No Internet by Marcelo Graciolli (CC BY 2.0) https://flic.kr/p/5h48hK

No Internet by Marcelo Graciolli (CC BY 2.0) https://flic.kr/p/5h48hK

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Canadian Internet Providers Warn of Site Blocking Consequences: Threat to Affordable Internet Access and Market Competition

Given that Canadian consumers pay some of the highest fees among peer countries for Internet and wireless access, the federal government has increasingly emphasized the need to address Internet affordability. Prime Minister Justin Trudeau has told the House of Commons that “Canadians pay enough for their Internet” and Innovation, Science and Economic Development Minister Navdeep Bains echoed the same concerns in a speech last year, noting that high costs create a digital divide that represents a barrier to continued prosperity for Canadians.

The Internet access cost concerns seems likely to emerge as a key issue in response to the Bell coalition website blocking plan. While some have tried to deflect the cost concern by pointing to the purported anti-piracy benefits of blocking (a claim that is subject to considerable dispute in the CRTC submissions), the clear position of the majority of Canadian providers – whether independent ISPs, cable companies, or satellite-based providers – is that the costs associated with blocking are likely to lead to increased consumer costs, reduced competition, and risks to extending broadband services to under-served areas.

For example, the Canadian Cable Systems Alliance, which represents dozens of smaller cable companies in communities across the country, states in its submission:

CCSA can only offer conditional support for the FairPlay Application. Specifically, we can only support it if smaller ISPs are exempt or protected from any costs associated with setting up and implementing the regime. If smaller ISPs are forced to bear these costs, Internet retail prices will increase and the extension of broadband services to unserved and underserved areas will be jeopardized. In such circumstances, we submit the real public policy costs of the proposed FairPlay regime would far outweigh its potential benefits.

CNOC, which represents many independent ISPs, argues extensively that the site blocking plan is ineffective and also points to the impact on affordability:

if ISPs are required to incur costs to implement FairPlay Canada’s proposal, these costs will likely be passed onto end-users, thus negatively impacting the affordability of telecommunications services. These costs will also likely have a disproportionate impact on smaller ISPs, thus negatively impacting their ability to offer robust competition to the incumbent operators. This will particularly be the case if ISPs are required to use any form of DPI technology, which, as CNOC noted above, would be completely unaffordable for most non-incumbent ISPs.

TekSavvy offers its own submission in opposing the proposal and lends its support to the CNOC intervention. Xplornet, the leading satellite Internet provider, declined to support the application, arguing that copyright falls outside the CRTC’s mandate and again pointing to costs:

ISPs will bear the cost of implementing this regime by taking action to block access to sites designated by the Commission as piracy sites. This will include having to handle any fall-out from customers trying to access blocked sites. These costs will be on top of the cost of administering the existing notice and notice regime.

Eastlink also urges the CRTC to address the cost issue:

We submit that if the Commission does decide in favour of the Application, it must consider and address the impact on costs of ISPs, particularly smaller ISPs such as Eastlink who may experience a more significant impact on systems and resources as compared to the much larger ISPs. We have direct experience with the costs of implementing systems relating to ISP requirements (such as the Notice and Notice regime) and how significant such costs can be when there is no cost recovery in place.

The Independent Telecommunications Providers Association says in its submission that “the ITPA would object to any regime that imposes costs without a cost recovery mechanism for service providers.” The B.C. Broadband Association warns that “adding the proposed additional burden to ISPs will further discourage competition in the marketplace from non-incumbent carriers, with a minimal decrease in piracy.” The Public Interest Advocacy Centre argues:

Requiring ISPs to block websites will be onerous and costly for small ISPs and other Internet infrastructure providers. Because equipment costs would have to be incurred before an ISP enters the market, this would add an additional barrier to entry and slight ongoing cost in the ISP market, which would limit competition and allow incumbents to raise their prices.

In fact, even the Canadian Wireless Telecommunications Association, which counts Bell as a member, could not achieve consensus support for the application. Instead, its submission is limited to urging the CRTC to “consider” the proposal.

The widespread concern from the industry points the real risk that the site blocking plan would increase costs and decrease marketplace competition. Indeed, the competitive impact may be one reason that Bell and the other large providers are so supportive since they would stand to gain from blocking with higher fees passed along to subscribers and reduced competition, leaving smaller ISPs with a difficult competitive challenge and consumers with higher bills. For a government committed to Internet affordability, the submissions to the CRTC leave little doubt that the blocking plan represents a major threat to a top policy priority.

7 Comments

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  6. This is the perfect blog for everyone who really wants to find out about this topic.
    You realize so much its almost hard to argue with
    you (not that I personally will need to…HaHa). You
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  7. Xplornet really got it right on the money: “copyright falls outside the CRTC’s mandate” Let Big Media use their own money to defend their revenue streams.

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