Day three of the CRTC's network management hearings brought in the views of several additional stakeholders along with the first large telco of the week. Witnesses included the Independent Film and Television Alliance, the Canadian Film and Television Production Association, Council for Canadians with Disabilities, the ARCH Disability Law Centre ACTRA, and MTS Allstream.

While all the creator and producer groups expressed support for net neutrality, it was their position on BitTorrent that was particularly noteworthy. Perhaps heralding an end to the demonization of file sharing, ACTRA emphasized that it wants to compete with illegal downloading and that the best way to do that is to ensure that its members can use applications like BitTorrent to distribute their content. In other words, copyright alone won't address their concerns (they added the need for copyright reform) as network management practices that create a level playing field are essential. Meanwhile, the independent producers emphasized the economic potential of BitTorrent-based distribution. Moreover, ACTRA argued that it was not the role of ISPs to determine the legality of content on their networks. That position is a far cry from what groups like CRIA would like to see happen.

The other big story of the day was MTS Allstream arguing that dominant carriers should never be permitted throttle wholesale services (ie. they argue that any throttling should only occur at the retail level). This led to repeated discussion about the nature of wholesale services (referred to as GAS or Gateway Access Service) with MTS explaining that wholesale service is not like buying Internet access as a retail customer (it was described as akin to a private virtual network). For that reason, there is no valid claim that congestion concerns are the basis for throttling wholesale services (left unsaid is why a company like Bell would throttle – competition from the very ISPs to whom it supplies wholesale access). The discussion was stunning since it left the distinct impression that the Commission did not fully understand what was at issue in the CAIP throttling case.

There was two other exchanges involving Commissioner Len Katz worthy of note. The first was a question in which he suggested that Bell and Rogers do not have a dominant position in Ontario, something that will be news to the overwhelming majority of broadband subscribers in the province. The second was the recognition that prioritization of content is effectively the same thing as throttling of content since the effect in both instances is to place some content on a fast lane and other content on a slow one.

These issues may arise again tomorrow when CAIP appears. Today's summary was compiled by Yael Wexler, a law student at the University of Ottawa. Other coverage available from the National Post liveblog, CBC.ca, and the cippic twitter feed (or mine for MTS).



CRTC Net neutrality Hearings – July 8, 2009

CFTPA and IFTA

Summary:

1. Independent producers are important content creators in Canada and the US.

2. The Internet is a necessary tool – sometimes the only tool – for financing, producing and distributing independently produced works.

3. Industry consolidation – the vertical integration of ISPs with production companies – threatens independently produced works with slower distribution in favour of preferential treatment for allied productions.

4. Network congestion must be more clearly defined.

5. Increasing capacity is the best way to ensure broadband service meets demand

6. Traffic management practices must be disclosed and transparent to the customer.

7. Urge the CRTC to reconsider whether ISPs should be immune from s. 27(2) of the Act

Opening remarks:

John Barrack, National Executive Vice-President Counsel, CFTPA:

Come before the CRTC to share the perspective of independent producers – the content creators – at home and abroad on the worldwide issue of ISP traffic control. Since CAIP v. Bell, the CRTC has taken initiative to develop a unified policy on this matter. The Alliance asks that the Internet remain a forum of direct, unfettered access to audiences for independent producers, via wireline or wireless. The Internet is the most efficient distribution method and is necessary for the very viability of Canadian independent production. ISP traffic management practices (ITMPs) create insurmountable barriers for independent producers to monetize their productions. Moreover, ITMPs hinder the innovation of new content-creating (new media) business models and practices. Another concern is that allowing ISPs ITMPs to go unfettered will result in a two-tiered Internet, whereby the big ISPs that are vertically integrated with production companies will give their productions preferential treatment at the expense of independently produced works.

Susan Cleary, vice President and General Counsel of IFTA

Ms. Cleary highlighted the situation in the United States, having first-hand knowledge of the issues there in her role at IFTA. IFTA puts the focus on independent content creators and the vast potential of the online space to finance, produce and distribute content. In many cases, the Internet is the only way for independent producers to work and recover revenues lost in tv, theatrical and DVD sales. The problem for independent producers is industry consolidation – the ISPs are also the cable, radio, newspaper and production company owners. In 2003 only 18% of US primetime was independently produced. Industry consolidation risks preferential treatment and carriage under guise of network management of congestion without a clear idea justification as what that is. ITMPs such as throttling and packet forging are likely to contravene s. 27(2) and 36. These offer a reasonableness standard for ITMPs, not targeting of specific applications given that they represent the only way to access non-conglomerate productions.

