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Archive for June, 2011

Down the Rabbit Hole at the CRTC: Regulator and Big 4 Make Molehill Out of Mountain on Telecom-Media-Internet Concentration Issues

As per my usual practice, this post is a slightly altered version of my column in the Globe and Mail today. It is a a wee bit longer and, as is my standard practice, comes more fully-equipped with citations and sources that you can turn to to follow up on, assess my take on things, and so forth.

In the first of two column’s last week I offered evidence and argument as to why the CRTC’s current vertical integration hearings are not likely to deal effectively with the question of telecom-media-Internet concentration in Canada. Sitting in on three full days of hearings last week has convinced me that the prospects may be even dimmer than I thought.

If you know how to say “voluntary code”, “case-by-case dispute resolution”, “skinny basic”, and status quo, you’re in luck because that’s probably what the outcome will be. Some consumers will benefit with slimmed down and more affordable basic cable and satellite packages and there’s a fifty-fifty chance that a hands-off-Netflix approach is in store, if I am right. The pay-per Internet model and less than a handful of telecom-media-Internet behemoths, however, will be still stand astride a set of highly concentrated industries, and we will be the poorer for this.

The hearings had an Alice-in-Wonderland feel, mainly because the evidence offered by all sides was remarkably poor. Consequently, discussion meandered between speculative worries and rose-tinted visions brought to us courtesy of the great media corporations of Canada.

The CRTC’s refusal to do much original research of its own compounds this problem, and compares badly with research conducted by, for example, the FCC and Ofcom, respectively. Like the mythical beaver that castrates itself in self-defense, the CRTC seems to worry that conducting original research might bias its decisions. Strange.

All of the top brass from Bell, Shaw, Quebecor Media Inc. (QMI) and Rogers attended, sometimes with as many as ten to a delegation. With few exceptions (see below), the Big Four stood as one against almost everyone else, but nonetheless they seem to have set the parameters of discussion around less than a handful of touchstone themes:

  • That we should rely on market forces to the maximum extent possible.
  • Canadian markets are competitive, small by global standards and need big media companies to compete.
  • problems that do arise should be settled one by one after they occur rather than establishing clear regulatory rules before hand.
  • concerns about the anti-competitive potential of vertical integration are mostly speculative rather than real.

Rogers allowed a crack of light to peak through when it broke ranks with Bell, QMI and Shaw to table a “code of conduct” that would require vertically-integrated media firms to sell programming rights to traditional broadcasters, such as the five CityTV stations that it owns. While the others tried to belittle or ignore Rogers’ stand on this point, the CRTC seemed to like the voluntary code of conduct idea very much. I suspect we’ll have some version of it.

Otherwise, Rogers, Bell, Shaw and QMI united behind the view that smaller rivals should not be entitled to a regulated guarantee of fair and reasonable access to their networks or the content rights associated with TSN, Rogers SportsNet, the History Channel or any of the other 100-plus television channels they own between them.

QMI’s CEO and majority owner, Pierre Karl Péladeau, scoffed at the idea that exclusive content agreements were a problem. Bell’s chief regulatory front man, Mirko Bibic called the idea that audiences should be able to access content on any device from any provider, anytime, “preposterous”.

Brad Shaw, the CEO and part of the family that controls Shaw Media, bristled when I intervened in a journalistic softball scrum to ask him to respond to the possibility that concerns with vertical integration and media concentration are not based on speculation and fear mongering but current evidence and recurring historical patterns. After shrinking back into my shoes, he returned to typical patter about how vital it is for Shaw to be “consumer centric”.

Over the course of the three days, Netflix was set up as a formidable threat to the Canadian broadcasting system. This may be a shock to some, but I got the sense that the CRTC is not all that eager to assume this role, despite enormous pressure from Bell, Shaw, QMI and (less so) Rogers, the Over-the-Top Working Group, media unions, arts and culture groups, the Senate Committee on Canadian Heritage as well as a pending Supreme Court case.

When I spoke with Michael Hennessy, Telus’s Senior Vice-President, Regulatory and Government Affairs, he came across as a thoughtful man and seemed to better understand the idea that just because a company owns the medium does mean that it should control the messages flowing through them. Telus’ primary focus is on connectivity, he told me, not content.

Telus’ periodic work with Google, amongst other things has taught the company, he also said, that it is better to grant as much access to outside content sources as possible and push control out to the edges of the network and into the hands of Internet users. One doesn’t have to be a dyed-in-the-wool Telus fan to accept everything that he claimed, but in my view Telus is on the side of angels on this question – even if this has not always been the case.

Telus’ launch of IPTV services over the past few years has been a success by Canadian standards, but obtaining content rights for its IPTV and mobile video services has been a real obstacle, with Bell standing out in this respect since its acquisition of CTV earlier this year. According to a recent OECD study, Canada ranks 19th out of 27 in terms of the percentage of subscribers to IPTV, while rates in Sweden, Belgium and France are four- to ten-times higher (p. 223). One wonders if this low ranking is related to the problems just described and regulatory rules not up to the task of curbing market power across a number of telecom, media and Internet industries?

Commercial broadcasters have been slow to develop online video services, doing so only around the end of 2007, early 2008. It was the CBC, instead, that blazed the way, only to find one of its early attempts to use BitTorrent to distribute an episode of Canada’s Next Great Prime Minister thwarted by Bell’s ‘network throttling’ practices. The big four have accelerated their efforts in the past year, mainly as Bell, Shaw, Rogers, and QMI import the “tv everywhere” from the US so that existing subscribers can access the companies’ own content anywhere, anytime.

Reflecting the fact that commercial broadcasters have been slow on the uptake, Konrad von Finckenstein asked Péladeau why QMI hadn’t launched an online video downloading service to compete with Netflix? The activities of the “state broadcaster” (the CBC), he responded, excessive regulation, and nervous investors were holding it back. The head of the CRTC also asked for evidence that Netflix was a threat to the television system, but was told by Péladeau that he had none.

Smaller players, in sharp contrast, piled anecdote upon anecdote to show that vertical integration is, in fact, a significant problem. Telus, MTS, SaskTel and Cogeco submitted a “joint proposal” as well that sets out a handful of principles that they want enshrined in a sturdy regulatory framework:

  • Access to content by television program distributors and carriers should be on fair and reasonable terms.
  • Subscribers should be able to access the content they want from the device they want anywhere, anytime.
  • Block booking — tying the rights to purchase one television channel to buying several others, among other things – should not be allowed (a stance consistent with CRTC’s favourable view of “skinny basic”, i.e. a minimalist basic cable tv service).
  • A tough regulatory regime is needed before-hand and not after the fact, as the big four would like.
  • The regulator must assume a tough stance toward vertically-integrated telecom-media-Internet conglomerates that possess substantial market power.

Most independent broadcasters more or less agree with these ideas, with some minor tweaks. Despite their merit, however, the evidence to support these principles, was not convincingly demonstrated by anyone.

The fact that evidence was probably never going to carry the day anyway, however, struck me hard on Day Three when von Finckenstein called Telus’s proposal “over the top”. Newly-appointed Vice Chair of the CRTC, Tom Pentefountas, added to this sense when he asked Michael Hennessy if Telus’ “proposals essentially take the ‘free’ out of the ‘free market’?”

Across the aisle from me, Bibic, the regulatory pitbull from Bell who had made more than one CRTC commissioner wince and waiver during his presentation a day earlier, smiled broadly like The Cheshire Cat. Day 3, and the endgame was coming clearly into view.

Day 3 and the endgame was coming clearly into view.

Media Historians and the Importance of ‘Dead Tree Media’ (aka Newspapers): An Interview with Prof. Michael Stamm

A couple of weeks ago I was introduced by my friend and colleague at Carleton U, Chris Russill, to a fascinating media historian and really nice guy, Michael Stamm. I’ve met up with Michael on a couple of occasions in the past few weeks, including just last Sunday when he flipped the kayak I leant him while paddling on the Ottawa River.

Michael is in Ottawa to do research at the national archives for a new project that he’s working on. I thought this would be a good place to talk about his work and contrived a situation to do just that. I’m going to try and do this more often as I bump into people with interesting things to say that broadly fit with what this blog is up to. So, here goes.

Michael’s an assistant professor at Michigan State University and earlier this year his new book, Sound Business: Newspaper, Radio, and the Politics of New Media, was published. I haven’t read it yet, but I’ve taken a peak and it is on the top of my list.

From what I’ve glimpsed and heard so far, Michael’s book provides us with a wonderful guide to making sense of how well-established media deal with the incursions made by ‘new media’. Addressing the question of how the newspaper industry dealt with the perceived threat stemming from the rise of radio broadcasting in the 1920s, Michael crisply tells us that

“. . . newspaper publishers of all sizes turned threat into opportunity by establishing their own stations. Many, such as the Chicago Tribune‘s WGN, are still in operation. By 1940 newspapers owned 30 percent of America’s radio stations. This new type of enterprise, the multimedia corporation, troubled those who feared its power to control the flow of news and information.”

Indeed, for over ninety years newspapers have had to deal with the steady incursion of new technologies, and I might even stretch that back another sixty or so years to deal with the rise of the telegraph in the early- to mid-19th century. Historian’s prerogative.

The obvious point being that as established media industries such as the press and music, in particular, encounter an onslaught of new technologies today, so too have they done so in the past. Of course, adjustments are not easy, and some specific individuals and elements of ‘old media’ models will get slaughtered, but an expanding array of media constantly enlarges and increases the structural complexity of the overall media ecology, and eventually things seem to find a relatively stable place within the routines of our daily lives and as a set of institutional-mechanical arrangements.

I want to come back and talk more about these issues with Michael in the next few weeks while he is still in Ottawa. For today, however, I want to ask Michael about his current research and what he’s up to in the archives overlooking the Ottawa River just down the street from where I live and the Parliament Buildings.

So, Michael, welcome and thanks a bunch for joining us. Can you tell us a bit more about your current research project, and some of the nitty gritty details about, well, how you arrived at this project, what you’re finding, and lets call it your ‘archival discovery of the week’?

Thanks very much, Dwayne.  I really appreciate the opportunity to share the results of some of this research.  Despite the great view over the Ottawa River and the wonderful opening hours at the Archives (8AM to 11PM weekdays and 10AM to 6PM on weekends, unheard of in the U.S.), daily archival work can seem like a grind after a few weeks. This is a nice break.

Broadly speaking, my research is on the political economy of news and journalism, and this new project is an extension of some of the themes and subjects that I covered in Sound Business. As I researched and wrote about newspapers’ involvement in the development of American broadcasting, what came to impress me was how they remained vibrant and even expanded in the years after radio broadcasting began in the 1920s, all the while some futurists were predicting the “death of the newspaper.”

In the book, I called this the “persistence of print,” and as I finished that project I wanted to find a way to look at the longer-term history of the newspaper as a paper product.  How and why has form of delivering the news persisted for this long?

