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Dead Horses and Internet Policy: the CRTC’s Usage-Based Billing and Vertical Integration Decisions as Lost Opportunities

I wanted to write you a short blog post, but I postponed and pondered, and so wrote a long one instead (with apologies to Mark Twain).

Some things fundamentally constitute the media landscape, and the CRTC’s vertical integration and Usage Based Billing (UBB) decisions in the last two months are two such instances. In each case, the bar was set low and delivered a wee bit of something for everyone, the decisive affect being to disrupt vested telecom, broadcasting and Internet players (often one and the same thing) and the status quo as little as possible.

It took me this long to fully appreciate that the key is not to understand what these decisions did, but rather what they did not do. Lesson number one when reading regulation: never trim your sails to the low bar set by CRTC and vested stake-holders.

Lesson two: don’t get lost in the underbrush of techno-economic mumbo jumbo that inevitably serves in these situations to shroud the interests and stakes involved in mystery, and to bash any meaningful whole into an indiscriminate heap of technical details without context or sense of the big sweep of things.

The vertical integration deal could have been about many things, but was mainly about whether or not the big four — Bell, Shaw, Rogers and Quebecor (QMI) – would be able lock down access to broadcast content for the 3rd and 4th screens (that’s fancy cyber-talk for the Internet and smart wireless portable devices). The big four argued that they should be able to leverage control over their own content and platforms for competitive advantage however they see fit. This is the way of the world, the Schumpeterian clash of goliaths versus goliaths that drives capitalism forward, they said.

The CRTC said no, or at least not entirely, and this is a good thing because it means that Telus, MTSAllstream, SaskTel and Wind, for example, can buy access to programming from CTV, Global, City, TVA and the more than 120 other TV channels the big four conglomerates own between them. Control over content – sports content especially – cannot be used by the vertically integrated telecom-media-Internet (TMI) behemoths to squash competition with Telus, Sasktel, Wind, Public, Mobilicity, said the CRTC. This was and is a good thing.

The CRTC also put an end to block-booking arrangements where channels were sold in bundles to carriers, called for greater choice in pricing for consumers, and let the big four keep exclusive rights for content they produce specifically for the 3rd or 4th screens. In contrast, Hollywood was forced to abandon block-booking of films in theatres in 1948. The end of block-booking was brought to the Canadian television universe by the CRTC sixty-three years later. Something for everyone, you could say.

Sorry if I am not impressed. Power is not about who wins and loses, and scattered compromises, but how the issues are framed, and by whom, and the ideological buy-in needed to get there. The vertically-integration ruling is mainly a compromise to a clash among the incumbent telecom and broadcasting titans, with the CRTC shoring up faulty markets for bandwidth, content rights and access to audiences. This is systems maintaining not disrupting regulation.

It is okay as far it goes, but the CRTC dealt with trans-media concentration with the weakest tools at its disposal, other than doing nothing at all. Independent tv and film producers, as well as media unions concerned about declining conditions of work within the consolidated Canadian media industries came away empty handed.

Fundamental principles within the Telecommunications Act (1993) (secs. 27, 28 and 36) that require network and content providers to be treated equally and in a non-discriminatory fashion are ignored. The possibility that rival OVDs — Netflix, YouTube, Apple – might be given access to networks and platforms on terms equivalent to those that Bell, Rogers, Shaw and QMI give to their own online video services is not even broached. The possibility that people might have a “freedom to connect” that supersedes the Netcos’ right to manage their networks as they see fit is unthinkable from within the CRTC’s constipated view of the world.

Michael Geist, however, thought that such issues might be taken up in the UBB decision. They were not.

The UBB decision sets the record for making a molehill out of a mountain. While it stresses the principle of equality between telephone and cable companies, it has precious little to say about equality between them, on the one side, and rival ISPs and OVDs, on the other. For most people, it is a change that will likely come and go without much notice (see below).

The ruling recognizes the fast growth in online video use, but does little to insure that bandwidth is available at levels and prices consistent with current and projected growth. It is in many ways cultural policy by stealth insofar that universal bandwidth caps reinforce the incumbent telecom and broadcasting companies’ – Bell/CTV, Shaw/Global, Rogers/City, QMI/TVA – custodianship over the “integrity of the Canadian broadcasting system”, discouraging the use of rival OVDs such as Netflix along the way.

