Net neutrality changes in U.S. could impact Canada

The epic battle in the U.S. over who gets to shape the future of the internet got even more heated this week when President Barack Obama weighed in in favour of net neutrality, urging regulators to ban cable companies from creating a two-tier information superhighway that would allow some websites to buy their way into a fast lane.

• Obama pressures FCC for strong net neutrality rules
• The net neutrality battle: EU, Brazil opt for more equal access

"We cannot allow internet service providers to restrict the best access or to pick winners and losers in the online marketplace for services and ideas," Obama said in a statement to the Federal Communications Commission (FCC), which is in the process of drafting new rules on net neutrality, the practice of treating all content on the internet equally regardless of where it's coming from. 

Canada generally has stronger net neutrality protections than the U.S. thanks to the internet traffic management practices the CRTC adopted in 2009. These prevent carriers from engaging in traffic shaping that is "unjustly discriminatory" or "unduly preferential."

The Telecommunications Act also prohibits them from giving "undue or unreasonable" preference or disadvantage to any one party.

We may not live in the U.S., but many of our favourite websites do.- Josh Tabish, Open Media

It also helps that Canada treats internet access as a telecommunications service whereas the U.S. considers it an "information service," which is not as strictly regulated. Obama and other supporters of net neutrality want the FCC to reclassify broadband internet as a public utility akin to telephone service and place it under Title II of the Communications Act, which offers some of the same protections as Canada's regulations. 

If the FCC rejects that model and allows so-called pay prioritization, it could impact Canadians, says Josh Tabish, campaigns manager at the Vancouver-based internet advocacy group Open Media.

"We may not live in the U.S., but many of our favourite websites do," he said. "Canadians rely on a lot of American services… to go about their daily lives.

"If a proposal were to go through that would allow slow lanes on the internet, that could impact how those services operate and what new services are able to emerge."

Netflix pays for faster service

Fast lanes already exist in the U.S. to some extent. Netflix — a proponent of net neutrality — recently reluctantly signed deals with Comcast and Verizon to get smoother delivery of its streaming service after subscribers complained of interruptions and delays in transmission.

"Netflix performance deteriorated on the Comcast network and then immediately recovered after Netflix started paying Comcast," Netflix CEO Reed Hastings wrote on the company's blog.

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As a controlling stakeholder in NBC Universal, Comcast is a content provider and a competitor with Netflix, but as the country's largest internet service provider, it has the power to affect the quality of its service. 

"If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future," Hastings warned.

If the FCC doesn't move to restrict such practices, many more websites will potentially have to do what Netflix did and negotiate new terms of service with ISPs or risk being relegated to the slow lane — including Canadian companies that want to reach U.S. internet users.

"Were the U.S. to become a market where there is pay to play or throttling… it could have a negative impact, especially on some of the start-ups and smaller businesses that simply can't compete if that's what the market is like," said Michael Geist, an expert in internet and e-commerce law at the University of Ottawa.

Alternatively, some U.S. internet entrepreneurs might start looking north.

"It could be that Canada emerges as a desirable place for some companies to start up because of the net neutrality protections we have in place," Geist said.

Tighter regulation hurts innovation, ISPs say

Even if jurisdictions like Canada, Brazil, Chile and parts of the EU have strong net neutrality rules now, a move toward a two-tier system in the U.S. could have a regressive effect and set a new, weaker global standard, Tabish said.

The major broadband providers in the U.S. argue that any attempt to more tightly regulate their industry is unnecessary and would hinder their ability to invest in internet infrastructure and innovate.

We will fight vigorously against efforts to impose this backwards policy.- Michael Powell, National Cable and Telecommunications Association

"The cable industry strongly supports an open internet, is building an open internet, and strongly believes that over-regulating the fastest growing technology in our history will not advance the cause of internet freedom," said Michael Powell, president of the National Cable and Telecommunications Association, in the wake of Obama's comments.

Powell, who was chairman of the FCC in the early 2000s, said providers "will fight vigorously against efforts to impose this backwards policy," but some experts say reclassifying the internet as a utility would give the FCC a stronger legal footing than when Verizon successfully challenged net neutrality rules in court last year.​

Net neutrality advocates say the industry's main concern is not regulation but profit.

"At the end of the day, it's about finding a new way to take as much money from as many websites as possible — and from internet users, eventually," Tabish said.

Broadband providers ultimately want a system that resembles the cable TV model, where they control the packaging and pricing of content, he said.

"The end goal is a system where the user goes through their ISP and has to pay a little bit more for Facebook, a little bit more for YouTube," Tabish said.

Mobile is new testing ground

Geist says Canadian media conglomerates like Rogers and Bell have been ​fairly good at accepting the limits on preferential and discriminatory practices. In instances where they have tried to throttle content, for example, they have backed down once the regulator started asking questions. 

• Rogers admits it may be throttling games
• Net neutrality setback unlikely to spark major change

"Having the CRTC rule against you is a strong disincentive," he said. 

Where the Canadian system does break down is in relying on individuals to file complaints and compile evidence of violations rather than having the CRTC actively police ISPs, Geist said.

One area where Canadian providers are testing the limits is in mobile. Bell's Mobile TV service is currently the subject of a CRTC complaint alleging that it unfairly subsidizes its own TV content and disadvantages competitors by exempting the service from the usual data caps.