With this issue of paper in mind, I began to see scattered references to “Canadian newsprint suppliers” in the archives I was working with, particularly those of the Chicago Tribune.  As I followed this trail further over the last eighteen months, I was struck by how the need for Canadian newsprint was one of the central problems of the American news business in the twentieth century. Historians have almost entirely ignored this.

I began searching for archival materials on the subject, and I discovered that the records of the Quebec and Ontario Paper Company, the Chicago Tribune’s Canadian newsprint subsidiary, were just about ready to be opened to researchers and the public.  With support of a Canadian Embassy Research Grant, I’m spending two months working with this collection this summer.

The material has been great, and what I’m ultimately trying to do with it is to combine two arcs of twentieth century history through a case study of the Chicago Tribune: the development of the American mass-circulation newspaper and the evolution of the trade relationship between the United States and Canada.

The basic facts of the matter, as I now understand them: though we often think of the newspaper as a significant source of public information (which it is), there is something less well understood about the printed newspaper, and that it is also a mass-produced consumer good with a shelf life shorter than that of milk and eggs.

Starting in the middle of the nineteenth century, publishers applied the technology of the industrial revolution to the production of newspapers by employing new methods of papermaking and printing, in the process dramatically increasing the number of papers they could produce on a daily basis and greatly expanding the size of the audience they reached with their publications.  In the early twentieth century, some metropolitan dailies had circulations as high as a million.  To make these newspapers required both a printing plant organized as a factory and a large amount of newsprint.

In contemporary discourse, many derisively refer to newspapers as “dead tree media.” The main animating idea seems to be highlight the perceived differences between a stodgy “old media” and a seemingly vibrant and participatory Internet, but I think it is important to call attention to the fact that newspapers are quite literally the physical products of felled trees.  Because of this incessant need for large supplies of newsprint, newspapers came to have a significant effect not only on society and politics but also on the environment and on North American trade.

For various reasons, spruce proved to be an ideal wood for making newsprint, and the location of dense forests along and north of the American-Canadian border, particularly near navigable waterways on the Great Lakes, made the tree even more attractive to American publishers.  This need for spruce-based paper increasingly drew publishers into arrangements with Canadian paper mills and made publishers seek raw materials for their products from outside the United States.

As American and Canadian policymakers struggled with trade reciprocity debates in the early twentieth century, America newspaper publishers lobbied aggressively in favor of free trade in order to get cheaper newsprint.  Though negotiations on full reciprocity failed in 1911, the American passage of the Underwood Tariff in 1913 made newsprint from Canada a duty-free item.

This new trade status was fortuitous for the Chicago Tribune’s Robert McCormick, who took over as the paper’s publisher in 1911. McCormick’s family had owned the paper since 1855 and, foreseeing a growing city, McCormick also saw tremendous growth potential for the paper.

When he took over the Tribune, one of the first things McCormick realized he needed to do if he wanted to expand his business was to find a source for cheap and plentiful newsprint, as this was among his most significant and costly inputs.  Immediately after newsprint was made duty free, McCormick built one of the most technologically advanced mills in the world on the Welland Canal at Thorold, Ontario.

He then began scouting timberlands on Quebec’s North Shore, where some of the richest pulpwood forests in North America were located.  McCormick soon had concessions from the provincial government to log a piece of forest almost the size of the state of Connecticut.

Instead of simply taking the trees from Quebec to his Thorold mill, McCormick decided to build another new mill on the remote site.  In doing this, McCormick was driven not only by business strategy but also by an ambition to act as urban planner, and in 1936 his company began building the city of Baie Comeau.

Drawing upon his experience as president of the Chicago Sanitary District, where he had supervised the installation of public sewer and electrical systems, and upon the lessons of Pullman, the revolutionary but ultimately unsuccessful company town built by railroad magnate George Pullman in the 1880s just south of Chicago, Robert McCormick directed the construction of both a cutting edge newsprint production facility and a model company town.

Construction of the mill and town began in the winter of 1936-37, and the mill formally opened on June 11, 1938.

Cont’d on Page 2 . . . . . . . .

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Breaking News: Competition Bureau Slams Bell for Ripping People Off

Bell was slammed with the highest fine possible today for ripping people off for bundled telecom-media-internet, $10 million. The Competition Bureau meted out the stiffest punishment it has and arrived at a settlement out of court that will also see Bell pay the $100k costs the bureau sunk into the investigation.

Here’s what the Competition Bureau’s press release had to say:

The Bureau determined that, since December 2007, Bell has charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless. The advertised prices were not in fact available, as additional mandatory fees . . . were hidden from consumers in fine-print disclaimers.

Astounding. Incredible. WTF?

I just heard Melanie Aitken, the Director of the Competition Bureau, talking on the CBC. She’s nobody’s fool, and we could only wish her tools were stronger and that instead of just looking at pricing and advertising, as important as they are, the Bureau could delve deeper into the very structure of the telecom-media-Internet industries of which Bell and its deceptive practices are a part.

That Bell is not exceptional in this regard is illuminated a bit further when we recall that it was less than a year ago that Rogers was also slammed by the Competition Bureau. In that case, Rogers was using the false advertising claim that its new, down market wireless phone service offered “fewer dropped calls than new wireless carriers”, an obvious — but completely false — attempt to cast aspersions on the first new competitors to enter the highly concentrated Canadian wireless market in years. So, chalk one up for consumers and competitors courtesy of the Competition Bureau.

All of this is, as I said, all to the good. It could, however, be even better when it comes to integrated telecom-media-Internet industries in four ways.

First, and again as I just said above, it needs to look closely at the structure of these industries (see here for related post and evidence).

Second, it needs to effectively deal with the fact that these industries are highly concentrated by the conventional standards of Concentration Ratios (T1, 2, 3 and 4 players control X% of market) and the Herfindahl-Hirschmann Index (HHI) (Market share of each player squared  and summed). The trends in Canada are also high by global standards – at least twice as high as in the U.S.

For those who like to watch how sausage is made, you can see some of the data backing up these claims in my presentation on the state of telecom-media-Internet concentration in Canada as part of my work with the International Media Concentration Project out of Columbia University. I am in the process of finishing the data collection for 2010 and will update soon.

The levels of concentration are not getting worse; nor are they getting any better. They’ve stayed pretty steady for most of the last decade at a high level.

Third, we need learn how to talk about communication, media and values. The fact that media concentration levels have stayed steady, even if at a high level, might be good enough for some people, but I don’t think it is.  Why?  Because it does not serve to maximize the diversity of voices available and the range of free and creative expression to as many people as possible.

Taking high levels of concentration as a given adopts the technocratic standards of the bureaucrat, like the CRTC which states that its goal is to promote “as much diversity as is practicable“. The last term is entirely procedural, rather than normative. Compare ‘as much diversity as practicable’ with the standard I introduced above regarding the need to strive fro the maximum range of voices and freedom of expression possible.

The CRTC eschews Facts because it refuses to do much of its own original research. It’s feelings about norms and values are even more suspect. Indeed, even the old sign hanging over it’s front door, at least it’s web page, “regulation in the public interest” disappeared from all public documents sometime in late 2009.  The regulator, in sum, has intentionally fenestrated itself in terms of both Facts and Norms, suggesting that not only is it poorly equipped but not all that interested in doing the job at hand.

Conservatives like to desparage this kind of talk as “aspirational language”, or words that convey some sense of how things might be or what’s worth striving form. Liberal fantasies, they smirk.

Umm, I think we should talk about what we want. That, in some ways, is what democracy is all about, organizing, talking, and translating into action some notion of what we want, not in all domains, but in those that constitute the ‘networked digital agora’, yep, we wanna talk.

Until we learn how to talk about and reconcile both the Facts on the ground with the ‘Norms’ conveyed through the language we use, as one of my fav social theorists/philosphers, Jurgen Habermas (and after The Structural Transformation of the Public Sphere, for you insiders) might put it, we will be forever unable to properly deal with the questions before us.

But back to the more immediate question at hand, and my fourth suggestion in terms of dealing with problems that, if not endemic, certainly seem to crop up with regularity in Canada’s telecom-media-Internet industries.

Bell got caught screwing people over and that’s a great deal. Slimy behaviour, however, can occur equally in markets that are topsy turvy with ruinous competition or heavily concentrated. In the case at hand, I’d say we have slimy behaviour by Bell and Rogers for two years running in highly concentrated markets. We need to think about that fact with eyes wide open, then decide what we wanna do about it.

And to this end, I would say that the Competition Bureau and CRTC should, after the latter in particular radically rethinks its raison d etre and way of doing things, work together on studying telecom-media-Internet markets in Canada and pick a course of action. The ‘maximum reliance on market forces’ mantra foisted upon the CRTC by Cabinet Directive from the Conservative Government in 2006 has gotta go.

Things cannot proceed on the terms now taken for granted but at the very least must take as a minimal model the congenial hand-in-hand approach taken by the Dept. of Justice and the FCC in the US in the recent approval of cable giant Comcast’s take-over of NBC-Universal. Some, indeed many, still refuse to accept this as a good deal, including FCC Commissioner Michael Copps, who wrote a scathing rebuke of the approval.

By Canadian standards, however, the Comcast NBC-Universal decision, truly is a ‘beacon of hope’ compared to the standards that we have now. To see the Competition Bureau and CRTC walk hand-in-hand with a real sense of the ‘facts’ on the ground and the values of the most open and democratic communication and media system possible clearly in sight would be a really decent place to start.

Coders of the World Unite? LulzSec Hits Military-Information-Media-Entertainment (MIME) Complex

At the peak of their notariety, the self-styled hactivist group, Lulzsec, declared today that it was winding down its efforts.

The group of largely unknown maruaders had defaced, defiled and otherwise disabled websites and ‘network operations’ of a number of high profile targets: Sony Pictures Entertainment, Disney, EMI, the U.S. Congress, US Navy, the CIA’s public website and other targets in the defense industries such as Lockheed Martin.

It is this ensemble of state-media and entertainment companies-telecoms-military firms that the theorist James DerDerian calls the Military-Information-Media Entertainment, or MIME complex. These are the entities that LulzSec has had in their targets, unhappy with journalistic coverage of Julian Assange and Wikileaks, outraged that people can’t remix big media content at will, and convinced that murky links across the MIME complex undermine open flows of information.

I can’t claim to know a ton about this MIME stuff, but regularly read those who do. The Open Network Initiative at UT led up by Ron Diebert in cooperation with others at SecDev in Ottawa. James DeDerian, as I said, is also very good.

The basic point that they make is that it is is useful to pay attention to the intersection of networked media technologies, entertainment and security. That’s exactly what LulzSec has accomplished; forced us to pay attention to these things, if nothing else.

Their logo is way cool — a Digital Robber Baron who looks suspiciously like his rapacious 19th century counterparts such as the reviled Jay Gould.