Interestingly, the only one standing outside this corporate media love-fest is the CBC, the most innovative of all of Canada’s broadcasters when it comes to podcasts, streaming video, the use of BitTorrent, and so on.

Canadians are the world’s most extensive online video users, so these are important issues. The following chart illustrates that “real-time entertainment” (TV, YouTube, Porn) now accounts for the biggest proportion of Internet traffic for significant periods of the day. Downplaying the vital significance of this issue, as the CRTC’s UBB decision does (and the vertical integration hearing before it), is irresponsible, if not deliberately deceptive.

To be sure, Shaw and Telus have raised their bandwidth caps over the past six months, and Bell has reigned in its use of P2P throttling, all of which recognize, at least in part, the steep growth in online video. More importantly, though, these changes may be the most important outcome of the political firestorm unleashed since last January when Canadians discovered that they had been dragooned into a pay-per model of the Internet over the last five years.

The lesson? Want change? Don’t go to the regulator; go to the streets, like OpenMedia did, with half-a-million people in tow.

The CRTC’s assumptions about bandwidth use as the basis of the two pricing models adopted by its UBB ruling – the existing flat rate model and new ‘capacity-based model – appear to be far less then more capacious limits recently put in place at Shaw and Telus, and behind global best practices further yet.

They are wildly out of synch with the illustration above created by the deep-packet inspection equipment maker Sandvine, too. When Sandvine talks about the appropriateness of using price and bandwidth caps to “discipline users”, it imagines a scenario where users have 200GB caps per month for peak use, and unlimited use thereafter (see p. 5). Putting aside the unsavoury language of using technology and prices to discipline how people use the Internet, these numbers are multiple times higher than the 40-60 GB per month that the CRTC’s UBB decision seems to assume.

Other than in the most abstract of ways, there are no real world examples of how Canadians use the Internet or how online video distributors (OVDs) such as Apple, Netflix and Youtube might be affected by the CRTC’s UBB decision. Yet, the UBB decision is cultural policy, even if it refuses to identify itself as such, protecting incumbent telecom and broadcasting players, on the one hand, stifling people’s everyday cultural production and consumption in the online, network media ecology, on the other.

The CRTC obscures questions about online media use by casting the remit of the UBB proceedings in resolutely narrow terms and shrouded in a thicket of dense language that only a technocrat can appreciate. Its headline achievement is the wholly uninspiring creation of a wholesale pricing framework based on the existing flat rate model for any Netco that wants it (Shaw, SaskTel, Telus)  and a new “capacity-based model” for those who asked for it (Bell, Rogers, QMI, Cogeco, MTSAllstream).

The two options and the ability to buy bandwidth in 100 Mbps blocks will give independent ISPs more flexibility in terms of how they package and price their services. For 94 percent of Internet users, however, the decision will have little impact.

They will continue to be saddled with the pay-per Internet model and bandwidth caps that Bell began foisting on them in late-2006, with other incumbents following in its footsteps ever since. The decision not only leaves this model intact, but girds it.

With increased flexibility, some indy-ISPs will be able to offer stripped-down services to low-end Internet users at cheaper prices. While 1.5 Mbps Internet service no longer serves as a target for Internet development anywhere, a cynic might say that this so-called flexibility at least adds to the chances that there will be an el cheapo Internet option for the poorest among us.

The CRTC doesn’t want to talk about how its decisions fit into questions of accessibility and usabililty, however. Be that as it may, there is a large broadband Internet access divide in Canada, and it is a class divide.

Household Internet use closely tracks income, as the chart below shows, with those at the top of the income scale (98%) nearly twice as likely to use the Internet from home as those at the bottom (52%). Or to put this another way, between one-fifth and one-half of households on the first three rungs of the income ladder do not have Internet access. Only the wealthiest in the top twenty percent have near universal access.

Source: 2010 Canadian Internet Use Survey, Business Special Surveys and Technology Statistics Division, Statistics Canada.

Some argue that the importance of the Internet to all aspects of our lives means that we should expand our understanding of communication rights to include “freedom of expression, freedom of connection” via the Internet. The CRTC and those who it regulates would undoubtedly see any such talk as heresy.

