Information & Ethics Committee on Feb. 15th, 2018

[Peter Kent, Conservative, Thornhill, ON]

I have a question about countering the December decision by the FCC commissioners. I've heard voices from Congress saying that there might in fact be be a legislative offset that would be effective. Would that process be easily achieved or would it again become a partisan issue on the Hill?

[Prof. Timothy Wu]

Have you ever heard of anything in the United States Congress being easily achieved? There's a movement right now to undo the Trump administration proposal immediately. It has 50 votes in the Senate. It's going to be voted on. Unfortunately, it would have to be signed. It would have to pass the House. Actually, I have no idea what President Trump thinks about this. I don't think he has ever thought about the issue, frankly, and he has no stated views on it as far as I can tell. However, there is the Republican House. It is possible that Congress will do something, but the idea that anything in Congress is easy or straightforward is not....

I have another point I want to make. Here's something that your committee should be looking at, the compatibility between the removal of net neutrality and some of the commitments that were made in NAFTA or the Canada-U.S. Free Trade Agreement, which I guess NAFTA superseded. I'm thinking now about a Canadian entrepreneur who comes up with a service and wants to sell it in the United States. That's called “trade in services” in trade terms, and if there's a possibility of its being blocked or action being taken to block it, I think that's potentially a violation of the trade agreement. I'm saying this without having done deep research, but I have done some research on the WTO versions of these laws. That may be worth thinking about as a proactive thing to do, for you to say, “Listen, we have some questions about the compatibility of what you're doing and NAFTA. If you're going to give the power to block Canadian companies, is that a violation of the telecommunication parts of NAFTA?”

[Peter Kent, Conservative, Thornhill, ON]

Thank you for the suggestion. We'll ponder it.

[The Chair, Conservative, Bob Zimmer]

Next up for seven minutes we have Mr. Angus.

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

It's wonderful to have you before our committee, Professor Wu, to discuss this issue.

It was interesting to hear the CRTC reassure us that everything is fine in Canada. The Prime Minister, as you pointed out, has noted his concern. However, we're talking about regulation. The FCC had decided in regulation to recognize and protect net neutrality. The CRTC's position in 2016 was that they were of the preliminary view that the act prohibited the blocking of access to end-to-end users.

Do you think, given the American experience, that we would be better off to define net neutrality in legislation, as opposed to having it interpreted by whichever CRTC commissioner we have at a given time?

[Prof. Timothy Wu]

I would support that. I think there's good reason at an early stage to do things in regulation—things are uncertain, and no one knows what's going on. It's been an about-15-year process, and I think the basic principles of net neutrality have proven to be very successful, as I said in my introduction. As long as you write them in a very basic way, with no blocking and no degrading allowed, and you have those principles, I think it's a good idea for legislation.

I didn't quite get to this in our last round of questions and should add that in the United States I suspect there is a sense that this will finally come to legislation there, probably after the next election. So, yes, I agree that the time has come.

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

Thank you.

I was interested in this whole issue, when we're talking about parity. Our telecom folks will start to push for parity. We have an oligarchy here. We have three or four giants, who also are content providers. They are very competitive with each other but not very competitive with consumers. It seems to me we are not all that different from the United States except that we probably do a much greater job of keeping the start-ups out of a very closed market.

Given the Canadian experience, you'd think we would be very susceptible to pressure. This is how it happens. They'll say, “Well, the Americans have it. We can't compete.” I mean, God, they come and cry on our shoulders all the time to get more and more protection for their protected market. Do we have to protect the consumer and people who use the Internet by having this very clearly defined?

[Prof. Timothy Wu]

I couldn't agree more. I think today these kinds of campaigns tend to be global in scope. In other words, the carriers are in a similar situation in that they succeed in the United States, and then they say, “Well, this is the new normal. Everyone needs to do what America is doing. Look how great it is. Look how much we have to invest.” I'm sure you're going to hear over and over again, “We're investing billions, and now we're going to invest more billions. Some of it, of course, is money you gave us, but that's fine.” I think it's very important to resist those arguments.

I think we have to be really serious—and I think you are taking this issue seriously—about how much consumers are paying for their bandwidth. When you add up home connection and the phone all together, it's become a major part of the consumer budget. I don't know what the numbers are like in Canada, but in the United States, even poor people are paying hundreds and hundreds of dollars of their monthly budget for these things. It operates like a tax on the economy. It keeps people in poverty in poor parts of the United States, and I'm sure that's a problem in Canada as well. It does need to be resisted. This is an incredibly profitable industry that doesn't need to make more money.

