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Report On Business New FCC head Ajit Pai could influence Canada’s net neutrality policies

Newly appointed chairman of the FCC Ajit Pai, right, has been a vocal critic of U.S. policies on net neutrality.

James MacDonald/Bloomberg News

Donald Trump's pick to lead the U.S. telecommunications regulator has taken aim at net neutrality rules, a move that could have an influence on policy in Canada.

Net neutrality is the principle that all Internet traffic should be treated the same. Following a fraught, politically charged process, the U.S. Federal Communications Commission passed the Open Internet Order in 2015. That reclassified Internet service as a public utility and cracked down on "fast lanes" by banning Internet providers from accepting payment in exchange for prioritizing certain traffic.

The rule was upheld in court last year, but Ajit Pai, the new president's choice for chairman of the FCC, has been a vocal critic of the order and is expected to target it in some fashion. He has also already shut down investigations related to wireless carriers offering free data usage for certain applications.

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Canada and the U.S. do not always take the same approach to telecom regulation. Unlike the U.S., for example, Canada has tried to spur competition by forcing its incumbent cable and telephone companies to sell wholesale access to their networks to smaller competitors who resell Internet service to retail customers.

But after the U.S. adopted the Open Internet Order, the two countries seemed largely aligned on net neutrality. If the U.S. now takes a dramatically different path on this issue, experts say it could be hard to ignore.

"Canada was ahead of the curve on this one. We established some pretty strong net neutrality rules… before the FCC had locked them down," said Gregory Taylor, assistant professor of communication, media and film at the University of Calgary.

Canadian telecom legislation prevents Internet providers from giving themselves or anyone else an "undue preference" and in 2009, the Canadian Radio-television and Telecommunications Commission introduced a policy that limits Internet traffic management practices such as slowing down or blocking content.

"Until very recently, net neutrality looked pretty strong in the U.S. as well, but with the arrival of the new chair, there are certain signals that some things might come up for debate again," Mr. Taylor said, adding that whatever happens in the U.S. "will have some really strong implications for how Canada's Internet develops."

Mr. Pai, a one-time lawyer for U.S. telecom giant Verizon Communications Inc., favours a non-interventionist, free-market ideology, according to Paul Beaudry, director of development at the University of Calgary's School of Public Policy.

"Obviously Chairman Pai is going to take the FCC in a different direction than his predecessor," Mr. Beaudry said. "It's not 100 per cent clear what kind of influence this could have on the CRTC, but certainly the regulator will look south of the border."

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U.S. policy on net neutrality can have a "global impact on how companies build and support infrastructure," said Desjardins Securities Inc. telecom analyst Maher Yaghi. "Even though each country is regulated differently, it ultimately has a moral impact on how governments view things."

Mr. Pai has not yet indicated whether or how he will reverse the Open Internet Order, which includes the rules preventing Internet fast lanes as well as blocking or throttling traffic. But he has taken swift action on a controversial marketing tactic – one that is currently up for debate in Canada – by shutting down an FCC investigation into "zero rating" practices by wireless carriers T-Mobile, Verizon and AT&T.

Zero rating refers to the practice of exempting certain Internet or mobile traffic – such as video streaming or music apps – from charges for the data it uses. Companies argue it represents innovation in marketing and is a way to stand out from the competition, but net neutrality advocates say it is an example of service providers acting as gatekeepers over the Internet, failing to deliver all content in an equal fashion. (The practice was not specifically barred in the FCC's Open Internet Order, in which the regulator stated it would examine complaints on a case-by-case basis.)

The CRTC is taking a hard look at zero rating and held a public hearing in the fall on the practice of what it calls "differential pricing." The hearing was spurred in part by complaints over Videotron Ltd.'s Unlimited Music program, which lets subscribers of premium wireless plans stream certain music services such as Spotify and Google Music without any data charges. The CRTC has yet to issue its decision in that review.

"Canadian companies will be screaming at the CRTC if zero rating is allowed in the U.S. and is still illegal here," Mr. Taylor said.

Mr. Yaghi says he does not think a shift in thinking on net neutrality – one that favours the loosening of regulations – is currently under way in Canada.

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"[But] we believe Pai's appointment could increase the legitimacy of non-interventionist policies, or at least give greater voice to those who support this point of view."

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