May 4, 2017 2 years 7 months ago

Internet Freedom Commentary: Will Canadians see greener Internet pastures in the USA?

IT IS ALMOST A DEFINING characteristic for Canadians to distinguish ourselves from our neighbors to the south. The untrained ear may think we speak English somewhat similarly, but Canadians emphatically define ourselves as “not American” while we roll-up-the-rim-to-win.

That doesn’t keep us from wishing we had American prices for gasoline, milk, eggs, airfares, clothing and alcohol. It is springtime, and it is natural for us to look wistfully at greener grass growing on the other side of the border. We can add the USA’s unlimited mobile data plans to the list, prompted by one of the first acts by Federal Communications Commission (FCC) Chair Ajit Pai of dropping an investigation into zero rating practices by U.S. carriers. The removal of that regulation resulted in every major carrier launching an offering of unlimited data plans.

Now, Chairman Pai has teed up the restoration of the free and open Internet as he recently announced his plan to restore the light touch regulatory approach that helped make the Internet great – and not a moment too soon. New research indicates that the misguided Title II regulation and the general pro-regulatory black cloud that has hung over the FCC in last five years, has deterred some $30-40 billion of internet investment annually in the US.

Canada’s current regulatory environment is reminiscent of the Obama administration’s FCC in which the Orwellian euphemisms of “openness” and “choice” characterized greater government control. Currently, there is an official telecom policy direction requiring the CRTC to “rely on market forces to the maximum extent feasible” and “when relying on regulation, use measures that are efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary.”

Still, a growing number of CRTC regulations (including price controls on internet access and regulating the internet) have served to reduce differentiation between service providers, such as with mobile video services, such as NFL Mobile and Bell Mobility.

Indeed, the CRTC purports that its increasingly heavy hand “relies on market forces to the maximum extent feasible, seeks to remove barriers to entry, and is a measure that is efficient and proportionate to its purpose.” But it is unclear that the CRTC's policy would survive an independent audit of compliance to certify that its  direction is consistent with market-based policy. I have written before about the cost of regulation in Canada [here and here] and have often asked, how will we measure success?

The CRTC offers no measurement.

As one long-time observer of the Canadian regulatory scene recently asked, should we expect capital to migrate to Canada because of our improved rules? If we look at the rate of startups in Canada versus the rate in the US, should we expect that rate improve in Canada relative to U.S.? I think not. Investment is pouring into the U.S. as a result of a return to its pro-competition and pro-consumer approach. In spite of the net neutrality policies purported to improve innovation in Canada, Canadian entrepreneurs continue to flock to the States.

In general, the world is siding with the U.S., not Canada on this issue. Courts in Netherlands, Sweden, and Slovenia have struck down heavy handed net neutrality regulation and price controls that restrict zero rating and free data policies. With any luck, the bold and much-needed moves from the FCC in the States will provide a needed example to the CRTC in Canada and help move toward greater Internet freedom again.

Mark Goldberg is a telecom consultant and is co-chair of The Canadian Telecom Summit. The Internet Freedom discussion is certain to continue at The 2017 Canadian Telecom Summit, taking place June 5-7 in Toronto.