LulzSec’s Manifesto declaring the end of their activities is a combination of Karl Marx retuned for the digital age and “Jack Ass”. Here’s what they had to say:

For the past 50 days we’ve been disrupting and exposing corporations, governments, often the general population itself, and quite possibly everything in between, just because we could. All to selflessly entertain others – vanity, fame, recognition, all of these things are shadowed by our desire for that which we all love. The raw, uninterrupted, chaotic thrill of entertainment and anarchy. It’s what we all crave, even the seemingly lifeless politicians and emotionless, middle-aged self-titled failures. You are not failures. You have not blown away. You can get what you want and you are worth having it, believe in yourself.

While we are responsible for everything that The Lulz Boat is, we are not tied to this identity permanently. Behind this jolly visage of rainbows and top hats, we are people. People with a preference for music, a preference for food; we have varying taste in clothes and television, we are just like you. Even Hitler and Osama Bin Laden had these unique variations and style, and isn’t that interesting to know? The mediocre painter turned supervillain liked cats more than we did.

Again, behind the mask, behind the insanity and mayhem, we truly believe in the AntiSec movement. We believe in it so strongly that we brought it back, much to the dismay of those looking for more anarchic lulz. We hope, wish, even beg, that the movement manifests itself into a revolution that can continue on without us. The support we’ve gathered for it in such a short space of time is truly overwhelming, and not to mention humbling. Please don’t stop. Together, united, we can stomp down our common oppressors and imbue ourselves with the power and freedom we deserve.

So with those last thoughts, it’s time to say bon voyage. Our planned 50 day cruise has expired, and we must now sail into the distance, leaving behind – we hope – inspiration, fear, denial, happiness, approval, disapproval, mockery, embarrassment, thoughtfulness, jealousy, hate, even love. If anything, we hope we had a microscopic impact on someone, somewhere. Anywhere.

Thank you for sailing with us. The breeze is fresh and the sun is setting, so now we head for the horizon.

Let it flow…

Lulz Security – our crew of six wishes you a happy 2011, and a shout-out to all of our battlefleet members and supporters across the globe.

So, is this what a call to the ‘coders of the world to unite looks like’? Is it Karl Marx’s new cybertariate rising up to throw of the shackles of digitization and the incessant ‘tribal drumbeat’ of an always connected, always on people? A world in which the amount of necessary labour time becomes longer and longer and the walls separating ‘work’ from ‘play’ and ‘eros’ (Marcuse) are completely intertwined. Is this why high flying people send pics of their penises to people they don’t even know, compounding their own stupidity by ‘broadcasting’ their message to all rather than sending it just to one?

Servers have been taken down over the last several days by law enforcement in not just the US but in many places and a 19yr old Brit arrested. LulszSec’s manifesto suggests that (1) the ‘network’ is in place to continue the operations and (2) the operations are just because the examples of complicity involving the MIME the come at the expense of civil liberties, democracies and open media and entertainment continue to pile up.

This past week, Comcast, ATT and Verizon have come closer to taking of using control over their networks to help the media and entertainment industries preserve their own ‘business models’. The National Security Agency works hand-in-glove with Google, Apple, Microsoft, Nokia, etc. to protect Lockheed Martin and other ‘critically important Defense Infrastructure’ companies.

As long as the MIME continues to pose severe threats to open information flows, civil rights and democracy, groups like LulzSec will step into the breach. And whether we love or loathe them, they will raise our attention and draw it to some fundamental points.

Big, Brash & Bold: Drop all Telecom-Media Foreign Ownership Limits

A new report by the CD Howe Institute came out today. It’s not big, just 3 pages and seemingly informed by a bunch of guys sitting around a table at the Howe’s ‘inaugural meeting’ last week (June 17).

It is brash, and some might dress it up as bold: drop all limits on ownership of telecoms and media industries in Canada, it says. Full stop.

No phase out. No ‘newcomer advantages’, full stop again. No attempt to separate the ‘medium’ (wires, spectrum, sewer access) and the message (broadcasting, integrated suite of ‘content’ from mags to blogs) from one another. A digital free for all, you might say.

Perhaps the gentlemen, and they were with the exception of only a single woman, thought this might be a good idea while they sat around and chatted last Friday afternoon. Apparently, there were not so many women ‘law & economics’ types available to join them, given that all but out of the 16 places apparently went to the guys and boys from Bell (see below). I guess ‘law and economics’ types like Sheridan Scott, a hard liner in these matters, and Monica Auer, who generally takes the opposite tack by speaking eloquently and passionately on the telecom and media workers’ behalf, weren’t available, or any of the other smart dames roaming these circles as I saw, in the minority, at the CRTC’s hearings this week.

I looked at the composition of ‘the deciders’ not just because their gender was so obviously skewed, but because I recognized the names of most of the guys. One in particular leapt out, Jeffrey Church, a University of Calgary economics professor. By all accounts, he’s an excellent teacher. Professor Church caught my eye because, in addition to advising the ‘big 3Ps’ in Canada as I’ll call them — Petroleum, Alberta Beef Producers, Pharma — Professor Church just wrote an economic analysis for Bell as part of the very, very important vertically-integrated telecom-media-Internet hearings now being held by the CRTC.

According to Church in his voluminous 93 page submission on Bell’s behalf, vertical integration is good for consumers and for Canada (p.5). I disagree, strongly, for reasons set out regularly in this blog (e.g. here) and my column for the Globe and Mail on Monday.

It’s not just Church that is so closely tied to Bell, but also Marcel Boyer, Bell Canada Professor Emeritus of Industrial Economics, Université de Montréal, as the CD Howe report indicates on the back of this slim 3 page ‘report’. 2 out of 16 does not a majority make, obviously, but their presence does stand out.

The rest of the lot in this ‘law and economics’ crowd does not seem very adventuresome, either. I know one professor occupying a BCE endowed chair that won’t be called upon, Professor Robert E. Babe at the University of Western Ontario, for he has traced the propensity of telecoms historically to go from limited competition to ‘total consolidation’ on a regular basis.  Let us say that the fact that Howe ‘report’ has zero to say about such notions is not all that surprising.

The 3 page ‘report’ is candid that dropping the foreign ownership limits on everything – telecom, media, internet — will not increase the number of competitors in the market. As it states, “given the small size of the Canadian market, the consensus view saw no major change in the number of national competitors”.

Translation, the big three companies in wireless telecoms — Bell, Rogers, Telus — for instance will still account for about 94% of the market (according to CWTA 2010), but they might be owned by yet a larger foreign based telco (Vertizon, the ‘new’ AT&T, Deutsche Telekom, etc.) or may private equity funds. Me, I have doubts many foreign investors — telcos, priv equity funds, banks — will even come if permitted to do so (or if we want ‘em to on such ‘carte blanche’ terms). I’m not alone on this, and hardly radical, given that even the World Bank states that the keys to effective foreign ownership is a ‘strong state’ able to regulate and competition.

Instead, the Council of 15 wise men and 1 smart woman says, drawing on newfangled theory about ‘competitive innovation’ drawn from the right-wing side of Schumpeterian ‘innovation economics’, that “the gains from liberalization would likely result . . . from better performance by telecommunications market participants”. Umm, I hope so, especially because its this same crowd breying for the withdrawal of any meaningful conception of regulation or state intervention. The CRTC’s horizons have been blinkered and public ventures like CANARIE have had their wings clipped. How foreign capital will ‘improve’ performance standards in Canada is not clear to me/self-evident.

The report advocates this ‘regulatory shock and awe’ to be developed in one swell swoop, with no distinctions kept between telecoms and broadcasting, between networks and content, between incumbents and newcomers. The telecom-media-Internet sectors are now so entangled on account of digitization and how people use media that they must be treated together as a whole. Partial agreement there about treating things ‘holistically’.

More targetted measures are suggested as alternative to foreign ownership for whatever “cultural policies” might be left over. Some of these ‘targetted measures’ I believe in — securing financing for content production, shelf space, strong CBC — and they have been promoted by at least two of the same writers involved in today’s 3 page missive (e.g. see Hunter and Iacobucci, with a third author Michael J. Trebilcock).

There are several problems with this “report”, however, that make it’s contribution to public discussion dubious, despite the fact that it will gain much attention.

1. Three pages is not a report and should not be pitched as one.

2. The Council of the Wise is skewed along lines suggested above, ie. by Bell and by Gender. Bell has always had a visible hand in the telecom, broadcasting and media industries, indeed, since it began broadcasting speeches, songs and sermons in the 1880s and took-over the Chairmanship of the 1905 Mulock Commission which had originally been convened to look into the underdevelopment of the telephone system in Canada in the early days of the 20th century.

So, that Bell continues to be front and centre 100 years later, at the dawn of the 21st century, is both a marker of continuity and somewhat unsurprising, but equally suspect/problematic in each of these occasions. The presence of Bell’s hired gun (Church), a Bell sponsored ‘academic chair’ (emeritus, Boyer), and BCE CEO George Cope’s speech at the C.D. Howe two months ago all so bunched up in time and common stance has a whiff of something not quite right about it.

3. While I don’t actually have many problems with increasing competition and dissolving lines between the medium and the message, or the network infrastructure and content, we also need to be upfront about the fact that the former (media infrastructure) are generally scarce and the latter (messages) abundant. In today’s OECD Communication Outlook 2011, it is clear that, generally speaking, the top 2 ‘netcos’ in each of the OECD countries account for between two-thirds and three quarters of fixed and mobile telecom network markets in each of the OECD countries (pp. 56-59). This means:

  • that Netcos generally should be regulated for market power, ‘messagcos’ generally not.
  • ties between Netcos and Messagcos are congenitally fraught with problems and propensity for anti-competitive behaviour.
  • Free speech standards and the values of a ‘networked free press‘ are also at play (and here). As the United Nation’s Human Rights Council recently stated, those standards apply to the Internet and people should have, as Article 19 of the Universal Declaration of the Rights stated before it in 1948, the freedom to receive and impart any information, through any media regardless of frontiers. At the CRTC Hearings on vertical integration the other day, Bell’s Mirko Bibic and Shaw’s brass called the idea that people should have access to any content on any device “preposterous”. The C.D. Howe ‘report’ is oblivious to these considerations.

4. The C.D. Howe report misses reality and the ‘big picture’. Perhaps this is because there is not a whiff of heterodox thinking among the ‘law & economics’ experts who wrote it. Not one ‘ecclectic’ economists, not one wild eyed, crazy lawyer, not a communication and media scholars or a historian in sight.

This is too bad because as long as it continues to be the case, people will continue to talk past one another. And it also means that ‘reports’ like this one, and the policies and approaches that actually do follow close in tow in the ‘real world’, will lack legitimacy.

5. Without being able to expand their horizon, the authors of the C.D. Howe ‘report’ blithely countenance “North American integration”. Economically, as I said above, I don’t have a particular problem with that, although I doubt that things will pan out as they expect, and even that what the Howe folks do expect ain’t much (“better performance” from same number of players).

Politically and culturally, however, there is a problem, not with Cancon and ‘traditionalist/romanticist’ conceptions of culture, but ‘network culture’. Netcos and search engines are now closely allied with state security, military strategy and defense contractors.  It’s probably best to keep some clear blue water between these domains. The authors give no hint that they have even thought of this.

