THE CRTC’S DECISION ON differential pricing practices will be praised or blamed according to one’s inclinations: whether to trust the innovative tendencies of carriers or the capacity of regulators to enforce fairness. Trust is the key, because each side of the argument honestly believes the other to be mistaken on a very large point of policy. How much weight do we assign to the deficiencies of regulation, as against the propensities of carriers to squeeze the tubes for profit?
Those inclined to trust the innovative propensities of carriers deplore the CRTC’s comprehensive decision to prevent unwarranted profit-seeking. Those who believe, as I do, that we can expect very little innovation from carriers, consider that the Commission was right to assert its role in policing their behaviours.
Each side places a very large bet on a real-world outcome.
My second point is that carriers provide access to the Internet; they do not constitute it. Failure to understand this point provides the proponents of carrier supremacy the opportunity to confuse the politicians. Claims that Ajit Pai, chairman of the FCC, will restore a “free and open Internet” by reducing the FCC’s supervision of the terms of access to it, are factually in error. The Internet is free and open, to the extent it is, for several reasons: the structure of its addressing system, the laws under which one publishes to it, and the existence or not of discriminatory practices in pricing, searching, or routing traffic. The carrier has a small but vital point of control.
“To claim that light-touch regulation made the Internet great is to mistake the Internet… for the conduits by which you reach it.”
The carrier acts as a kind of guard at the door of the shopping mall. If the terms of access are set by the guard, then he has the means, motive and opportunity to guide you to some stores and not others, and to extract payback from the retailers so privileged.
All this is normal business behavior, which society has seen fit to control since the days of railways and other public works, and for the same recurring reasons.
To claim that light-touch regulation made the Internet great is to mistake the Internet, which is productive, innovative, and largely beneficial, for the conduits by which you reach it. The Internet is accessed by means of carriers because there are as yet – for example – no implants in your brain that allow you to reach it by power of thought alone. Anyone who exercizes market power along the chain of access to the Internet has the means, motive and opportunity to strike private deals with the owners of some end points to shape traffic and receive a tip, a kickback, a fee – call it what you will – for doing so.
The carriers reason that everyone is making money on content except for them, and why should they be excluded from the banquet?
The public has determined that the power of carriers should be constrained. Periodically the leash is loosed or tightened until people get the results they want. In Canada we have determined that we want more regulation of access. In the States they are placing their trust in the carriers. The bet which the Ajit Pai’s of this world want us to make is to trust the carriers more than their policemen. To my mind this is a faith in the benign outcomes of markets where the competition that would make markets effective is missing.
It is easily foreseeable that, just as with election financing laws, medicare, and their respective national constitutions, the political experiments of Canada and the United States in matters of net neutrality might continue for decades, side by side. Let the experiment continue.
Timothy Denton is a lawyer by training who practices principally in telecommunications and Internet policy and domain name issues, with a strong concentration on explaining what the technology is and what it means. He was a CRTC commissioner from 2008-2013.
