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Canadian Government Faces Off Against Its Own Telecom Regulator

OTTAWA, ONTARIO, CANADA – Convergence is rapidly changing the space in which internet, telecommunications, and broadcasting sectors operate throughout the world. With the realization of quad-play (convergence of data, voice, video, and mobility), the Canadian federal government is on the verge of having a regulatory body that is ineffectual and irrelevant through an inability to keep up with evolving market forces. Evidence of this potential irrelevance is no more apparent than in Canada’s burgeoning VoIP marketplace. Last month in a surprise decision, the Canadian Radio-television and Telecommunications Commission (CRTC) issued a decision on VoIP that reaffirmed its original May 2005 order to limit deregulation of this sector. This decision completely ignored the government’s request for the CRTC to reconsider the earlier ruling. Without the deregulation of local VoIP services, the Canadian government is concerned that market forces will be hampered, preventing healthy competition.The original CRTC order (May 2005 – almost two years ago) recommended local service deregulation of the dominant phone companies occur only after their market share had fallen by 25%, their barriers to entry were eliminated, and they could demonstrate that competitive behaviour was in place. The ruling effectively established price floors for the major phone companies, while their domestic upstart rivals are free to charge any price. The only major difference in last month’s new ruling was the statement that the CRTC would consider lowering the 25% threshold to 20%.Both the original and subsequent appeal decisions of the CRTC were unwelcomed by the large telcos (Bell Canada and TELUS), and the status quo remains. Meanwhile, internet/phone/cable companies such as ROGERS or SHAW, now worry about current regulations being transformed before there is an opportunity to increase their market share. It is a rather rare occurrence for a Canadian regulatory body not to take into consideration the comments of the government when the government refers a decision back to a regulatory body for reconsideration. Per regulations, the government’s Cabinet now has 90 days (December 2006) to respond to the CRTC’s ruling, although avenues exist to delay a decision.What options does the government have in its play book? The most immediate lever the government seems to have is replacing the current CRTC Chairman. The current chairman was appointed by the previous government in 2002 with his term due to expire December 31st of this year. Already the government is publicly soliciting resumes for those who would be interested in the position. Appointing a new Chairman would send a strong message to the remaining CRTC Commissioners to seriously reconsider the government’s recommendations.It remains to be seen what the government will ultimately decide, but the Minister responsible for the CRTC has indicated that major changes are forthcoming.

Superstitions 101: Paraskevidekatriaphobia

SAN JOSE, CA – I believe it is is the great Stevie Wonder who sings the song “Superstition.” Paraskevidekatriaphobia is the superstitious fear of Friday the 13th. Why, however, is 13 considered unlucky and Friday the 13th particularly unlucky? For those of you who saw or read “The DaVinci Code” you may know it had something to do with the The Knights Templar…however, I like this story from better: “Twelve gods were invited to a banquet at Valhalla. Loki, the Evil One, god of mischief, had been left off the guest list but crashed the party, bringing the total number of attendees to 13. True to character, Loki raised hell by inciting Hod, the blind god of winter, to attack Balder the Good, who was a favorite of the gods. Hod took a spear of mistletoe offered by Loki and obediently hurled it at Balder, killing him instantly. All Valhalla grieved. And although one might take the moral of this story to be “Beware of uninvited guests bearing mistletoe,” the Norse themselves apparently concluded that 13 people at a dinner party is just plain bad luck.” Who thinks of this stuff?I’m not particulary superstitious, but my sports teams do seem to win more games when I’m not watching them. For instance, I will not watch the A’s play today and they will win. I was at Game 1 and, true to form, they scored only 1 run and lost. I didn’t go to game two, watched some of it on television and they scored 5 runs and lost. So, I’ll check the score tonight when I get home or watch some SportsCenter and, hopefully, they will have already won. I also won’t be watching Wake Forest play NC State this weekend. Go Deacs! (Yes, Demon Deacons is a lame mascot, but it’s the only one we have.)Happy Friday the 13th and thanks to the WWW for the wealth of information on the number 13 and Friday the 13th. (This internet thing is a wealth of information…I think it is here to stay.) Methinks that through the years people have just had too much time on their hands to think of all the reasons why 13 is bad and why Friday the 13th is worse. Have a great, lucky day. Or just a great, normal day. But, don’t believe the hype and have an unlucky day.