On a less prosaic level, there will be pricing and packages galore under the new wholesale pricing regime; probably to the point of confusion. While it is conceivable that some low-end Internet users may benefit, for mid-range, high-speed Internet services prices will likely rise 25 percent relative to comparable services now.

Indy ISPs will also be under more pressure to manage their subscribers’ use and to push high bandwidth real-time entertainment video use into off peak hours. This pressure will become more intense over time as online video use continues to explode. Daytime soaps or early a.m. World of Warcraft, anyone?

Overall, prices for Internet services for all users in Canada will continue to be high relative to relevant global standards. Whereas the tendency in countries that we’d probably like to emulate is for bandwidth to increase steeply and prices to fall gently, in Canada, bandwidth availability and prices are both going up, with some companies (Telus and Shaw) seeming to do a better job than most.

Canada will continue to retain the dubious distinction of being among just three advanced capitalist democracies – Australia, Iceland and New Zealand – where bandwidth caps are low and near universal in coverage. In 2010, by contrast, twenty other OECD countries had no data caps at all. Elsewhere, bandwidth caps were one option among several. In Spain, just two of twelve broadband providers surveyed used bandwidth caps, for example (OECD, 2011, p. 275).

At the heart of the UBB decision is the CRTC’s stubborn insistence that Internet access is sufficiently competitive, despite the fact that 94% of users obtain access from the dominant incumbent telephone or cable companies in their city. This stance is decisive because its sets the foundation upon which everything else turns (for the state of media and Internet concentration in Canada, see here).

Because of this position, the new rules do not give maximum, unbundled access to bandwidth and other essential elements that rival ISPs need to serve their subscribers over the incumbents ‘last mile’ links, but the minimal level possible whilst still giving access to network facilities at all. The highly restricted form of network access given to independent ISPs is based on a concept invented out of whole cloth three years ago by the CRTC itself: i.e. “non-essential, conditional mandated access” facilities. There’s no such thing anywhere else in the scholarly literature or the real world, as far as I know.

Under such fairy-tale conditions, concentration disappears and the CRTC ignores the potential to use the much stricter “essential facilities” guideless, let alone functional or structural separation, to foster more competition and more open networks. While these measures are growing in appeal in Europe and have been adopted in Australia, Italy, the Netherlands, New Zealand, Sweden and the UK (OECD, 2011, pp. 11-44; Benkler, 2010, p. 159), there is little trace of them in either the vertical integration or UBB proceedings.

Under the “essential facilities” guidelines, rival ISPs would be able to acquire access to bandwidth and last mile connections on terms that are equal to those that incumbents’ offer to their own ISPs. The CRTC could also demand much higher levels of information disclosure from the incumbents and use a more transparent process to set the wholesale rates that ISPs will have to pay as a result.

Crucially, the CRTC could cap the wholesale prices that the dominant players charge at “cost + 15 percent”. Instead, the CRTC’s ‘sufficient competition’ standard set rates on the basis of “the individual large cable and telephone companies’ costs to provide the service plus a reasonable markup” (p. 2).

What those costs are, and whether they are reasonable, we’ll never know, because nobody but the CRTC and the incumbents have access to the underlying data used and just what measure of reasonable is used. Indeed, the whole process is erected atop a murky foundation of minimal data disclosure and transparency. This is Internet Policy making in the dark.

The result is a fairy-tale world of the CRTC’s making where dominant market power disappears and wholesale rates appear to be more fiction than anything based on a scrupulous reading of the facts. Bandwidth apparently is cheap and plentiful in Manitoba and more expensive in territories served by Shaw and Telus, while scarce and very expensive in the rest of Canada.

Capacity-Based Model Capacity Rate/100 Mbps Access Rate
MTS Allstream $281 $23.08 (32 Mbps)
Rogers $1,251 $21.00 (25 Mbps)
QMI (Videotron) $1,890 $23.77 (30 Mbps)
Bell $2,213 $25.00 (25 Mbps)
Cogego $2,695 $24.98 (30 Mbs)
Flat-Rate Model Monthly Access Rate/Subscriber
Shaw $21.25 (25 Mbps)
Telus $39.51 (25 Mbps)
Sasktel $53.49 (25 Mbps)
Bell Alliant $30.27 (15 Mbps)

The CRTC attempts to explain away the eight-fold disparity between Bell and MTSAllstream’s prices in a footnote buried in the appendix at the back of the decision by pointing to the simple architecture of the latter’s network relative to Bell’s. I doubt this adequately explains the chasm, but even if it did, then I say give us simple architectures rather than complex TMI conglomerate structures, please.

