When the Broadcasting Act received royal assent on February 1st, 1991, the World Wide Web did not exist. Although Tim Berners-Lee had previously developed the requisite software at CERN in Geneva, the Web didn’t go public until August 1991. Yet the first four-machine, peer-to-peer network that eventually became the Internet was operating over two decades earlier, in December 1969 – coincidentally, the year after the 1968 Broadcasting Act was introduced.

The Internet is a disruption, not a replacement

This chronology puzzles many people, because of the widespread – and mistaken – belief that the Internet and the Web are one and the same thing. This misconception, and others, have plunged Canada into a crisis over how to maintain and nurture access to an open, affordable Internet. We characterize this as a crisis for three main reasons.

First, the CRTC’s so-called “new media” proceeding last year showed that the Broadcasting Act is hopelessly outmoded and inadequate as a way to manage the Internet and the universe of digital media. The Commission said as much in their June 4 decision, especially Commissioner Denton in his Concurring Opinion. Commissioner Denton has kindly shared some of his thoughts on the issues addressed here in a series of e-mail exchanges. (They represent his personal opinions only and not those of the Commission or any of his colleagues.)

Second, the Commission is hobbled by the obligation to manage the Internet under a second key piece of enabling legislation, namely the Telecommunications Act, whose core goals are diametrically opposed to those of the Broadcasting Act.

Third, this conflict is compounded by the obligation on the CRTC to administer telecommunications under the 2006 Cabinet Direction on market forces, which we believe has best served the public interest when ignored by the very government that created it (one prominent example is the highly interventionist 40% set-aside for new entrants in the AWS auction).

This overall framework, encompassing “content” under one statute and “carriage” under the other, has created a policy environment we argue is distinctly anti-consumer in the way it has influenced the ISP, BDU and cellular markets, in terms of retail prices, service quality and choice, the state of competition, and the use of tax-based subsidies. Ottawa’s continuing reluctance to modernize this framework is undermining not only consumer welfare but the future of innovation. The Web happens to be the most successful and prominent Internet-based innovation of all time – a global service operating on top of the Internet made possible by the non-proprietary TCP/IP platform. This is the platform which has also given us e-mail, search engines, VOIP, social networks, Wikipedia, grid computing, blogs, video conferencing, distance learning, telemedicine, Mapquest, RSS feeds, BitTorrent, Amazon, YouTube, open government, Google Earth, iTunes and online banking, among hundreds of others.

No permission. Berners-Lee had some initial difficulty selling his insight to others. He therefore decided to undertake much of the work himself. One thing he did not have to do, however, was get anyone’s permission to develop and release his invention. The importance of this fact cannot be over-emphasized. As Commissioner Denton puts it, the concept of permission is significant in understanding the difference between the Internet and traditional media networks:

“I expressed as plainly as I could in my Concurring Opinion that the Broadcasting Act, if applied to the Internet, would establish a regime of communication among people by permission of the State, in the form of licensing and exemption from licensing, to which are always attached conditions as the basis of exemption. We do not communicate to each other by State permission in the normal course of events.”

The encouragement of innovation at the edges of the network, and free access for new services, are hallmarks of the Internet. They are also principal features distinguishing it from the highly centralized, voice-optimized networks operated by the large telecommunications carriers in the developed countries. Innovation is not a hallmark of incumbent carriers. Indeed, AT&T, Bell Canada and other one-time regulated monopolies fought for many years to prevent any innovation or device from being developed for their networks by third parties. It would have been difficult for any carrier to have projected that in less than two decades the number of websites would have risen from one to 200 million.

Sorry, content’s not king around here

We move now to the single most important – and misunderstood – fact about the Internet: it is and always has been a personal communications platform, not a delivery platform for third-party content. The Internet is far more like the PSTN than what professional content creators would like it to be – just another way to deliver content, especially television.

Internet use began entering the mainstream in the mid-1990s; and today about 3 in every 4 North Americans are considered regular Internet users. I’ve been following research on uses of the Internet since the late 1990s. The number one activity continues to be sending and receiving e-mail – a figure that grows in significance when we add other forms of personal messaging, such as IM, chat and communication using social software (like Facebook), platforms increasingly important to teens.

I am the killer-app. According to the Pew Internet and American Life Project, the proportion of adult onliners who use e-mail stands at 89% – just ahead of using search engines; looking for maps, health information and hobby-related information; and conducting product research. The only activity that concerns third-party, “professional” content and that is anywhere near as popular is news – consumed by 72% of onliners. Other research has also confirmed a telling fact about why onliners like broadband. To the chagrin of ISPs, portal operators and other content providers, the appeal of broadband doesn’t lie in the ability to watch video in a way that seems more like TV or going to the movies. There is no single third-party killer app; the broadband killer-app is being able to do whatever I personally want to do on the Internet, only faster and more conveniently.

Supply-side regulation has run its course

The Commission’s approach to the new media proceeding was hemmed in by its mandate under the Broadcasting Act – not to mention the expectations of those who have for many years depended on our broadcasting system to earn a living. In our own written submission to the proceeding, we were critical of the Commission’s decision to exclude both interactive services and user-generated content (UGC) from the scope of the hearings, since these are two major defining characteristics of contemporary Internet culture (the submission can be downloaded from http://www.davidellis.ca).

