One day before the Federal Communications Commission in Washington announced draft guidelines to establish an American Net Neutrality policy, the Canadian Radio-television Telecommunications Commission (CRTC) announced its own guidelines to govern what Canadian broadband providers can and cannot do with the Internet traffic they deliver to millions of Canadian consumers.  While Bell (Canada), the nation’s largest telecommunications company praised the CRTC for its provider-friendly ruling, consumer groups varied their responses from “a step in the right direction” to “weak” to “here comes more gouging.”

The CRTC Net Neutrality policy for Canada essentially permits providers to continue to throttle broadband speeds for both retail and wholesale customers, and block traffic altogether should the CRTC grant permission in “exceptional cases,” as long as the provider discloses the practice to consumers up front, and warns them in advance of any policy changes that further slow their connections.

Laurel Russworm, who runs Stop Usage Based Billing, was not pleased.

“The CRTC decision doesn’t have a silver lining I can find; in fact they essentially said that usage based billing and caps are good tools to use to fight congestion. All Bell Canada has to do is warn us first, then they can gouge as they please. They’ve deferred making a decision on usage based billing until after the court challenges are dismissed, but I’m not holding my breath,” Russworm wrote.

On Wednesday the CRTC decided that Internet providers in Canada need measures to manage the traffic on their networks at certain times to deal with what providers claim to be a congestion problem.  At hearings held this past summer, several CRTC commissioners were receptive to the claims providers made that Canadian broadband does not have the capacity their American neighbors have.  Providers like Bell and Rogers claim that peer to peer traffic and increasing consumption of high bandwidth services have created capacity shortages on their networks, requiring traffic management which artificially slows certain traffic on their networks at “peak times.”  Canadian broadband providers almost universally also impose Internet Overcharging schemes on their customers, limiting customer use and charging them overlimit penalties for exceeding usage allowances.

The commission accepted the providers’ claims and gave the green light to those practices, but said before a provider literally blocks access to online services, or throttles time sensitive traffic on services like Voice Over IP telephone or two-way video conferencing to the point it becomes “degraded,” it needs to get Commission permission first.

Mirko Bibic, Bell Canada’s senior vice-president of regulatory and government affairs, told The Globe and Mail the ruling gives carriers the right to run their businesses the way they see fit. “We’re the experts, and we get the flexibility to determine how to manage our networks to give the user the best experience,” he said.

Bell already “throttles” its Internet service by slowing peer-to-peer downloading between 4:30 p.m. and 1 a.m. to make sure the network is not overloaded by a relatively small number of people transferring large video and music files.

Independent Internet providers are among the biggest proponents of Net Neutrality, and a ban on Internet Overcharging schemes known in Canada as “usage based billing.”  Many Canadian broadband providers obtain connectivity through wholesale accounts purchased from Bell.  The Canadian phone giant imposed both speed throttles and usage based billing on their wholesale customers.  Those costs, and the speed bumps that go with them, are now increasingly passed on to consumers.  Independent providers fear being put out of business.

For many of them, Wednesday’s decision might as well never have happened.

“This has really not changed anything,” Tom Copeland, chair of the Canadian Association of Internet Providers, told PC World.

Copeland said the “biggest, most glaring omission” from the ruling is the lack of restraints on the time of day or how long suppliers like phone or cable companies can manipulate traffic. “So we could continue to see traffic management every day of the year,” he said.

“We’re still not addressing the cause of the problem,” he added: “Either weak points in the network, or abuse by users.” Most casual users of peer-to-peer applications — the biggest offending programs in the eyes of providers – aren’t the problem, he said.

“We just went backwards at warp speed,” lamented John Lawford, counsel for a coalition of consumer groups that fought for an end to throttling of Internet traffic of consumers, “ while we watch the U.S. rocket ahead.”

“The CRTC has said in this decision that ISPs own your content and own your Internet connection” said Lawford, “You just got owned.”

