Barrel Strength

Over-Proof Opinion, Smoothly Aged Insight

Barrel Strength - Over-Proof Opinion, Smoothly Aged Insight

CRTC abandons position on regulating Internet

The CRTC retreated from an indefensible position today. It will not attempt to regulate an Internet content company.  It told Netflix that their comments are being struck from the record and that the Commission can decide the future of Canadian television without their participation. The letter is sniffy and tries to make it look like Netflix was rude, but the substance is that the CRTC is backing off the threat of ordering them to provide data.

I do not know whether to congratulate them for doing getting off a losing position so quickly, or reproach them for getting into trouble in the first place. On balance, Canadians who understand the issue appreciate that the war has been called off. If I were the Chairman of the CRTC, I might like to review the legal advice I was receiving about whether the Commission can regulate the Internet as “broadcasting”, and if I were acting as my own chief legal counsel, I would remind myself about the perils of a lawyer representing himself.

And maybe something like that imaginary call from the Clerk of the Privy Council to the Chairman of the CRTC did occur.

 

OMG! CRTC!

For once I would like to record that the Globe and Mail editorial board and I seem to be dwelling in the same universe. Which is to say that anyone concerned with preserving broadcast television is in the same place as those seeking to preserve bookstores and music record stores. A noble cultural goal for some people perhaps, but not for enough of us to sustain the commercial model.

About ten years ago, I recall the son of Sam the Record Man of downtown Toronto fame talking about why people would always want to browse through physical  records. Just the other week in Ottawa, one of the best and last record stores, CD Warehouse, closed its doors. I mourn its loss, but I buy from Amazon now, and I am a dinosaur for still buying physical media like books and CDs.

Do we really care that we get our news from an advertizer-supported television channel? Are we not informed enough?  I go occasionally to Law Society conferences where broadcasting lawyers and regulators grin and talk of broadcasting’s mission civilatrice, whistling past the graveyard. Moreover, do we need to subsidize this particular form of news dissemination at the cost of:

  • the CRTC declaring that all full-motion video content is “broadcasting” and therefore subject to licensing?
  • that we can exempt ourselves from their licensing by
    • obeying their general directives as to taste, range of acceptable attitudes, and decorum, and
    • sending to the Canadian broadcasters a little mordida in the form of a “broadcasting exemption order fee”

I am surprised we have not yet heard from OpenMedia? OpenMedia.ca was the group that led the charge against usage-based billing in 2012. If usage -based billing was the outrage to Internet freedom because it priced bandwidth too high , what is this, which makes uploaders obliged to get a broadcasting licence, or obey an exemption order?

Apparently Google – that tiny little California hippy commune – considers the issue sufficiently important to protest the CRTC’s attempt at extending its jurisdiction to the Internet.

Michael Geist has some good articles on this dispute here.

Here is an interview with a former CRTC Commissioner on this issue by Don Martin of CTV’s “Power Play”.

There are billions of IP addresses, and millions within Canada. By contrast, the number of regulated broadcasting entities in Canada is in the low thousands. When you speak, or blog, or write an email or novel, you do not have to clear your work with the CRTC, the Jesuits, the Conservatives, the Department of National Heritage, or any authority whatsoever. You write or speak under laws of general application, and not because you hold a licence from the state. With broadcasting, you need a licence.

In the 20th century, the limited number of people who could occupy airwaves justified some control over them and what they said, because they held extremely valuable rights to “speak” to the many. That licence has become progressively less valuable as the number of speakers has risen to number in the millions and tens of millions, thanks to the Internet. No scarcity of voices, or Canadian voices, needs to be fixed or requires artificial protection on the Internet.

I keep wondering whether this conflict between the CRTC has been a deliberate provocation in order to offer the Harper government a convenient excuse to do something about the Broadcasting Act and the CRTC which implements it.

