Time to break up?

Is it time to break up the CRTC into separate brodcasting and telecommunications agencies? I think so.

The CRTC has climbed down from its untenable position on regulating the Internet. It has huffed and puffed and struck Netflix’ testimony from the record, which is about as sensible as striking Trotsky from the pictures with Lenin and Stalin. Or as Andrew Coyne remarks today, like the characters in Hamlet, ignoring the oncoming army of Fortinbras, which will put an end to the whole crew in Elsinore Castle.

By far the more important comment is found in the Financial Post by my friend and colleague Philip Palmer, who argues that the CRTC does not have authority over the Internet – a view which I have taken since 1996. The four arguments are, briefly:

  • the CRTC does not have jurisdiction over what is not in Canada
  • The CRTC gave itself jurisdiction over on-demand services and it may not have it, if the Court so rules,
  • A content supplier on the Internet never intersects federal jurisdiction over radio or telecommunications systems. The Internet is so designed as to separate content from carriage.
  • Charter rights over freedom of speech trump the wording of the Broadcasting Act. The CRTC has claimed to extend its licensing and exemption jurisdiction potentially into millions of holders of Canadian websites and IP addresses.

I do not think many people quite grasp what the Internet is, and when they do, they seek to abolish its distinctive features. Russia, China, Iran and despots of all stripes hate its liberating aspects. The ITU and other statists hate it because the Net has displaced their importance. Smaller states want the Internet turned into the subsidy mill that was the old international telephone system. Large carriers are ever ready to turn it into a cash machine by inserting traffic control points. Just about everyone dislikes the Internet except the people who use it.

And the people in Canada who every reason to hate the Internet are the licensed importers of US programming, called “broadcasters”, whose money has been made by virtue of legal privilege of holding a spectrum licence and on top which a broadcasting licence. Since cable and telephone companies were allowed to vertically integrate with broadcasters under the previous von Finckenstein regime, they do not know quite where their interests lie.

As Kevin Crull, head of Bell Canada’s broadcasting division said at the recent Let’s Talk TV hearing, vertical integration bought them four years to save local broadcast television. The entire structure of Canadian telecommunications was distorted to buy four years of business as usual?! [I was not on that panel so I take no responsibility for that decision.]

Returning to the CRTC, it maintains it has complete jurisdiction over “broadcasting” over the Internet.  This leads me to my point, at last.

The CRTC administers three statutes, the Broadcasting Act, the Telecommunications Act, and the Canadian Anti-Spam legislation. The first is in decline as the objects of its tender care pass away with technological change. Networks – and what ails them – are robust and essential to a modern economy.

The principles on which the Telecommunications Act are founded will remain pertinent: no unjust or undue discrimination, deregulation or exemption from regulation where competition is sufficient, and powers to place an activity inside or outside regulatory supervision. In short, the Telecommunications Act is predicated on a distinction between carriage and content. It is far better adapted to the Internet than the Broadcasting Act, because it makes no assumption about trying to control the universe in order to engender Canadian programming. The Telecommunications Act will survive, the Broadcasting Act is only as relevant as the technology it regulates, which is melting away before our eyes.

Separating the CRTC into two regulatory agencies will focus the attention of each on their distinct tasks. It will also sharpen up the appointments processes, so that billion dollar telecom industry issues may be made by Commissioners with some knowledge of networks, and no legal or cultural obligations to content creators beyond non-discriminatory carriage arrangements.

It will also have the effect of separating, sooner or later, the carriers from the content producers. The basic issues in telecom and broadcasting now are the perpetual conflicts between the carriers who have rights to signals and those who have signals but do not own a carrier system. The CRTC has had to work out common carrier (non-discrimination) rules and devise new  hearing arrangements to sort out the numerous complaints of those who wish to communicate to the public but have to go through rivalrous carriers to do so.

Because the Internet established a technical separation of content from carriage, the content providers have become the modern-day equivalent of the prairie wheat farmers and the carriers have taken over from the railroads in getting grains to market. We introduced the predecessor to the Telecommunications Act, the Railway Act, on exactly the same principles for exactly comparable reasons: to regulate the power of carriers to extract economic rents from producers. Now that everyone is a content producer, thanks to the Internet, it is time to revive the principles of common carriage.

A precedent for such a breakup exists. The Department of Communications was a separate department of government charged with overseeing culture, broadcasting, and telecommunications. It was broken up in 1991. Thereafter telecommunications policy rested with a branch of the department of Industry, and culture and broadcasting went off to the Heritage Department. Since that time federal telecom policy has been free of concerns for ballet, and vice versa.

It is time for the same split at the regulatory end. It will seem outrageous to the people in the CRTC, but something has to happen to change its inbuilt programming.

Departments and agencies respond to their legislation more than they do to transient Ministers and Commissioners. Legislation is like an operating system you stick into the computer, and it drives your machine forever unless new instructions are loaded. So I do not expect the CRTC to back off its claim to be able to regulate the Internet, ever. External action is required, and that means the Prime Minister should be considering completing the break up of broadcasting from signals carriage that was started back in Kim Campbell’s day when the supervisor of broadcasting and telecom policy, the Department of Communications, was split.

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