Information & Ethics Committee on Feb. 15th, 2018

[Anita Vandenbeld, Liberal, Ottawa West—Nepean, ON]

Thank you very much.

We very much appreciate your expertise in this area.

I'd like to go to something you said about the censorial power. This is quite alarming, I think, to most Canadian citizens. When we talk about this issue, a lot of the discussion is more around the free market as opposed to free speech—the idea of antitrust, anti-monopolies, and making sure that new players have access to the market—but for most of the public, this is about free speech. This is about being able to have open access for ideas and the flow and exchange of communication.

You talked about Wikipedia. The ISPs here who came to see us talked about the fact that they are just the channel. If they were to block content, they said they'd wait for a court order. They don't block what goes through, and it sounded as if they were being quite strict in when and if they would do that. My understanding, from what you just said, is that's not the case in the United States.

[Prof. Timothy Wu]

Assuming that this new Trump administration policy goes through, they could block any website they wanted to. It gives them the power that the Chinese government has over speech, frankly. If you ever spend time in China, you'll notice that the Internet's very different. You can't visit any Tibetan independence sites; you can't visit Taiwanese sites; Wikipedia is blocked; Facebook is blocked. It's a completely different.

After this there's nothing stopping an American carrier from doing the same thing based on their idiosyncratic preferences, or maybe based on what the government tells them to do. Because the Americans have this blind spot toward private censorship, let's say the Trump administration says it wants you blocking all these sites that are saying nice things about North Korea, and everyone says, yes, why should we hear good things about North Korea, let's block all of those sites. They say that they agree that these sites are irresponsible; they're helping the enemy.

I'm not sympathetic, obviously, to the North Korean position, but I am sympathetic to free speech. They have the power. What you're hearing from the ISPs is basically some version of “Trust us”. As the last member suggested, I think Canadian ISPs are still bound by the telecom act, but for the United States, after this rule there are no holds barred, and it's open season for private censorship.

[Anita Vandenbeld, Liberal, Ottawa West—Nepean, ON]

What is the exact legal change that is causing this particular change?

[Prof. Timothy Wu]

It's the elimination of net neutrality, of the rule that said no blocking. In other words, the old rule said that when a customer asked for something, you had to deliver it; there was no blocking of websites, IP addresses, or anything like that.

I worked in the industry. It's not hard to block sites. Some sites are blocked already. They tend to be by court order, of child pornography sites usually and things like that, so there is some blocking already. It creates an open season.

The American ISPs come to us and to the U.S. government and say, “Trust us, we're not censors, we're not interested in that”. However, my grave concern is what happens when they are encouraged by, let's say, the Trump White House to start blocking or slowing down all the anti-Trump sites or CNN or MSNBC or something like that. They might then think, why do we not just make sure they're a little more annoying to use than other sources of information? The capacity is very powerful for some real manipulation of the system.

The United States has a serious speech problem already, which is to say there are increasing numbers of new challenges to free speech. We're not very well meaning. For example, I'm talking about the harassment of journalists by online trolls, propaganda, fake news.... We have all these problems. The end of net neutrality in some ways makes them worse.

[Anita Vandenbeld, Liberal, Ottawa West—Nepean, ON]

Do you know any other democratic jurisdictions that have anything close to this kind of system?

[Prof. Timothy Wu]

No.

[Anita Vandenbeld, Liberal, Ottawa West—Nepean, ON]

Wow.

[Prof. Timothy Wu]

I think everyone has some kind of no blocking rule. I'm not 100% sure, but no. It's a big step backwards for the United States, which used to be in the forefront of these policies.

[Anita Vandenbeld, Liberal, Ottawa West—Nepean, ON]

Some of the testimony we've heard has indicated that because of this there might be apps that will actually come to Canada and develop in Canada, so we may actually see more innovation on this side of the border. Do you think that may happen, or is that outweighed by the fact that Canadian companies, content producers, would lose access to the American market potentially?

[Prof. Timothy Wu]

I think that most apps or start-ups are still trying to reach a North American market. There might be some who decide, “Okay, we can get our start in the Canadian market; maybe that's a good place to get started.” I notice that a lot of start-ups come from Scandinavia, and they start with the Scandinavian markets and move on. So maybe there's some effect. Still, in the longer run I would think that most start-ups in North America want to reach the American audience as well as the Canadian audience. It could have some effect. Often Canada is the beneficiary of very stupid American policies, and there's the short-term moment where things move to Canada and new opportunities come to Canada. This might be one. I wouldn't expect a big boom, but sometimes it happens that way.

[Anita Vandenbeld, Liberal, Ottawa West—Nepean, ON]

Thank you.

[The Chair, Conservative, Bob Zimmer]

Thank you, Ms. Vandenbeld.

Next up, for three minutes, is Mr. Angus.

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

Thank you.

