CRTC Decision 2009-657 on Traffic Management

It's only the second day since the CRTC issued its ruling on ISP traffic management and there is already a large number of articles (here and here, etc.) -- summaries of the ruling and analyses -- circulating in print and on the internet. There is little point in having me do the same, so I won't repeat what others have already done. Instead I want to look at just how this ruling benefits the large ISPs -- the major carriers against whom the complaints were originally made -- beyond what has already been mentioned. I believe there is a reason why these companies are pretty happy with the outcome:

BCE said in a statement that it thinks the decision is a good one and that its "existing Internet traffic management practices are already compliant with it."

Michael Hennessy, senior vice-president of regulatory and government affairs at Telus Corp (T.TO), said the communications company doe not currently throttle traffic. However, it does employ some general caps on bandwidth usage.

"There are growing concerns about congestion," he said, adding the CRTC's decision is "very good and very fair", and that continued network investments and consumption-based pricing are among ways to address heavy traffic volumes.

I suspect these companies are happier with the ruling than is apparent in their public statements; they do not want to be seen as gloating. Let me now go through my reasoning why this is a potentially big win for these companies.

Apart from the notification requirement, the carriers are in total control of their actions. What I mean is, the CRTC is leaving every judgment call and technical determination of impact on retail and wholesale customer to the carriers; the CRTC has not injected themselves anywhere into the process whereby the carriers must seek approval before acting as they see fit. If you read the decision yourself, you may very well believe that I am wrong about this since the requirements the CRTC lists are, by and large, neutral to positive for the carriers' customers. The only mention I've come across that shows any level of doubt is that it is up to the carriers' customers to call attention to any inappropriate traffic management behaviour, which is very difficult to prove from outside the network. I believe the impact is greater than this would indicate.

First, notification is only a requirement if the carrier is instituting traffic management that is more restrictive than what is extant (paragraph 80). The only judge of this is the carrier itself, and so they can choose to not disclose what they've done (paragraph 84). Further, the criteria to measure restriction are exceedingly loose, apart from VoIP and media streaming (paragraphs 126 and 127) which requires pre-approval to throttle or block. This leaves the carrier free to argue, whenever the change is noticed and they are questioned about it, that what they are doing is not more restrictive than what was done before, just different. When conflict inevitably arises, as with the present issue, they will almost certainly continue on with their new traffic management practice unless and until their customers convince the CRTC to act against them. As we've seen, this can take a very long time, during which the carrier can do as they please.

One surprise is that they ruled wireless (mobile) data operators must conform the same traffic management behaviours ruling (paragraph 116). Although it will suffer from the same loopholes as cable and DSL internet access, it is something positive for consumers. This is an interesting development in light of the FCC's proposed rules out today (October 22) on the same matter: wireless network neutrality.

CRTC intervention may be even less likely in future, or at least longer in coming, with their direction to the industry to cooperate and negotiate over points of dispute (paragraph 76). This is not a Commission that intends to be interventionist, despite offers to hear complaints in certain cases (paragraphs 127 and 128).

While it is certainly true that there are political arguments to be made as to why the CRTC is acting as they are, there is an economic reason as well. Reading paragraph 35, the CRTC is consistent in not wanting (if you like) to kill the goose that is laying the golden eggs: it's the carriers that are making the investment and taking the business risk of building the internet infrastructure in Canada. ISPs that make use of GAS (DSL wholesale) do not, although they so provide a source of price and service competitive balance in an otherwise near-monopoly market.

My opinion is that they will continue to regulate with a light hand, and in so doing they will tolerate modestly discriminatory behaviour, believing that if the carriers' balance sheets remain strong, investment in their networks will continue. In contrast, they are not (yet) willing to bet on new entrants or existing small players to take a major role in building out infrastructure. Whether you consider this good or bad often depends on where your own interest lie. There is no absolute right and wrong in this matter despite attempts by some to colour it that way.