom says that it expects to issue its decision and revised guidance by Autumn 2023.

“We want to make sure that as technology evolves and more of our lives move online, net neutrality continues to support innovation, investment and growth, by both content providers and ISPs. Getting this balance right will improve consumers’ experiences online, including through innovative new services and increased choice.”

Earlier this week, The Globe and Mail carried an article in which Conservative leader Andrew Scheer said his party supported “the concept of net neutrality” and the newspaper portrayed this as being in contrast to his Innovation critic, Maxime Bernier.

Mr. Scheer added that his party supports the concept of net neutrality, the rules that require all internet traffic be treated equally. This comes in contrast to his innovation critic and former leadership rival, Conservative MP Maxime Bernier, who publicly advocated against it in favour of less government control and more free competition.

Are these positions really in conflict with each other?

Every so often, I like to refer back to the report of the Telecom Policy Review panel [pdf, 1.6MB]. While that panel reported back to parliament more than 11 years ago, most of its work still holds up today. Recall, the panel defined net neutrality in terms of “the right of Canadian consumers to access publicly available Internet applications and content of their choice by means of public telecommunications networks that provide access to the Internet.”

The panel said:

Given the complexity of this area, the rapid evolution of technologies and the market dynamics, the Panel believes the regulator here should have more discretion than in other areas of regulation. However, the Panel also believes this discretion should be exercised with a view to encouraging reliance on market forces and customer choice as much as possible. For example, there may be situations in which a customer wants an ISP to block access to particular applications or content. In addition, some customers may be willing to accept a reduced degree of access in exchange for a lower price. Such consumer choices should be respected.

In the Panel’s view, the purpose of a customer access rule should be consumer protection, and there should be a strong emphasis on ensuring that customers have the information required to make informed choices. In this way, the rule would promote the efficient operation of market forces.

Recall, this was a panel originally created by a Liberal government, that ultimately delivered its report to Maxime Bernier, the Conservative party Industry Minister at the time.

It is possible to support the principles of net neutrality, “the concept”, and still support the implementation of rules that encourage “reliance on market forces and customer choice as much as possible.”

We should not presume that supporting the concept of net neutrality is inconsistent with a light touch regulatory approach to its implementation.