Still, Bell’s senior vice-president for regulatory and government affairs, Mirko Bibic and QMI’s CEO-hands-on owner Pierre Karl Peladeau have groused about how the CRTC forces them to give discounted rates to rivals. This is simply not true. The wholesale prices set are rate caps not an artificially low floor.

For Bell and QMI (as well as Cogeco), the interesting things is that, left pretty much to their own devices, they put forward prices that look ridiculous relative to those offered by MTSAllstream and Rogers, as well as those who did not ask for the capacity-based rates at all (e.g. Shaw, Telus, SaskTel, Aliant).

Some have suggested that perhaps the CRTC was being shrewd after all, and may have heisted Bell, QMI and Cogeco on their own petard. With Konrad von Finckenstein on his way out the door in January, the idea of a last parting shot at those whose gaming of the regulatory process seems to know no bounds has some appeal.

If this is a game, however, it is too clever by half. Key tools in the regulatory and Internet policy toolkit have been left laying fallow and there is not a mention of common carriage or network neutrality to be found in the UBB ruling, although if there was ever a home for such bedrock principles, this is it. Instead, there are only references to Cabinet Directives and select passages cherry-picked from the objectives of the Telecommunications Act to the effect that the CRTC is to rely on market forces to the maximum extent possible. On this, the UBB and vertical integration rulings are one.

It is not that there were no other options being kicked about in these two rulings. Over the past year, many have emerged with alternative, realistic views of how things could be. It was not just OpenMedia and 500,000 petition signers that blasted the do-over of the user-centric, open Internet into a provider-controlled pay-per Internet model, but many smart people who tossed their ideas into the ring: a former Director General of Telecommunications Policy at Industry Canada (Len St. Aubin), the ex-Chief Knowledge Officer at Canarie (Bill St. Arnaud), popular writers (Peter Nowak), University of Ottawa Canada Research Chair in Law and E-Commerce, Michael Geist, Jean-Francois Mezei (Vaxination Informatique) and respected scholars (David Ellis, Catherine Middleton), make up just a small number of those who offered us much to think about with respect to the issues at hand.

These people did not all read from the same hymn sheet. What they did offer, though, was a set of bright ideas and realistic visions that only seem beyond the pale by the dim lights of what passes as Internet policy and regulation in this country.

The Twitter-Wikileaks Decision: How the Corporate Model of Internet Privacy Serves the National Security State

Social media users of the world take note: according to a U.S. District Court‘s decision in the Twitter-Wikileaks case (November 9, 2011), you have no right to expect privacy online. The immediate result of the decision is that Twitter must hand over a substantial body of personal data for three of its users to the U.S. Department of Justice in relation to the latter’s ongoing Wikileaks investigation: Icelandic MP and Collateral Murder video co-producer, Birgitta Jonsdottir, Wikileak’s volunteer Jacob Appelbaum and Dutch hacker Rop Gongrijp.

The information sought is as expansive as it is intimate: subscriber registration pages, connection records, length of service, Internet device identification number, and more (see pp. 7-8). It’s reach is global, as is the opposition mounting against the the so-called Twitter Order. Besides putting fuel in the belly of hactivist groups such as Anonymous and LulzSec, the U.S. government’s efforts to shake-down Wikileaks has been condemned by Iceland, 85 members of a European parliamentary group and the Inter-Parliamentary Union.

The latter was especially sharp, stating that it “failed to see” how the Twitter Order could be squared with Article 19 of the Universal Declaration of Human Rights. It also worried aloud about the emergence of a “national and international legal framework concerning the use of . . . social media . . . [that] does not appear to provide sufficient guarantees to ensure respect for freedom of expression, access to information and the right to privacy”.

The case began last December 2010 when the U.S. Department of Justice obtained a court order requiring Twitter to turn over a slew of user account information for a list of people that were of interest in the ongoing Wikileaks investigation. To its credit, Twitter refused to do so without notifying the people targeted first and mounted a serious legal challenge to the ‘gag’ order (see the story by Declan McCullagh of CNET here).

