The widening divergence between Internet regulations in Canada and the United States may threaten investment in Canadian innovation, warns one of U.S. President Donald Trump's telecommunications advisers.
"My biggest concern for Canada is that you continue to add regulation that deters the incentive to invest," Roslyn Layton, one of three experts appointed to Mr. Trump's transition team for the Federal Communications Commission (FCC), said in an interview with The Globe and Mail.
Ms. Layton, a visiting fellow at the American Enterprise Institute, a conservative think tank, also took aim at comments made by Canadian Heritage Minister Mélanie Joly during her visit to Hollywood and Silicon Valley last month to press the case for U.S. firms to invest more in made-in-Canada content. Among Ms. Joly's pitches to U.S. tech executives was Canada's commitment to net neutrality, a principle that says the Internet should treat all content equally, free from interference from corporations looking to favour their own content or strike deals with deep-pocketed digital media companies. Tech giants have come out strongly in favour of net neutrality, which they argue helps place limitations on the power of Internet service providers to control the content that gets streamed over their networks.
Ms. Joly's visit came on the heels of a ruling from the Canadian Radio-television and Telecommunications Commission striking down a music-streaming service that Quebec wireless carrier Videotron Ltd. offered to certain high-paying subscribers that wouldn't count toward their monthly data cap.
The ruling was a major blow to the practice of "zero-rating" – where Internet providers offer exclusive content for free, by exempting it from data charges. Critics argue the practice violates net-neutrality principles by creating two-tiered Internet that offers a "fast lane" for some while disadvantaging smaller content providers and lower-income Internet subscribers.
Ms. Layton drew heat from Canadians after posting on Twitter late last month that the CRTC's decision put Canada "in the class with backward India." She has previously spoken at CRTC hearings into Canada's broadband Internet regulations.
She argued in the interview the Canadian government is going in the wrong direction and should instead be zero-rating all Canadian content, while charging U.S. firms for the bandwidth they use to offer entertainment to Canadian viewers. "People would go out of their minds, but I would say that all Canadian content should be zero-rated," she said.
"Canadian content should have a fast lane."
Her comments come as Canada and the United States appear to be going their separate ways when it comes to broadband Internet regulations.
Until recently, the two countries had been converging in their approach to governing Internet providers, with both moving toward favouring net neutrality.
A 2015 Federal Communications Commission ruling reclassified broadband Internet as a public utility in the United States, similar to phone and television service, putting the United States in line with Canada's approach to the sector.
Telecoms regulators in both countries had also launched reviews into the practice of zero-rating.
Yet a series of developments since Mr. Trump has taken office have begun to push the two countries further apart.
While Canada has reaffirmed its support for net neutrality and its opposition to zero-rating, Ajit Pai, Mr. Trump's pick for FCC chairman, has shut down the commission's investigation into zero-rating practices by U.S. telecoms.
Last week, Mr. Pai announced a proposal to reverse the decision to designate Internet providers as public utilities. The move has sparked criticism from U.S. tech giants.
Ms. Layton predicted that as U.S. regulators rollback rules governing Internet access, Canadian institutional investors, including the country's large public pension plans, may start shifting their focus south of the border in search of new mobile and Internet investment opportunities. "They will change their portfolio slightly, more to the U.S. and maybe more to Mexico," she said.
After the U.S. enacted its stricter rules in 2015, AT&T, one of the largest U.S. telecoms companies, shifted much of its new investment to Mexico, she said.