While I do not entirely discount this possibility, it is far more likely that the CRTC’s chairman just got sucked into a fight with stroppy little rebels like Netflix and Google. In any case, it is probably serving Harper’s interest to have this fight erupt at this time.

An imaginary conversation about Netflix

News that the Chairman of the CRTC had ordered Netflix to tell him by Monday afternoon how many subscribers it had in Canada, sparked this imagined interchange.

The phone rings at the Chairman’s house. It is today, Saturday morning, September 20th, 2014. The caller ID reads “PCO”.

-Bonjour? Hello?

-<a woman’s voice> Good morning Mr. Blais, it is the Clerk calling. Can you hold while I put him on?

-Certainly {Jean-Pierre Blais straightens his dressing gown and stands up from the breakfast table. His heartbeat accelerates}

-JP! it’s Wayne. Thank you for taking the call. How are you?

-Surprised to get your call Mr. Wouters. To what do I owe the honour?

-JP I won’t beat around the bush. The PM is apoplectic about your move on Friday.

– You mean telling Netflix they owe us a statement of how many subscribers they have in Canada?

-Exactly. The PM is very concerned. You recall the storm that the Commission created when it imposed usage fees on the Internet?

-How could I forget?

-Yeah, well I know that wasn’t under your charmanship but the PM believes that any attempt to regulate the Net will provoke a shit storm of opposition.

-But the Internet is within our jurisdiction.

-Maybe it is and maybe it isn’t. The PM is heading into an election in 2015. Do you think he wants the CRTC to be raising cable rates to feed the Canadian television industry? He does not want an immense court case to get in the way of his agenda.

-Mr.Wouters, I am not sure this call is entirely proper. Is this intended as a direction from government the decisions of an independent regulatory tribunal?

-Not at all Mr Chairman. This is a friendly encouragement to lower the heat on this issue. We cannot afford another earthquake like the usage based billing thing.

-I will pretend this conversation never happened.

-Do as you please, JP, but the PM will not back you if you raise this issue again.

-Thank you Mr Wouters.

-Good day, JP.

<click>

The second call goes from the Clerk of Privy Council to the PM.

Wouters <Prime Minister, I just spoke to JP. It is done>

Prime Minister Harper <Did he get the message?>

Wouters < I gave it loud and clear, Prime Minister. He is a clever man. I think he can respond to a clear statement of your concern.>

PM Harper < Will he raise a stink about regulatory independence?>

Wouters <He will pretend it never happened>

PM Harper <Thank you, Mr Wouters. Well done>

Wouters <Your’e welcome, Prime Minister>

PM Harper <Let’s talk Monday. It’s time to revisit dismantling that place>

Wouters < Yes, Prime Minister

<click>

Something of value on Twitter

In the vast info-spew that is the Internet, one occasionally comes across a digital gem. A growing Twitter meme has been parodying of Salon.com, an online magazine that itself is degenerating into unwitting self-parody.

Salon.com’s actual headlines today range from “9 sinister things the Christian right does in the name of God” to “7 biggest myths about big penises“, so we know that under-equipped cis-male secularists can feel upbeat and informed.

So how does that differ from this:

or

Television price increases irrelevant, says producers association

In the immortal words of Arnie Schwarzenegger, “I like you, I kill you last”.

Once more the Canadian production community is at it, seeking rents and subsidies,  and regardless of the tone, much of what Mr. Hennessy says below  is accurate.

GATINEAU – That broadcast distributors would increase the price of basic packages if the CRTC licensed new 9(1)(h) services is a red herring, according the Canadian Media Production Association (CPMA) told commissioners on Tuesday.  “We believe that the impact of 9(1)(h) services on affordability’ is a red herring that threatens to overshadow the achievement of more significant objectives under the [Broadcasting] Act”, Michael Hennessy, president and CEO of the CMPA, said during his opening remarks.

