Law Times

Page 10 June 5, 2017 • Law Times www.lawtimesnews.com U.S. and Canada diverge on net neutrality BY MICHAEL MCKIERNAN For Law Times T echnology lawyers say recent regulatory deci- sions have set Canada and the U.S. on diverg- ing tracks when it comes to net neutrality. In April, the Canadian Ra- dio-television and Telecom- munications Commission shut down an attempt by Quebec- based Videotron to favour cer- tain types of online content with a service that exempted some music-streaming services from mobile data caps. Just weeks lat- er, the U.S. Federal Communi- cations Commission began the process of dismantling its own net neutrality rules with a vote to undo a 2015 order that brought Internet service providers under the jurisdiction of Title II of the country's Communications Act. "Canada and the U.S. are moving in opposite directions on net neutrality," says Safwan Javed, a Toronto lawyer with entertainment and media firm Taylor Oballa Murray Leyland LLP, who has written on the sub- ject for the Public Interest Advo- cacy Centre. Timothy Denton, a former CRTC commissioner who now runs his own technology and telecommunications law prac- tice in Ottawa, agrees. "Our policy, as in so many other instances, stands quite distinct from the U.S. and it will be interesting to see how the ex- periment plays out," he says. "In the long term, both coun- tries will work out different rules for what carriers can do to Inter- net traffic, but I'm not sure one will inf luence the other in that regard." The 2015 U.S. changes stopped ISPs from creating fast- and slow-lane Internet traffic by prohibiting them from block- ing, slowing or discriminating in any other way in its treatment of lawful content. But new FCC chairman Ajit Pai, who was appointed in Janu- ary, has made scrapping the re- strictions a priority, claiming in a statement that they have stif led innovation and investment in domestic broadband. "With the possibility of broadband rate regulation looming on the horizon, com- panies investing in next-genera- tion networks hesitated to build or expand networks, unsure of whether the government would let them compete in the free market," he wrote, advocating for a return to a "light-touch" approach to Internet regulation. The CRTC's decision and policy position on "differential pricing" arose out of Videotron's 2015 launch of Unlimited Music, a premium service that allowed customers to stream as much music as they liked on services such as Spotify without having the data use count against their monthly allowance. Proponents of the practice, also known as "zero-rating," argued before the commission that it has the potential to boost consumer choice while lowering prices, but the CRTC concluded that it generally negatively af- fects competition and innova- tion in the sector. "Any short-term benefits of differential pricing practices would be greatly outweighed by the negative long-term impacts on consumer choice if ISPs were to act as gatekeepers of content through their use of such prac- tices," the CRTC's policy state- ment reads. "Ultimately, differential pric- ing practices are likely to result in ISPs having arrangements with only a small handful of popu- lar, established content provid- ers — those with strong brands and large customer bases. This situation, coupled with the sig- nificant financial incentives for consumers to access zero-rated or discounted content, would ef- fectively steer consumers toward content chosen by the ISP." Such marketing innovations by ISPs should be shunned in favour of enhancements to "the speed, coverage, capacity, secu- rity, and reliability of their ex- isting networks, for the benefit of Canadians," the CRTC state- ment adds. Javed says the decision ce- ments Canada's position as a pro-net neutrality jurisdiction, calling the CRTC's approach a "well-balanced and measured" one that also allows "market players to employ sustainable business models." Ren Bucholz, another net neutrality proponent, says en- suring the equal treatment of Internet traffic should remain a key goal for regulators. "One of the reasons that the Internet has been as exciting and important a development as it has been is because of the neutrality of the structures that make up the network," says Bu- cholz, a commercial litigator with Paliare Roland Rosenberg Rothstein LLP. "That neutral setting allowed a seemingly infi- nite number of new technology and business models to thrive." In a statement issued after the CRTC decision, Videotron pres- ident and CEO Manon Brouil- lette expressed her disappoint- ment with the result. "We regarded Unlimited Mu- sic as a compelling example of innovation and diversification from a new market entrant seek- ing to differentiate itself from the dominant mobile carriers, to the benefit of Canadian con- sumers," she said. The company has since asked the commission to review its de- cision, and to postpone the July 19 deadline it was given to halt the service, so that it can have more time to transfer existing customers. Cynthia Khoo, a Toronto FOCUS Safwan Javed says Canada's position as a pro-net neutrality jurisdiction has been bolstered by a recent CRTC decision. 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