Timothy M. Denton

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The Klass decision: the CRTC finally adopts Internet thinking

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I have nothing but praise for the majority decision in Ben Klass' fight with Bell and Videotron (Broadcasting and Telecom Decision CRTC 2015-26). They have achieved a conceptual revolution: they have adopted essentially an Internet view of the businesses they regulate. Since they did not announce their revolution as such, let me point it out. And allow me to heap a little praise on their heads.

The Internet, which is essentially an engineering idea, divides the world of communications into layers. At a minimum there are transport, code and applications. The OSI model breaks communications into many more. The number of layers is not really the point. The issue of importance is that the style of engineering that the Internet embodies segregates functions into layers, and allows for changes in a layer to be made, without the change requiring changes to the engineering at every other layer. Thus functionality can be added in one layer with causing billions of dollars worth of changes to be made at every other. The style of design was called the end-to-end principle.

The Internet world is divided into "applications" and "transport" in consequence of how the Internet's layers segregate  machinery and codes from applications: email, the world wide web, word processing suites, and so forth.

None of this way of conceiving communication systems has managed to make its way through the impenetrable thicket of telecom and broadcasting laws until January 29th, 2015, the date of the Klass decision. The concepts with which Commissioners wrestle have been until this decision almost entirely driven by legal divisions between "broadcasting" and "telecommunications". Lawyers and Commissioners have been using concepts embedded in legislation that map poorly onto the engineering systems at the core of what they regulate.

For most public policy discussions, what the Internet is or has achieved is irrelevant; the only thing that counts is: is it telecoms or broadcasting? If telecoms, you may not discriminate unjustly or unduly; if broadcasting, you are obliged to discriminate in favour of Canadian signals.

Once you have succeeded in having your services characterized as "broadcasting", you escape obligations of fairness towards other carriers and users.

In short, the division between broadcasting and telecoms was vertical, and it went all the way down.

Before this decision, the nature of the service determined whether the entity behind it was a "broadcaster" or a "telecommunications carrier". So that, if the cable television company offered telephone service, it was regulated insofar as it carried telecommunications as a "carrier". But it would be regulated as a "broadcaster" for all of its television service. For a carrier, the trick is to have as little as possible of their capacity assigned to "telecommunications", so that their carrying capacity could not be regulated to enforce obligations of common carriage.

By contrast,  when the CRTC characterized the services that Ben Klass was complaining about, the Commission spoke of "apps" -applications. To access these apps, the subscriber had to subscribe to a wireless voice plan, a data plan or a tablet plan. The issue concerned whether the terms of Bell's and Videotron's offerings were discriminatory to other users not on their respective plans.

10. The threshold issue in dispute in this proceeding is whether Bell Mobility and Videotron, in the transport of the mobile TV services to end users’ mobile devices, are operating as Canadian carriers providing telecommunications services and are therefore subject to the Telecommunications Act and policies made pursuant to that Act.

and this is what the Commission said:

16....It also considers that Bell Mobility’s and Videotron’s roles as Canadian carriers in providing wireless data connectivity and transport services to enable subscribers to access content on their mobile devices are not necessarily transformed into those of broadcasting undertakings merely because they are involved in the content. Rather, it is necessary to examine in each case the facts to determine the true nature of the services being provided.

The Commission found that the use of the wireless networks by the companies to establish data connectivity and provide transport was agnostic as to the content itself, and was therefore best classified as telecommunications services.

On examination of the terms on which this traffic was carried, they found unjust and undue discrimination in favour of themselves against other users not subscribed to their transport services and other apps providers. The Commission also found the discrimination could not be justified in terms of advancing broadcasting policy objectives.

However, the main point of the Klass decision is that the conceptual apparatus with which the Commission examined the question assumed the division of the world into transport and apps.

The significance of the Klass decision is clearer when you read Commissioner Raj Shoan's dissent. He is not a confrontational writer, but he manages to convey the essence of his disagreement as the Commission's "avoidance of a broadcasting lens".

If you supply "programming" by way or radio waves or telecommunications, he writes, you are captured by the Broadcasting Act. ISPs have escaped being regulated as "broadcasters" because they provide "passive access to broadcasting over the Internet". But wireless service operators, he implies, could not avail themselves of the Internet exception; their billing practices show a degree of management of consumption that could not be described as passive.

Since the issue concerned "broadcasting', and since the dispute related to "billing practices associated with mobile television services", the Commission ought to have used the digital media exemption order to resolve the preferential treatment issue. In short, the issue was broadcasting all the way down. The digital media exemption order is the Commission's attempt to regulate broadcasting carriage issues according to rules of non-discrimination borrowed from telecom law. It assumes that what is being regulated is "broadcasting".

What was the harm the Commission engaged in, according to Commissioner Shoan? It seems that Mr. Shoan's objection is that the majority decision left a broadcaster in a poor position to further a broadcasting policy objective if he sued a telecom carrier. The carrier could always plead his obligation of non-discrimination.

Why is this problematic? In an era of convergence typified by merging distribution and business models, there is an element of short-sightedness for any regulator to foreclose against certain jurisdictional arguments when industries and services are constantly being re-defined by business realities and are in a state of flux.

In my terms, Commissioner Shoan argues that the Commission is weakening its ability to regulate for Canadian broadcasting objectives because it is recognizing that carriage is governed by the provisions of the Telecommunications Act.

When I hear the word "convergence", I am immediately on guard. Nothing is "converging". "Convergence" is an anachronistic idea, dependent upon the prior belief that communication systems are divided according to 19th and 20th century pre-Internet ideas.

Conceiving the issue in terms of applications and transport is to conceive things in terms of the Internet - which is why the majority of the CRTC got it fundamentally right in the Klass decision. And this is why I think a conceptual revolution has been accomplished.

 

 

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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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Guest Monday, 26 August 2019
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