The framing of “new media” for purposes of the proceeding had several unfortunate side effects. First, certain participants set the precedent for “de-personalizing” the Internet by excluding all e-mail traffic as irrelevant to regulation. Second, the construction of the “regulatory Internet” helped produce a great deal of misinformation in the hearings and press reports. Claims were made that Canadians spend “most” of their time online watching video – claims that went unchallenged and added urgency to the perceived need to regulate. Third, because the proceeding took place under the aegis of the Broadcasting Act, the principle of technological agnosticism held sway, meaning there was a mistaken presumption that the Internet is an economic substitute for Canada’s television networks

One further feature of the hearings was a relentless preoccupation with Canadian content. How much is there online? Is it enough? Can it be measured? Do Canadians need webisodes? The real failing in these discussions was the pretence that Canadian end-users – 20-some million of them – have no say or interest in the matter, and are waiting poised in their armchairs to be sent to a cornucopia of Canadian content.

The neglect of actual user behaviour is part and parcel of the wholesale exodus North Americans are making from conventional media, including ad-supported network television. But Canadian media consumers are not simply being neglected. For the 90% or so that receive their TV signals from a BDU, they have also been experiencing an unusually sharp rise in their cable and satellite rates. For the 2002-2008 period, the Commission indicates in its 2009 Monitoring Report (graph, p.29) that BDU rates have been going up at exactly twice the rate of the Consumer Price Index. While Commissioner Denton said he had some concerns about BDU prices, he also said it was difficult to discern how much of the price inflation could be ascribed to “public service obligations and other regulatory objectives.”

The new media decision

The Commission’s findings in the June 4 decision came as something of a surprise (Broadcasting Regulatory Policy CRTC 2009-329). The biggest single surprise was certainly the revelation that the Commission was painfully, if discreetly aware that they were hamstrung by their enabling legislation and unable to make good policy within the framework of the 1991 Act. Their conclusions are among the strongest acknowledgements we’ve ever seen by the regulator that they do not have the tools they need to do their job (para 76):

“While the Commission's focus on broadcasting in new media has been appropriate given its mandate under the Act, it is limited in scope compared to the wide range of issues resulting from developments in the digital age. The Commission recognizes that issues raised in relation to matters of taxation, copyright, privacy, spectrum management, and convergence of broadcasting and telecommunications industries, among others, are all interrelated and warrant a coordinated approach.”

What followed in the decision was even more unexpected. First of all, the Commission gave its explicit endorsement to the idea that the Government of Canada should develop a national digital strategy. Commissioner Denton then added his Concurring Opinion, an eloquent and expert look at many of the technical, economic and social issues behind the dilemmas that faced Denton and his colleagues. I had long been curious about why this was dubbed a “concurring” opinion and how it fit the broader framework of the main decision:

“My colleagues were fully aware and supportive of my views. It was the first concurring opinion published in CRTC history, to my knowledge. I received every institutional support I could have for the expression of those views. Hence it is not a question of me against them, or of the enlightened versus the unenlightened.”

The single greatest disappointment in the wake of the decision was the reaction of the cultural lobbies. Several of them, including ACTRA and the Writers Guild of Canada, expressed bitter disappointment that the Commission had not shown the courage to rescind the New Media Exemption Order and impose Canadian content requirements on entities deemed to be new media “broadcasters.”

Regulating the Internet: take it off the agenda once and for all

As we’ve argued, the Internet is not a closed, proprietary network like Canada’s “single” broadcasting system. It is not a delivery system for professional content, whose users have migrated from their place on the couch as passive TV viewers. And it is not a platform that was ever intended to promote job creation for one small segment of the economy. A huge academic, mainstream and technical literature supports our principal thesis: far more social benefits flow from allowing the Internet to remain open to innovation, free expression and personal communication, than from a regulatory strategy that construes it as just another cultural industry.

We should also be mindful of what happened in the first phase of the Web’s commercialization, from the mid-1990s to the year 2000 - sometimes referred to as Web 1.0. As we noted in our submission:

“The Web 1.0 era was characterized by the belief that the Internet would eventually fulfill its true destiny as a delivery medium for professionally produced content, which would gradually become a substitute for the content distributed by conventional media. ... When the dust from the two-year dot-com meltdown finally settled in late 2002, however, big media woke up to a stunning epiphany: the Internet is an intensely personal medium. That epiphany marked the beginning of the second age of online life - referred to popularly (though not always with the same intent) as ‘Web 2.0.’”

In conclusion, we urge the Commission and its political masters to put the whole matter of regulating Internet content to rest, once and for all. This bold move may precipitate a reconsideration of the statutory framework which, by the Commission’s own account, no longer serves it well as a framework for policymaking. A further benefit from such an initiative would be a re-examination of how the broadband access market is currently functioning - an area where re-regulation and government investment are both badly needed.

This article was first published in the Ontario Bar Association’s online newsletter - Entertainment, Media and Communications, edited by Dan Ciraco (Vol.19, No.2, February 2010).

David Ellis teaches Communication Studies at York University, works off campus as a consultant and blogs at www.davidellis.ca. Associate Devin Harris has worked with David over the last two years on numerous consulting and writing assignments.