Netcos, ISPs, search engines, etc. are also constantly being badgered by lobbyists as well as politicians in Canada and the U.S. to play a greater role on behalf of  media and entertainment industries (for most recent and strong opposition to this from within just the mainstream’, see here). The approaches have differed, with the last government in Canada wisely turning down lobbyists push to have ISPs play the role of ‘copyright cop’, disconnecting people who repeatedly are identified as ‘copyright bandits’.

The International Federation of Phonographic Industries (IFPI) launched it’s efforts to lean hard on ISPs and search engines, and less on Digital Rights Management (DRM), in 2008. It has been picking off ‘wins’ for this agenda around the world, but not so much yet in Canada.

Yesterday, CNet journalist Greg Sandoval reported that AT&T, Comcast, and Verizon “are closer than ever to striking a deal with media and entertainment companies that would call for them to establish new and tougher punishments for customers who refuse to stop using their networks to pirate films, music and other intellectual property”.  That turn-of-heart, in turn, he reports, was eased by coaxing from the Obama Administration and the National Cable TV Association.

The pressure is already strong in Canada, but so far government and regulators have refused to make ISPs the deputies of the media and entertainment industries or to regulate the Internet as a broadcast distribution medium. On law and order, however, the push is for a stronger state and more compliant Netcos and Searchcos.

While there’s lots of dots to connect between all of these latter points, the key idea is that integration at the network and market levels is going to increase pressure to harmonize tougher matters that impinge greatly on network media, and thus network culture. That the blokes and one women from C.D. Howe have nary a word about this and don’t dare let the phrases ‘network neutrality’ and ‘open media’ cross their lips is a problem of the first order because those concerns, as sure as night follows day, are at the heart of the emergent network media culture. How can foreign ownership be reconciled with these concerns should be the question, rather than if it if good or bad altogether.

In sum, until we can start speaking one another’s language and stop passing off economic and policy platitudes backed by those with big stakes in the game, the nominal ideas presented in this “report” should be shelved and other big questions — vertical integration, for example — put on hold.

Ultimately, Pork, Petroleum and Pharma are not the same as telecoms and media. We need some new thinking for ‘new media’.

Until we recognize this, we’re not going to get very far, at least in a a way that takes into account the full range of issues at hand, rather than the economists narrow measuring rod of value.

Rubber Stamp or Real Questions?: CRTC Addresses Vertically Integrated Media for Next 2 Weeks

As I normally do, this post largely replicates my column for the Globe & Mail today with the addition of a few more links so that you can follow up on things that I refer to. I was at the opening of the hearings today and plan to be there a few more times this week and next. I’ll have more to report in a few days.

Altogether, seventy-eight different parties filed interventions with the CRTC. There are 50 scheduled to give presentations over the next two weeks. You can find all of the links to the briefs and studies filed with the CRTC by the companies and other intervenors here.

The CRTC’s hearings on vertical integration began Monday. For the next two weeks this means that the four major vertically-integrated media companies in Canada – Bell, Shaw, Rogers and Quebecor – could face tough questions about whether they have the clout to dominate telecom, media and Internet services across the country and, if so, what should be done to curb that potential?

The hearings were scheduled last November after the CRTC approved cable giant Shaw’s $2 billion take-over of bankrupt Canwest Media’s television assets (27 television stations, the Global network, 30 specialty cable and satellite channels). It was given added impetus after Bell’s $3.2 billion deal to acquire CTV and the A-channels was given the green light in March.

There is every reason to be skeptical about these hearings given that they are a classic case of “bolting the barn door after the horse has already left the stable”. It is also CRTC approvals all down the line that have allowed integrated media conglomerates to become the norm to begin with.

In the U.S., media conglomerates have become the exception (Comcast/NBC-Universal) after the disastrous AOL Time Warner merger, the collapse of the ‘old’ AT&T, break-up of Viacom-CBC, and so on. Indeed, vertical integration is in retreat in almost every other developed capitalist democracy.

We should also remember that Bell attempted – and failed– to extend its reach from the medium to the message from 2000 to 2006 by taking-over CTV, CHUM, and the Globe & Mail. The fate of Canwest was worse. Yet, we seem to be stuck in a time warp, with CEOs, Cabinet Ministers and the CRTC singing in unison that media conglomerates are all the rage, for much the same reason that they did back in the 1990s.

Be that as it may, Bell, Shaw, Rogers and Quebecor Media Inc. (QMI) do exemplify the trend in Canada. They are the ‘big four’ and the hearings are all about them. They stand at the apex of a set of telecom, media and Internet markets that have grown greatly from $42 billion in revenue in 1998 to $73 billion today (in constant 2010$).

The real issues, however, are not about the sheer size of the ‘big four’, but their market power. Between them, Bell, Shaw, Rogers and QMI control:

  • 86 percent of cable and satellite distribution
  • 70 percent of wireless revenues
  • 63 percent of the wired telephone market
  • 54 percent of Internet Service Provider revenues
  • 42 percent of radio
  • 40 percent of the television universe
  • 19 percent of the newspaper and magazine markets
  • 61 percent of total revenues from all of the above media sectors combined.

That, by any standard measure of concentration, constitutes a highly concentrated market.

The fact that Bell, Shaw, Rogers and Quebecor stand as gateways to so much raises concerns that they will give undue preference to their own services rather than serve as open gateways to the maximum range of entertainment, communication, knowledge and news possible. In this regard, more is a stake than anti-competitive behaviour, because the range of expression available in a society is a barometer of the quality of freedom of expression and democracy in it. None of the ‘big four’ waxes much about this, however, insisting as they do that the laws of normal economics should be the only measuring rod of value.

To be sure, the ‘big four’ are hardly the only players in town. There is also an important second tier of a dozen or so smaller players that have stuck to their knitting in just one or two media: Telus, MTS, SaskTel, Cogeco, Bragg/Eastlink, the CBC, Astral, Postmedia, Transcontinental, Power Corp, Thomson/Globe & Mail, Torstar and Brunswick News. Then there is a third tier made up of the thousands who fill in the nooks and crannies of the media universe: Wikipedia, the Mark, media workers, star journalists, opinion leaders, blogs, your best friend, personal websites and so on.

The position of all these parties turns on where they sit. To the ‘big four’, to the extent that there’s ever been a ‘golden age’ of media, the picture just presented is it. Thousands upon thousands of actors, big and small, making it nearly impossible for any single entity to exert excess influence over it all.

According to Bell’s hired-gun, University of Alberta economics professor, Jeffrey Church, “vertical integration is beneficial for consumers”. According to him and other briefs filed by the big four, consolidation is good for consumers and Canada because:

  • it reflects efficiencies, spurs competitive innovation and is a global trend.
  • telecom, media and Internet markets in Canada are “highly competitive”.
  • our ‘small media economy’ needs a few deep-pocketed ‘national champions’ to compete globally and invest heavily in innovation at home.
  • instances of harm are mostly imaginary and few and far between.
  • it helps keep “consumers . . . within the regulated system” (Shaw, p. 4)

The collapse of media conglomerates elsewhere, the evidence of market power above, and the fact that Canada has the eight largest media economy in the world, after France and Italy, and just before South Korea and Spain, should raise an eyebrow or two about claims one through three. Claim four is false (see below), and the last one repugnant.

Many in the second tier and ‘nooks and crannies’ of the media also challenge these claims. Telus, for instance, argues that the harms are real, not prospective. Buying program rights, for example, from CTV, the Comedy Network, TSN and two-dozen other channels, it argues, became a whole lot harder, and more expensive, after Bell Media took them over.

Access, a cooperatively run cable-system-cum-Internet provider in Saskatchewan raises similar concerns. Those that have content, but not distribution networks – Astral, CBC, media workers – make a similar case, but point to how control over networks rather than programming rights can cause real world harm.

Periodic squabbles between Quebecor and Bell highlight much the same point, with Quebecor’s SunTV hobbled in equal measure by self-inflicted wounds and its inability to sign an acceptable ‘contract for carriage’ with Bell. Just last week, the CRTC declared that Bell’s decision to move Shaw’s ‘Cave TV’ service into the upper stratosphere of its offerings conferred an undue preference on channels Bell owned, and ordered the change to be reversed. If these pitched Goliath versus Goliath battles are regular occurrences, we can only imagine the problems that David – the little guy – is having.

While Bell, Shaw, Rogers and QMI operate their own online video services, they assert that congestion problems require them to manage traffic through usage-based billing and bandwidth caps, although such measures cripple rival online video distributors such as Netflix, Apple TV, GoogleTV, and so on. Netflix, for instance, downgrades its services relative to standards elsewhere, and bitterly complains about having to do so, all the time. Smart and savvy telecom guys like Jean-Francois Mezei and rabble-rousing groups like Open Media are convinced that such practices are a deadweight on creativity, innovation, freedom of expression and an open internet.

For the public, the practices just listed and networks that are under-developed and over-priced by global standards constitute subtle yet pervasive constraints on how we use and experience the emerging networked digital media. Stubbornly, Canadians lean against the wind and remain heavy Internet users, downloading and uploading to and from Youtube, virtuously contributing to Wikipedia, and watching porn at rates that rank at the very top by global standards.

All this, too, despite the fact that, as Shaw’s brief repeatedly states, the industry and regulators are one when it comes to the goal of keeping “consumers in the existing broadcasting system”. We can only imagine what things might be like if they strove for the maximum freedom of expression possible, rather than only “as much diversity as practicable”, as the CRTC put it in its 2008 Diversity of Voices decision.

Ultimately, the problems of fully-integrated media conglomerates are congenital, not imaginary. They run hand-in-hand with media history the world over and until we accept that, we’ll have to continue settling for scraps off the table as regulators let the ‘big four’, I mean, the market rip.

Will Bill C-51 turn ISPS into Internet Gatekeepers?

My most recent column for the online technology section of Globe &Mail came out Tuesday. It is available here.

The article builds on some recent posts that I have done considering the mounting pressures being put on Internet Service Providers to act more like gatekeepers rather than gateways to the Internet. Four such forces, I suggest, are pushing in this direction:

  • a strong push from the ‘copryight’ industries, especially the music industries, to make ISPs and search engines extensions of the copyright enforcement regime. This has become especially strong since 2008, when the International Federation of Phonographic Industries (IFPI) and the Recording Industry Association of America (RIAA) turned to such measures more forcefully, while backing off somewhat from Digital Rights Management (DRM) (see page 3 of the IFPI’s Digital Music Report, 2008);
  • the near universal adoption of usage based billing and bandwidth caps by Canada’s ‘big six’ ISPs — Bell, Rogers, Shaw, Quebecor, Telus and Cogeco — and now the mid-sized Atlantic region player, Bragg/Eastlink (although with some recent significant developments from Shaw).
  • the fact that all of the major ISPs, except Telus, are vertically integrated and appear to be using usage based billing and bandwidth caps as a kind of ‘television business protection plan’ for their interests in the television industry.
  • and finally, the focus of yesterday’s column in the Globe and Mail, the push from national security and law enforcement agencies to build in increasing monitoring and surveillance capacities into their networks, and to conduct ‘warrantless searches’ if proposed new legislation is passed.
A fuller treatment of the issues covered in Tuesday’s column can be found in my earlier post here, and another that places things in a larger, global context here.

