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The Internet Society of Canada proposes legislative reforms

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The following is a letter prepared by several people within the Internet Society of Canada and sent today to the ministers responsible for industry/telecommunications and heritage/broadcasting. Collectively, the authors have at least 150 years of experience in the telecom/broadcasting/policy/regulatory arena. Special thanks to Philip Palmer, Len St.Aubin, Helen McDonald, Konrad von Finckenstein, Benjamin Klass, Cynthia Khoo, and  Evan Leibovitch.

 

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July 14, 2017

 

To        The Minister of Canadian Heritage

            The Minister of Innovation, Science and Economic Development

 

Modernization of Canada’s communications legislation

 

The recent budget announced the following upcoming legislative review.

To ensure that Canadians continue to benefit from an open and innovative Internet, the Government proposes to review and modernize the Broadcasting Act and Telecommunications Act.

In this review, the Government will look to examine issues such as telecommunications and content creation in the digital age, net neutrality and cultural diversity, and how to strengthen the future of Canadian media and Canadian content creation.

The government is to be commended for conducting a review of the broadcasting legislation and telecommunications, given that the present legislation stems from the 1980’s and 1990’s. The world wide web dates only from 1989, and the two pieces of legislation assumed a largely pre-computer world that is in the process of passing away.

The Internet Society Canada Chapter considers that following points must be addressed if you are to achieve legislation appropriate to today’s digital reality, while respecting and furthering Canadian digital content.

1.      Centrality of the Internet

It is essential that any new communication legislation be based on a recognition of the centrality of the Internet. The Internet is key to our modern digital economy. New legislation should consistent with net neutrality, seamless interconnection, fair competition, the prevention of abuse, and the protection of privacy.

·         The Internet is now essential to Canadian innovation, competition, economic growth, consumer choice and freedom of expression, including cultural diversity and the flourishing of content for local and global audiences.

 

·         Policy should distinguish among:  the underlying infrastructure of the Internet; intermediaries that provide access to the Internet; and online service providers.

 

·         Consistent with long-standing common carriage principles, policy should, to the greatest extent possible, foster open access to online services and content by end users, without undue impediment or interference from providers of infrastructure or intermediaries. The major benefit of the Internet has been permissionless innovation, and this should continue.

 

·         Attempting to select or privilege some distribution channels or content over others is incompatible with the nature of the Internet and would undermine its value to Canadians as citizens and consumers. Online services are not digital analogs of conventional ‘broadcasters’. Controlling or managing access to content can no longer be used to promote or cross-subsidize Canadian content.

 

·         The policy framework for the support of Canadian content, including broadcasting regulation, needs to be adapted to the Internet reality.  The contrary policy is to try to apply to the Internet a framework developed for another era and vastly different pre-computer environment. Broadcasting legislation regarding Canadian digital content should concentrate on funding, promotion/discoverability and fair access by all creators without allowing any entity discretionary power to grant or deny access by any party to the Internet.

The government has been very successful in the past in linking Canadian content to regulatory policies and deliberate subsidies. These policies were successful because spectrum was scarce and cable delivery could be controlled. With optical fiber and the Internet, scarcity is no longer an issue. Access control can no longer be used to subsidize Canadian content.

2.                  Broadcasting Act/Canadian Digital Content

 

In light of our comments on the centrality of the Internet, care should be taken to ensure that any forthcoming Broadcasting Act not apply to the Internet in general. ISOC Canada is opposed to any legislation that would require the licensing of Internet content providers such as streaming services, YouTube, or other purveyors of online audio or visual content. Any future revision of the Broadcasting Act should state that it does not apply to purely online content. There may be instances in which the regulation of a broadcasting undertaking may encompass its online activities, but this should only be ancillary to a broadcasting licence.

Much of the value of a broadcasting licence is being eroded by alternate sources available over the internet. Radio and television audiences and advertising revenues are eroding. In future, we can expect that the importance of regulatory policy will decrease, as the economic value of the sector declines.

It is also a timely occasion for a comprehensive review of the means by which licences are granted. Instead of the beauty contest approach we use now, we should examine if the auctioning of licences might be a superior method of determining who gets radio licences and in what format the licensee choses to broadcast to the public.

Legislation regarding Canadian digital content ought to concentrate on funding, promotion, discoverability and fair access by all creators, without allowing any entity discretionary power to grant or deny such access.  Essentially a scheme similar to tax deductions ought to be employed. Any thought of regulatory subsidy or creating an uneven playing field by tweaking communications legislation ought to be abandoned. It is mostly likely unenforceable at any reasonable cost and would only undermine the efficient working of the Internet.

