Yesterday I appeared before the Standing Committee on Industry, Science and Technology as part of their examination of telecom deregulation.  I was pleasantly surprised to receive an invitation, which I took to be an opportunity to discuss net neutrality.  I hope I didn’t disappoint – I’ve posted my opening remarks below.  I focused on three issues in my opening: net neutrality, broadband strategies, and anti-spam legislation.   I tried to emphasize the need for action now, particularly with Canada developing an international position on net neutrality at the OECD (which behind the scenes is developing a paper on Internet traffic prioritization). The remarks attracted some interest from the committee, particularly Bloc MP Paul Crête, who asked many questions on each issue.  It will be interesting to see whether these issues make into the committee’s final report.  My prepared remarks were as follows:

Appearance before the Standing Committee on Industry, Science and Technology
February 26, 2007

Good afternoon.  My name is Michael Geist.  I am a law professor at the University of Ottawa, Faculty of Law, where I hold the Canada Research Chair in Internet and E-commerce Law.  I am also a syndicated weekly columnist on law and technology issues for the Toronto Star and the Ottawa Citizen.  I served on National Task Force on Spam struck by the Minister of Industry in 2004 and on the board of directors of the Canadian Internet Registration Authority, which manages the dot-ca domain name space, from 2000 – 2006.

I appear before the committee today in a personal capacity representing only my own views.  I would like briefly discuss three Internet issues that have a direct link to telecommunications regulation – network neutrality, broadband access, and spam.

Net Neutrality

Network neutrality has generated an increasing amount of attention in recent months and was the subject of a brief question and answer when the Minister appeared before your committee last week.

While the definition of net neutrality is open to some debate, at the core is the commitment to ensuring that Internet service providers treat all content and applications equally with no privileges, degrading of service or prioritization based on the content’s source, ownership or destination.

Several concerns are often raised in the context of net neutrality.  The first is the fear of a two-tier Internet.  As providers build faster networks, there is reason to believe that they will seek additional compensation to place content on the “fast lane” and leave those unwilling to pay consigned to the slow lane.  While consumers already pay different prices for different speeds, imagine a world in which Chapters cannot compete in the online book space because its content is on the slow lane while Amazon is on the fast lane.  Consider an Internet where U.S. television shows and movie productions zip quickly to consumers computers because U.S. studios have paid for the fast lane, while Canadian and user generated content creeps along in the slow lane.  Or think about an environment where two-tier health care is replicated online such that only some health care providers have their content run on the fast lane.

This vision of the Internet is one that may become a reality.  In the U.S., major telecommunications companies such as Verizon and BellSouth have talked about just this sort of activity.  In Canada, Videotron has publicly mused about the potential for a new tariff for the carriage of content.

The second concern is that ISPs will block or degrade access to content or applications they don’t like, often for competitive reasons.  In the U.S., one ISP, Madison River, blocked access to competing Internet telephony services.  In Canada:

• Telus blocked access to a union supporting websites during a labour dispute, blocking more than 600 other sites in the process
• Shaw advertised a $10 premium surcharge for customers using Internet telephony services opening the door to creating a competitive advantage over third party services
• Rogers currently degrades the performance of certain applications such as BitTorrent, widely used by software developers and independent film makers to distribute their work

In response to these concerns, there has been growing momentum for net neutrality legislation.  The provisions would require ISPs to treat Internet content and applications in a neutral fashion so that the opportunities afforded to today’s Internet success stories such as Google, Amazon, and eBay will be granted to the next generation of Internet companies along with the millions who contribute content online.  The US Congress debated such legislation last year and AT&T recently agreed to net neutrality conditions as part of its merger with BellSouth under pressure from the Federal Communications Commission.

Note that the net neutrality legislation concerns have grown due to at least two problems in the Canadian market.  The first is the lack of competition – Canadian consumers have limited choice for broadband, typically limited to cable or DSL, or neither.  A viable third provider running their own network rarely exists. Markets with greater competition face less concerns about net neutrality since consumers can always make alternate choices.  The second is the lack of transparency – when Rogers degrades the performance of some applications, they rarely disclose these practices.  In contrast, some ISPs in other countries transparently identify how they treat all forms of content and applications.

Finally on the net neutrality issue, last week the Minister indicated that he was still studying the issue.  I think it is important to note that Canada is already active on net neutrality policy on the international front.  The OECD is currently working on a report titled “Internet Traffic Prioritisation.”  Given our active participation at the OECD, I must assume that Canadian officials are participating in the drafting process.  According to a recent draft, the OECD has acknowledged the concerns associated with anti-competitive conduct, the prospect of hindering access to information, and the privacy implications of monitoring the content that travels through ISP networks.  Moreover, it notes that robust competition can help mitigate these concerns, though Canada is not cited as a country with the competition to counterbalance anti-competitive incentives.

Broadband Strategy

In addition to net neutrality, I want to briefly touch on two other issues.  First, we all increasingly recognize the critical importance of high-speed or broadband access.  Whether for communication, commerce, creativity, culture, education, health, or access to knowledge, broadband access represents the basic price of admission.  Canada was once a leader in this area.  In the late 1990s, we became the first country in the world to ensure that every school from coast to coast to coast was connected to the Internet.  Soon after, we launched a broadband task force committed to developing a strategy to ensure that all Canadians had access to high-speed networks.

In the years since that task force, Canada’s global standing has steadily declined.  Many European countries have eclipsed Canada in its broadband rankings.  More importantly, the Telecommunications Policy Review Panel undertook a detailed analysis of the Canadian marketplace with the goal of identifying whether the market could be relied upon to ensure that all Canadians have broadband access.  Their conclusion was that it would not.  The panel concluded that at least five percent of Canadians – hundreds of thousands of our fellow citizens – will be without broadband access without public involvement.  We need the implementation of a broadband strategy that ensures equality of access for all Canadians.

Spam

Second, over a twelve month period in 2004 to 2005, I served on the National Task Force on Spam alongside representatives from every major stakeholder group including ISPs, telecommunications companies, cable companies, marketers, and consumer groups.  The unanimous conclusion of the task force was that Canada needs anti-spam legislation.  Our current legislative framework – which includes privacy laws, telecom laws, and the Criminal Code – are simply ineffective.  With virtually all of our major partners having enacted specific anti-spam legislation to deal with Internet harms, Canada risks becoming a haven for spammers.  Moreover, Canadians face a growing deluge of spam, while the costs – to small business, network providers, educational institutions, and individual Canadians – continue to mount.  Legislation alone will not solve the problem, but neither will the issue be solved without it.

Anti-spam legislation – along with net neutrality and a broadband strategy –  should be an integral part of telecom reform.