Could CANARIE fly on its own?

While writing the last post on the potential termination of funding for CANARIE, I got in touch with someone who I have recently come to know and have a great deal of respect for, Bill St. Arnaud. Bill’s important to the CANARIE story because he was Chief Research Officer with it for fifteen years before starting off on new adventures in early 2010.

After reading CANARIE’s annual reports for the last decade and the Government’s budget for 2011-12 tabled last week in Parliament that signals the end of CANARIE as a government funded initiative, I got in touch with Bill to see if I was understanding things correctly. Here’s a brief reprisal of the email conversation we had:

DW:

Dear Bill, I was wondering if you could please help me make some sense of some numbers related to Canarie that I’ve recently come across in the Governments Budget for the upcoming year? I see that they refer to the ‘sunset’ of $31m in funding to Canarie last year, and zero allocated for the upcoming year. Surely that doesn’t mean that Canarie’s entire budget has been eliminated, does it?

BSA: CANARIE receives only block grants approximately every 5 years.  The last block grant was for $120m in 2007 . . . .  So currently CANARIE’s funding sunsets next March. . . . CANARIE has virtually no other sources of income.

Over its 15 years existence CANARIE has received almost half billion dollars in funding made from a multitude of block grants.  After the receipt of each block grant many times the government has told CANARIE that it should be self sustainable from that point on.  Finally I think this government actually means it this time.  But CANARIE’s board and management is actively lobbying government for another block grant when the current one expires next March.

However I have been arguing for some time that CANARIE should be self sustainable, at least on a day to day operational basis. Many of CANARIE’s counterpart research networks around the world are operationally sustainable like those in Australia, US, Nordic countries, Netherlands, etc.

Although some of these networks, from time to time do receive capital funding to invest in new infrastructure or build community networks. Being operationally sustainable, has its challenges (especially at this late hour), but it  has a number of advantages:

(a)    It would give CANARIE the freedom and independence to pursue more aggressive broadband strategies without fear of reprisals from incumbents lobbying government to prohibit such activities.  Internet 2, in the US for example, when it was created deliberately eschewed  government funding for this reason

(b)   CANARIE can do much better long term planning instead of having to stare at a 5 year horizon. The last block grant literally came at the midnight hour – and we had to start to give layoff notices to many staff just prior to receiving the funding

(c)    CANARIE can be a much greater force for innovation if it is self sustainable by offering innovative new services such as national wireless, zero carbon Internet, community networking etc

————————————————————————————————————

So, if Bill is right, then the end of government funding doesn’t necessarily mean the end of CANARIE.

But will it continue to operate as a semi-independent actor capable of experimenting with advanced versions of the Internet that will only become widely available years from now?  Will it continue to push the envelope when it comes to open network and interoperability principles that define the original, non-commercial Internet?

In other words, will it continue to set an independent, alternative high-bar standard against which the incumbent telecom providers — Bell, Shaw, Rogers, Telus, Quebecor, Cogeco, etc. — can be critically assessed?

While I struggled to get my head around the idea that it could be okay to cut CANARIE off of government funds cold-turkey, it also took a while to fully realize Bill’s first point: that CANARIE has been put under incredible constraints already by incumbents constantly badgering the government to keep it on a short leash. In other words,the incumbents have pushed to keep CANARIE from actually competing with them in ‘the market’. It’s done what its done, so to speak, with one arm tied behind its back.

So getting CANARIE off the government trough seems to be Bill’s way of hoping that doing so might give it greater room for manouver outside the constraints imposed on it by governments acting at the behest of incumbent lobbyist. This is an incredibly important point, but one might wonder if government ought not steel its spine and actually stand down the lobbyists?

My feeling is that it would be better, in short, to have continued public funding and proper shielding from undue commercial influence. In a perfect world, we could have both, but I now understand why Bill doesn’t see cutting funds for CANARIE as the death blow I originally anticipated.

Maybe this can all be made a bit clearer by drawing parallels to television and hockey. It is commonplace in Canada and all countries with any kind of public service media for commercial broadcasters to whine about the CBC ‘unfairly’ competing with them for the rights to air NHL hockey games and anything else that draws eyeballs and attention. And so too for CANARIE, because the comparisons drawn with the private sector might not prove so favourable, better to cordone it off in areas the private sector is willing to leave behind to begin with. Seeing things from Bill’s perspective we can only imagine what CANARIE might it do if set loose after being held on a short leash for all these years?

In all of this is a vital demonstration in the political economy of communication, and it is as old as the first telegraphs, submarine cables and so forth in the 19th Century, and that is that governments shall never compete with private capital for markets. In ‘normal economics’ it’s called crowding out, while a more radical perspective sees this as the subordination of democratically elected governments to the interests of capital, or business to put it more simply. Today, it’s putting things like CANARIE and the CBC on short leashes, so that they can be ‘remedial public’ programs, not hardcore alternative providers in ‘the market’.

We can also see this kind of thing in  familiar terms when we look across the Atlantic to the UK, where the BBC — a core public service media provider — is constantly under pressure from the likes of James Murdoch of News Corp. and the Newspaper Publishers Association, for instance, to trim its sales. The Newspaper Publishers Association, for instance, argues that the BBC’s online news ambitions “threaten to strangle an important new market for news and information”.

Translation? The BBC should be tied to the mast of a sinking ship: television broadcasting, with rabbit ears preferably, while the rest of the explosive digital and commercial media market is handed off exclusively to ‘market forces’. This is a point that has also been driven home to me by my friend and NZ communication scholar, Peter Thompson, who recounts how Canwest Media used its ownership of television and radio interests to similarly argue against anything other than the most minimal role for TVNZ. It is also the basis of our own Conservative Government’s Directive to the CRTC to ‘rely on market forces to the maximum extent possible’ (for another post on this with respect to UBB and bandwidth caps, see here).

But back to CANARIE, some economic independence from government coffers could lead to greater autonomy and fewer shackles. Yet, CANARIE could also simply be sold to the highest bidder, likely those who previously fought tooth and nail to constrain it? In that sense, it would be grafted onto the operations of one or other of the existing incumbents and constitute yet another moment when government policy serves a primary purpose: to expand markets and open new sources of revenue for the private telecoms carriers.

These are some critical questions and with nothing more than a line item buried in the budget alerting us to any of this, we should start thinking about these questions now before CANARIE really does come to the end of the line in March 2012.

** With thanks to Bill St. Arnaud for his help and agreeing to let me use our correspondence for this post. Bill’s blog can be seen here.

CANARIE Killers?: Did the Conservatives Just Pull the Plug on Canada’s Premier Internet Research Network?

I received an email this morning alerting me to something that had, well, been flying under my radar: CANARIE, or Canada’s Advanced Research and Innovation Network as it is formally known. It appears that the Conservatives used their new budget to eliminate all funding for Canarie as of last year.

Originally set up the early days of the ‘information superhighway by the then Liberal Government, for nearly the last two decades Canarie has progressively built a more extensive high-speed, fibre optic cable that stretches across Canada linking up over 2,000 schools from kindergarten to high schools, 87 universities and hundreds of colleges, 150 hospitals, and dozens of research centres to one another and their counterparts around the world.

You can check out the places, province by province, that are connected to CANARIE’s network here. Who knows, maybe there’s a place connected to CANARIE right in your own neighbourhood. Probably.

It allows researchers to collaborate and share their data and knowledge. It is also a linchpin in a dozen or so provincial and regional initiatives to extend leading edge broadband facilities throughout Canada, such as Alberta’s SuperNet. It connects Canadians to the outside world, with links to 100 international peer networks in eighty plus countries.

CANARIE works with the private sector in many areas of telecoms, ICTs, medicine and so forth, such as a pilot project designed to create a wireless network with a cellphone for the deaf that it is working on with Research in Motion or another with Flintbox that provides digital content and copyright management services. Flintbox originated at UBC in 2003, but was privatized last year in a sale to a U.S. company, Wellspring Worldwide. The venture has done extremely well since, expanding the number of universities, pharmaceutical companies, software developers, and so forth that use the service from 78 to more than 400 institutional users.

For some that would be a sign of the commercialization of universities, but from a conservative’s point of view it would simply be using universities to create commercially viable products for the marketplace — a public prop for private enterprise, which is in someways what CANARIE is and has been too. CANARIE is also tied close the private sector through a board of directors that is choc-a-bloc full of a rotating bevy of heavy hitters from the telecom and ICT sectors, from Bell, Telus, Cienna Networks, to IBM, but also those who hail from the research side of Government policy making and the academic community. It’s list of affiliated members similarly consists of a whose who of corporate, government and academia in Canada.

But CANARIE has, since it’s inception, been designed as a non-commercial entity that aims to further the development of Next Generation Networks and applications for them, rather than being either an extension of or competitor to the major commercial network providers in Canada: Bell, Rogers, Shaw, Telus, Quebecor and Cogeco. It develops and experiments with networks that are far more advanced than what commercial providers offer and its networks are based on an inviolable commitment to principles long associated with the Internet: open systems and interoperability.

At a time when those principles are under assault, and the commercial development of networks in Canada lags its major global counterparts, CANARIE in a sense has competed with the private sector by showing what is feasible, and what can be done. As another little piece of CANARIE promotional material gloats:

CANARIE is unlike any standard network anywhere in Canada.  CANARIE’s core capacity enables data transfer speeds that at-home movie downloaders can only dream of – 10 billion bits per second across the core network and 100 billion bits per second in key corridors.  That’s 200 to 2000 times faster than the fastest current commercial Internet offerings. CANARIE’s ultra-high speed, capacity, and reliability deliver high performance, enabling transmission of and access to high-definition two-way streaming video, audio, complex 3D models and simulations, and ultra-complex 3D images from molecules to galaxies. CANARIE is a non-profit corporation supported by membership fees, with major funding of its programs and activities provided by the Government of Canada.

In terms that make it easier to understand, that means that someone connected to CANARIE’s core network could download the entire iTunes catalogue of 2,500 films in just 7 minutes, or “just 7 seconds on its ultra high capacity networks in major corridors between Halifax, Montreal, Toronto and Vancouver”.

CANARIE’s original mandate was set to expire in 2007, but with the good graces of the Conservative Government it was given a new lease on life and $120 million spread over the next five years. As then Industry Canada Minister, Jim Prentice stated at the time,

The government is working toward becoming a world leader in research and technology. CANARIE embodies some of the strategy’s key goals, such as promoting world-class levels fo scientific and technological excellence, and creating partnerships to accelerate the pace of discovery and commercialization in Canada.  The government’s commitment to collaborative research was underlined in Budget 2007, with $120 million in new support for CANARIE to maintain the network for the the next five years and to develop the next generation network (p. 3).