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

Thank you.

In another life I was a musician. We saw how much the Internet turned over the traditional music model. Certainly there are many factors besides the Internet for what happened to the recording industry in the early 2000s. I came to Parliament, and the Internet was the biggest menace stalking the halls of Parliament. We had to constrain it. We had to define it. We had stop all the pirates. We came up with these big, giant bibles on how to save television by really committing to that 1970s vision of television. The market is changing and new things are happening. Certainly you mentioned this golden age of television. Now on Netflix I watch Icelandic television and Swedish television and New Zealand television.

What is the track record of having an open Internet, where things do get upset, where traditional models are overturned, and new start-up punk operations actually turn the world upside down? How do you see the importance of what the Internet has done and its potential to create new forms of communication?

[Prof. Timothy Wu]

I think the track record is strong. I think it involves a lot of disruption that shouldn't be completely glossed over. People losing their jobs is a sensitive thing. Sometimes, as in television, the fear that everything that we hoped for, all good content, would be gone doesn't materialize. You always have to be conscious of, in what is arising, what sense of opportunity there is. I say that with one caveat. There is always this danger, and I think the Canadian Parliament should be thinking about it, which is that one thing that happened with open competition, which people didn't expect, is the excessive rise of monopolies in various areas. I think that has been a little unexpected. Everyone thought that there would be 10 Googles, or something like that. That has not happened. But otherwise, I think the track record has been stronger than people had expected and unexpectedly good things have happened along with a lot of disruption.

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

On the issue of the effect of Canada, we've been talking a lot about start-ups and companies, but let's talk about experimental, intellectual, and medical non-profits, for example. If I'm making connections, trying to create some new form of database of information, and I'm talking from Edmonton to Vancouver, it's a pretty straight line. If I'm talking from Edmonton and San Bernardino and Vancouver, it becomes a little more complicated.

Given the ability of the major carriers in the U.S. to throttle content, slow it down, degrade it, and given the fact that so much of the architecture of the Internet is in the United States, is there a spinoff effect degrading the ability of Canadian users of the Internet to get the full benefit of the use of the open Internet?

[Prof. Timothy Wu]

Yes. I think that Canada should be seeking assurances from the United States that this continent-wide community is able to communicate among themselves without interference.

The phone and cable companies in the United States have been empowered—it is quite shocking—to block anything they want to. It's frankly a censorial power. If there is a Canadian site that is criticizing the excessive imperial attitudes of the United States, they can just block it so that no Americans see it. We had thought of this as an open continent, that in North America we can talk to each other, but they can block, they can intercept, they can block all your email communications. If they don't like what you have to say, because Charlie disagrees with Verizon's hegemony in this area, they can block it.

I think that if I were in the Canadian position—I wish I had said this in my opening remarks—I would seek assurances, maybe working with the trade treaties, maybe in terms of a question about free speech, that there will not be blocking of Canadians who want to speak with Americans.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Angus.

Next up now, for seven minutes, Mr. Saini.

[Raj Saini, Liberal, Kitchener Centre, ON]

Good morning, Professor Wu. Thank you very much for being here—well not actually here, but via the technology we have today.

I want to ask you two philosophical questions because I think my colleagues have done a very good job getting down to the limitations or implications of net neutrality. Since you're living in the United States—and I lived in Boston for three years when I was a student—the two principles I don't understand, particularly why there has not been a larger backlash to this, are the elements of free enterprise and free speech.

If we look at net neutrality, for the last 15 or 20 years there has been a constant effort to try to diminish that concept, indirectly or directly. If you look at the way the Internet was designed, the end-to-end principle of network design—you mentioned the Madison River case, and if you look at AOL, with their walled garden strategy, and AT&T not having Skype on the iPhone, or Verizon not having a Google wallet—there have been attempts for the last 15 or 20 years to circumvent the rule of net neutrality.

I go back to the debate that you had with Professor Yoo many years ago. One of the things he talked about in that debate was access tiering, which you were against, but the other thing he brought up was Schumpeter's thesis, wherein only large companies could innovate.

If you go back over the last 15 or 20 years, with the advent of the Internet and the technology we have, it's smaller companies that are innovating. You mentioned that very clearly. You said that Bell was great at developing the infrastructure for telephone but wasn't so good at, or came late to, the Internet.

What I fundamentally don't understand, when we look at the American system, is why there has not been a larger outcry, especially when the heart of the American system is being attacked, which is free enterprise. I don't understand that, because the country and its systems of government and the economy have been built on the concept of free enterprise, yet there has been no large outcry.