The association acknowledges that licensing additional services with mandatory carriage orders may trigger basic package rate increases, but it says this isn’t the sole reason broadcast distribution undertakings (BDUs) raise rates,
which have been climbing steadily for years, regardless. It would be a stretch to blame consumer dissatisfaction with the price of their BDU service on your rare decisions to add new, exceptional Canadian services to basic, said Hennessy.
That may be the spin, but the reality is that the cost of basic is already heavily inflated by inclusion of the BDUs’ own services, including their high-cost sports services.”

All true. But take a look at Figure 3.1.7 below  from the CRTC’s own annual statistical report. You will see that cable television costs have risen faster than the consumer price index, the price of telecommunications other than the Internet, and the price of voice telecommunications. Here it is:

Figure 3.1.7 Price indices [TPI1, BDU2 (cable and satellite, including pay television), Internet access services, and CPI]

This line chart shows the following price indices from 2002 to 2011 Consumer price index (CPI): 100, 102.8, 104.7, 107, 109.1, 111.5, 114.1, 114.4, 116.5 and 119.9; Telephone price index (TPI): 100, 100.2, 100.6, 101, 100.9, 101.6, 105.9, 106.5, 111.2 and 112.3; Cablevision and satellite services (including pay television) index: 100, 104.8, 108.8, 112.5, 116.8. 122.7, 128.7, 135.8, 143.4 and 151.4; Internet access services index: 100, 99.1, 99, 97.1, 96.7, 97.5, 95.8, 94.8, 95.8 and 100.9.

Please note that the more the industry is exposed to competitive pressures, the less the increase of price. The broadcast distribution undertakings (BDUs, that is, cable companies acting as distributors of “broadcast” programming) show the highest price increases across the sector most regulated as to conditions of supply (Canadian content obligations and others). Internet access is a pure play of telecommunications using IP technologies, with neither legacy circuit-switching, nor public service obligations, and exposed to the operations of Moore’s Law more completely than any other sector. Voice telecommunications is largely what is covered in the line marked “TPI”. It is imperfectly competitive, but most of its prices have been deregulated.

Back to Mr. Hennessy, the television producers’ lobbyist, and a fine one indeed. He is in effect saying, don’t blame mandatory carriage of new services for your cable price increases: we are only one of a number of villains, sorry, causative agents.

I agree. The Broadcasting Act itself is the problem. It is directed to produce mediocre productions, and country houses for clever men who milk the system, at staggering costs to the Canadian consumer. We pay the approximate costs of two or three  modern naval destroyers per year, every year, to sustain this regulated system. Personally I would prefer a stronger navy. We are paying for a naval expansion program already in broadcasting and film subsidies.

 

 

Statistical note:

  1. The TPI reflects the price changes experienced by a household for a basket of telephone services. The basket of telephone services reflects a weighted-average of consumer expenditures on basic local service, other local services (such as options and features), and long distance, installation, and repair services. However, the TPI does not include wireless or Internet service expenditures.
  2. The BDU price index reflects the price changes experienced by a household for a basket of cable television services. The basket includes both ‘Basic’ and ‘Extended’ cable services. Basic cable service is the minimum service to which all customers must subscribe. Extended cable service is the most popular package of additional channels. The index does not account for ‘bundling discounts.’

Source: Statistics Canada

Those who supported greater state control of the Internet, and those who did not

The infographic below tells you all you need to know about the 55 countries that did not support the ITU’s attempt to take over the Internet, and the many more countries which did. Constitutional democracies prevail in those who did not support the ITU’s takeover attempts.

Infographic_Who_supported_the_ITRs_at_WCIT-12

It is reasonable to conclude that the ITU has been shattered in the attempt. Time will tell. Those countries which did not sign the treaty modifications (called International Telecommunications Regulations, or ITRs) will carry on as usual.

From the ITU website, a full list of the states that and how they voted.

You can block the Internet; watch how the ITU proposes to do it

China moves to block all virtual private networks. No more tunnelling under the Great Firewall of China. The ITU’s attempts to take over management of the Internet is backed by regimes such as this.

