Canada Rushes To Defend Net Neutrality As The U.S. Moves To Dismantle It

from the who-needs-a-healthy,-working-internet-anyway? dept

Here in the States, regulators and Congress are preparing to gut our existing net neutrality rules -- replacing them with the policy equivalent of wet tissue paper. In Canada, regulators are taking the complete opposite tack, last week cementing the country's net neutrality rules as some of the most comprehensive in the world.

After years of some obnoxious behavior by Canadian ISPs like Rogers, Canadian regulators adopted guidelines back in 2009 that prevent ISPs from blocking websites, while requiring that they're transparent about network management. In 2013, those guidelines were expanded to cover zero rating after Ben Klass, a graduate student in telecommunications, filed a complaint with the CRTC over zero rating. Specifically, Klass and his co-filers noted that Bell had begun exempting its own streaming video service from the company's usage caps, thereby putting smaller streaming competitors at a notable disadvantage.

While many people (especially here in the states) continue to labor under the misconception that zero rating gives them something for free, Klass rather concisely broke down why this was a problem in a blog post at the time:

"To figure out exactly what’s going on, I compared the price Bell charges for 5 gigabytes of mobile TV data to the least expensive data-only plan that lets you watch 5GB of Netflix without going over your cap (it’s called the “Tablet Flex” plan). It turns out that Bell charges you $5 a month to watch 5GB worth of their own content. If you want to watch 5GB worth of Netflix on the Bell network, on the other hand, they charge you $40. That’s a markup of 800%."

The short version: usage caps (which are already arbitrary constructs only made possible by a lack of real competition) are being used as an anti-competitive weapon to harm streaming video competitors. Here in the States the FCC seems to think this is a really nifty idea. In Canada, Chile, Japan, India, Norway, and The Netherlands where the practice has been banned; not so much.

In 2015, the CRTC sided with Klass, arguing that this implementation of zero rating could wind up "inhibiting the introduction and growth of other mobile TV services accessed over the Internet, which reduces innovation and consumer choice." And last week, the CRTC released its final net neutrality guidelines, which puts in place a framework for addressing similar zero rating complaints moving forward. The CRTC decision first makes it clear that this kind of "differential pricing," when applied asymmetrically, can harm the overall market:

"differential pricing practices, generally speaking, result in (a) a preference toward certain subscribers over others, (b) a preference toward certain content providers over others, (c) a disadvantage to subscribers who are not eligible for, or interested in, a differential pricing practice offering, and (d) a disadvantage to content providers that are not eligible for, or included in, an offering."

Instead of using usage caps to disadvantage competitors and fracture the market, the CRTC has a crazy idea: how about ISPs instead directly compete on the quality and price of their networks?

"The Commission considers that competition in the retail Internet access services sector is best served, and the telecommunications policy objectives set out in the Act are best achieved, when ISPs compete and differentiate their services based on their networks and the attributes of the services on those networks, such as price, speed, volume, coverage, and the quality of their networks."

Of course ISPs loathe the idea of simply being "dumb pipe" providers that just offer a quality connection at a quality price. And they'd much rather continue engaging in half-hearted non-price competition -- using the lack of said competition to protect their TV revenues. But the CRTC also wasn't buying the argument put forth by ISPs (and the policy wonks and politicians paid to love them) that zero rating somehow improves overall internet access. Nor did it buy the argument that zero rating benefits users by letting them watch content for "free":

"The Commission considers that any short-term benefits of differential pricing practices would be greatly outweighed by the negative long-term impacts on consumer choice if ISPs were to act as gatekeepers of content through their use of such practices.

In other words, consumers labor under the illusion they're getting a better deal because their ISP's content doesn't count against caps. But as we've pointed out for years now -- the practice of zero rating simply shifts the cost burden around -- driving up costs elsewhere and hurting overall streaming competition. The CRTC is making it clear that -- barring some exceptional creative trickery by ISPs -- this will no longer be acceptable business behavior in Canada. For now.

This is all dramatically different from what we're doing here in the States. Our 2015 net neutrality rules didn't specifically ban zero rating, but instead left it up to the FCC to determine the anti-competitive impact of such plans on a "case by case basis" (something we made clear was a mistake at the time). But by the time the FCC actually got around to enforcing the rules last fall (when it warned both AT&T and Verizon their zero rating plans are clearly anti-competitive), the existing FCC was on the way out the door, to be replaced by a new FCC led by new boss Ajit Pai.

And Ajit Pai's first order of business? To kill the agency's inquiry into zero rating. And he's now getting ready to push a plan that would eliminate hard, real net neutrality rules and replace them with voluntary guidelines -- and weaker FTC oversight that ISPs are fairly certain to laugh at. In other words, as Canada moves to protect consumers, net neutrality and competition, the United States -- driven ignorantly and blindly by Comcast, AT&T and Verizon lobbyists -- is preparing to give a giant, neon middle finger to all three.

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Filed Under: canada, fcc, net neutrality, us, zero rating