Five years is up next year and, guess what, CANARIE’s funding is set to be eliminated. Never mind that much needs to be done, and the Harper Government’s own previous praise for it as a leader in its field, funding levels that have hovered between $20 and $30 million for most of the last decade appear in this year’s budget to fall to zero next year (see pp. 209-210).

As the dry language of that document states, the “reduction of $31 million is due to the sunsetting of the grant”. Wow, like the rhythm of the solar system money comes and money goes, rather than a decision to kill CANARIE before its mission is accomplished.

This should also be cast in the light of one other consideration that peeks through the budget: the fact that most of the Government’s announced $225 million in ‘stimulus investment money’ earmarked for broadband development in rural and remote communities has already been spent, with $166.5 million out the door last year and with only $21 million set aside this year to extend broadband connections to what the government estimates is the 200,000 rural and remote households without such services.

That the Conservatives are low in their estimate of the scale of the problem and the size of investment needed to solve it is indicated, for instance, by the Quebec Government’s budget early this year, which announced spending of $900 million between now and 2020 to extend broadband Internet to all Quebecers and, in particular, the 290,000 households in Quebec alone theat currently do not have access to broadband Internet capabilities. The Conservative Government also lowballs investment in broadband development relative to the US’s plan to spend $7.2 billion on such initiatives, or Korea’s $24.6 billion or Australia’s $43 billion, and a long line of other countries (see here).

In other words, without any fanfare or public attention, it really does seem like we are seeing our own “CANARIE in a coalshaft”, a government pulling a plug on an initiative that has not only been a world leader but also adhered steadfast to principles of an open, interconnected and constantly evolving next generation internet that delivers up a broad range of public goods. As the open, user-centric model of the Internet comes under pressure from a broad array of forces bent on implementing a the ‘pay-per model’ of the Internet, CANARIE served as reminder that alternatives are not only available, but actually feasible and critically important.

For a government bent on a fairy tale version, at least in public, of ‘free markets’, the sense of a viable alternative in our midst was just too much. Better to kill a couple of birds with just one budget-sized boulder, and so CANARIE is sacrificed and miserly support for broadband development for all Canadians cut to the bone.

For a government already widely criticized for lacking a decent vision of the future and an adequate ‘digital economy’ strategy, these moves look just dumb.

Silly Season: Cellphone Charges, OECD Comparisons and is Canada a Wireless Leader or Laggard?

It’s silly season again. The OECD just released another study showing that, on the telecom front, Canada is not doing so well, and continues to slide. This time, the OECD looked at the cost of “international roaming charges” for wireless data plans used abroad for the two largest cellphone companies in each of the 34 member OECD countries.

The headlines cascading across the ‘news media chain’ — daily newspapers, television, Internet and so on down the line — yesterday were dramatic. I used the story too. For a 1MB download on wireless data plans from Bell and Rogers, Canadian’s pay around $25 in roaming charges when outside the country versus under $5 for Greeks, and $10 for the OECD on average.

This is bad news indeed, and one more that ranks Canada at the very back of the pack in ‘global telecoms lemming race': 34 out of 34 amongst OECD countries.

Financial Post editorial writer Terrance Corcoran today had a fit. The International Roaming Charges report, he snorted, “is another mangled OECD statistical mess in the agency’s ongoing production of screwball international telecom reports.”

Corcoran is right that news media glommed on to headlines, and so too did I at first, before digging deeper and linking directly to the OECD. Change the lens, he says, and things look a whole lot different.

Instead of looking at the cost of a one time downloading fee, he wants us to look at the cost of downloads of 1, 5 and 20MB in wireless data plans offered to the cheapest destination and the place where we are most likely to visit — the United States. And we should measure ‘roaming charges’ to the US (versus the rest of the world) for over a period of several days or even a month, not just a one shot splurge. Do this, he says, and a wholly different picture emerges.

Indeed it does. For example, it only costs $12 to download 5MB of data over the course of five days versus an OECD average of $21.  In Japan and Chile, at the opposite end of the spectrum, charges are really silly at $58 and $70, respectively.

The roaming charges for Bell and Rogers – since the study looks at the two biggest cellphone companies in each country, for a total of 68 in all — on this measure rank 13th out of 34 countries. It’s not exactly first prize, but it is substantially better than the ‘bottom of the barrel’ story that flooded the headlines.

Things look better yet when going to 20MB, with Canada ranking 7th, with an average price of about $25 versus $60 plus for OECD countries on average, although the Slovak Republic (USD 14.50) and Slovenia (USD 18.14) came in at the low end of the scale.

Corcoran argues that it is just this kind of nonsense that rubbishes the study as a whole. He shakes his head in disbelief that Industry Canada continues to support and stand by such idiocy while the likes of Bell, Rogers and Telus take an unnecessary beating, not least by those he ridicules as the ‘telecoms bashers’.

He finds other studies to mention or show, that like his own examples, that Canadian cellphone companies fare closer to the top than the bottom of the heap. Besides, he claims, the studies have already been dated by the speed of events because Bell, Rogers, Telus, Public Mobile and Wind’s new plans make the ‘old concerns’ obsolete.

But hold on here a minute. The point is that there is not just one study, but one after another by diverse sources that point in the same direction. In addition, not Industry Canada, but Statistics Canada takes the lead in these kinds of studies. We must get beyond the idea that OECD stats are rubbish, too. The data is provided by Canadian carriers and the OECD’s methods have been developed under the leadership of folks from Statistics Canada.  The data and methods are admittedly imperfect, according to those I know who have been directly involved in these processes, but they are among the best we have and highly credible.

Corcoran already knows this in a way because his own ‘contra’ evidence is drawn from the same study, just a few different measures. And yes, new plans come and go (part of the problem actually, intentionally sowing confusion as it does), but when a snapshot is taken and of the two biggest players for each of 34 countries broader patterns emerge.

And that’s really the nub of it. Corcoran is amiss in his critique of the overall quality of OECD data and reports, and insofar that his own portrait cherry picks the bits that support the kind of argument that he wants to make, while ignoring the rest.

In between the headlines and his picked cherries, however, is a broader range of measures that help fill in the picture. Looking at them, unfortunately, restores the dominant image of a country whose quality of telecom services has steadily slipped over the past decade.

When it comes to roaming charges to use our wireless data devices in the big wide world outside the United States, it costs more to download 1, 5 or 20MB of data for Canadians regardless of whether we download once, or spread it out over five days or even a month.

Looking at those measures, Canadian carriers again fall consistently in the bottom 5 or 6 of the pack when it comes to international wireless roaming charges. We must remember that this is an ‘international’ study, not a Canada-US centred one.

When we think in terms of the flows of people – mobility, migration and jet-setters – and beyond the horizons of the U.S., it is the world out there rather than just the neighbour nextdoor that we need to look to and make our judgements. Corcoran’s analysis is, in this regard, selective and myopic. This is a study of international roaming charges, remember, not just roaming charges for Canadians in the U.S., as he would like to have it.

The table below presents a fuller, although not complete range of relevant comparisons.

Service Type Canada’s Rank out of 34 Canadian Cost (US$ PPP) OECD Avg. Cost (US$ PPP) Cheapest (US$ PPP)
1MB/1 Session 34 25 10 4.90 (Greece)
5 MB/1 Session 31 60 32 11 (France)
5MB/5 Days 31 60 40 11 (France)
20MB/30 Days 29 180 140 48 (France)
20MB/One Session 28 180 120 20 (Ireland)
 
‘Cheapest Dest.’
1 MB/1 Session 13 10 5.80 1.80 (Ireland)
5MB/5 5 Days 13 12 25 5 (Luxemb)
20MB/30 Days 7 25 60 15

Shaw’s ‘New New’ Internet Pricing Regime — Raising the Bar?

Whew, I’m just coming back from blogosphere, and sheesh can things sometimes get tough out there. I’ve been thinking the last few days about an idea based on these forays into blogs, columns for newspapers, and stuff like that: Blogoslama, or what happens when the trolls of cyberspace get nasty.

That’s the title I have for people like Know Your Facts, RightTruth, TheFactCorrector, TheCorrectOpinion, SeektheTruth and, well, you get the picture, that run around blustering and puffing up their chest in umbrage over something or other that you’ve wrote.

Now don’t get me wrong, and sometimes these strange combinations yield fruit. I enjoy the to and fro of online conversations and generally think highly of them, for reasons that I’ve attributed in previous posts to scholars like Yochai Benkler, Nancy Baym, and others who see these activities of valuable forms of ‘sociality’ and public communication.

I also like the interesting characters like Strunk&White and UseYourSpellCheck who politely remind people how important a tidy sentence is to a civil conversation. And there’s others like Grumpy Scientist, TvWorker, and Old Green who speak wisely, although maybe somewhat slower than others in these sometimes rough and tumble places do. Amidst these different voices are some that really make you think, and sometimes to do a rethink.

Sometimes, though, I must admit, I can feel my skin growing thicker. In some wierd way, the old ‘blender theory of truth’ espoused by great liberals is alive and well. This is the theory that if we throw enough ideas into the mix, the truth, or at least the possibility of understanding, will rise to the top. Some say the Internet, and the blogosphere in particular, functions as a giant ‘echo chamber’, hardening opinions and throwing a monkey-wrench in the ‘blender theory of understanding’. In broad brush terms, I disagree.

So there I was just checking in on my recent contribution to The Mark, a piece that takes a blog entry I did on May 27th about cable media conglomerate Shaw’s new Internet pricing polices. A reworked, shorter and much polished version of that appeared this week as “We”ll Lift Your Internet Cap — If you Buy Our Cable TV” on The Mark. Between now and then, little did I know, Shaw had replaced its first new plan with a new, new one — each a ‘better response’ to ‘public consultation’ than the one before.

The story was a response to Shaw’s announcement last month that it would be doubling the bandwidth of its High Speed Internet services, while maintaining the same price and speeds for these services. Even more importantly, it announced that it would be offering two new tiers of High Speed Internet Services that offered even higher speeds and more voluminous bandwidth caps, up to 1TB in some cases and in others no caps at all. Shaw made a big deal of this, splashing about the news that it had made these ‘radical’ changes in light of recently held consultations with its subscribers.

This is and was a pretty big deal, especially in Canada where the user-centric and open Internet has been transformed step by step into a pay model where bandwidth caps are nearly universal and costs out of line with relevant global comparative standards. We have been drifting steadily toward the pay per Internet model, with Usage Based Billing and Bandwidth Caps leading the way.  I am opposed generally and strongly to the direction of events.

One fly in the ointment, however, with the big splashy announcement was that the you can only get the high end Internet capabilities by purchasing one of two of Shaw’s television services . . . as they become available over the next 16 months.
As a quote from Shaw’s official site stated: “These broadband packages will come bundled with TV and will roll out in two phases.”

In other words, this was ‘tied selling’, which is a big problem with vertically integrated media conglomerates. It also looked like a Business Protection Plan for Shaws vast television interests, from cables, to DTH satellite service, the Global network and a vast stable of television and radio broadcast stations.  And in this regard, Shaw is symptomatic of a broader problem in Canada: the extent that such integrated media conglomerates continue to roam the earth. Elsewhere, such beasts are generally on the wane, although Comcast’s acquisition of NBC earlier this year is an important exception.

