From the Open Internet to the Evolution of UBB, 1998-2011: the Rise and Fall of the Canadian Internet?
From the Open Internet to the Evolution of User-Based Billing, 1998-2011
Understanding the CRTC’s January 25 UBB is no easy task. It has a ‘long tail’, so to speak. In the following I offer a chronology from 1998 to the present.
It begins with a series of early decisions to adopt a relatively open Internet that was, without exaggeration, the envy the world. To be sure, this period looked a lot better from far away rather than close up. Already, clear problems of market power, lack of equal access, pricing, policy and regulatory indecisiveness, etc. are cropping up.
The second period runs from, roughly, 2000 until 2005, a period of steady back-peddling from the principles of the open Internet, but not yet complete capitulation.
The third stage runs from, roughly, 2006 until now. As a scene-setting directive from Cabinet put it in December that year, the CRTC was to rely to “the maximum extent possible on market forces”.
The CRTC is directed to insure that its decisions:
(a) do not disturb incumbent’s incentives to invest in networks;
(b) ensure that there is “sufficient” (versus real) competition;
(c) ensure that telephone and cable companies are treated equally (not independent ISPs, Online Video Providers (OVPs), etc);
(d) do not impede incumbents investment in new content and services, i.e. IPTV.
Rather than a policy promoting an open Internet and competition, this looks more like an “Investment and Business Model Protection Plan” for the incumbent telephone and cable companies. The period marks not so much an incredible deference to the market, but to the incumbents with market power. This period locks in bandwidth caps, ‘excess usage charges’, so-called Internet Traffic Management Practices, the death of Net Neutrality.
Throughout all three periods some common themes emerge. In each phase, independent ISPs constantly find impediments to network access. Issues of market power and concentration are treated evasively. Calls for ‘structural separation’ are not treated seriously. Concerns about anti-discriminatory behaviour by the large players, the influence of network owners over content and the character of the Internet as a media space, the privacy and surveillance implications of deep-packet inspection (DPI) technologies and the jamming of certain applications, e.g. P2P file sharing networks, come up time and again, but are not meaningfully addressed.
To understand all of these deeper issues, however, I think we need to begin by charting out the basic terrain. There are, of course, other choices that could be made, and what follows is by no means exhaustive. One thing is for sure, however, and that is that the UBB decision is, as I said in a previous post, just the tip of an iceberg.
If anyone would like to turn this into a time line, please get in touch. I think it would be very useful. If there are things that are not on here that you think should be, let me know; if you disagree with my list and discussion, you can let me know that too!
July 1998 (98-9) ISP Access to Cable Company Networks. Gives ISPs access to cable networks at regulated rates. Cable and telephone companies now both governed by Open Network rules. In theory, probably most “open network” framework in the world, but finer points not well articulated.
Weaknesses: Proposals for structural separation rejected. Cdn. Cable TV Association in charge of proposing technical conditions for access. ISPs claim that cable companies have delayed network access while building substantial market power since launching own High Speed Internet in1996.
July 1999 (99-8). Regulation of Cable Carriers High Speed Internet Access. Reiterates commitment to ‘open network’ for both telephone and cable companies. CRTC finds market insufficient basis for network access. ISP/CCTA Technical Working Group established. This group will go on to play a lead role for the next year. Outside the ‘cable group’, most would say it was primarily a stalling tactic and a method for getting others to sign on to their technological and business models. The CRTC would take back the job of regulating in a more engage way in 2006.
September 1999 (99-11). Discounted ISP access to Cable Carriers High Speed Internet Access. ISPs reselling cable companies High Speed Internet Service. Get a 25% discount. No real interconnection/network access rights. ISPs accuse cable companies of stalling while building dominant market share.
August 2000 (2000-789). Terms and Conditions for Access to Large Cable Carriers High Speed Internet Access service. Maintains ‘non-discrimination’ principle, ie. cable companies cannot discriminate between their own services and those of competitors. Stresses need for ‘regulatory harmonization’ for cable and telephone companies. Sets access rates for each carrier, but does not distinguish between different service levels, i.e. lite, express and extreme. Approves Shaw and Videotron proposals Bandwidth Caps and ‘pay-per’ use proposals. Rogers and Cogeco required to file ‘pay-per’ use rates, even though neither has proposed them or expressed interest in establishing. “Volume usage rate restrictions [could] be appropriate means of disciplining end usage of cable carriers’ shared capacity” (para 106). Claims that cable companies’ need to maintain control over facilities, modems, etc. to protect integrity of network accepted.