Hope was dashed and important communication rights rolled back last week when a District Court in Eastern Virginia declared that Jonsdottir, Appelbaum and Gongrijp forfeited their right to privacy when they clicked to accept Twitter’s terms of service policy. As the court argued, by clicking on Twitter’s terms of service policy, they “voluntarily relinquished any reasonable expectation of privacy” (p. 28).

For good measure, the decision also curbed Jonsdottir, Appelbaum and Gongrijp’s First Amendment rights claims as well, declaring that they have no right to know if the DOJ has also approached Facebook, Google or any other Internet companies with similar requests and, if so, just what kinds of information about their lives online had been turned over (see p. 52). The case is also about the network free press too because Twitter has become an integral part of journalistic routines, and Josdottir is undoubtedly worthy of as much free speech as can be mustered, given her status as a video producer, MP and advocate of turning Iceland into a ‘digital media, free speech haven’.

The decision’s outstanding feature is the way in which it makes privacy rights a creature of social media companies’ business models rather than a function of constitutional values, law or social norms. Making Internet corporations’ business models the standard of online privacy, however, is outlandish because Twitter, Facebook and Google’s terms of service policies are all about maximizing the collection, use and commodification of personal data, not privacy.

The Twitter-Wikileaks decision is remarkably candid in its view that the standard of privacy on the Internet that we should expect is whatever Internet companies’ terms of service policies say it is. Social media users, according to the court, would have to be woefully naive to expect that privacy is a priority value for advertising-driven online media, given that almost the entire business model of major Internet companies is about collecting and selling as much information about audiences as possible.

Such a view reduces privacy to the logic of corporate business models and market transactions. Worse, by turning privacy into the plaything of corporate business models, the court essentially turned commercial Internet companies such as Twitter, Facebook and Google into the handmaidens of the national security state.

Christopher Soghoian captures the essence of the problem in relation to Google, but his comments are applicable to Internet companies in general:

Google’s services are not secure by default, and, because the company’s business model depends upon the monetizaton of user data, the company keeps as much data as possible about the activities of its users. These detailed records are not just useful to Google’s engineers and advertising teams, but are also a juicy target for law enforcement agencies.

Things don’t have to be this way. Instead, the Internet could be organized in ways that further communication rights and a democratic society by, amongst other things, minimizing the collection of personal information and retaining it for the shortest time possible, as the Electronic Frontier Foundation recommends and as some non-commercial websites such as IndyMedia centres do. The Virginia District Court, in sharp contrast, leverages the mass production and storage of personal data enabled by Google, Facebook, Twitter, and so forth as fully as possible and for the advantage of the state.

The idea that privacy rights turn on the terms of service policies offered by private companies rests upon a peculiarly squinty-eyed view of things. Even if we took the perspective of corporate behaviour as our guide, Twitter has sometimes distinguished itself in the Wikileaks and other cases by placing a higher premium on privacy values than Facebook and Google, for instance.

In contrast, to the latter, which have remained quiet in the case, and to Amazon, Apple, Paypal, Visa, Mastercard, everyDNS, and several webhosts in Europe that were only too eager to aid the U.S. government’s crackdown on Wikileaks by withholding critical resources — money, servers, domain names, webhosting, etc. — essential to Wikileaks’ survival (see here, here and here), Twitter refused to join the information blockade. Instead of buckling under intense government pressure, it refused to turn over account information for Josdottir, Applebaum and Gongrijp before notifying them first when a subpeona wielding US Department of Justice came knocking last December.

Twitter challenged the gag order in court as well, thus giving Jonsdottir, Applebaum and Gongrijp a heads-up about the events unfolding. It also directed them to the Electronic Frontier Foundation for legal advice, which, in turn, brought some of the best minds in the U.S. on privacy, social uses of the Internet, surveillance and security to mount their case (see here).

Twitter adopted a similar stance during the London riots this past August by refusing to comply with British government requests to shut-down its service and hand-over users’ information, while Facebook served eagerly on bended-knee. Thus, even by the narrow measures of corporate behaviour, it is not unreasonable to assume that Twitter’s behaviour could cultivate a higher sense of privacy amongst its users.

Of course, there’s no need to pretend that Twitter is the epitome of virtue in such matters, because it is not. To take just one instance, for example, while Google, WordPress and several other entities have all signed on to the broad statements of principles regarding privacy and online free speech rights set out in the Global Network Initiative, Twitter and Facebook have conspicuously refused to sign on to even these ‘market-friendly’ standards.

