Information & Ethics Committee on Feb. 15th, 2018

[Raj Saini, Liberal, Kitchener Centre, ON]

Thank you very much.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Saini.

Next up we have Mr. Gourde for five minutes.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you, Mr. Chair.

Mr. Wu, net neutrality seems to be assured in Canada, more so than in the United States. The federal and provincial governments invested in infrastructure when they decided to give all Canadians greater access to the Internet. That gives us a certain right to require that companies maintain this neutrality.

In the United States, was it only the private sector that invested in infrastructure, or were investments made by the U.S. government to increase access to the Internet for all Americans?

[Prof. Timothy Wu]

This may surprise you to hear, but the United States has invested almost nothing in Internet infrastructure. There was initial funding for the research that led to the invention of the Internet. That was very generous research funding given to scientists. However, in terms of infrastructure programs, the answer has been almost zero. That's one of the reasons the phone companies and cable companies say, “Why should we listen to these rules? This is our network.” On the other hand, even when the United States does subsidize things, companies still say that they have the right do what they like, so I'm not sure. However, there has been almost no investment in infrastructure in the United States by the government.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

These same U.S. companies indirectly benefit from other countries' infrastructure given that we now have a global market. Do these companies have the same philosophy? In Canada, we have invested 35%, 40% and even 50% or more in certain regions to provide Canadians with Internet access.

[Prof. Timothy Wu]

That's true. I think the American companies do benefit from the Canadian investments. I have to say that's true.

One consequence of the non-investment in American infrastructure is that the rich parts of America have extremely high-quality access and have faster speeds than anywhere other than maybe parts of Asia. However, the poor parts of America are back in the 1990s. They're in terrible shape. The companies are all out of business or are providing very marginal service. The Internet infrastructure in the United States is echoing inequality and making it worse right now due to failures of investment. In fact, it's gotten so extreme that the Trump White House is now talking about not only building a wall.... I don't know if you've heard this in Canada, but President Trump wants to build a wall on the Mexican border. I haven't heard about a Canadian wall yet.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We're building it.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

I have one last question for you you.

Would it be fair and equitable for U.S. Internet service providers to at least charge Canadian consumers the Canadian taxes on the services that are currently exempt?

[Prof. Timothy Wu]

I don't know the specifics of how those are being offered. There was a policy in the nineties or early 2000s of not taxing the Internet because it was new and needed to get started. I think those days are over and I think the Internet companies should be subject to normal taxation with no special breaks.

[Jacques Gourde, Conservative, Lévis—Lotbinière, QC]

Thank you.

[The Chair, Conservative, Bob Zimmer]

Next up we have Mr. Erskine-Smith for five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

I want to pick up on some of the questions by Mr. Angus, specifically as they relate to the difference between regulation and legislation. Of course, in the United States it was regulation, and in Canada we have legislation through the Telecommunications Act. Specifically, the latter states that “a Canadian carrier shall not control...or influence the meaning or purpose of telecommunications...by it for the public.” I think it has been reasonably interpreted by the CRTC that companies can't block websites and can't control or influence the content. Do you think that's a fair and reasonable interpretation?

[Prof. Timothy Wu]

I'm not a Canadian administrative law expert, but that sounds okay to me.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Yes, the language of net neutrality specifically is not in the act. We've talked about enshrining the principle, perhaps, although it seems more symbolic than anything because when you look at section 36 of the act, you see that “a Canadian carrier shall not control...or influence the meaning or purpose of telecommunications carried by it for the public”. That's one important component of it.

The second important component is subsection 27(2), which is that a Canadian carrier cannot “unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage”.

Those twin provisions in the Telecommunications Act seem to, based on all the testimony we've heard, cover all the ground necessary to protect net neutrality, and all we would be doing is enshrining this general principle as a preamble of sorts. How effective do you think that is?

[Prof. Timothy Wu]

Let me explain what I think the challenge would be. The American telecommunication law also has non-discrimination provisions. If you've read it as well, you'd say that would seem to bar any blocking or things like that. What the current FCC has done is to say, well, those are great rules, but they just don't apply at all. I think you used the word “telecommunications”.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

We have a Telecommunications Act with those two provisions interpreted in our law to say it protects net neutrality.

[Prof. Timothy Wu]

Right.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I guess my curiosity is piqued when we say that we should put it in legislation, and I agree with that, absolutely; but in Canada, we do have it in legislation. I recognize you're not so familiar with the Canadian law, but it seems to me and based on the testimony we've heard that there might not be anything else for us to put in the law other than perhaps enshrining the general principle.

I'll go to American law, which you're more comfortable with. A few of us met with the FTC in Washington in early October. It was incredible to me how much they've pushed this idea of unfair or deceptive acts or practices in protecting against privacy breaches, as an example. It's an incredible extension and interpretation of the law, a good one to get where they want to get to, but I understand that section 5 has limits with respect to net neutrality because there's an exclusion for common carriers. Perhaps you can explain. The ninth circuit in 2015 had a decision that expands that notion of common carriers. Is that something that lawyers and academics are looking at addressing?

[Prof. Timothy Wu]

It's a very good question.

Can I say one thing on your previous comment before I get away from it?

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Sure.

[Prof. Timothy Wu]

I think the reason to do it by means of legislation in Canada is not that you don't cover it, but that someone or a future CRTC would say, “This is all fine, but broadband is not telecommunications”. Do you see what I'm saying? That was the approach taken in the United States, to say we have all these non-discrimination rules, but broadband is completely different and it has nothing to do with telecommunications. Telecommunications is telephones, and broadband....

It's a different legal manoeuver. You don't say, oh, this is not about...; you just pull it out of the statute all together and say the statute doesn't apply at all.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That may well be impossible to do in Canada, but I appreciate that with the Americans, you can.

[Prof. Timothy Wu]

It could be. That's the American legal manoeuver that was used in this one. That's what's been challenged in the court.

As for this question of the FTC's authority. There's a lot to say about that. I worked at the FTC myself. I spent a lot of time thinking about the statute's section 5. There, the FTC would answer what you just said by saying that the broadband is no longer a common carrier because of this reclassification; because of what the FTC is doing, it's no longer a common carrier and therefore we do have jurisdiction over it.

Now someone could challenge that, relying on the ninth circuit, and say it's still kind of a common carrier, but they are taking it out of the common carrier category in order to give the FTC jurisdiction.

You're right that the idea of unfair acts and practices has been used in a lot of different ways. I think it has its limits. It's one of those things. It's like this tiny bit of authority that's been stretched pretty far. The main problem it has is that it basically creates regimes that are like click-through regimes. You just have to give notice of things. You can do anything you want; you just have to have a lot of fine print. I think that has not been good in privacy, frankly. You've probably heard this. I think the Canadian approach of privacy by design is better, if I can call that a Canadian approach, as opposed to...and I think most American academics think that the approach of just giving notice has failed. I mean, nobody reads the stuff. They never negotiate. I mean are you going to negotiate with Facebook when you have to see your grandkids? I know you don't have grandkids, but you know what I mean. It's an absurd fiction. That's how I feel about that.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Erskine-Smith.

Next up, we have Ms. Vandenbeld for five minutes.