Otherwise, in the US, media behemoths such as AOL Time Warner and ATT fell apart (although Comcast NBC is making a comeback), Vivendi in Europe exploded, and the story is similar from one country to the next. The main point for here, though, is that Shaw appeared to be merely tinkering generously with the ‘pay-per Internet’ model and then using it to defend other elements of its media stable. I was also circumspect of its claims about all of this coming from the good graces of the company after a series of consultations with subscribers. I think it had more to do with the intent politics of the Internet that have been at a steady and high boil for at least the past six months — a kind of late realization of the gravity of the stakes at hand, after years of slumber.

Anyway, to make a long story short, as soon as you start talking about concentrations of corporate power and the Internet being bent to private interests, people get their backs up, and in cyberspace, where anonymity is the lubricant of choice, they let you have it

Know Your Facts, who I introduced to you above, blasted me, stating that I should, umm, in his very own words, “No your facts before you write a objective review”. I don’t think that I ever claimed to be objective, but I do claim to be thorough and honest and good with the evidence at hand and that I produce, interpret and put in context. But before I could talk to KYF about the production and interpretation of facts, and how that renders notions of ‘objectivity’ problematic, he wound up and smacked me, FULL CAPS ON.

High Speed Internet services from Shaw are available from Shaw. He sent me a link that went to a Shaw page that required me to tell them where I lived so that Emma, or whatever their silly ‘agent’ is called, could tell me what’s on offer. It was a dead-end.

But I was wondering, had I made a mistake, lost the plot? Was it true, as WordUp said (slinking into the saloon), that by just referring to the ‘big 5′ other media behemoths alongside Shaw that I had blinded myself to reality?

Umm, no. I checked again. And again. The document I was relying on was still there. It clearly said everything I said above. Here it is again for your reference.

But then Craig arrived. Craig, you see, is from Shaw. He seems like a nice guy. He posted something to The Mark, in the comments section under my article. Everything now makes sense.

Shaw changed its pricing again on June 6th. The source I had been relying on had been superceded. The new page is here.

The improvements are considerable and I am glad that Shaw has seen fit to go further than the initial scheme announced to much fanfare.  There are still some quibbles that one might gnaw on, but the broad principle that access to the highest end Internet capabilities should not be tied to a subscription to any of Shaw’s television services.

To be sure, Shaw has raised the bar and it is to be applauded for doing so.  If it can just get rid of the bandwidth caps altogether and make sure pricing is in line with relevant global comparisons, then, at least when it comes to Shaw, we will be able to rest at ease.

Yet, one thing that also is crucial to this is that the bar set by Shaw should also become the minimum baseline standard adopted by the rest of the ‘big 5′: Bell, Rogers, Quebecor, Telus and Cogeco. Moreover, and to repeat from an earlier post, these must not be seen as a diversion from the central issues that remain core to the upcoming CRTC hearings on vertical integration and UBB.

Ooops, I did it again. Did that screw it all up for you?

Globalive: InstaAnalysis of Wind Mobile Decision

Globalive’s (Wind) ability to operate and compete in Canada’s cellphone market was given surer footings and wider berth yesterday.  That’s the effect of a Federal Court of Appeal ruling that said that the Government acted properly when it used an “order-in-council’ to allow Globalive to enter the Canadian wireless market even though it was clearly owned and financed by capital from Orascom, an Egyptian company that has since passed into the hand of new owners: VimpelCom, a Russian based outfit.

The decision has not yet been posted on the Federal Court of Appeals website, and even using the mighty Google proved fruitless in turning up the original decision, or perhaps I’m just dumb. Several other sources of varying quality, however, are available: here’s Windmobile’s self-serving cant; an online source that looks useful is TelecomPaper, and the law firm Stikeman Elliot offers a thorough review. After this, there’s the cascade of your run-o-the-mill news sources — CBC, the Star, National Post, and Globe & Mail, in roughly that order — that all seemed to follow the basic line that hit the wires (and here).

So, the fact that the actual decision itself is missing is, umm, a problem. It appears that some people have not quite got that we now live in a ‘show me’ environment, where having the actual decision easily to hand would be nice. We should not have to work so hard to find important things, or rely on hand-me downs in the news and information realm.

In December 2009, the CRTC found that the Egyptian-based Orascom owned and essentially controlled Globalive, mostly because it provided the lion’s share of capital investment standing behind the erstwhile Canadian cellphone company. The CRTC denied Wind Mobile a wireless license, thereby stopping it from entering the market.

The Government overturned the regulator, but then found its own path subverted when communication workers (CEP), Telus and Public Mobile successfully challenged the Government’s ability to skirt the Telecommunications Act’s limits on foreign ownership by way of Cabinet Directive before the Federal Court earlier this year. The Federal Court agreed with them and slapped down the Government for using the power of Cabinet Directives to do an end run around the regulator and existing law, putting Wire Mobile in limbo.

Complicating matters greatly, just before the CRTC denied Wind Mobile’s application for a wireless license, Industry Canada had sold spectrum rights to Globalive, in line with Government policy.  With Industry Canada and the CRTC at odds with one another, something had to give. The CRTC was pushed aside in the end, Wind Mobile can go ahead with its spectrum and wireless markets now more firmly in hand.

Cabinet has broad authority to interpret and reconcile such clashes between different branches of ‘the State’, according to yesterday’s Federal Court of Appeal decision.

That the CRTC decision had made the spectrum rights just given by Industry Canada to Globalive useless, demanded that Cabinet step up with a novel interpretation of telecoms law and policy in Canada. It did, arguing in a novel manner that nobody else seems to have thought of that promoting access to foreign capital is part of promoting competition in the marketplace. I can see the link, but think that interpretation is pretty hard to square with the foreign ownership restrictions in the Telecommunications Act.

Many might not complain too much about promoting competition by loosening the foreign ownership rules, although some would (CEP).  Few, however, would agree that the Telecommunications Act is meant to promote access to foreign capital. A plain reading is that its restrictions are designed to limit foreign ownership and control. And few would suggest that it’s okay for the government to do end runs around the regulator and law to achieve changes to the law that it could not obtain in Parliament.

That’s what the Federal Court said in March. That set of principles, however, was thrown out on appeal yesterday by the Federal Court of Appeal, and everything else that the CRTC and Federal Court had said. The Appeal decision accepted the Government’s position. It gave a blank cheque to Cabinet to rule by fiat rather than the Telecommunications Act. And it broadened Windmobile’s scope for action and the security of its spectrum and market access rights.

The decision may delay the introduction of more competition, however, because the ground rules remain murky and the existing foreign ownership rules in the Telecommunications Act intact. The Government may find good reason to move even slower on reforming the law because there is no longer a specific case to prod its hesitant hand.

This state of affairs will serve Wind Mobile and almost all of the other incumbents reasonably well. However, Public Mobile intends to appeal the case to the Supreme Court.

The Communication Energy and Paperworkers will likely join it. As the banner hanging from CEP Headquarters in Ottawa proudly declares, “it’s your’s, own it”, by which they mean telecoms, culture, broadcasting, lumber, energy plants, etc. “The need to maintain Canadian-control of telecom and broadcasting is more critical than ever”, Peter Murdoch, CEP’s VP media, states.  I am not so sure. Is that really true?

I do agree with CEP and PM (Public Mobile), though, that opposing giving Cabinet the authority to do end-runs around regulators and laws, to rule from the top rather than the messy processes of ‘regulation from below’, is a bad thing.

One thing that CEP might take cold solace in is that foreign ownership ain’t gonna happen just because Harper et. al. and the Federal Court of Appeal have opened the Pearly Gates to Canada’s telecom market — big as it is, ranking around eighth or so, depending on whose doing the counting.  But make no doubt about it, that we’ll need rules . . . . , and even then it is not certain how much capital will come.

When the rule of law and regulators clashed with policy and politics yesterday, it was the former that crumbled. Of course, Globalive, and its ultimate owners and investors, Vimpelcom, are the immediate beneficiaries of this court decision. So, too, are customers, a point made with no time wasted by Windmobile Chairman Anthony Anthony Lacavera, and figure-head for the concept that, regardless of where the money comes from, it is Canadians like him and other Directors on Windmobile’s board that are in control.

As Lacavera exclaimed, “we and our 300,000 customers are thrilled with this decision.” Well, maybe not thrilled . . . . . but you know what, he’s not entirely off the mark.

Just yesterday, another OECD report placed Canadian wireless users at the bottom of the international heap for outrageous international roaming charges, 25 bucks/MB for Canadians versus less than $5 for people in Greece and just under $10 for OECD countries on average. The full report can be found here.

Lacavera’s other comments were little more than self-serving cant: “Now we can continue . . . without the distraction and expense of challenges by our competitors to our right to operate.” Ya, sure, whatever.

I do not like it when politics and policy trump law and regulation in a heavy handed way. There’s lots of room to finesse this, but for now I can say that I do not thing that rule by Order in Council is a good way to make policy. It politicizes it. In fact, there seems to be a penchant for this in Canada when it comes to telecom, media and the Internet, as I have shown in a previous post. You can see for yourself by looking at the Privy Council Office’s Order-in-Council database.

The penchant for rule by Cabinet Directive has been ramped since the Chretien Liberals in the mid-1990s and has not abated since. Canadian levels of intrusiveness appear to be high by my estimation points to a certain backwardness in Canada that allows relationships between telecom-media-Internet titans, regulators and the ruling Government of the day to be too close. That’s code, in other words, for the cozy relationship between politics and telecom-media-Internet companies in Canada is a bad thing, anti-democratic and at odds with the ideals a free and open network media system.

About the Other Day: Lawful Access and ISPs in Canada

The other day I pounded away madly on the keyboard about global internet regulation. I was perturbed by the preliminary ‘e-G8′ meetings convened by President Sarkozy that seemed mostly designed to push a regulated Internet on the basis of bringing order to a disorderly and criminal Internet. It was a bad idea I said.

Here, though, I want to speak about the push for similar measures in Canada. As I see things, an open network is caught in the cross-hairs of several forces at the present moment:

  • first, we have the well-known issues of UBB and bandwidth caps that are transforming the open and user-centric Internet into the pay-per Internet;
  • second, we have the copyright industries pushing for ISPs and search engines to become extensions of the copyright enforcement regime;
  • third, each of the ‘big six’ ISP’s ‘acceptable use policies’ contain extensive measures that constrain what people can and cannot do with their Internet connections;
  • fourth, proposals in the Investigative Powers for the 21st Century Act (Bill C-51) introduced in the last Parliament and set to be reintroduced with the new Government’s omnibus crime bill sometime soon aim to retool communication networks in Canada for greater surveillance capabilities and to make it mandatory for telecoms providers, ISPs and search engines to disclose subscriber information, including name, address, IP address, and email address law enforcement official without court oversight.

This post focuses on the latter initiative, and what is known as ‘lawful access’. As with the rhetoric mobilized by Sarkozy, underpinning the push for greater surveillance power and easier access to records of Internet users is the idea that the Internet is disorderly and unruly place.