More important than all of this, however, is the fact that the relevant measuring rod of communication rights is not the market or corporate behaviour. Instead, we should look not to corporate business models and terms of service policies as a guide but to legal, political and international norms. Even more importantly, the focus should be on how social norms govern privacy and how we disclose personal information in complex, negotiated and contingent ways (see dayna boyd’s work on the point, for example).

People manage their identities and disclose personal information differently in the ‘online world’ versus the ‘real world’, but in both cases their expectations about privacy are contingent on time, place, contextual cues as well as the nature of the relationship involved. These issues as well as the fact that the vast majority of people do not even read online terms of service policies — and those that do more often than not do not fully understand what they mean — were all brought to the court’s attention, but quickly buried in a footnote and brushed aside (see here).

In the end, the Twitter-Wikileaks decision serves the U.S. government’s bid to drive Wikileaks out of business well. Even reluctant actors such as Twitter have been forced back into line. For the rest of us, the decision at least has the merit of making it clear that the hyper-commercialized ‘free lunch’ model of the Internet comes with a steep price: privacy rights and an entire industrial arrangement poised to serve as the handmaiden of the national security state.

Birgitta Jonsdottir has just published a new column, How the US Justice Department Legally Hacked My Twitter Account in The Guardian, here.

The Anatomy of Internet Service Provider Responsibility: Three-Strikes Copyright Law Comes to New Zealand

Changes in copyright laws are changing the Internet and how people use it around the world. This has become increasingly so since 2008, when the Recording Industry Association of America (RIAA) and International Federation of Phonographic Industries (IFPI ) set on a quest to make “ISP and intermediary responsibility” the law of the land in one country after another.

The idea that ISPs should be legally required to block access to websites that facilitate illegal downloading and file sharing as well as cut-off the Internet connections of those who use such sites is not a new idea but one that has been around since the 1990s, but politically impossible to implement. Now, however, as the IPFI states approvingly in its 2010 Digital Music Report, “the mood of change is clearly reaching governments” (p. 3).

Indeed it has. Since the IPFI and RIAA began their worldwide drive, Britain, France, Sweden, Australia, Ireland, South Korea and Taiwan have all adopted new copyright laws in which “intermediary responsibility” and three strikes rules play a starring role. These issues are currently coming to a head in the U.S., where Congress is considering two bills that would extend intermediary responsibility well beyond ISPs, websites and hosting services to include advertisers, search engines and financial intermediaries (i.e. banks and online payment services): the Protect IP and Stop Online Privacy acts.

The most recent convert to the copyright maximalist faith is New Zealand. Its new Copyright (Infringing File Sharing) Regulations, 2011 kicked into gear in September. It’s core features include a three-strikes law that sets out a sequence of progressively more punishing measures: notices, the possibility of a fine of up to $15,000 for repeat offences, and cutting off the Internet accounts of repeat infringers.

In the past few weeks, the Recording Industry Association of New Zealand (RIANZ) delivered its first batch of notices of infringement to four of the biggest ISPs in the country: Telecom, Vodafone, Orcon and TelstraClear. They’ll be sent to Internet subscribers as soon as the ISPs sort out who has to pay what for the delivery service.

The notices target 75 IP addresses on behalf of Universal Music, but one serious question in this is just who does an IP addresses belong to: individuals, a household, an office, or some other unit of organization? Until this issue is cleared up, whole households risk being removed from the Internet on account of one person in it who has run afoul of laws governing just one aspect of life online.

Yet before Universal Music and the RIANZ entered the scene, New Zealand’s ISPs had already noticed something else: a steep drop in international peer-to-peer Internet traffic. It was like somebody clamped down on the country’s Internet connection to the outside world.

Orcon — one of the major ISPs involved — noted that its international p2p Internet traffic had fallen by ten percent. As the second biggest type of data traffic behind streaming video from websites like YouTube, the decline in p2p Internet traffic has been significant.