The Public Interest Advocacy Centre represented the Consumers’ Association of Canada, Canada Without Poverty and Option consommateurs during the hearings on Net Neutrality.  PIAC argued that the Telecommunications Act required ISPs not to interfere with customers’ Internet traffic unless such traffic was clearly harming other users of the network and not otherwise.  “ISPs should act as common carriers and just carry traffic, not as broadcasters deciding what you watch” continued Lawford, “but now they can decide what gets through – and how much they get to charge you for the privilege.”  Lawford also noted the CRTC’s requirement for the ISPs to disclose their “Internet traffic management practices” will not actually stop any of the practices.

The CRTC has repeatedly taken broadband industry-friendly positions in direct opposition to Canadian consumer interests, helping to set the stage for Canada’s rapid decline in broadband leadership.  The country’s standing in broadband rankings has taken a stunning fall from its earlier top-shelf position.  Regulatory policies that permit abusive, anti-competitive practices and reward providers for rationing broadband instead of investing in expanding it are at the heart of the problem.

Since the CRTC has taken positions more worthy of a industry trade group than an independent regulator, an increasing number of Canadians are demanding the CRTC lead or get out of the way.  A large group of Canadian voters upset about any issue is sure to attract politicians, and the New Democratic Party of Canada (NDP) has arrived.

Charlie Angus (NDP)

Charlie Angus, New Democrat Digital Affairs Critic and MP for Timmins-James Bay, who already is on record opposing Internet Overcharging schemes, says the CRTC dropped the ball on Net Neutrality.

“Yesterday’s CRTC decision on Internet traffic-management practices is a blow to the future of digital innovation in Canada,” Angus said in a statement.

“This interference [from traffic management] will be bad news for small third-party competitors and leaves consumers subject to digital snooping and interference from cable giants,” he added.

“Basically the CRTC has left the wolves in charge of the henhouse. ISP giants have been given the green light to shape traffic on the internet in favor of their corporate interests,” he said. “This decision is a huge blow to the future competitiveness of the Internet.”

Angus says that the premise of today’s decision – that notification from the ISP will allow customers to make an informed decision on where to buy Internet service – misses the harsh reality that the market for Internet service in Canada is not nearly competitive enough to work.

“Canada has fallen to the back of the pack in Internet service provision and pricing after leading the way for years. This is the direct result of a small band of ISP giants blocking out competition,” Angus said. “This decision clears the way for ISPs to squeeze out third-party players who are attempting to provide better price and service options.”

South of the border, the FCC has taken clear steps toward the establishment of Internet neutrality on U.S. networks.

Angus said that principle of Net Neutrality should be at the center of Internet policy in Canada, and that the CRTC has missed a golden opportunity with yesterday’s decision.

“The principle of Net Neutrality must be a cornerstone of the innovation agenda. The CRTC has once again acted as the rubber stamp for large ISP and cable players to dominate the market and decide which traffic goes in the fast lane and which traffic gets stuck in the slow lane. This decision continues a long and dismal tradition of Canada’s communication policy decisions chipping away at the public interest to the benefit of a few corporate giants.”

Dissolve the CRTC, a group collecting signatures to petition for the closure of the Commission, also made several comments about the CRTC decision.

Among their conclusions:

• The new policy leaves the door open to providers deciding their economic interests are better served from traffic management practices like throttles and usage limits than network investments.  Short term limits may serve the interests of stockholders, but could discourage long term investments needed to create new 21st century broadband platforms;
• The Commission’s encouragement that providers make additional investments in their networks is likely to fall on deaf ears.  It was Bell’s lack of investment in their broadband network which led to the traffic management practices, and the recent hearings about them, in the first place.  Without mandates, there is no real pressure on Bell to change their investment strategy.
• The Commission’s policy to regulate this issue through a user complaint process that calls out bad actors has no historical precedent of working.  The CRTC has a long history of ignoring public involvement in telecommunications proceedings, and does not like to involve themselves with individual customer complaints.  Campaigns to flood the CRTC with complaints on specific issues using their language may be the only way to get them to investigate.  Additionally, complaints that call out the disparity in network management policies between wholesale and retail accounts may only lead to additional restrictions on both types of accounts, making a bad situation even worse.