A Net Neutrality Perspective: Google and YouTube

SAN JOSE, CA – If you don’t read Scott Cleland’s Precursor Blog, you should. His blog entry of today is brilliant and says in short strokes what I have been unable to successfully point out in previous blogging attempts. The gist of his entry is: Google’s position on net neutrality isn’t all that altruistic in looking out for the “little guy.” It really just want consumers to pay, so it doesn’t have to.For me, the key graphs are below, but please go to his blog and read the entire entry: “Before Google liked to wax eloquently that their motives on net neutrality were ‘purely altruistic;’ they said they were fighting, not for their own gain, but for the little Internet entrepreneurs toiling away in garages that needed protection from capitalists and market forces. Now it is clear that Google is simply using the public policy process to leverage commercial negotiations for Google’s commercial advantage with youtube. People need to remember that key to Google’s exceptional finanical success is their abilty to dump most all their normal distribution costs on the consumer. Its by shifting their biggest cost to the consumer, that they enjoy 80+% gross profit margins, have ten billion dollars in cash, a hundred billion plus market capitalization, and can afford to pay $1.6 billion for a company that has no profits and little revenue. Remember these numbers when Google is publicly indignant about having to pay more for new innovative Internet bandwidth that can better carry video.”

Gambling Firms Turn Out to be a Bad Bet

LONDON – Oh dear, a few months back I wrote about online gambling sites that

The stock market has expressed its view of the likelihood of gambling regulators effectively controlling behaviour by pouring hundreds of millions of pounds into gambling companies that draw revenue from a sizeable US user base.

And now we see the share prices of these same firms collapse as the US Congress has indeed taken legislative action to block their activities.Whatever the rights and wrongs of gambling as a specific issue, this decision is significant for the future of internet content regulation. Whilst it does not actually prevent access to sites, it asserts the right of a national government to control the online activities of its citizens. In the EU, regulatory activity has focussed more on laws requiring service providers and search engines to block access to sites containing material deemed to be illegal. The net effect of both forms of action is that increasingly the internet behaves differently depending on which country you are in. Where this will lead us over the long term is as yet uncertain but it is a trend that is worth watching.

Net Neutrality: Canadian Style

SAN JOSE, CA – I would like to draw your attention to a recent academic paper penned by Craig McTaggart, a senior regulatory counsel at TELUS, a Canadian communications company. The paper was prepared for the 34th Research Conference on Communication, Information and Internet Policy George Mason University School of Law Arlington, Virginia, U.S.A.His paper begins: “A new net neutrality rule cannot be justified as simply a codification of”the way the Internet has always been.” If the Internet was ever predominantly ‘neutral,’ it was at a time when the public was not allowed to use it. Since then, the requirements of Internet users have necessitated changes to many aspects of the Internet’s design and operation, with many of those changes requiring divergence from the Internet’s early customs and architecture. The examples of non-neutrality explored in this paper -preferential content arrangements,distributed computing, filtering and blocking to control network abuse, differential interconnection and interconnectivity, and the impact of resourceintensive applications and users -demonstrate that the Internet and its use are far from neutral or egalitarian. (Italics are mine). Those advocates who would like to see the Internet forced into the mould of a regulated public utility bear the heavy onus of justifying rejection of competitive market outcomes in favour of a stylized vision of public internetworking that prohibits or reduces the incentives for innovation within the network itself. The types of uses to which users are increasingly putting the Internet, as well as the subject-matter of current architectural research, suggest that the incongruity of a net neutrality rule with the interests of mainstream Internet users will only continue to grow. Instead of trying to prejudge what kinds of data service offerings consumers will find attractive in the future, the user-driven evolution of the Internet should be allowed to continue.”Read the full paper here. (.pdf document)