Register Tuesday | March 20 | 2018

Net Loss

Why the Canadian government must step in to keep the internet free from control and open to innovation.

In the early months of 2009, as world leaders and financial experts debated whether we were entering a Greater Depression or just the Greatest Recession, signs of another crisis began to emerge. The internet, warned media activists and technology analysts, was under attack. The source, however, wasn’t another malicious virus or spam attack run out of Eastern Europe.

Instead, like the economy, the internet is facing a threat from within its own institutions. Just as the banks and investment companies wreaked chaos on themselves and the economy in the absence of regulatory safeguards, internet service providers (ISPs) are in danger of creating their own industry apocalypse by abandoning one of the core principles of the online world: net neutrality.

Put simply, net neutrality demands that ISPs treat all information equally. No screening practices which privilege or suppress certain sites or services are allowed. Your neighbourhood blog is as readily available to you as Apple’s iTunes store.

Net neutrality favours you and me, the users of content, rather than the commercial producers and distributors of that content. Without net neutrality, our online experience would be vastly different: a handful of large corporations would control not only what we access but how we access it, which in turn would affect what gets produced. The stakes—technological innovation and free speech—couldn’t be higher.

But Canada’s ISPs have gradually been undermining net neutrality without most users even being aware of it. Our ISPs are notorious for bandwidth throttling: using software to inspect the content of customers’ data streams and, if customers are using file-sharing applications like BitTorrent that often place a heavy demand on the network, slowing their transmission speed.

ISPs argue network management practices should be determined by market forces rather than regulation. But their own history indicates how dangerous this can be, not only to consumers’ rights but also to innovation. Bell Canada, for instance, introduced throttling practices ostensibly aimed at its own customers, but the changes also affected several smaller ISPs that used Bell’s network infrastructure, thus forcing Bell’s rules and restrictions on its competitors and, coincidentally, reducing their ability to compete with Bell. Around the same time, Bell introduced its online video store. Presumably customers benefited from its speedy download service at the expense of those who were now being throttled.

And, of course, most ISPs offer tiered pricing, where customers’ download speeds and data usage are improved by paying a higher monthly fee. The fact that this practice has largely been accepted by Canadian consumers isn’t surprising—there’s little we can do about it, after all. But ISPs are now setting their sights on the other end of the data stream: the content providers, from large corporate websites to the smallest personal blogs.

Many ISPs want to charge a fee to deliver selected data to consumers. This “premium” data would travel faster (i.e., receive higher network priority) than unpaid-for or “free” data. Such a tiered scenario would obviously benefit large corporations and stifle innovation from competitors who can’t afford the premium or unthrottled service.
For a real-life example of how this could work, download a movie via iTunes, and then download a similar-sized file using the free file-sharing program BitTorrent. If you’re like most Canadians, you’ll notice a significant difference in the length of download times—sometimes in the range of days.

Why the difference? BitTorrent has been throttled by some ISPs in Canada because it is frequently used for illegal file sharing. Some people may be thinking to themselves, rightfully so—but not me, and no one who works for CBC television. When it used BitTorrent to legitimately distribute its show “Canada’s Next Great Prime Minister” in 2008, users said the files took so long to download because of throttling that the service was effectively useless—a perfect example of how market forces can prevent new, consumer-friendly systems from developing.

Consider another situation. Free video-conferencing software Skype—which lets people use the internet to make phone calls around the world—has changed modes of communication for hundreds of thousands of people and saved them loads of money. Now imagine an ISP throttling Skype or blocking it outright because it undermines the revenue model of its cell phone division. Sure, you could switch to an ISP that doesn’t have a cell phone division, but what happens if that ISP launches a Skype-like service that costs a monthly fee but is much quicker than the throttled Skype? The dynamics of this imaginary case are already being played out for real in the current practices of our ISPs.

ISPs are trying to have it both ways. When accused of discriminatory practices, they claim to be “dumb pipes,” simple distributors of others’ content. But they are also emerging as content providers in direct competition with many of the businesses and creators using their services, which means they are sometimes in direct competition with the interests of consumers. ISPs are becoming the transmittors of new media and the new media itself.

In 2008, MP Charlie Angus (NDP) said in Parliament, “Net neutrality is a cornerstone of an innovative economy.” He’s right, but he could have just as easily said net neutrality is a cornerstone of a healthy economy, because we’re now in an era when a functioning economy requires continued innovation. We’ve been living with the web as an information-sharing tool for over a decade now, but we’re still in the early stages of the digital revolution: a period when technology is transforming society through new models of consumption and thus new models of production, distribution and payment.

The music industry was the first to adapt. MP3-swapping applications like Napster disrupted (and perhaps destroyed) established business models, and forced record companies to become more innovative. The result was online music vendors like the iTunes Store and all-Canadian Zunior, which are healthy, commercially viable businesses embraced by large numbers of consumers. They have become Angus’s economic cornerstones. And many artists are forging entirely new relationships—creative and commercial—with their fans, thanks to such online portals as MySpace. Some are even bypassing the music labels entirely and experimenting with different forms of distribution and payment. For an example, see Radiohead’s pay-what-you-want release of In Rainbows (2007).

The film and television industries are going through a similar shift right now, as pirated shows have moved from the underground data streams of BitTorrent to the mainstream web via such services as YouTube, MEGAVIDEO and the other video sharing services that pop up on a daily basis—a file-sharing tsunami compared to Napster’s ripples. Hollywood is undergoing its own growing pains as it adapts to customers’ desires by embracing services like iTunes and developing alternatives such as Hulu.

In the case of both industries, change was directed by consumers turning to new forms of distribution that served their needs better than the traditional ones, which in turn led to revolutionary new business models as well as new opportunities for consumers and producers alike. Take the extraordinary success of Montreal musical comedian Jon Lajoie, who has quickly established a commercial career through YouTube—a service many entertainment corporations first denounced as a hub of piracy. Such opportunities for solo artists would be much more difficult in an environment that didn’t ensure a level playing field for everyone.

It’s no surprise that the Obama administration, with its change mantra, officially supports net neutrality as an important factor of economic revitalization. Unfortunately, Canada’s current government isn’t as progressive. Former Industry Minister Jim Prentice recently stated the Conservatives are happy to let consumers work it out with ISPs. In other words, throttle away.

But this position misunderstands the importance of net neutrality. It’s not about government regulation versus free markets: it’s about the survival of the economy itself. Many industries and their business models are on their last legs, but the new models aren’t fully formed or don’t even exist yet. This means more chaos and economic decline ahead if the situation isn’t handled properly.

Most observers, for instance, agree that newspapers as we know them are doomed. But blogs and community information sites are nowhere near being able to replicate the news-gathering services of traditional media, which means we’ll be left with an information vacuum after the mediapocalypse. That’s why we need principles that encourage new approaches while preventing corporations from tying us to restrictive or dying business models simply because they have a monopoly or the financial power to do so.

The Canadian government needs to enshrine net neutrality in legislation, or at least publicly support it. And the government needs to more closely monitor, and regulate, our internet system, just as it manages our transportation systems. If it can make decisions about our highways that are meant to benefit society as a whole, surely it can do the same for our information superhighways.

If there’s one thing that’s certain, it’s that we can’t let market forces  alone determine our future. As the bankers have shown us, that way lies madness.