I want to just talk about the larger picture beyond the issue of net neutrality. In terms of questions of antitrust, which Americans tend to have been better at than Canadians in some areas, I was thinking of the Microsoft antitrust case and the issue of the bundling of services with Microsoft Office and Windows and all that. You'd mentioned the rise of very strong monopolies, which was certainly unexpected in the development of the Internet. Are we now also reaching that point with mobile devices and the enforced lack of compatibility, like the Apple Store, Google Play, and Amazon tablets? We're dealing with really dominant control of the market, and they're giving us all the great toys we can use, but we have to use them on their terms. In light of the net neutrality ruling, is there some question as to whether there will be be less of a desire to go on antitrust after them, or do we need to start breaking apart some of these monopolies?

[Prof. Timothy Wu]

I think in the United States there has been an impressive revival of antitrust thinking. I don't know if this has reached Canada. I think the pressure and the drumbeat to do something, to take seriously the market power expressed in some of the ways you described, has definitely built. I don't know quite what the target will be, but I think there's been a shift.

This is not a party thing. The Trump administration's Department of Justice has an aggressive lawsuit against AT&T right now, one of the biggest lawsuits in a long time, to try to prevent a big merger. At the end of the Obama administration, when I was in the White House, I didn't do these cases but there was a series of blocked mergers. I

I think antitrust is on the march again. I think people are saying, why not break up Facebook or something? What would be the downside? Instagram has managed to buy up all their rivals. Wouldn't it be better to have some competition in that space? Yes, I think that drumbeat is very strong right now.

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

Thank you.

I'm interested because we have similar issues in Canada, but we just take them from a different point of view, which is, again, that of protecting our basic industries and how we have to save them.

I remember that when I was first elected there was still a discussion about media monopoly. There was still a discussion about limiting the power of one or two or three players from owning all of the newspapers in a given area or owning all of the media markets. Then we were told time and time again that if they were given more and more of that monopolistic control, they would reinvest locally and we would have a much broader field of voices. What they ended up doing, of course, was firing all the local editors and local journalists, and then they pumped in the editorial content from Sun Media or Torstar. Now, once again, they're coming back and saying that we need to help them.

I'm looking at this in terms of the telecoms, because in Canada they are controlling more and more of the market in terms of the app services and the online devices. They pretty much run all the big sports networks and you can get them on your phones. We have dealt with them throttling and cutting off competition because they brought forward this issue.

Therefore, I want to go back to the issue of needing to actually put in legislation on net neutrality, because there is an interpretation that we're okay here, but there's always pressure in Canada to say that these giants are now too big to fail in our Canadian market. We can't get Americans to come in and take over. We have to protect them. We've created oligopolies. We have not based it on consumer competition. I think we are susceptible.

Given your experience in the United States with the power of the oligarchies there, do you feel that we do need to have some kind of written definition to protect consumers?

[Prof. Timothy Wu]

I said earlier that I am in favour of the statutory law, for the reasons I suggested earlier. I share exactly the same concerns you do. Canada needs to take a careful look at the United States and learn from some of the errors. The inequality problems in the United States are really serious and each of them is earned by us. It has to do with policy and each of the things you're talking about contributes to these problems.

One thing I'll say about antitrust is that a predictable consequence of allowing an extreme concentration of industries is that they have increased political power of the kind you are talking about. These are small groups, which are very organized, that understand the payoffs from investing in legislation. In the United States, for example, the pharmaceutical industry invested $117 million in lobbying to prevent drug prices from going down. That has benefited them to the tune of $70 billion a year. The concentrated groups understand this. Failing to enforce the antitrust laws and allowing industries to over-concentrate will lead to stronger political pressure on people like the people in this room.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Angus.

Yes, go ahead, Mr. Erskine-Smith.

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

Because Mr. Angus and I were going down this line of questioning, it might be helpful if the analysts sent Professor Wu subsections 27(2) and 36 of the Telecommunications Act, some information about that and how we protect.... We don't necessarily have the same distinction between telephone carriers and broadband in our law. If Professor Wu comes back in writing and says that this is insufficient and here's how we might want to protect it further, that might be helpful to us, rather than our putting questions to him orally now when he doesn't have the context in front of him. I don't know if that's possible, but it would be helpful to us.

[The Chair, Conservative, Bob Zimmer]

I'm sure we could make that happen.

Are you okay with that, Mr. Wu?

[Prof. Timothy Wu]

Sure. I'm open to my national duty.

By the way, when are you guys going to hold a hearing on the NHL and the Olympics? I want to know about that.

[Some hon. members]

Oh, oh!

[Prof. Timothy Wu]

That's what I'm upset about. I have an editorial in today's New York Times asking the Canadian Parliament to allow Canadian athletes to play if they want to, and proposing a law for the Canadian Parliament.

I know that's aside from net neutrality, but it's an issue that concerns me very deeply.

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

I prefer women's hockey.

[The Chair, Conservative, Bob Zimmer]

Thanks again.

Are there any further questions for Mr. Wu?

I want to thank you, Mr. Wu, for appearing today before our committee—and we appreciate your opinions on Canadian hockey. We'll talk—

[Prof. Timothy Wu]

Can I make one quick closing statement?