ISOC Canada also opposes any concept of a dedicated tax or regulatory levy on ISPs and/or online services to subsidize Canadian digital content. Available evidence suggests that Canadian content is alive and well online, that Canada is a global powerhouse in online games development, and that Canada's audiovisual production sector is seeing a significant boom in activity, due in part to demand for online content.

 

3.                  Splitting the Regulator

 

 

ISOC Canada considers that there are no longer synergies to be had by combining broadcasting regulation with telecommunications regulation. We recommend that a specialized regulatory authority be created for broadcasting regulation – to the extent that such regulation is believed to remain necessary. The existing CRTC should be split into separate broadcasting and telecommunications regulators. This would help alleviate the perception that telecommunications policy is often subverted by the desire to assist broadcasters achieve the objectives of the Broadcasting Act.

Here are some considerations that support this view.

First, the two acts have entirely different purposes. The Telecommunications Act controls the behaviour of large engineering infrastructure owners who usually have significant market power. The Broadcasting Act is a highly detailed licensing scheme for deliverers of radio and television services, whose every act is governed by regulation.

Second, by placing the two sets of concerns in one agency, with one set of regulators required to deal with both, the selection process for commissioners has tended to be biased. The pattern of appointments has favoured journalists, writers, activists, and people for whom the term “protocol stack” is first heard several months after joining the Commission. Commissioners are asked to make important decisions affecting the access by Canadians to the Internet with little or no knowledge of its technical realities. As regulators, lawyers are useful – but adding a few network engineers would be even better.

Third, and as a consequence, the million-dollar issues of broadcasting prevail over the billion-dollar issues of telecommunications. Broadcasting has been held traditionally to be more important than access to the Internet. It has been observed that Commissioners spend time discussing 3 millivolt signal contours between two adjacent radio stations (a $50,000 dollar issue) while access to the Internet (worth several billion) is relegated to after lunch. The very detail in which broadcasting is regulated – a scheme made necessary by the Broadcasting Act - causes Commission time to be absorbed in it, to the expense of knowledge, focus, and concern for telecommunications issues.

The former Department of Communications was broken up decades ago, and its functions put into two departments, greatly to the improvement of focus on the policy and business aspects of telecommunications. Today, in the same regulatory agency, two wholly distinct laws, purposes, rationales and styles of decision-making are forced to cohabit. The Internet has separated content and carriage and it is time for the regulation of same to follow. Split the CRTC into two agencies, with Commissioners/regulators likewise.

 

4.                  Telecommunications Act

 

As recently as 2006, the Telecommunications Policy Review Panel report advocated combining the Broadcasting Act and the Telecommunications Act. We think this to be a terrible idea. The purpose of the Telecommunications Act is to ensure that the physical networks are available at affordable prices to enable Canadians to communicate – whether by wireline, wireless, satellite or any other means of communication. The objective is to permit Canadians to carry on their personal, business and public affairs. Telecommunications is content neutral. Communicating over telecommunications infrastructure is not a legal privilege but a fundamental Charter right: freedom of expression.

Telecommunications deals with conduct of the providers of infrastructure, not with the content that is carried over that infrastructure.

By contrast, broadcasting is about content: the right to broadcast is a privilege accorded to the few to deliver messages to the many. This was the architecture required when radio communications were first established. As broadcasting channels were few, the state had an interest in ensuring that broadcasters did not misuse their privileges to manipulate public opinion, favour particular political parties, or broadcast material that was offensive to the public. No such concerns apply to telecommunications, apart from the general laws that apply to criminal conduct, hate speech, defamation and matters of that nature – the enforcement of which lies outside the purview of the telecommunications regulator.

Any review of telecommunications legislation should address its objectives. For instance, given the gradual removal of Canadian ownership requirements, does it remain an objective of telecommunications policy that Canadian carriers remain Canadian owned and controlled?

Second, should there not be a presumption of regulation in the case of a carrier exercising market power, and for not regulating when there is no market power?

On the whole, the Telecommunications Act remains relevant to the questions of market power, though improvements can be made, as we have suggested.

 

5.                  Radiocommunication Act

 

Any review of communications legislation has to include the Radiocommunication Act. There are at least three reasons for this:

a.       The Radiocommunication Act preserves ideas about the capacity of devices that pre-date computers and ignores contemporary technological capacities;

 

b.      It is dissociated from the goals of the Telecommunications Act. The Minister “may” but is not obliged to consider the objectives of the Telecommunications Act in administering the Radiocommunications Act.

 

c.       It is time to address whether spectrum management is best placed in ISED or its equivalent, or should be devolved to the telecom regulator.