Brad Fox – Producer, Strada Films and Rocket Ace Moving Pictures

New media content-creators can't run the costs and risks required by an 'after-the-fact, case-by-case' basis regulatory approach to traffic throttling. Discriminatory ITMPs are being erroneously portrayed by the ISPs as being in the public's interest when they are not at all. The CRTC should use its powers under s.24 to prohibit discriminatory ITMPs. This would promote competition in the ISP industry and set a straightforward standard for acceptable ITMPs.

Dan Hawes – President and Founder of March Entertainment

There are preferred means of managing traffic. First, increasing capacity is the best way to ensure broadband service meets demand. An inquiry to how US federal spending on national broadband infrastructure has worked leaves Canadians with broadband envy. The CRTC's call for national digital media strategy can help in this regard. “One of the pillars of any such strategy must be to reclaim Canada's place as a legitimate leader in broadband speed, access, and affordability.” A second option is to increase last-mile capacity and a third is deploying content delivery networks. There are others; they all indicate that there are other solutions to traffic management other than throttling.

Reynolds Mastin – Associate Counsel, CFTPA

Traffic mgmt practices must be disclosed and transparent to the customer. The CRTC should impose notification requirements on ISPs so that consumers can have greater understanding of their Internet service and give them greater control to the service they pay for. We support Score Media's proposal of disclosing the proportion of physical access link that is dedicated to Internet access in order to see if there is ‘fast tracking' of types of files. Another proposal is for symmetrical regulation of wireless and wireline services, by reconsidering whether ISPs should be immune from s. 27(2) of the Act and including an undue preference/discrimination clause in the New Media Broadcasting Undertakings. CFTPA continues to advocate for the inclusion of ISPs under “broadcast undertakings” and therefore under the purview of the Broadcasting Act.

Questions:

Chair –

The problem with the Alliance's submission is that the CRTC has laws against undue preference. On what basis can we as regulators believe that “throttling” will be a future business strategy ISPs employ knowing it is against the law? I'm not convinced that a condition of license would have better adherence than the same as a provision of the law

Alliance (Reynolds) –

Knowing something is against the law is different from abiding by it, or hedging your bets that a small time producer isn't going to fight a big player ISP on the issue. There is potential for throttling to become the dominant mode of ITMP. If it becomes an established practice, plus the exigencies of filing a complaint under 27(2), could have a damaging impact on independent and emerging producers' ability to get their product to market. The best way to avoid this practice is to include a rule against it as a condition of the license for an ISP to operate. The difference between having it be a law and a condition of service is the difference between ‘may' and ‘must.'

Chair –

Is it a lie that P2P takes more bandwidth than direct access sites?

Alliance

Comcast decided to throttle all Bit torrent regardless of the content, which they lied about, and then paid people to sit in public hearings about it to contravene the democratic process. The FCC was enraged, and did not fine them, but made them to disclose their throttling practices.

Commissioner Timothy Denton –

How did you come up with the three part test?

Reynolds –

3 stage analysis is common among the people testifying in this proceeding. Whether the practice is reasonable and in the public interest, and it provides a clear lens for reaching a decision.

Denton –

Congestion is the basic problem carriers are trying to deal with?

(Alliance) Barrack –

When an ISP is building up its network, it's economically viable to build it up to full capacity. But when you under-provision, you run the risk of congestion. We recognize the need for flexibility in ISP management, except in this one respect of throttling certain types of carriage.

Denton –

Will this allow for the propagation of obnoxious practices by those who would use the public rules to get around them?

Alliance (John) –

Transparency is the answer. We're not suggesting that publishing is the solution, but it would allow for the opportunity for everyone to know what's going on.

Alliance (Reynolds) –

We need to have an informed consumer. As a general principle, when it comes down to how something is being trafficked, the maximum amount of information disclosed is optimal.

