My weekly Law Bytes column (Toronto Star version, BBC Version, webpage version) examines America Online and Yahoo!’ s recent announcement of a new fee-based system for commercial email. I argue that certified email will do little to address spam and may not attract a large client base.  Rather, its more significant impact lies in the fact that it is yet another step toward the two-tiered Internet that will ultimately shift new costs to consumers.

Notwithstanding the link between certified email and spam, it is important to note that it has little to do with reducing spam.  Unlike spam, which is unsolicited commercial email, certified email only involves email that recipients have agreed to receive. In fact, there is a danger that the plan could ultimately hinder the fight against spam, since there is an inverse relationship between the attractiveness of certified email and the effectiveness of spam filtering.  In other words, as the accuracy of spam filtering decreases (ie. greater blocking of legitimate email), the desirability of a certified email system that guarantees delivery increases, creating incentives for email providers to reduce the effectiveness of their spam filters in favour of a lucrative certified email system.

While there is good reason for concern about the negative impact of certified email on spam filtering, there is also ample reason to doubt that it will prove popular with marketers.  Marketers estimate that approximately 95 percent of legitimate email arrives at its intended destination.  If AOL and Yahoo! account for half of consumer email addresses, marketers will have to balance the value of paying to deliver emails for half their list against the loss of 2.5 percent of intended recipients.

If certified email does little to reduce spam and may not present an attractive business model, why all the attention?

I point to at least three reasons.  First, many non-commercial organizations such as charitable or civil society groups may not have the resources to even engage in a cost-benefit analysis of certified email. 

Second, while consumers enjoy considerable choice among email providers, switching costs remain high since advising contacts of an email address change is a laborious process that invariably results in lost connections and missing emails. 

Third, this marks the continuing progression toward increased differentiation – or tiering – of Internet services.  Users and websites are accustomed to a straightforward model that involves a flat fee for an established service.  In recent months, ISPs and now email providers are challenging those assumptions by moving toward two-tiered pricing, two-tiered access, and two-tiered email delivery. 

This movement represents a fundamental reshaping of the Internet.  It requires the active involvement of regulatory agencies such as the CRTC and the Competition Bureau in order to ensure that the dominant Internet access and service providers do not harm the long-term potential of the online world.