Montreal Economic Institute isn’t ready for internet reality

No, cat videos aren’t going to interfere with self-driving cars and the internet of things.

montreal economic institute, cat videos

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Is everybody ready for pathetic internet speeds and car crashes caused by streaming cat videos? We better be, because we won’t be able to look back when it happens and say that no one warned us.

The Montreal Economic Institute is predicting such a dystopia in a Globe and Mail op/ed this week titled, “The CRTC isn’t ready for the internet of things.”

Written by Paul Beaudry and Martin Masse of the Montreal Economic Institute, the piece is a critique of two particular rules of the telecom road: wholesale internet access and net neutrality.

Canada will fall behind, the think tank argues, if it continues to allow indie third-party internet providers such as Teksavvy to access big incumbent networks such as those owned by Bell and Telus. That access, according to the op/ed, discourages the network-owning companies from upgrading their infrastructure:

Only competition between strong providers that use their own networks (“facilities-based competition,” in telecom jargon) can bring about the necessary network investments, as well as the quality and lower prices that consumers want. The rising importance of the Internet of Things only reinforces the arguments against propping up small players at the expense of strong facilities-based providers.

The same goes for the CRTC’s recently reinforced net neutrality rules, which prohibit internet providers from unduly discriminating between different types of traffic. This is bad because streaming cat videos could apparently interfere with connected cars and delicate health-care monitoring systems:

Basic Net neutrality rules stating that a carrier should not block or unduly slow down services are widely accepted. But how should a data packet sending crucial information about the position of a self-driving car be treated, compared with another one sending a cat video? What about a platform monitoring a complex system of machines in a manufacturing plant? Or an eHealth platform on which the survival of patients depends?


It isn’t so much that the CRTC isn’t ready for the internet of things, it’s that the Montreal Economic Institute – a right-wing think tank that has been beating these same anti-regulatory ideological drums for some time now – isn’t ready for the internet of reality.

The first argument has been discredited countless times while the second shows either a misunderstanding of the CRTC’s net neutrality rules or is an attempt to create fear and uncertainty where there is none.

As far as indie ISPs discouraging investment goes, it’s an argument the industry dusts off every time a rule or regulation is suggested: “If you make us do X, it’ll cost us more and we’ll invest less.”

In Canada, the argument has been used against giving new companies wireless spectrum, creating a wireless code of conduct, instituting a telecom complaints body, sharing cellphone towers, implementing net neutrality rules and so on, ad nauseum.

In the United States, industry supporters including Federal Communications Chairman Ajit Pai are currently using the old canard to support axing net neutrality rules. Investment in new networks, Pai says, has supposedly been down since his predecessor Tom Wheeler enacted those rules.

The argument is nonsense – and even the telecom companies themselves often say so. Big U.S. ISPs including AT&T and Comcast have publicly spun the argument, then privately told shareholders otherwise. Ultimately, so have their balance sheets.

The same goes for Canada. As University of Ottawa professor Michael Geist pointed out last year, Bell publicly rolled out the regulation-hurts-investment yarn while continuing to spend regardless. Frustrated CRTC chairman Jean Pierre Blais recently called these companies out for this public-private double talk:

“Oddly enough, as they were saying one thing to us about slowing down investments, they were having a completely different dialogue with the investors and saying quite the opposite… it goes straight to credibility when you make arguments in front of us one day and take a completely different position when you’re in an investor or shareholder call.”

Telecom company investments are dictated by a variety of factors, including cost savings, better revenue opportunities and even old-fashioned competition. Regulations are just one of those factors and they are rarely the most important.

In that vein, there just isn’t any evidence that Canadian telecom companies are under-investing or that they will in the future. Quite the opposite – they often boast about it and how their networks are world-class, and that’s despite having those pesky indie ISPs riding on their networks.

On the issue of net neutrality and those potentially fatal cat videos, Beaudry and Masse have it especially wrong considering the CRTC’s rules specifically make exceptions for so-called managed services. As its April ruling states:

For the purposes of this decision, the term “differential pricing practice” refers to the zero-rating (or discounting) of retail Internet data traffic, regardless of whether or not the data is sponsored and whether the practice is agnostic or non-agnostic. Practices associated with ISPs’ own managed Internet protocol (IP) networks are not included in the analysis and determinations set out in this decision.

No one in their right mind wants sensitive health-care applications or connected cars running over public, non-managed networks, which is why the CRTC has left that door open for internet providers.

The point of the net neutrality rules, rather, is to keep providers from picking winners and losers or from giving themselves unfair advantages. Despite what the op/ed implies, it isn’t an attempt to apply ideological purity to internet packets. Only the ideologically inclined would believe otherwise.

Beaudry and Masse conclude their piece by stating that Ottawa, including the CRTC, needs to adapt its policies to the new IoT reality if it wants to “walk the walk” of innovation.

Alas, there’s no evidence on either the investment front or on net neutrality that the existing approach is wrong, which suggests that it isn’t Ottawa that’s out of touch with reality, but rather the Montreal Economic Institute.

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