With the conclusion of the CRTC New Media hearing last week, the Commission will now digest the many hours of testimony and thousands of pages of documents with the goal of reaching a decision on the future of new media exception/regulation later this year (day 1, 2, 3, 4, 5, 6, 7, 8, 9, 10).  While no one knows what the CRTC will do, this posting contains my best guess. 

The hearings highlighted that there are several new media broadcasting platforms and that the potential solutions differ for each.  I think three in particular will garner attention – fixed Internet, wireless/mobile Internet, and Internet radio.

 

Internet radio is the easiest to address. Notwithstanding the urging of Sirius satellite radio for new measures to address competition from Internet radio, there was conflicting evidence on the scope and importance of this delivery channel.  The Commission is likely to say that Internet radio is still in its infancy as a genuine competitor to regulated radio services and that it should remain unregulated in Canada.

The wireless/mobile Internet is a bit more contentious.  The industry similarly argued that it is still early days for new media broadcasting to mobile platforms.  I suspect that the Commission will agree and exempt wireless service providers from levy schemes or prioritization requirements.  However, the consistent concerns about walled gardens and discriminatory practices must surely have captured the CRTC's attention.  A non-discrimination provision within the wireless exemption is a real possibility and the issue will likely garner considerable attention this summer in the network management hearing.

The real action will obviously come from within the fixed Internet world.  Notwithstanding the urging from ISPs to do nothing (ie. retain the 1999 new media exception as is), my guess is that the CRTC will not view that as an option.  Noting the significant change in the new media broadcasting landscape since 1999, it will argue that there is a role to play for regulation under the current law. 

While there were many proposals floated during the hearings, three primary options are on the table:  licencing, levies, and prioritization.  I think the Commission will reject licencing as both unworkable and unnecessary.  Licencing may be needed where there is scarcity of bandwidth or channels, but there is no compelling reason to gatekeep through licences in a world of abundance.

The media has focused most intently on the ISP levy proposals and my guess is that the Commission will set the groundwork for a levy to fund the creation of new media content.  Given the lack of specificity from many proposals and the current economic environment, the CRTC may ask both sides to flesh out the idea, with the knowledge that the CRTC will impose its own solutions if the private sector is unable to reach a deal.  Even with a private sector deal, a court challenge appears inevitable.  Practically speaking, this means that a levy is years away with negotiations and legal proceedings taking years to resolve (this could mean that many of the Commissioners will no longer be with the CRTC by the time the matter is concluded).

Although the levy gets most of the attention, I think prioritization might emerge as the big issue.  There are several reasons for this.  First, prioritization feels the most like conventional Canadian content requirements (with an adaptation to the Internet).  Second, the Commission spent a lot of time talking about technical ways to identify Canadian content (ISAN, dot-ca domains).  Third, the ISPs acknowledged that some form of prioritization might be possible.

That said, there is a huge spectrum of possible prioritization approaches.  Obviously, any system that grants preferential delivery treatment to Canadian content over foreign content raises net neutrality concerns and I believe should be rejected.  Moreover, some ISPs indicated that they do not have a fast lane/slow lane, so that prioritizing based on speeds is not possible. 

What could happen?  One possibility is that the CRTC could mandate that if ISPs adopt two-tier Internet approaches for content delivery, that Canadian content be treated equally – in other words, placed on the fast lane (this was what I tried to suggest in a column last year).  This might create a disincentive to a two-tier Internet.  Another option would be the exclusion of Canadian content from ISP bandwidth caps – in other words, require ISPs to allow subscribers to download an unlimited amount of Canadian content without such downloads counting against their monthly cap.

A likely objection to this latter approach will be that it is impossible to identify what content qualifies as Canadian for the purposes of excluding it from bandwidth caps (or to do so in a manner that does not invade user privacy).  I must admit that I'm not so sure.  A system that excluded peer-to-peer from its ambit, would avoid some of the deep packet inspection requirements.  That would leave streaming activities, which some reports indicate has passed P2P in bandwidth consumption.  Although ISAN and domain name-based solutions do not work, self-identification based on established criteria might.  Sites or creators that want to benefit from the bandwidth exclusion (and thereby make downloading their content more attractive to Canadians) would have the incentive to self-identify or tag their content as Canadian.  This could be extended to all Canadian content, thereby avoiding the challenges associated with distinguishing between "professional" and user generated content.  ISPs could likely establish a system to identify tagged Canadian content (Rogers said as much during the hearing) without peeking at user viewing habits or causing undue stress on their networks.

None of this is to say that these are my preferred approaches.  I continue to believe that support for new media should come from government programs, not levies, and that the goal should not be prioritization of Canadian content, but rather equal treatment.  After three weeks of hearings, however, I'm thinking the CRTC will not be content to leave the current framework alone.