Meantime, Hamadoun Toure, head of the ITU, has expressed surprise that the US has not signed on to revisions to the ITU treaty aimed at giving states greater say in the management of the Internet. Recall that the ITU excludes all business and civil society actors from its councils unless they speak as representatives of states. The opposition of the United States, Canada, Australia, United Kingdom, Norway and other, generally liberal, communications regimes to greater ITU control of the Internet has been as plain as day for months. The other countries that refused to sign the updated treaty proposals included Costa Rica, Denmark, Egypt, Sweden, the Netherlands, Kenya, the Czech Republic, Japan, New Zealand, Qatar, Serbia, Greece, Finland, and Poland. A total of 55 countries refused to sign the new International Telecommunications Regulations.

A good summary by Andrew Couts can be found here.

There were two key points.

First, control of “spam” could be used to control all communications not liked by states.

Second, the proposed reform of how the Internet is paid for means that the open nature of the Internet could be cut back. As matters work now, a person in Mali who receives video lectures from the Harvard University in the US, gets them by paying his access fees to a local carrier. One payment covers the traffic back and forth from the United States. The ITU proposals are intended to allow the national carrier in Mali to charge someone in the United States, such as Harvard University, for the reception of those signals coming back from Harvard University. This is the resurrection of the old system of telephone payments, where people paid carriers to “terminate” their traffic. You can imagine that, if Harvard or some carrier in the US gets a bill from some pipsqueak national carrier in Mali, it will not pay it, and if sufficiently bothered by importuning from such carriers, an American carrier will cut them off. Harvard is not hurt; the US carrier is not hurt, but the poor fellow in Mali learning about angioplasties, well-drilling or treatments for parasitical diseases will be. In essence the  countries receiving messages  – which are preponderantly in the poorer regions – want compensation from their countrymen for asking for the information (which they get) and compensation from the sending country (which they do not). Third world countries wanted more revenue out of the richer ones. That was how they were bribed to vote for the other arrangements about spam and greater national control of the Internet.

For the devoted, the proposed changes to the ITU treaty are found here, with the changes marked in red. You will see terms like “termination rate” on page 16 of the draft.

If you are interested in how the Internet works, a good place to start is the Internet Society’s pages. Try this one.

You can also read “A Brief History of the Internet”,  a collaborative effort of its founders to recount the events. To the best of my knowledge, it is definitive.

Good news! Canada rejects takeover of Internet by ITU

This is important for the long run: the western democracies have broken with most of the world by rejecting a takeover by the ITU (International Telecommunications Union) of essential governance functions of the Internet.

The news is reported here, here, here and here.

 

Why does it matter? The ITU is a treaty organization of the United Nations. The only entities with rights to speak at the ITU are nation-states. While it may seem absurd that, in the political world, Niger and Syria have the same vote as the United States and France, in the business world, entities like Google and Apple have no voting rights at all. Nor does anyone else. Thus the foundational aspects of the Internet: standards for software set by the Internet Engineering Task Force, addressing policy (domain names and Internet Protocol addresses) set by ICANN and its dozens of sub-assemblies, are all governed by semi-autonomous bodies where user participation is paramount. None of these people or institutions have any rights to speak at an ITU conference. Non-governmental bodies have about the same weight in the ITU as slaves in the US Constitution before the Civil War, at about 3/5 of a person. Or maybe, worse still, Apple and Google count for nothing at all.

Say Goodbye to the Internet as you have known it

Over the next year, the International Telecommunications Union (ITU) will seek changes in the basic arrangements governing the Internet. Though the story is too large for one blog posting, it boils down to this. Russia, China, Brazil, India, Syria and other states are militating against the free exchange of information, and the ITU, which is a treaty organization of the United Nations, is their chosen instrument for achieving much greater control of the Internet.