Yet, we must remember that in Canada, the Criminal Code already covers the Internet and crimes in real space are also crimes in cyberspace, notably child pornography, ‘hate crimes’, and obscenity. In other words, the Internet is not the wild west without the rule of law in place.

The Government wants to, it says, simply update and ‘modernize’ the existing arrangements with the Investigative Powers for the 21st Century Act (Bill C-51), a move which they say is long overdue because the existing laws were put into place when there was no such thing as the Internet. The Canadian Internet Policy and Public Interest Centre (CIPPIC) offers a good historical review of the current bill and its predecessors here.

In some ways, the Government claim is true. Public communication networks have always been intertwined with the interest and operations of the nation-State. That was as true for Roman roads and Venetian canals in the past, as it has been for the telegraph, postal and other media networks that have evolved up until today.

From emergency 911 services, spectrum grants to police and firefighters, and the Defense Early Warning (DEW) line in Northern Canada during the Cold War (and lucrative development ground for what eventually would become Nortel, before it crashed and burned on the embers of dot.com stupidity), the state and communications providers often work hand in glove. Silicon Valley North, as some in Kanata like to say, ain’t next to Ottawa (and the DND, or CSIS, or the Communication Security Establishment) for nothing.

In the past, some heterodox media political economists such as Dallas Smythe and William Melody complained that building networks to high-end national security, military, law enforcement and business needs created gold plated networks that were effectively subsidized by the general telephone subscribers.

Yet, just because there is nothing new in telecoms companies being deeply involved in matters of the state and law, this does not mean that there is not a lot that is new in the Government’s proposed legislation.

The new legislation:

  • is not based on compelling arguments that it will deal better with crimes in cyberspace — child pornography, ‘hate crimes’, and obscenity –than the Criminal Code, without unduly stifling the free of expression in network media spaces.
  • would require telecoms providers, ISPs and search engines to adopt expensive ‘network upgrades’ that expand their capacity to collect and retain ‘general contact data’ for all of their subscribers and even for specific contents of our online communications.
  • to disclose this information to law enforcement and national security agencies upon request.
  • to do so without a court-authorized warrant.

A few journalists and bloggers have issued alarmist calls that the new legislation would effectively outlaw anonymity and certain kinds of hyper-linking. I don’t think so.  Michael Geist and the legislative review of the Investigative Powers for the 21st Century Act done by the Library of Parliament show convincingly enough that that’s not likely to happen.

It will, however, implement several new measures that will skirt, or bypass existing practices: no court orders, wide-scale implementation of news surveillance technologies, and procedures that have left all of Canada’s provincial Privacy Commissioners and others strongly opposed to the Conservative’s proposed new law.

One virtue of the Investigative Powers for the 21st Century Act (Bill C-51) is that it will bring out into the open and formalize in law a set of ‘voluntary’ practices that are already used to combat ‘cybercrimes’, but currently conduced behind closed doors.

Project Cleanfeed, for instance, involves ISPs working hand-in-hand with police to identify and block problematic URLs, mostly for the purposes of blocking access to child pornography and to facilitate investigations of such activities. The RCMP works hand-in-hand with the Immigration and Customs Enforcement (ICE) in the United States and thirty some odd similar agencies worldwide to disable access to ‘illegal websites’, so-called ‘domain name seizures’. The new law would match up with the facts on the grounds as they’ve already been established by ‘the State’.

The problem, however, is enrolling telecoms providers, ISPs and search engines in such processes to begin with. Up until now, ISPs act in tandem with the police through secret lists, no CRTC oversight, no court orders, etc. in Project Cleanfeed. Formalizing the requirement that they continue to take on this role, and to do so at the beck and call of national security agencies and cops rather than a court authorized warrant, takes a very bad route to a potentially good thing. Legalizing ‘rough justice’ and a murky role for ISPs does not sound like a good idea to me.

As I said earlier, telecoms companies have always had to build their networks equipped for national security and law enforcement purposes, and to comply with court orders when they are presented with them. That should continue to be the case today, with more candour and conformity to the concerns of privacy raised by, among others, all of the Provincial privacy commissioners pointed to above.

Basic rule in all of these cases, and regardless of whether it is the state or market interests that are bending basic networks and functionalities (i.e. search, storage, surveillance, etc.) to their purposes, is that gateways (telecom networks and ISPs) should never be gatekeepers. The goal should be to minimize rather than to maximize surveillance and ‘gatekeeper’ powers.

The idea of badly authorized and murky intelligence operations running roughshod on the public Internet is not a dystopian and remote fantasy. Over three quarters of U.S. military communications runs on the public netowrk. All submarine cables landing on U.S. shores must be equipped with electronic surveillance capabilities built to the specs of the U.S. state. Aspects of the common carrier/network neutrality obligations for telecoms and ISP providers in the U.S. were traded off in 2005 in return for major telecoms providers upgrading their networks in line with the asserted needs of a ‘post 9/11 world’.

Under the guise of the ‘global war or terrorism’, all of the major US telecoms and ISPs — AT&T, Verizon, SBC, Sprint, etc. (except, to its credit, Qwest) turned over these capabilities to the National Security Agency to eavesdrop on telephone, email and Internet communications between people in the US and elsewhere in the world. Again, while the objectives may have been legit, the operation skirted the existing laws and the courts found such activities illegal and claims that President Bush had unbound ‘wartime powers’ unjustified as New York Times’ reporters James Risen and Eric Lichtenblau revealed in December 2005 — albeit, after the New York Times had sat on the article for a year.

Congress rewrote the law in 2008 to bring the law into line with the facts that the Bush Regime had established on the ground. The new law also gave AT&T, et. al. retroactive and future immunity from prosecution when dealing with similar requests. A Second Circuit Court of Appeal in New York put the issues back into play recently when it reinstated a lawsuit by human rights groups, journalists, media organizations, labour unions and others who argue that Internet and telecoms surveillance violates their rights to privacy and freedom of expression (See here for a fuller treatment of the issues).

I am concerned that, from the general drift of things in the Investigative Powers for the 21st Century Act, as well as the lessons from the past decade in the U.S. and the choir of voices coming from the G8 last week about the need to ‘civilize’ cyberspace, point in the wrong direction: a more tightly regulated, closed and murky Internet. Basic standards of judicial oversight are removed and capacities expanded. There are pressing issues at hand, but they need to be handled with dexterity rather than the iron-fist of the national security state.

Just for fun, let me point to just one alternative way of doing things: the Icelandic Modern Media Initiative, a drive to adopt the most open and freedom of the press and communication-friendly environment in the world. Here’s a Youtube video outlining some of its ideas and ideals. Imagine. .

Musicians, Labels, Bankers and Retailers: Who Gets Paid What in the ‘Digital Music Age’?

Here’s something to get you seething, especially if you’re a musician. I came across it the other day in a book I’m reading: William Patry’s (2009) Moral Panics and Copyright Wars (Oxford U. Press).

Patry is a lawyer at Google, but as he admonishes us at the beginning of the book, don’t mistake him as a shill for the company. No, he seems much smarter than that and he gives us a learned treatise on copyright, its history, and the repeated ways in which the copyright industries have tried to whip up the public, nay, the politicians who write the laws, into moral panics.

As he notes, the Copyright Wars have broken out repeatedly for nearly 300 years. In each case, morality and the sanctity of the artist is invoked, yet mostly as a way of legitimating claims that allow the distributors (who are also often the financiers) and not the creators to obtain the lion’s share of the spoils from whatever art form is at stake — books, music, films, etc.

In terms of moral panics, the basic ingredient is to make the industry’s problem a public problem of the highest order, one in which deviants — mods and rockers in the UK that lead to Stanley Cohen’s pathbreaking sociology on ‘moral panics’ in the 1970s that Patry borrows from for his own title– threaten the fundamental foundations of society in one way or another. Now, it is pirates and people who rip and burn music, so the saying goes, that threaten to suck the lifeblood out of cultural creativity.

Patry, perhaps not surprisingly comes down full-square on behalf of the communication and media technology companies, the ones who make things from the VCRs and DVDs of yesteryear to the computers and smart phones of today: the Apples, Nokias, Microsofts, LGs and Google’s of the world. Copyright industries, in a tale well worn, but novelly told by Patry, are the enemies of innovation.

It’s a great read for anyone who wants to see how media technologies over the past four decades have been shackled by the music and movie industry’s penchant for either eliminating or blunting new capabilities that would allow people to say, record a broadcast and watch it at their own time (time shifting) or shift it from one device to another so that they can watch, read or listen to their content on a device or at a place of their choosing (space shifting). Great stuff indeed.

Now here’s the part that really got my goat, from page 118, where Patry breaks down who gets what in terms of the revenue generated from the sale of music. When CDs were king, musicians received about 9 percent of the sales revenues, the big labels (Warner, Sony, Universal, EMI), about 46 percent and the retailers (Walmart) 45 percent.  Key point: those who created the music to begin with were the low folk on the totem pole.

Now, fast forward a few years to the ‘digital music age’, where stuff is downloaded or streamed online from the likes of Apple, Amazon, Spotify and the 460 some odd other legit sites now in operation, according to the Recording Industry Association of America. So, have things got better or worse for musicians?

Worse. When it comes to digital downloads, musicians now get 8 percent (vs. 9), the label’s stake has soared to 68 percent (vs. 46 percent), the digital download sites get 15 percent (although Apple typically gets 30), and those who finance the transaction — credit cards and Paypal — get 9 percent.

It is a bit of a crazy, upside down world when those who facilitate the purchase of music actually get more than those who created the stuff in the first place. This is the intermediaries’ grubby tail wagging the musicians’ creative dog.

It is an index of a world out of whack. It is a world in which it is not pirates or music swapping amongst fans that are the problem but a set up in which the source of it all to begin with rank at the bottom of the heap.

More on how and why all of this ties back to Google, Patry’s place of business after all, and the rest of the ‘consumer electronics’ and ‘network’ industries in the next few days.  There is a tension between the latter and the ‘content industries’, and they are constantly at odds with one another, albeit just as often aligned. As Google introduces its own ‘digital swipe payment’ system, it now gets to stand midstream in the flow of money between media sellers and their audiences, as Visa, Mastercard, Paypal now currently do.

Google, like Apple want to bundle music and other media, with search or devices, and in their own digital lockers, or the more cuddly sounding notion of the cloud. In each, the bundling practice is presented as convenient, effective, technologically sleek and seductive overall. The name bandied about for such arrangements is ‘Total Systems Integration” (TSI).

I’m not sure why this is necessarily a bad thing. However, TSI sounds a lot like the notion of “one system, universal service” that AT&T rode to monopoly status for nearly a century. It sounds administratively technocratic.

Timothy Wu writes nicely about this in the Master Switch. I’ll write more about it, as I said above, in the next day or two. You may find the ‘refresher’ that I offered a few weeks ago on how the telegraph and telephone gave birth to the recorded music in the 1870s.

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