Denton –

A complaints-driven process may be necessary but it might give undue weight to one side.

Alliance (John) –

It's extremely useful to hear the voices of the independent producers who can't afford to carry through the entire legal process. We can learn some of the lessons about solutions from other self-regulating models.

Commissioner Leonard Katz –

Risk of independent producers being squeezed out by ISP gatekeepers vertical integration. What if businesses engaged in transactions between non-aligned producers for preferential treatment, how would that not be any different than vertical integration? Would you be opposed to that?

Alliance (Cleary) –

Independent producers can't find aggregators interested in those kind of transactions, they‘re not interested in one-off productions or even medium sized catalogues. Hulu is the closest we've come to that type of arrangement.

Katz –

So you're issue is broader, you're interested in the way we regard independent productions as people and as an industry?

Alliance (Barrack) –

Yes, but we're most concerned about this democratic forum of the Internet. Wireless devices are indistinguishable.

Katz –

But you acknowledge why wireless has had a more flexible environment.

Alliance (Fox) –

A significant proportion of our audience that we hadn't anticipated are commuters, who use wireless.

Commissioner Suzanne Lamare –

The last mile in wireless access is spectrum management, which is part of the infrastructure. In order to manage traffic, building on infrastructure is a good way to go. But it's much easier to unroll cable than spectrum. So when you talk about the greatest degree possible of symmetrical regulation of wireline and wireless, the regulations aren't the same b/c they have different capacities.

Alliance (Reynolds) –

By maintaining scarcity, it creates content management issues and veils it as capacity issues. Scarcity could be used to the advantage of independent producers.

Lamare –

Is it your opinion that P2P is the way for independent producers to monetize their work?

Alliance (Cleary) –

P2P doesn't equal piracy. You can monetize it, and you don't have to go through an aggregator. We don't advocate it industrially because the practices aren't there yet for great monetizing, but it has potential. When people talk about P2P they think Bit torrent, which sometimes has a negative framing as being unprofitable.

Council of Canadians with Disabilities and ARCH Disability Law Centre (ARCH)

Summary:

1. People with disabilities rely on the Internet to improve their quality of life.

2. Traffic management practices must not be directly or indirectly discriminatory, and should not force people with disabilities to forego on their privacy.

3. ARCH presents its own three-step approach to s.36 disputes.

4. The advantageous programs on the Internet and inventive ways of combining programs are too many to count. Therefore a whitelist approach to obtaining special exemptions or recourse for traffic control of necessary services for disabled people is impractical.

Opening remarks:

We advocate and represent the expansion of the world of accessible technology and software applications. We recommend that the CRTC establish clear guidelines for s.36 against controlling content carriage. However, ARCH welcomes the initiatives only if the guidelines directly make provisions for accessibility that is their legal obligation, just as it is in privacy considerations. We hope the result will provide accessibility without needing the commission's specific direction every step of the way or after-the-fact. ARCH suggests its own three part test for determinations under s.36, but that is different than the Oakes-like test the Open Internet Coalition suggested yesterday. However, ARCH would hold on creating a test for s. 27. If the Oakes-like test is applied to.s27 the CRTC risks undoing years of s.27 jurisprudence.

1. Consideration of whether ITMP is caught under s.36

2. Determination of whether the ITMP practice is contrary to law. This is different from the Oakes test. You are asked to determine if there is a contravention of s.36 by asking, does it amount to unjust discrimination and against the law?

Assessment must be made

3. The practice can be saved if it's found to be neutral or a positive intervention. Then the min impairment test may apply (as suggested by the OIC).

Expert Dr. Gregg Vanderheiden:

People with disabilities are now enjoying a greater lifestyle due to the many services of the Internet. The captioning of non-captioned movies by crowd sourcing, availability of film and entertainment outside of the regular channels of commerce for people with intellectual or social disabilities are just some examples of how the Internet can be used advantageously for disabled people. We're looking for a level playing field, where people with disabilities can use programs without needing to register them as ‘special' or name themselves.

Traffic management needs to be non-discriminatory. ISPS that require that consumers use specific programs rather than those of their choosing precluded people w/ disabilities from finding the programs that are best for their circumstances. Users must be free to use any combination of programs -whether it's preferred by the ISP or not – so that they can use the Internet freely and to better their lives like everyone else.