This is not the first time this has happened, and some argue that it is a recurring and expected pattern. When Sweden implemented its new Intellectual Property Rights Enforcement Directive (IPRED) in April 2009 Internet traffic plunged thirty percent overnight (see here). The outcome left Swedish copyright lawyer Henrik Pontén delighted:

“The majority of all internet traffic is file sharing, which is why nothing other than the new IPRED law can explain this major drop in traffic . . . . This sends a very strong signal that the legislation works”.

Indeed, from the view of the music and entertainment industries, “virtually all P2P content is illegal”, as the IFPI baldly declares in its most recent Digital Music Report, (p. 14). Therefore, suppressing it is both justifiable and a deliberate aim of the new copyright rules. As New Zealand’s Ministry of Economic Development put it, the new law is all about “stopping illegal peer-to-peer file sharing such as sharing movies via BitTorrent”.

Supporters of this approach argue that the ‘graduated response’ approach to piracy achieves its goals “without unduly impacting individual liberties”. The majority of Internet users stop infringing after receiving notices from their ISPs (see here)

These are deeply problematic claims, however. Among other things, they blithely ignore the fact that p2p serves many other purposes than just facilitating traffic in ill-gotten media content.

To take just a few examples, the band Nine Inch Nails uses p2p to offer free downloads of their music. Akamai uses it to create ‘content distribution networks’ for entities like Netflix, Facebook and Amazon that run parallel to the Internet so as to relieve congestion on the telecoms carriers and ISPs networks. The CBC used it in 2008 to deliver an episode of  Canada’s Next Great Prime Minister via BitTorrent; the BBC still uses it for its iPlayer service.

P2P also underpins ancient pre-web 1.0 Internet functions such as Internet Relay Chat, the nasty bits of 4chan, and the privacy enhancing, authoritarian-fighting Tor protocol that has been used in the “Arab Uprising” and by the hacktivist group, Anonymous, alike. In the olden days, media content regulation was seen as more heavy-handed and less respectful to free speech concerns than structural rules that applied equally to all; today, app-specific regulation that deliberately targets specific Internet uses now stand in a similar place in relation to free speech and other democratic values.

App-specific regulation is destined to be fraught with overkill.  While their supporters claim that the “graduated response” and digital intermediary strategy have only a minimal impact on individual liberties (see here and here), a recent UN Internet & Human Rights minced no words when it argued exactly the opposite point of view:

“. . . [C]utting off users from Internet access, regardless of the justification provided, including on the grounds of violating intellectual property rights law, [is] disproportionate and thus a violation of article 19, paragraph 3, of the International Covenant on Civil and Political Rights” (p. 21).

Article 19, by the way, is the article setting out freedom of opinion and expression rights.

Beyond multiple uses of p2p, and freedom of expression values, others raise an economic argument to the effect that RIAA/IFPI-style copyright laws are broadband Internet development killers. Ericsson’s resident intellectual and policy wonk, Renee Summer, made this point in regards to New Zealand’s plans, warning that “the new rules could slow down consumer demand on the Government’s ultra-fast broadband network”. The point was also made with respect to Sweden back in 2009, when John Karlung of the ISP, Banhof, made the connection this way:

“Half the Internet is gone. If this pattern keeps up, it means the extensive broadband network we’ve built will lose its significance.”

The idea that new copyright laws are broadband Internet killers is appealing yet it may be too early to reach this conclusion because most countries have not carefully tracked the impact. Moreover, the Swedish case muddies the waters because a half-year after the new law was introduced, traffic levels climbed back to their original levels.

Whether this was because people simply returned to their old ways or the steep rise in bandwidth hungry TV and entertainment content (e.g. Netflix, LoveFilm, etc.) being delivered online is still an open question. Yet in all cases, significant changes had occurred nonetheless.

First, ISPs are now in the business of regulating information flows and user behaviours, rather than being neutral points of access to the Internet. Second, people modified their Internet use, adopting a slate of new tools — encryption, anonymity, and other means of circumventing the new rules – that reflected a tilt away from the open Internet towards a more closed system.

Changing people’s behaviour is not too be taken lightly and moving control from the edges of the Internet and putting it deeper into its central nodes by way of ISPs and an expanding array of intermediaries is no more palatable in the 21st century than fifteen years ago when first trotted out in the teeth of fierce resistance. Thus, we need to look beyond the careful stage-managed introduction of new copyright rules to carefully assess their impact on the Internet and the ever-widening range of what we do online.

Today, all eyes should be on New Zealand.

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