December 2006. Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives, P.C. 2006-1534, 14 December 2006 (the Policy Direction). CRTC ordered by Cabinet to rely on “market forces to the maximum extent possible”.
December 2006 (2006-77). Third Party Internet Access (i.e. Independent ISPs) to Major Cable Company Networks. CRTC mandates access and sets rates for TPIA. Supersedes Cable/ISP working group. Rejects ‘essential facilities’ doctrine, ‘structural separation’ and wholesale rates. Instead of a ‘strong’ open network framework, this is a weak access regime. Sets baseline prices for 3 tiers of service: Lite, Express and Extreme.
Rogers’ claims to have never applied UBB fees to its retail customers or to wholesale services, but has filed tariffs for such things since 2000 at CRTC’s request. Rogers requests to withdraw them denied.
December 2006. Bell begins shutting down unlimited Internet plans.
February 2007. Bell no longer offers unlimited Internet plans to new subscribers.
March 2008 (2008-17). Revised regulatory framework for wholesale services and definition of essential service. Expands scope of essential services by moving from “monopoly supply” to “market power” standard. However, rather than sticking with standard definition of ‘essential services’, uses six new categories invented two years earlier: (1) essential services, (2) conditional essential services, (3) conditional mandated non-essential services, (4) public good, (5) interconnection, (6) to be by phased out.
Only ‘directory services’ database (i.e. the database of telephone numbers used to make telephone books) is “essential service”. Local loops are “conditional essential services”. Services required by independent ISPs are “conditional mandated non-essential. The outcome is minimal standards for dealing with market concentration and minimal ‘open network’ requirements.
October 2009 (2009-657). Internet Traffic Management Decision. CRTC accepts that network congestion is a problem. Adopts hierarchy of procedures to deal with it: (1) Network investment to increase capacity; (2) economic measures such as bandwidth caps and UBB to “discipline users”; (3) technical measures so long as they can be justified, are as narrowly drawn as possible, discriminate against or harm network users as little as possible, and the carriers can show why such measures are superior to network investment or economic Internet Traffic Management Practices (ITMPs).
Exempts wireless carriers from rules governing ITMP.
Rejects concerns that such measures as thus far practiced discriminate between incumbents and competitors services (i.e. do not violate sec. 27) of Telecoms Act, that they do not constitute editorial influence over the flow of information or the content of information (sec. 36), or violate privacy laws (e.g. sec. 7(i) of Telecoms ACT or PIPEDA).
December 2009 Order Issuing a Direction to the CRTC re. Cybersurf, P.C. 2009-2007, December 10, 2009 (Policy Direction). Requires CRTC to revisit speed matching and wholesale access decisions (2008-117) and review in light of: (1) potential disincentive for incumbents to invest in networks; (2) whether there is “sufficient” (versus real) competition in the market; (3) parity between telephone and companies; (4) potential disincentive for incumbents to invest in new content and services, i.e. IPTV.
Basic gist: network access was too liberal and did not give incumbents’ interests enough weight in their determination.
March 2010 (2010-255). UBB and Bandwidth Caps for Rival ISPs adopted. The CRTC accepts the plan by the major telephone companies to implement wholesale UBB. The CRTC accepts the idea, but with the condition that rates for two main components of wholesale services – the ‘gateway access services’ that provide the ‘last mile’ connection between the ISPs and subscribers and wholesale UBB prices – be 25 percent less than their own retail Internet services.
August 2010 (2010-632). Wholesale Access/Speed Matching Decision. Harmonizes the ‘speedmatching requirements’ for telephone and cable companies. Both must make the same level of facilities used by their own retail Internet services available to independent ISPs on equal terms. That is smaller ISPs should have access to the technical resources that allow them to match the ‘big six’ players’ basic, express and ultra-fast Internet services. Tied to several previous cases. The dissent by CRTC Commissioner Timothy Denton is a must read. It lays out much of what is wrong with the regulator’s approach to independent ISPs.
October 2010 (2010-802). Telephone Companies Appeal Initial Wholesale UBB Ruling (CRTC 2010-255). Argue that the CRTC’s 25% discount rate for wholesale facilities is arbitrary (i.e. why not 10 percent, or 40 percent?). Also, rules of parity require that any discount applied to telephone companies should be applied to cable companies to level the playing field.
January 25, 2011 (2011-44). UBB for Rival ISPs Final Decision. Extends UBB to wholesale “gateway access services” and “retail Internet” offered by independent ISPs. Reduces wholesale gateway access services discount from 25% to 15%. Harmonizes the 15% discount rate for gateway access services and wholesale UBB for telephone and cable companies.