Whitelisting is not a solution – it would be impractical because of the tailoring to individual's needs. Also, it's not that these people are using alternative programs, it's that they're using mainstream programs in a different ways in order to accommodate their needs. Whitelisting also can be used to target people for marketing, or discriminated against for employment, insurance purposes, which the individuals do not want.

People with disabilities do not require significantly larger bandwidth, but it may be needed in some areas. For ex: phone calls, lower bandwidth for talking than for video with sign language, so it would require higher bandwidth. However, both of these are nothing compared to an HD movie. But if an ISP decides that the audio is important but not the video, it affects people with disabilities. Disclosure of ITMPs is critical for people with disabilities. Accordingly, the CRTC must not take a wait and see approach and trouble shoot problems only after occur.



Questions:

Chair –

You're saying that when private information exists, the ISPs will use it in wrong ways, for marketing for instance. But there is no grounding for an assumption that the ISP will give out private info to marketers about people with disabilities.

ARCH –

Well, when things are vertically integrated, like they are in the US, the ISPs can misuse their customer information in a manner that violated privacy. ID fraud happens all the time – once you're in databases with specific personal info is out there, it is out there and you're vulnerable to targeting. There is information harvesting done from sources of information. Our concern is with whitelisting. For the ISP to take that information for service provision purposes, the ISP is doing more than just being a pipeline, it advertises and directs users to a server with advertising. It is a common practice for ISPs to direct specific advertising.

Commissioner Leonard Katz –

Self identification levels the playing field and helps people with disabilities. But you're saying that whitelisting won't work. So what will work?

ARCH – –

If barriers to accessibility on the Internet are broken down, and the creation of software applications continues, then we'll get to a place where one won't need to self identify as disabled. If the CRTC does this right, people won't need to declare and forego on their privacy. We're not saying that if you want a discount, you shouldn't have to self identify, but just for disabled people to get the regular service, at the regular price, shouldn't demand self-identification.

Katz –

If the CRTC was going to look into getting special rates for people with disabilities, how much that would cost?

ARCH –

The amount is minimal because for instance, the cost of having captions doesn't increase even if bandwidth does, it's a standard price. The Internet provides the option of not needing extra costs like other telecoms need. The Internet gives us the option for multiple types of communication at once; if we are able to use the Internet without barriers, there is the potential for no extra costs and time for people with disabilities.



Alliance of Canadian Cinema, Television and Radio Artists (ACTRA)

Summary:

1. ISPs giving undue preference to their content threatens the content creators' ability to reach audiences

2. Traffic throttling is an abuse of power by the ISPs

3. ITMPs are against the Telecommunications Act and moreover, ISPs should be governed by the Broadcasting Act.

4. ITMPs should be a temporary solution, the need for which should be publicly justified as it happens by the ISPs

Opening remarks

Ferne Downey – National President

Canadian artists do not want the CRTC to hand over the keys of the Internet to Canadian ISPs. We help create the content, and so we're worried about Internet traffic management. More Canadians are using the Internet to access our work. About 70% of Canadian Internet usage is for AV files, and the Internet is helping us to compete in local and international markets.



Two specific concerns:

1. The risk of ISPs giving undue preference to content they own: The ability of the Internet to provide open access is threatened if ISPs can give preference to their own content.

2. The potential of ISPs to slow down Internet traffic – to abuse their power as gatekeepers: Vertical media integration is a threat to diversity and the same is true for ISPs.

Stephen Waddell – National Executive Director

P2P like BitTorrent (BT) receive undue criticism by the ISPs as a scapegoat to traffic control. BT is the standard for distributing large files, for legitimate copyright holders (even CBC used it to distribute “Canada's Next Great PM”). ACTRA is not endorsing illegal file sharing, but it's not the job of ISPs to determine the legality of files going through their networks. Therefore, ITMP is against the Telecommunications Act. Moreover, we ask that the CRTC reconsider its jurisdiction over ISPs under the Broadcasting Act.

Traffic management should be only to avoid serious problem and a temporary solution to them.

