Good morning, Mr. Chairman and honourable committee members. My name is Chris Seidl, and I am the executive director of telecommunications at the Canadian Radio-television and Telecommunications Commission. With me today is my colleague Stephen Millington, senior general counsel and executive director of the CRTC's legal sector. Thank you for giving us the opportunity to appear before you to speak about net neutrality.
As you may be aware, the CRTC is an independent administrative tribunal responsible for regulating the activities of telecommunications service providers further to the Telecommunications Act. As such, the CRTC is required to make every decision with the goal of ensuring the fulfillment of the policy objectives set out in the act.
Net neutrality is the concept that all traffic on the Internet should be given equal treatment by Internet providers, with little to no manipulation, interference, prioritization, discrimination, or preference given. This concept is enshrined in the Telecommunications Act through subsection 27(2), which prohibits unjust discrimination or undue preference, as well as section 36, which prohibits telecommunication companies from influencing the content they transmit unless they have received express authorization to do so from the CRTC. These sections of the act provide the CRTC with the tools and the flexibility to establish and enforce a net neutrality framework that is entirely appropriate and reasonable for Canada.
Interestingly, these are not new provisions. They date back to the Canadian Railway Act of 1906, when the concept of common carriage ensured that railway companies would carry all goods without discrimination. It turns out that the same principles are effective whether we're referring to cargo transported on railway cars or data carried over telecommunication networks. It is important to keep in mind that net neutrality is focused on carriage rather than content.
We mention this because the broadly-worded statutory provisions have stood the test of time and have allowed the CRTC the flexibility required to address more modern concerns. They have been able to adapt to modern technology and needs, including net neutrality.
The CRTC was one of the first regulators in the world to implement an approach to uphold net neutrality. We have taken several decisions that demonstrate our approach. Let me share with you three key ones.
The first, in 2009, created a framework against which Internet traffic management practices may be evaluated for compliance with the Telecommunications Act. Honourable members, the CRTC clearly stated that when congestion occurs, an ISP's first response should always be to invest in more network capacity.
However, we recognize that expanding and upgrading a network is not always the most practical solution. Internet service providers will, when necessary, adopt economic or technical measures to better manage the flow of traffic on their networks. They could, for example, charge extra fees for customers whose Internet usage exceeds a predefined limit or slow traffic on their networks to manage an unusual network congestion situation.
It may be of interest to the committee to note that although the CRTC permits ISPs to use technical measures to manage Internet traffic, we recognize that these measures may allow ISPs to view and collect consumers' personal information and data. Therefore, in the interest of protecting Canadians' privacy, we have put measures in place to limit ISPs' use of that personal information or data to traffic management. They may not use or disclose such information for any other purpose.
We have required ISPs to be transparent about their use of lnternet traffic management practices. Customers must be told how the practice will affect their service, including the specific impact on speeds. Should a consumer believe that their ISP is not being transparent, they may ask the CRTC to intervene. Our most recent statistics show that the CRTC received 19 complaints relating to Internet traffic management practices last year.
We have been proactive in ensuring transparency and follow-up on each of the complaints that we receive. We firmly believe that our approach is effective. For instance, when we receive complaints alleging practices or approaches that are of significant concern, we hold public consultations and deal with them in a definitive way.
Let me explain. A few years ago it came to our attention that certain companies were offering mobile wireless services that exempted their own mobile television services from their customers' standard monthly data allowance. Content from other websites or apps, on the other hand, counted against the customers' monthly data allowance. The CRTC issued a decision in 2015 in which we directed these providers to stop giving their own mobile television services an unfair advantage in the marketplace. We also required the companies in question to amend their practices. The CRTC stated that while it is supportive of the development of new means by which Canadians can access both Canadian-made and foreign audiovisual content, mobile service providers cannot do so in a discriminatory manner.
This decision was the second step we took to uphold the principle of net neutrality by ensuring that audiovisual content is made available to Canadians in a fair and open manner.
The third and most recent step we took was in regard to differential pricing. This is a practice by which providers offer the same or similar products and services to consumers at different rates. Differential pricing can occur when an Internet service provider exempts a particular application from a user's monthly mobile data plan or when an application provider enters into agreement with a service provider to exempt or discount the rate paid for data associated with that application.
In April 2017, we declared that ISPs should treat all data that flows across the networks equally. By enacting differential pricing practices, service providers are in effect influencing consumer choices of which data to consume, the result being that these practices restrict access to content over the Internet, something that the CRTC found was contrary to the Telecommunications Act. Our framework supports a fair marketplace in which ISPs compete on price, quality of service, data allowance, and innovative service offerings.
Net neutrality is an issue in other regions of the world, and has been brought to the forefront of public conversation as a result of the U.S. Federal Communications Commission's decision last December.
The members of this committee may be wondering what impact this decision will have on the CRTC's policies, Canadian ISPs or Canadians. The Federal Communications Commission's vote will not affect the way in which Internet traffic is treated in Canada. The CRTC has set out its approach to net neutrality, consistent with its powers and duties under the Telecommunications Act, and we will continue to enforce it within Canada.
By the same token, the CRTC has no jurisdiction over the way in which Internet traffic is managed outside our country. We therefore cannot comment or speculate on the effects of such a practice, nor the ways in which data will be treated by service providers in other jurisdictions.