Canadians must contact their elected officials and demand federal legislation to enact true consumer protection and broadband reform policies to restore Canada to a position of leadership in broadband.  The CRTC is ineffective and must not be the final arbiter on these important issues.

The FCC today voted unanimously to begin writing a formal Net Neutrality policy to govern broadband services across the United States.  Three Democratic commissioners voted yes and applauded the concept of Net Neutrality.  The two Republican commissioners also voted to move the process forward, but signaled they would likely oppose the final draft of the rules.

Support for Net Neutrality, which would prohibit providers from slowing down, blocking, or charging higher pricing for favored access to web content, was spearheaded by FCC Chairman Julius Genachowski.

Genachowski said the rules were needed to protect consumers from abusive behavior by telecommunications companies that might seek to block or restrict access to broadband content, including telephone and video services.

“Internet users should always have the final say about their online service, whether it’s the software, applications or services they choose, or the networks and hardware they use to the connect to the Internet,” Genachowski said.

Other Democratic commissioners agreed with Genachowski.  Commissioner Michael Copps stated it was important to hear from everyone about the proposed rules.

“We need to recognize that the gatekeepers of today may not be the gatekeepers of tomorrow,” Copps said.

John McCain

Many Republicans were unconvinced of the need to establish Net Neutrality as formal policy.

“I do not share the majority’s view that the Internet is showing breaks and cracks, nor do I believe that the government is the best tool to fix it,” Republican commissioner Robert McDowell said.

“These new rules should rightly be viewed by consumers suspiciously as another government power grab over a private service provided by private companies in a competitive marketplace,” Sen. John McCain wrote in an opinion piece published by The Washington Times.

McCain compared Net Neutrality with the federal bailout of Wall Street and the American auto industry.

Under the draft proposed rules, subject to reasonable network management, a provider of broadband Internet access service:

1. would not be allowed to prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet;
2. would not be allowed to prevent any of its users from running the lawful applications or using the lawful services of the user’s choice;
3. would not be allowed to prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network;
4. would not be allowed to deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers;
5. would be required to treat lawful content, applications, and services in a nondiscriminatory manner; and
6. would be required to disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in this rulemaking.

The draft rules make clear that providers would also be permitted to address harmful traffic and traffic unwanted by users, such as spam, and prevent both the transfer of unlawful content, such as child pornography, and the unlawful transfer of content, such as a transfer that would infringe copyright.

Today’s vote marks only a beginning of the process to begin writing the formal policy of Net Neutrality governing Internet use in the United States.  As with the ponderous debate on health care reform, what ends up defining “Net Neutrality” will be open to interpretation, and a barrage of lobbyists and arm twisting from politicians will be part of what comes next.

On the eve of the historic vote, Verizon Communications seemed to join Google in affirming some of the basic principles of Net Neutrality.

However, the devil is in the details, as is always the case in telecommunications policy.

Verizon supports its own interpretation of Net Neutrality, which is wrapped in a concept they call “innovation without permission,” which is code language for a deregulatory open free-market environment.  It broadly accepts the concept that telecommunications companies should not interfere with legal content, but the company doesn’t want a whole barrage of new regulations to specifically define what would constitute “interference.”  Verizon believes onerous rules would stifle investment, and that existing rules already in place at the FCC are sufficient protection.

Things get downright dicey when Verizon spells out its “network management” principles, warning the FCC overly specific rules in this area could have unintended consequences.

Broadband network providers should have the flexibility to manage their networks to deal with issues like traffic congestion, spam, “malware” and denial of service attacks, as well as other threats that may emerge in the future–so long as they do it reasonably, consistent with their customers’ preferences, and don’t unreasonably discriminate in ways that either harm users or are anti-competitive. They should also be free to offer managed network services, such as IP television.