Allied with them are a number of third world countries who believe they will recover money from international data traffic, money which they lost when the Internet overturned the charging arrangements that underlie telephone voice traffic.

To understand what they are up to, it helps to understand how the Internet works. Essentially, the Internet is the stupid network, and the telephone system is the intelligent network. The telephone network has to be intelligent because it is charging you money for the movement of your traffic. The Internet does not have to be intelligent in that way because its designers threw out all the machinery that tracked packets for the purpose of charging you for them.

The effect of this has been revolutionary. You pay your local Internet service provider a monthly fee for bandwidth usage. You roam about the Internet, summoning packets from all over the world, without regard to distance or time of day. Google sends you information, you upload pictures, or play games, do what you want. The ISP is tracking overall usage, perhaps, but it is not concerned with the end-points you are reaching. Nor does the person offering you information charge you, unless there is a specific agreement that it will cost you. More important, the ISP closest to Harvard University cannot send you a bill for contacting Harvard University.

People in Cameroon or Ohio can take a course from Harvard, and pay no more for the course than a) what Harvard charges, if anything, and b) their monthly usage bill for bandwidth.

How much does this all cost? Just what you pay now. All the transmission capacity, routers, servers, IP addresses, storage, websites is fully paid for now. Your local ISP collects your payments, sends a payment up the food chain to a larger ISP, which aggregates more traffic, up to the apex of the exchange system, where the really large carriers “peer” – exchange traffic for free (what’s a terabit among friends?). These are all unregulated private arrangements. The Internet has worked this way since it started.

It follows that, if someone wants to charge more for the Internet, as the proponents of change at the ITU do, they want to collect twice: once from the user, and once again from the sender, or the sender’s ISP.

The countries that compose the bulk of the ITU’s membership lost money because of the Internet. Their state-owned monopolies used to collect revenue from people sending traffic to their countries, which was usually from a rich country to a poor country. Under the Internet regime they collect money locally, and have to pay to larger players up the food chain when they pass on traffic from their countries to the large international carriers. In the old days they collected money from North Americans calling to the third world. Now they have to pay for the cost of transmission pipes to North America, Korea or Japan, and pay a free for connecting to larger ISPs.

In exchange their people gain access to everything that lies on servers in the wealthier countries.  Since their people benefit, but their telephone monopolies do not, the poorer countries are mostly concerned with recovering their “lost” telephone settlement money. Hence a majority of states is ready to wreck the Internet, not knowing what they are doing. States with an agenda hostile to the free flow of information, such as Russia, China, Iran and Syria can pile on to this majority to effect even worse changes to the international communications system. This will be the subject of a later posting.

Background on Internet design

The designers of the Internet assumed away the costs of transmitting data. It was designed not to be concerned with who paid for it. When the founders of the Internet looked at the telephone system, they found that most of its cost lay in the machinery that counted call minutes, that kept track of who called whom, and for how long, over what distance, and what time of day. These are called “charging arrangements”. The Internet has no machinery to do this. The Internet runs on a packet routing technology. Packets go towards their destinations, guided by routers, which tell a packet where a computer (called a server) with the right IP address is. Once the packet has passed through the router, the router has no memory of the passage of the packet through it.

Think of a packet as yourself driving down the road, looking for the turnoff to your friend’s town. You know he lives in Belleville, Ontario. First you look for directions to Ontario, then to Belleville, then to his street address. As you pass the signs for province, town, and street, you read them, but they do not remember you. You direct yourself towards your destination; the highway signs are merely indicators; they do not do the driving for you.

At the Core of the Old System

The core of the old system (telephones and telegraphs) is composed of states. The ITU is a treaty organization among states. Private persons, civil society groups, and business do not have a right to speak at these conferences. The ITU works on one state-one vote.

The core of the Internet is composed of privately owned computers. Private persons, corporations, and governments work in what are called multi-stakeholder organizations to resolve policy issues.

The consequence is that people and businesses have no right to speak at the ITU.