Appeared in the Toronton Star on November 6, 2006 as Fear of a Two-Tier Internet

Last week, while most cable and telecommunications observers were focused on changes to the rules for income trusts, news of record earnings for Telus, and a Statistics Canada report that illustrated how the cable industry has successfully transformed itself in less than a decade by focusing on Internet communications rather than television programming, Videotron President Robert Depatie unloaded a policy bombshell at a telecom conference.

Lamenting the costs of building new, high-speed Internet networks, Depatie called for the establishment of a new Internet transmission tariff that would require content creators of all sizes to fork over millions of dollars for the right to transmit content to ISP subscribers.

The comments rekindled fears about the prospect of a two-tier Internet in Canada whereby the cable and telecommunications providers, shielded by limited competition, charge creators and e-commerce companies to transmit their content, reduce bandwidth for some applications, and potentially even engage in content blocking.

The issue - frequently characterized as a battle over network neutrality - has generated heated lobbying and several bills in the United States, where proponents of network neutrality legislation seek a legally enforceable commitment to treat applications and content equally.  They fear that without such assurances, there is a real danger that a two-tier Internet will quickly become a reality.

In fact, there is mounting evidence that content and application discrimination is already here.  In Canada, the Depatie remarks join a handful of examples that include Telus' 2005 decision during a labour dispute to block access to a website that supported its union (blocking hundreds of additional websites in the process), Shaw Cable's ten dollar surcharge for "premium" Internet telephony service (which generated a complaint to the CRTC from Vonage, a leading Internet telephony provider), and Rogers' decision to limit bandwidth for legitimate peer-to-peer software applications (without full public disclosure of the practice).

Moreover, incidents of network neutrality violations are arising with alarming frequency worldwide.  In the United States, the Federal Communications Commission, the U.S. counterpart to the Canadian Radio-television and Telecommunications Commission (CRTC), has ordered at least one ISP to stop blocking access to third-party Internet telephony services, while major carriers such as Verizon and Bell South have unabashedly promoted their vision of a fee-based higher-speed Internet that would run alongside a slower, free public Internet.

Europe and Asia have similarly not been immune to net neutrality concerns.  This summer, Norway's public broadcaster, the Norwegian Broadcasting Corporation, learned that NexGenTel, one of the country's largest broadband providers, was limiting bandwidth to its content.  The ISP dropped the practice only after public disclosure and customer complaints.

Meanwhile in South Korea, three million broadband Internet subscribers were recently denied access to HanaTV, an Internet-based video-on-demand service.  The ISPs engaged in the blocking were evidently concerned that the service would harm their own video offerings.

While opponents of network neutrality legislation argue that a competitive marketplace removes the need for government intervention, the reality is that the market for broadband services in Canada is at best an oligopoly.  Most Canadians have limited choice, with consumers in urban areas choosing between indistinguishable cable and telephone Internet packages, while Canadians in rural communities are often left with no broadband options at all.

In light of the current environment, a recent Canadian telecommunications policy review directly addressed the network neutrality issue. The Telecommunications Reform Panel Report, a massive 400-page government-commissioned study that detailed a new vision to reshape Canadian telecommunications regulation recommended the establishment of a new legislative provision to "confirm the right of Canadian consumers to access publicly available Internet applications and content of their choice by means of all public telecommunications networks providing access to the Internet."

Furthermore, according to documents obtained under the Access to Information Act, this spring Industry Canada quietly conducted an informal consultation on stakeholder responses to the report that confirmed industry support for a complete implementation of report's recommendations.  In a memorandum to Industry Minister Maxime Bernier, officials noted that the "department solicited stakeholders' views on their top five and bottom five recommendations" and concluded that "most firms only oppose recommendations if they are implemented separately, and believe the Panel's report should be implemented as a package." 

Despite mounting consumer concerns, the Panel report's recommendation, and industry support for reform implementation that would include a network neutrality provision, there is widespread speculation that Bernier will ignore the issue by focusing exclusively on deregulation when he unveils his plans for telecommunications reform.  In doing so, he would not only eviscerate many statutory consumer protections, but also risk accelerating the development of a two-tier Internet in Canada.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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