Mr. Chairman, we hope this overview helps you understand the concrete steps taken by the CRTC to address the issue of net neutrality in Canada. The decisions taken by the CRTC, based on the powers currently in the act, combine to create an effective approach to net neutrality and ensure that Canadians always have access to the free movement of ideas.
Before concluding our remarks, we want to advise you that we may not be able to answer all the questions that you would like to ask us today. For instance, you may have read that a coalition called FairPlay recently submitted an application asking the CRTC to establish a regime that would enable ISPs to block access to websites that host pirated content. Mr. Chairman, we trust you will understand that we cannot comment on that application or any other that is currently before the CRTC.
We'd be happy to answer any questions you may have about our approach to net neutrality.
That's the reason we launched that process; it all started with some of the other applications. I mentioned when Vidéotron offered a set of music services with zero rating. Those services did not count toward the data cap. We looked at that and we said we didn't want this to occur otherwise and have to look at it more broadly, so we launched a public notice. We had an oral hearing in October 2016, with the decision in April 2017. We walked through all the different cases, because in subsection 27(2) the bar is unjust discrimination or undue preference, not just discriminatory preference. There has to be some effect that is not in line with the policy objectives of the act.
We found that in certain cases there may be things that are okay from a differential pricing perspective, but very few. When we looked at just accessing your bill and paying your bill online, we felt that wouldn't affect any other content providers, so that probably wouldn't be a problem. They were things that we thought were agnostic to the application, such as time-of-day data allowances with unlimited data during the midnight hours or whatever, and some counting of the daily use at other times. There still was some discrimination, but it wasn't undue, in our minds. We thought that was probably okay.
We walked through all the different types of cases, and the ones we thought were the most at issue were the application-specific ones, especially the ones through which you would prefer your own application, your own content, your own service over others when that would cause them to have a disadvantage. We obviously support a fair and open marketplace where innovation happens at all edges of the application space, from the small companies to the large.
I think it is already there. I mentioned section 36 and section 27(2) to you earlier in terms of unjust discrimination and undue preference. Really the foundation is common carriage, and those concepts are there. As I mentioned, they have stood the test of time.
It's very much a nuanced approach. Those provisions allow us to look at the issues based on the facts before us to understand where to draw the line, because it's not a black and white line. You don't want to over-regulate and over-provision that into legislation, where you don't have that flexibility to address specific cases.
We heard different solutions that potentially could come out of there, be it a social good and so forth, that might be of benefit. For example, one provider had an issue with some of the software downloads to make sure their phone supported 911, and we wanted to get that out to as many people as possible. You don't want to block that if there is a data charge. People were worried about their data cap.
Therefore, in some cases you say it doesn't really cause a problem and allow it, but we've set up clear guidelines for the industry right now.
I just want to talk again about the content providers who have a very protected market, the ISPs in Canada, and they're now handling all manner of television and other media.
When my daughter was working in Africa, she had much better download speeds and Internet service than she does in some major cities. When you get into northern Ontario and other rural regions, you have service providers who have no competition, who have no willingness to extend service, and they charge exorbitant fees to people who are stuck having to use satellite and all other means.
This is not really an issue for the ethics committee—it's more industry—but Canadians are not getting a great deal from our service providers. We pay Cadillac rates and get broken Volkswagen service.
Do you think that there's a way that we can crack this market open and get some better competition?
I understand the business case, but we're not dealing with free market players. We're dealing with people who have been given very strong protections by government, by legislation, to protect their markets, and they're not providing the service.
In my region, we had Ontera, Ontario Northland, providing the service where Bell wouldn't. The Liberal government decided to sell off Ontera at a fire sale to Bell. We wrote to the Competition Bureau, and the Competition Bureau agreed that this was not in the public interest, but hey, it was big giants buying up the little guy. They went along with it. Now when you call Bell and say, “Listen, I have businesses on a main trans-Canada highway that can't get Internet services”, they say that there's no business case.
I put it to you that we protect the market, we give them preferential treatment, we keep out American competition, and we're still getting hosed. Businesses and families can't get Internet services when government tells them that this is a priority. Government tells them that this is how they're going to pay their taxes, this is how they're going to get their medical care, yet we do not have a market that does that.
What do you see, from the CRTC, that we can do to force them, if we're going to have a protected market, to actually service Canadians? As I said, you get better cellphone service in Somalia, a broken nation, than you do in a lot of the region that I represent.
We have time if other people have questions.
I had one question in relation to net neutrality, although I would piggyback on Mr. Angus's concerns.
I lived in the U.K. for a year seven years ago, and broadband networks were pretty competitive. You mentioned TekSavvy and being able to piggyback on existing networks to provide additional competition, but we really don't have the same thing in the mobile world to the same degree as we have with the TekSavvys of the world. In the U.K. seven years ago, I had more content for a lower price than I've had for the years I've lived in Canada since, so keep pushing to bring more competition.
On net neutrality, subsection 27(2) and section 36 provide the foundation for protecting against anti-competitive behaviours, and that's been interpreted as providing a strong foundation for protecting net neutrality. However, net neutrality isn't defined in the act and it isn't enshrined in the act in any principled way, so while we have existing interpretations from the CRTC, which I think are incredibly effective, and it's great to see that you have a document that strengthens that neutrality and you have the differential pricing telecom policy that you just introduced last year, do you think Parliament ought to be seized with the idea of improving the act, enshrining the principle of net neutrality, and effectively taking some of the jurisprudence that has been developed by the CRTC and codifying it in law?