It is in this area where very specific rules are appropriate to write, because what one company defines as appropriate “network management,” could be discriminatory against selected content those providers seek to “manage.”

No broadband user has ever objected to network management that controls spam, “malware,” denial of service attacks, and other like-minded traffic.  In fact, most consumers wish more could be done to control these things.  Nothing in the current framework of telecommunications regulations or in those proposed have ever sought to impede this type of management.

No consumer minds having access to additional content, such as IP television.  But consumers do object when such content is used as an excuse to ram through Internet Overcharging schemes limiting broadband usage or imposing higher fees for using the types of services companies like Verizon now advocate.  “The broadband sky is falling” rhetoric about “exafloods,” overloaded “Internet brownouts,” and other such scaremongering nonsense often comes from the same providers that now want to provide IP television.  What they provide with their left hand, they want to limit with their right.

It’s anti-competitive, because the same companies with an interest in selling these pay television services (FiOS, cable television, fiber-telephone U-verse, etc.) also provide the broadband service that companies like Netflix and Hulu use to indirectly challenge their video business models.

Another concern is “traffic congestion” management, which all too often has meant speed throttles selectively imposed on “offending” applications, particularly peer to peer traffic.  There is good traffic management, such as routing equipment that provides even delivery of services like streaming video and Voice Over IP telephone calls, which rapidly deteriorate on loaded down networks, and then there is bad traffic management which selectively slows down the speed of whatever the provider deems to be of “lower priority.”  Allowing the customer to make the decision about which traffic gets priority is one thing.  Allowing a provider to do it without the consent of the customer is quite another.

Too often, the “unintended consequences” Verizon and Google speak about in the joint statement go to the provider’s favor, not to the consumer.  Overly broad, non-specific language opens loopholes through which providers will eagerly leap through.

Verizon also advocates transparency — “All providers of broadband access, services and applications should provide their customers with clear information about their offerings.”

Disclosure alone doesn’t suffice for consumers, particularly if there are few competitive places to take your business if you disagree with company policies.  Those rules should include realistic speed information (marketing stating “up to 10Mbps” that in reality only delivers 3Mbps would be one example).  It should not simply be an escape clause for providers to abuse their customers with throttled, slow service, and give them the excuse that “we disclosed it.”

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Federal Communications Commission Open Meeting

October 22, 2009

112 minutes

(Warning: Loud audio)

One of the nation’s top authorities on global Internet traffic growth says his latest data show no reason to fear network capacity shortages, as traffic growth may even be slightly decelerating.

An article published Tuesday in Telephony Online carries new evidence that the so-called “bandwidth crisis” may be based more on fear than reality.

Professor Andrew Odlyzko, director of the University of Minnesota’s Interdisciplinary Digital Technology Center, released a report last week charting the growth in Internet traffic.   Odlyzko concluded that growth continues at predicted levels between 50-60% per year, which is unchanged for at least the past three years.

Odlyzko introduced his research remarking that the “threatened deluge that was supposed to clog the Internet” still has not made any appearance.   In fact, he said, bandwidth rates may in fact be trending downwards.

Proponents of the Network Bandwidth Congestion Crisis theory usually argue that the apocalyptic end of the Internet as we know it will occur either from capacity shortages on the Internet backbone, or because of congestion at the local “last mile” level, between the broadband provider and your home.

But the raw data suggests neither is an impending threat, particularly assuming that broadband providers do not attempt to shortchange stable investment in their networks to meet the demands of their growing customer base.

Broadband providers could engineer a self-fulfilling prophecy of a bandwidth crisis if they reduce their investment in their networks, preferring to take additional profits from the broadband business while cutting costs in order to prop up shareholder return or profitability.   But such moves, which are often uncovered by carefully reviewing required public filings made for shareholder review, would quickly expose the fallacy of the position taken by several bandwidth providers that usage caps are necessary to reduce demand, which could have been met by responsible company practices to maintain and expand their networks to the same historic degree they have done for the last several years.