In December 2010, the U.S. Federal Communications Commission passed the Open Internet Order, which featured relatively weak net neutrality rules. Despite their limited impact (the Order did not go as far as the Canadian Internet traffic management practices which were established a year earlier), Verizon challenged their validity in court. A U.S. appeals court sided with Verizon in 2014, ruling that the FCC did not have the authority to issue the order. The Verizon win proved to be short-lived, however, since later this week, the FCC will pass new net neutrality rules that go much further than the 2010 order. As Ars Technica recently noted, the Verizon net neutrality gamble backfired.
The Verizon blunder came to mind this past weekend as word began to circulate that Bell is seeking leave from the courts to challenge the CRTC’s recent net neutrality ruling involving its mobile television service. The company argues that the CRTC does not have the jurisdiction to issue its ruling under the Telecommunications Act (which forbids undue preferences) since the service should be governed by the Broadcasting Act (which does not have an undue preference provision). From Bell’s perspective, the court challenge presumably seems like a no-brainer: if it wins, the ruling is struck down. If it loses, it still delays the implementation of the CRTC decision for months or even years, thereby maintaining its existing practice for the time being.
Yet this case might prove to be another illustration of the maxim, “be careful what you wish for, you just might get it.” First, the case is no slam dunk for Bell. I asked Len St. Aubin, the former Director General of Telecommunications Policy at Industry Canada and currently an independent consultant to comment on the case. He offered the following analysis:
“The CRTC got it right: there is no confusion in the Mobile TV Decision. At its core, the issue before the CRTC was whether a wireless telecommunications common carrier can escape its common carriage obligations under the Telecommunications Act in the treatment of its jointly-owned content service (mobile-TV) simply by labelling that service “broadcasting”. The CRTC found that mobile TV is “broadcasting” but that it is being delivered by the carrier on the same network capacity used to deliver other telecoms traffic. In that configuration, the CRTC rightly concluded that the carrier cannot confer an undue preference on itself, i.e.: on its own content service — “broadcasting” or otherwise.
In context, whether or not mobile TV is “broadcasting” is mostly a side-show. Since 1991, the Broadcasting Act and regulation do not require that broadcasters own or operate transmission facilities; so an argument based on a link between a broadcaster and transmission facilities has no basis in the Act. Broadcasters can, and do, lease capacity from carriers to reach the public. Section 28 of the T Act follows through on Parliament’s intent in the B Act: It explicitly recognizes this flexibility by giving the CRTC (not carriers or broadcasters) specific authority to take into account broadcasting objectives in considering whether a preference or disadvantage is undue where broadcasting is delivered directly to the public on common carrier facilities. The Commission considered S. 28 and concluded that, broadcasting or otherwise, self-dealing is self-dealing.
In some instances, where the same network infrastructure is used by an entity that is both a carrier and a broadcaster, capacity is dedicated — physically and/or virtually — to either service. For example: phone and Internet offered by cable-TV operators; and IPTV offered by telephone companies. Such arrangements have normally been subject to CRTC approval, given the potential to: a) negatively impact broadcasting in a cable-TV system; or, b) negatively impact telecommunications on a carrier’s network. This analogy was raised in the proceeding. But in the mobile TV case, there was no dedicated capacity — let alone any approved by the CRTC. Rather, mobile TV was being delivered via the public telecoms network alongside all other traffic, and hence subject to the same common carriage expectations.
Any other outcome would give vertically-integrated “converged” companies tremendous opportunity for self-dealing anti-competitive behaviour.
As for network capacity…. if mobile carriers really have enough to offer their own bandwidth-intensive multi-channel mobile-TV services under such favourable usage allowances, maybe the CRTC should take a close look at their much-more-constrained generally applicable usage caps. Are they legitimate economic Internet Traffic Management Practices grounded in real network capacity constraints, or just revenue-maximizing pricing strategies? “
Second, even if Bell is right and it wins in court, much like Verizon, it may still lose. Support for net neutrality remains strong in Canada and the government has left little doubt that it is prepared to oppose telecom companies in the name of broader consumer and pro-innovation interests. A win for Bell would immediately lead to vocal calls for tougher net neutrality rules along with increased regulation of vertically integrated companies and undue preference rules for broadcasting. In fact, the lawsuit alone may foster momentum for expanded rules to safeguard an open Internet in Canada (along with rules to prevent the chilling effect of joining students and single mothers in the appellate process with threats of legal costs). The CRTC decision is consistent with rulings in several other countries. Competitors such as Rogers abandoned the Bell approach in the light of the law. Bell is certainly within its legal right to appeal, but like Verizon it may also find that the gamble ultimately backfires.