 

Wireless services have grown to be an essential part of both the Canadian economy and the lives of individual Canadians. We have intelligent devices in our hands but they are not permitted to extend their reach to how we use spectrum. The Radiocommunication Act should be opened and revised to reflect the overwhelming importance of spectrum licensing to the Canadian economy, and the advances in intelligence in devices that lessen, if not wholly undermine, the assumptions that undergird how we licence spectrum now.

The current Radiocommunication Act is essentially a radio act, with its primary focus on the licensing and operation of individual radio apparatus. A modern approach would be to deal with the broader question of spectrum management, with an emphasis on the planning and use of spectrum, rather than device specific performance (although this must also be provided for, where appropriate). Matters such as the auctioning of spectrum and the dedication of spectrum to specific uses, and how changes is use of spectrum are to be conducted, should be at the core of future spectrum management legislation. 

We acknowledge that ISED and its predecessor Industry Canada have made progress toward market-based licensing, including auctions, which are now the primary means of licensing spectrum for which there is anticipated market demand, and Canada has followed other countries in enabling open-use spectrum based on intelligent equipment capable of avoiding interference, although the latter remains exceptional.

Though the Department has used spectrum auctions, it is still unclear what you get when you obtain a licence. The rights that attach are not specified in legislation or regulation. This has led to uncertainty about secondary markets. ISOC believes that future legislation should specifically enable and thus encourage the growth and diversity of secondary markets. Spectrum licences should specifically permit sublicensing without governmental consent. The legislation should provide for the protection of registered interests in spectrum frequencies – including security interests. Transfers of interest within the term of a licence should be permitted as of right. Secondary spectrum markets will encourage economic growth, diversity of applications, and technological innovation. Disincentives for spectrum hoarding and reliance on outmoded technologies to deliver signals should be designed into new legislation.

Whether spectrum management legislation should remain outside the Telecommunications Act is an open question. What is clear is that the policies governing spectrum management should be subjected to the telecommunications policy of Canada, and the Minister’s discretion with respect to wireless decisions should be exercised within the parameters of that policy.

Among the live issues is whether the responsibility for spectrum management should be granted to the telecommunications regulator. A principled decision should be made on whether spectrum management should remain with the Minister of ISED, or should be devolved in whole or in part to the telecommunications successor of the CRTC. The addition of administrative and monetary penalties to the Radiocommunication Act demands a high level of judicialization of departmental processes. That would argue for adjudication of penalties being before a tribunal that has at its disposal processes that have been shaped in accordance with the principles of administrative fairness.

Assigning radiocommunications functions to a telecom successor of the CRTC might have several other advantages:

-          a longer-term focus independent of changes in Ministers or senior personnel; and,

-           

-          enhanced flexibility to modify fee structures in light of changing patterns of use and demand.

The commitment to the review of communications legislation presents a unique opportunity to undertake a thorough review and revision of the Radiocommunication Act to meet the challenges of today’s transformed radio carriage environment.

6.                  Cable Carriers

 

Cable operations should be recognized as telecommunications common carriers. The day when cable was technologically distinct from other telecommunications enterprises are long past. The digitization of networks and the capacity of virtually all cable operations to permit two-way communication and to carry internet content to cable subscribers demands a rethinking of the role of cable carriers. Their treatment as broadcasting undertakings is an artifact of a pre-Internet past.

 

7.                  Ministerial Responsibilities

 

The existing overlap of ministerial responsibility is no longer required. One Minister should be responsible for content (broadcasting/digital content) and the other for communications carriage (telecommunications). Appointments to the new regulatory agencies should follow suit, with the cultural affairs minister recommending the appointment of the broadcasting/digital content commissioners, and the industry/commerce minister appointing the regulators of telecommunications. This division would also allow for people with appropriate skill sets to make decisions within their range of competence.

8.                  The Need for Independent Review

 

We believe that there should be an open consultative process leading to new communications legislation. It is doubtful that an entirely in-house consultation can lead to consensus around the important policy issues that are now at play.

In the 1980s there was the Caplan-Sauvageau review of broadcasting legislation. In 2006 there was the Telecommunications Policy Review Panel report, and in 2008, the Wilson report on competition policy: Compete to Win.

We hesitate to suggest further reports, but note that there has been an erosion of the broadcasting sector over the past decade, and it may be timely for an independent panel to be appointed to make legislative recommendations for the communications sector.

 

In closing, the Internet Society Canadian Chapter would like to express its interest in being involved in any ongoing legislative review and development process.

We thank you for this opportunity to express our initial views on these important issues, and hope that our contribution will assist the Government in its deliberations.

 

Sincerely

 

 

Timothy Denton

Chairman, Internet Society, Canada Chapter

 

 

 

 

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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.

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