The CRTC should regulate it according to the following principles:

1. Onus should be on ISPs to prove they need to manage traffic to manage the integrity of the system

2. ISPs must fully disclose what types of traffic mgmt practices they are using and when

3. There should be no discrimination as between wholesale and retail clients

4. There should be no discrimination as between end users

5. There should be no differential treatment between different applications of content

6. The only exceptions to these principles would be the ability for ISPs to give preferential access to any emergency service authorized by public authorities.

Questions:

Chair –

This is a utopian picture you're painting. The fact is that there's more usage than their pipes, just like cars and we have to make regulations and discriminate fairly. So how can you come here and say that there should be no throttling or controlling? Presumably, ISPs are doing the best they can, after all, they're business people who want to satisfy their customers. We clearly have more demand than capacity.

ACTRA (Waddell answered all the questions) –

It is utopian indeed. ISPs who are making significant profits should reinvest in their own system, their own infrastructure. ACTRA had no hard evidence to present to the Chair when he asked for evidence of self-preferences occurring contrary to the law.

Chair –

In terms of p2p, is your industry a heavier user of p2p than others? Will ITMP hurt Canadian film industry harder than anybody else?

ACTRA –

Yes. Since the Canadian AV industry relies on P2P heavily.

MTS Allstream

Summary:

1. Competition in the market should be promoted because that would obviate the need for regulation or traffic controlling

2. ITMPs should never be imposed on a wholesaler from the dominant carrier. ITMPs should only be in a retail context.

3. The CRTC should implement a case-by-case approach to assessing and justifying ITMPs.

Opening remarks:

Theresa Griffin-Muir – VP, Regulatory Affairs

Kelvin Shepherd- President of the consumer market division

Paul Frizado – Chief Information and Technology Officer

Principles:

1. Competition in the market should be promoted b/c it has a direct impact on the need regulation. The UK example illustrates our point that the more competition, the less need for Internet neutrality regulation, like in the UK. Each ISP can decide how best to manage its own practice and consumers can choose among them.

2. No ITMPs other than normal network management should ever be imposed by a dominant carrier on wholesale access customers. Wholesale access customers should be able to decide their own practices subject only to the CRTC, and if the dominant carrier oversteps their boundaries, the CRTC should step in. Bell's contention that they can't identify if the traffic is being controlled by their users or a wholesalers is a red herring and isn't true.

3. The CRTC should take a pragmatic, case-by-case approach to assessing the use of ITMPs. Not every control will be problematic. For example, with spamming, ITMPs are considered reasonable. The reasonableness of other measures might be judged by assessing whether such arrangements are applied to all content providers.

Paul Frizado –

How should ISPs deal with congestion? Regardless of the view on traffic, the best approach to network management is the same:

1. Network planning and engineering

2. Compliance with laws of general application

3. Measures that are agnostic in the their treatment of content

4. ‘CAP' based measures – content application protocol based on latency of an application, blocking, expediting, throttling, Deep packet inspection (DPI).

Are CAP measures necessary? Yes, in some cases. The debate around DPI has become inflammatory for nothing. It's just one tool among many for a larger network management strategy, and the large ISPs have been saying this. It would be a mistake to attempt to regulate Internet technology. The solution is a marketplace where there is enough competition to provide their users differential retail options which would mitigate the issues around net neutrality and customer satisfaction.

Questions:

Chair –

You explain that traffic shaping should only apply in the retail, not wholesale, context. Won't you get congestion then? Don't you need wholesale ITMP?

MTS (Frizado) –

Once it's sold to a wholesaler, it's out of the dominant carrier's network. We're not buying Internet access like a retailer. Bell's diagram shows that they can identify the different traffic, even prior to DPI equipment was invented.

Chair –

Are there economic decisions that motivate Bell or a dominant carrier to traffic control usage not on their networks?

MTS –

Not that we know.

Commissioner Lamarre –

In category 1, do you really mean infrastructure building?

MTS (Frizado) –

Yes. The one exception is some types of filtering like anti-virus and measures to prevent denial of service attacks are considered category 1.

Lamarre

Do you demonstrate to your customers the due diligence you took in determining that category 1 techniques have been applied before others?

MTS (Shepherd) –

Category 3 measures are legitimate starting points, and where services are defined around the speed of the Internet, you start with cat. 1, but cat. 3 and 4 come into play when you want to increase the quality of service being offered to customers. So they can be employed to ensure the performance and the network to end users. So the answer isn't to apply cat 1 techniques first all the time, because cat. 3 and 4 do play an important part.

