Reposted from Art Threat

A new report challenges claims made by Canada’s largest telecommunication companies in recent disputes over Internet billing and governance. Casting An Open Net: A Leading-Edge Approach to Canada’s Digital Future, offers an at times scathing critique of telecom positions on Internet congestion, BiTorrent use, billing strategies and throttling and backs its criticisms with topnotch research and analysis.

The report is published by OpenMedia.ca (in the interests of disclosure, I sit on the board of OpenMedia, a Canadian non-profit media advocacy group, altho’ others authored the report), and also takes a look at what is happening internationally in Japan, Sweden, UK, United States, Australia and Chile demonstrating a variety of strategies in other jurisdictions that protect Internet openness without stifling innovation or economic growth.

It is a readable, well researched and welcome contribution to this all-important debate. What follows are some of the highlights.

The implications of connectivity and access are enormous. Large telecommunications companies worldwide are pushing for changes that would allow them to structure fees and speeds in such a way that new tiers of access could deny all but the wealthiest to the kinds of speeds and services we take for granted today. This is the global battle for net neutrality, one of the most important this generation will face.

Net neutrality is an issue that the public cares about. In 2010, more than 11,000 submissions were made by Canadians to the CRTC during the Internet traffic management hearings. According to surveys, approximately two-thirds of all Canadians support net neutrality, and the figure jumps to 86% among those who use the Internet at home. Our primary issues of concern it seems are industry accountability, the negative impact of limited market choices, and privacy.

One of the primary complaints by industry in support of their anti-net neutrality practices is “congestion”. The industry claims that there is too much data trying to flow through too small a network and that this justifies (i) extra charges on users, and (ii) slowing down certain kinds of traffic (called ‘throttling’, ‘traffic management’ or ‘traffic shaping’). The industry has so far been targeting peer-to-peer (P2P) usage (also called Bitorrent downloading) which they say clogs the Internet and uses a disproportionate amount of capacity.

Now, to be clear, the report explains that when we talk about the “telecommunications industry” in Canada, we are talking about the five biggest telecom providers nationwide: Videotron, Rogers Cable, Bell, Shaw Cable and Cogeco who dominate the Canadian ISP market. Many or even most of the smaller ISPs do not use the same techniques or advocate for the same regulations.

What the report reveals is that industry claims about congestion and P2P usage are not supported by empirical studies of Internet usage. For example, traffic shaping and throttling aimed at P2P traffic ignores the fact that only 5% of users account for large data use, which meaning that 95% of of the people effected by throttling are not causing the problem.

More troublesome, throttling singles out one kind of Internet use for special treatment and penalty. Why should ISPs be deciding how the public should be allowed to use the Internet?

The industry says that because P2P traffic is not “time sensitive” (meaning usage involving real-time communication) it can be throttled without diminishing enjoyment of use. But this argument patently ignores what is actually happening on the Internet and who is using P2P technology for what ends.  It turns out that P2P sharing is a remarkably efficient way to distribute data capacity throughout a network in real-time, and that there is growing use of P2P in all kinds of innovative distribution projects.

Throttling also ignores the fact that P2P usage occurs mostly in off-peak hours. When congestion is at its worst, P2P usage is at its lowest. It isn’t torrents causing congestion, apparently, but rather inadequate infrastructure and the failure of industry to upgrade network capacities.

Another important fact ignored by the industry is that P2P traffic as a percentage of overall use is in decline. The industry claims that 36% of Internet traffic is P2P – a figure that misleadingly includes upstream data flows. Congestion occurs in downstream flows. P2P download traffic accounts for a modest 18% of all Internet use, and this percentage is steadily shrinking as more and more television and film services migrate online.

And there’s more:

(1) The large ISPs claim that the Internet in Canada is experiencing unmanageable growth – bandwidth constraints demand throttling, predatory pricing, etc. Not true – growth in usage rates is in fact slowing, a trend being experienced worldwide.

(2) The large ISPs say that they can’t build their way out of this problem – it’s too expensive. Not true. According to the report, modest upgrades would more than accommodate the kinds of usage growth rates being experienced in Canada. As the report says: Functioning markets do not squash demand, they increase supply. Experts indicate that modest and normal infrastructural upkeep and reinvestment would do the trick.

(3) The large ISPs claim that congestion periods last for hours. Not true. Real-time monitoring of Internet use indicates that congestion usually lasts for a few minutes. Throttling or increasing fees for 10 hour stretches is unrelated to the problems of congestion.

What the large ISPs want is to implement usage-based billing (UBB), a plan that industry argues makes consumers pay for what they use, that penalizes band-hogs, and is fair. The OpenMedia report makes it clear that under any kind of scrutiny these arguments ring false.

The exorbitant fees ISPs charge for extra data use, for example, have nothing to do with actual costs: the ISPs are gouging consumers. Actual costs for 1GB of data flow are about 8 cents, but ISPs have been charging up to $10/GB for excess use. And UBB policies implemented to date do not target the small percentage of high-use customers (which is not necessarily fair, either), but are in fact discouraging regular users from using the Internet at a time when Canadians are increasingly migrating their cultural interests online through streaming video services (like Netflix).

UBB is having the effect of discouraging ordinary Canadians from using the Internet by making it increasingly difficult and expensive to access video, television and films online.  Some observers have cynically suggested that the big players are trying to protect market share for their own programming services by making it more expensive to access independent program providers.

The report also provides excellent summaries of regulatory approaches in other jurisdictions around the world.  They are a must-read for anyone interested in finding creative solutions to Internet regulation in Canada. There are indeed options other than letting the large incumbent industry players in effect to dismantle net neutrality in order to fill their pockets.

The US is probably the weakest model.  Over the past decade the Federal Communications Commission has experienced a steady erosion of regulatory power (something Canadians need to be mindful of in terms of our own CRTC). Wireless Interent services have more or less been abandoned by regulators in the net neutrality fight allowing ISPs in the US to throttle and choke wireless services to their shareholder’s content. And the Republican controlled House has been pushing the FCC to back away from any kind of regulation protecting net neutrality claiming that such provisions threaten innovation, investment and jobs.

But Japan, Sweden, Chile, even the UK all have flourishing ISP markets that are regulated in such a way to protect not only consumers from gouging but to a large extent the principle of openness and accessibility.

The report is well worth the read for anyone interested in the future of Internet policy in Canada and in maintaining net neutrality as the organizing regulatory principle. Others have had to fight for net neutrality around the world, and so must Canadians. This report is an excellent primer on the politics, technical arguments and cultural implications for an open Internet policy and what it might look like in a Canadian context.