According to this official news release, the Canadian Radio-Television and Telecommunications Commission (CRTC) denied a request from the Canadian Association of Internet Providers (CAIP) to stop Bell Canada from throttling without notice the traffic of rival ISPs leasing access to Bell Canada’s network. Instead, CRTC punted to a general inquiry on traffic shaping.
According to Michael Geist, expert on all things telecom and Candian and general super-smart guy, this is not the last word from the CRTC on the question. But since — according to the public notice — the first public hearing on the subject is scheduled for July 9, 2009, Canadian ISPs can look forward to a considerable period of time when they live at the mercy of their largest rival.
This does not depress me, as I do not live in Canada. Rather, I am excited at the prospect of some other country (for a change) deciding to make offerings to the Gods of the Marketplace and play games with its critical infrastructure while I get to watch. Until now, Canada has generally been outranking us in the international rankings on penetration, although it ranks less well on affodability and only so-so on speed (as compared to countries with real broadband). Those who see such things as relevant (and not everybody does, the situation is complex and the data messy, hard to come by, and subject to multiple interpretations) generally regard this as a consequence of bad policy choices by the FCC (again, not everyone agrees, the data — to the extent we even have data — is very messy and complex). In particular, a lot of us think that the decision to eliminate mandatory wholesale access and rely on “intermodal” competition was a phenomenally bad idea.
Now we may get a chance over the next few years to test this hypothesis, and at someone else’s expense! Go Canada!
More below . . . .
Broadband Reports does a pretty good job laying out the issues. Briefly, some years back, when the FCC eliminate requirements that telcos lease broadband facilities to competitors and generally deregulate broadband access on a theory that this would spur investment and encourage “intermodal” competition, the CRTC went the other way. It required Bell Canada to make DSL lines available at wholesale rates to rival competitors, like we did here in the U.S. until 2005.
Last year, Bell Canada began throttling user traffic (or, if one prefers the industry euphamism “shaping”) on its residential DSL service. It also started doing the same for its wholesale customers — but without telling them. Unsurprisingly, ISPs were annoyed to discover that their chief rival had taken such liberties and pissed off their customers for them. They complained to the Canadian Radio-Television Commission, Canada’s equivalent of the FCC. Bell Canada claimed that it was necessary to throttle everyone in order to prevent them from overwhelming the network. In other words, even though the competing ISPs were willing to pay for more bandwidth, they couldn’t get it. And, rather than let the competing ISPs offer different kinds of network management schemes, Bell Canada required them to adopt the same throttling scheme as Bell Canada — and under Bell Canada’s control. When pressed by CRTC to provide evidence of congestion, Bell Canada submitted data which suggested that it did not face an immediate crisis of bandwidth absent throttling. CRTC, however, felt differently.
Reading through the CRTC decision is rather enjoyable, given that I am not Canadian. It is rather like reading the Comcast/BitTorrent Order from some alternate universe where Robert McDowell was Chairman of the FCC. CRTC accepts Bell Canada’s data without question and finds their choice of network management reasonable because, after all, Bell Canada should run the network and government should not interfere in something as delightfully free market as the internet. CRTC also rejects the idea that this can possibly be anticompetitive if Bell Canada throttles the traffic of its rivals in the same manner it throttles its own. CRTC also dismisses in a fairly cavalier fashion the fact that Bell Canada implemented this network management scheme without notice, and that it may violate the privacy rights of users.
Needless to say, those who opposed the result we got here in the U.S. are delighted with the CRTC for “getting it right.” As for myself, I’m fairly delighted as well. While this hardly denotes a true test given the “observer effect” (i.e., Bell Canada knows it is being watched), I am looking forward to seeing how this plays out over the next few years (assuming CRTC moves as slowly as the FCC does on a general notice of inquiry). For one thing, we will get to observe whether there is an “exaflood” threatening us all or not. Those who disbelieve the exaflood note that only those with a financial interest in the exaflood claim it exists. Those who think network congestion is a real issue argue that traffic data is private and needs to be kept proprietary. I personally think that this amounts to “trust us, there is an exaflood” from people I am not inclined to trust. But that’s just me.
So how will Canada’s ISP industry evolve? Will Bell Canada take this as license to play further games, the way the Bells here in the U.S. did once they knew the FCC would not enforce the line sharing requirements (until they were eliminated)? Will the Canadian independent ISP industry gradually whither away while Canadians end up with reduced access to internet services and/or content? Or will we in the U.S. suffer under bandwidth caps that choke our access, or end up drowning our ISPs in an exaflood of data they are powerless to manage because of the awful intrusion of government bureaucrats into network management. Will the fact that Bell Canada’s video product is not throttled make a difference for the development of Internet delivered video as a potential competitor to Bell Canada? Or will the U.S. never evolve a video competitor to Comcast and Time Warner because the would-be video providers cannot buy sufficient quality of service for reliable delivery?
I expect there will be no clear answers for awhile. Reality is always messy, and I expect data to be conflicting for the first few years. As I have noted before in the broadband debate (and elsewhere) life and public policy are all about trade offs. The trick (IMO) is neither blind worship of the free market or adoration of government, but to pick the right tools for the job you want accomplished. Still, its rare that someone else decides to leap off the free market deep end in such a radical, pro-incumbent way ahead of us. I’m glad Canada elected to be the guinea pig this time.
Stay tuned . . . .