Lamarre –

Do you really need to go to cat. 4 prioritization ever?

MTS (Frizado) –

Yes for reasonable quality of service. It's not always possible to anticipate traffic surges on the network, like the Michael Jackson funeral. Traffic management was necessary because it's unpredictable. Predictable issues on the network warrant the cat. 1.

Lamarre –

In justifying a discriminatory infringement of 27(2), you mentioned that the consent from the user is an element that could help the CRTC to determine whether or not the measure was just. How do you reconcile these? Being an informed consumer is one thing, but whether or not the consumer has been informed and even consented doesn't make it just. Our market isn't such that if I have a contract for three years, and you disclose something to me about network management and I'm faced with a choice of breaking the contract, at a cost, and finding another network, at a cost, there's nothing just about it. We don't have a market with so much choice and ease of movement between them.

MTS (Griffin-Muir ) –

Once you've transparently disclosed the practice and the customer has consented (as against another ISP who doesn't disclose) then it is just. We advocate for more competition in the market. Consent is only one factor, as is the degree of choice. There's legislation around privacy and we would have to be compliant with it and couldn't force a customer into consent simply because they have no other choice of ISP. Explicit consent for marketing, let's say, doesn't seem problematic to us.

Lamarre –

Dominant, as in “dominant supplier,” is a relative term. For instance, MTS is the dominant player in Manitoba. So when you're on the dominant side of the coin, do you agree to act accordingly to the rules you've put forward today?

MTS (Griffin-Muir) –

Yes.

Commissioner Katz –

Can you tell us whether there are ITMP employed by British Telecom. All the competition is on a retail basis, buying space from British Telecom.

MTS (Griffin-Muir) –

British Telecom is on a retail basis; it doesn't do ITMP on a wholesale basis.

Katz –

Can you clarify what you mean by exclusive content to end users?

MTS (Shepherd) –

There are customers who want quality of service agreements for their service which is possible to get into. If you throttle everybody else for someone, as opposed creating agreements, there is a difference in what you're doing. If it's exclusive, there's potentially a discriminatory element that may exist. You have to assess whether the arrangement is being offered to all application providers, the competitiveness in the market. This is an emerging area and it's not something that has been implemented in the market yet. Offering those applications might require a performance in capacity more than what is available.

Commissioner Candice Molnar –

If there is no traffic management on the wholesale service, as the wholesale customer, can you provide guarantees that the GAS customer would have no impact on the underlying network, even if all cat. 2/3 was pulled off of that service. If all traffic mgmt was removed from GAS as a wholesale customer of that product, you can guarantee the incumbent that their service wouldn't be affected.

Shepherd –

Yes. Unaffected. Requires that the services you're using have the capacity. Congestion hits where multiple slams hit the Internet access piece.

Molnar –

Are there any concerns particular for the business market which you serve? Ex: SME's use the Internet for debit cards in rural areas, lottery terminals.

MTS (Griffin-Muir)-

No, there's nothing specific. SME's look very much like consumers in the applications they're using. Typically, large businesses aren't using the public Internet for large applications.

Commissioner Denton –

You're saying it's on the retail service provider to engage in traffic management? Yesterday they were talking about the need between the retailer to signal the wholesaler on its traffic management.

MTS (Frizado) –

That was to indicate that congestion is going on. That's a plan for the future, but not something now.

Denton –

How is your four-part classification to be implemented, if the CRTC were to accept the proposals?

MTS (Griffin-Muir) –

If you accept that beyond cat.1 generally speaking there is no need to go further, if there is sufficient competition in the retail industry, our suggested measures could be adopted. Anything beyond that would go to the CRTC if it were allegedly discriminatory. But the CRTC shouldn't be telling us that we can't use certain types of tech like DPI.

Denton –

The complaint is that smaller players can't keep coming to the CRTC to deal with issues. So in order to do something preventative, what would you do? We want to know about how you would implement your own suggestions.

MTS (Griffin-Muir) –

We would still have it be case by case dispute resolution, but we will submit a more detailed plan in the final submissions.