We are discussing this issue in Canada, although it has happened in another country. Can you explain what's happening in the United States? Is it that people don't know, that they don't understand the implications? Even for business people—small, large, medium—it's going to have an implication.

[Prof. Timothy Wu]

Thank you for that question. I think it's a good one. Let me say two things.

First, on how this could even come out of the United States given that it's a free enterprise country that is interested in entrepreneurship, I think there's a very big difference between being pro-market and being pro-business. There are a lot of members of both parties, let's say, particularly the Republican Party, who claim to be pro-market but actually are pro-business: in other words, they're pro the businesses that are there already and against their disruption by newer businesses.

It is telling, as I said. In its original form, this was pushed by the early Bush administration, in the sense that they could see what was going on, and I think it is really breaking.... It's not just this loony, left-wing thing. It is a pretty important principle that businesses, to get their start, need to be able to reach their consumers, and if they get blocked by bigger businesses, that's a bad thing.

Why is there not more backlash? I wouldn't say there's none. There is an effort in Congress to reverse this. Maybe I'm in the middle of it; I hear it all the time. It has a bit to do with our current political situation, where there are so many daily acts of outrage that I think people find it challenging. I think in a quieter environment.... This is a big one. Speaking as a resident of the United States, we have this prospect of nuclear war with North Korea, and we have an investigation into the President's lawyer paying off a porn star, and these things are a little hard to compete with when you're talking about telecom policy. It has rarely been as sexy as that—

[Raj Saini, Liberal, Kitchener Centre, ON]

That's true.

[Prof. Timothy Wu]

—not to mention the idea of Russia trying to throw the election. These are big issues, all the way from salacious to nuclear war, and it's like it's impossible to compete with them.

[Raj Saini, Liberal, Kitchener Centre, ON]

Continuing on that line, the fact is that there is now this issue that is going to affect certain businesses, but indirectly, if you look at the global aspect of what's happening, the United States is the largest economy in the world. It does do business around the world. If its internal networks are not going to adhere to the principle of net neutrality, if they have trade deals or trade arrangements with other countries, how is it going to stop at the border, then change, and then get to the border, then go to...? How is that...? It's almost like a self-limiting principle. Whether you're pro-business or pro-market, irrespective of that, at the end of the day, you have to make a profit, right?

[Prof. Timothy Wu]

Right.

[Raj Saini, Liberal, Kitchener Centre, ON]

How are they going to prevent or control what they want to do when other parts of the world are not going to do it? With the Internet, you have no borders.

[Prof. Timothy Wu]

This is rare for me, but I think this is how they'd see it. I don't echo this, but they would say that most of net neutrality—the speeding up, the blocking, and all of that—is actually quite local.

The way they usually do it today is at the exchange point. It would happen somewhere in Ottawa. I don't know where. There is some point where all the Internet traffic reaches Ottawa and is exchanged to all the local Ottawans. That's where the blocking or degrading would happen, or inside the local office nearer to your house.

I guess that is the idea. It's that the backbone is more or less untouched but it's the stuff nearer, near consumers. Does that make sense?

[Raj Saini, Liberal, Kitchener Centre, ON]

Do I have time for one more question, Mr. Chair?

[The Chair, Conservative, Bob Zimmer]

Yes, one more.

[Raj Saini, Liberal, Kitchener Centre, ON]

I have a final question for you on the second point that I wanted to bring up.

We talked about free enterprise, but the other very basic and very strong principle in the United States is free speech. When you look at free enterprise, you look at free speech.

You have companies now, such as Comcast, for example, which owns NBC, and other broadband carriers that have other news elements. Here's my question. If that happens, then even in the concept of free speech, which is so clearly defined in the constitution, you're limiting free speech because, depending on which program you get, which package you get, and whatever is being steered toward you, that's the only stream of information you're going to get. Even that principle nobody has cried out over, whether it be free enterprise or free speech.

[Prof. Timothy Wu]

May I say that there is a blind spot in the American constitutional understanding? In my view, it's a blind spot when it comes to private power. The slightest thing the government does is examined and struck down. Some of the First Amendment decisions in the United States—even though I'm a firm believer in free speech—are absurd in their overprotectiveness. For example, some of the states tried to ban pharmacies from selling patient data as a privacy issue. I'm sorry: that is free speech to sell patient data.

On the other hand, a company like Comcast has complete domination over who speaks to who and who hears somebody. They can block people altogether. They have a censorial power, but you know, they say that it's just their property rights.... That is, I think, a constitutional blind spot that is maintained for obvious reasons and is a big challenge for the United States as a country.