Canada Continues To Play With Itself For My Amusement — CRTC Allows New Tarrif for Metered/Capacity Limited Wholesale Services.

Back in December, I was very excited by the decision of the Canadian Radio-Telecommunications Commission (CRTC) to permit Bell Canada to throttle traffic for its wholesale customers. This represented the first OECD country taking a major step away from mandatory unbundling since the FCC deregulated our telcos in 2005. As a lover of empirical data, the thought of another country playing games with its critical infrastructure to test market absolutism struck me as a welcome relief from the U.S. always playing the guinea pig on free market absolutism.

And now, CRTC has gone further. In this Order, the CRTC approves an interim tariff for usage based billing (UBB) or, as we would call it here, metered billing with a capacity cap. I’m not sure if, reading this, it merely permits Bell Canada to offer a wholesale metered plan or if it allows Bell Canada to drop their unmetered plans and offer only metered plans. If the later, CRTC has pretty much delegated the entire industry structure over to Bell Canada. But even if this is just an option, it lets Bell Canada set the business model for how ISPs can do metered billing. So again, Bell Canada is going to have pretty tremendous influence on how the business model for DSL delivery evolves going forward.

Bell Canada had also asked for a fairly steep charge against an ISP if the ISP could not identify the specific customer using capacity, since that would evade the capacity cap. Happily for independent ISPs in Canada, the CRTC decided to hold off on that one for a bit.

As always, I shall be very interested to see what happens as a result. It’s always rare to see a similarly situated country willing to become a laboratory for experiments with its critical infrastructure. I look forward to seeing multi-year data on what happens to their broadband penetration, pricing, and overall use as a consequence.

Stay tuned . . . .

RIPE Makes Me Vaguely Uneasy By Creating Legal Market For IP Addresses.

Talk to anyone who was involved back in ye olde days of the development of the Internet address system and underlying protocols and they will tell you that most of the major stuff — like the division of the domain name system into generic Top Level Domains (gTLDs) and country code top level domains (ccTLDs) just evolved on their own. Sometimes this worked out real well. Sometimes, not so much. But for better or for worse, these decisions set the pattern for how the internet evolved and created huge policy issues as the internet scaled up from a universe in which everyone knew everyone else to a system of global communications that always seems to be lurching toward — but never quite reaching — total collapse.

I’m not saying I could do better, or that anyone could. Indeed, I can argue that a lot of good stuff happened when people handled problems in an ad hoc manner and that the major effort to put a little forethought and adult supervision over the whole process, the Internet Corporation for Assigning Names and Numbers (ICANN), turned into a total mess.

Nevertheless, it gave me a bad turn to read that RIPE-NCC, which allocates the IP addresses for the European Union, will now allow holders of IPv4 addresses to openly buy and sell these address allocations (you can read the policies around the address allocation here).

Why does this make me uneasy, especially when a gray market in IPv4 addresses already exists? Because it makes fundamental changes in an underlying piece of critical infrastructure. That always makes me queasy, especially when I know that those making the changes have not adequately considered the very many ways this can go badly, as well as the ways in which it can go well. OTOH, I also recognize that, as Ecclesiastes warns, “to the making of many books there is no end, and much study is a weariness of flesh.” (Eccl: 12:12) Somebody needs to act sometime. Nor do I have a very clear idea what I would do instead to solve the IPv4 address exhaustion issue. But I really worry about creating a class of powerful incumbents invested in preserving the value of their IPv4 real estate and opposing transition to IPv6.

For more detail on this than any sane person would otherwise want, see below . . . .

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BitTorrent Employs Self-Help After CRTC Ruling. Net Neutrality Folks Called It Right So Far.

Well that certainly didn’t take long.

Richard Bennett has an article at The Register describing BitTorrent, Inc.’s new method for circumventing traffic throttling. Essentially (if I understand it), BitTorrent has altered the way in which its uTorrent P2P application will work. Instead of relying on the Transfer Control Protocol (TCP) uTorrent will now use the User Datagram Protocol (UDP) to move packets. Richard describes what this means and the potential impact of this better than I can. Critically, however, Richard describes this as a means by which BitTorrent can avoid Bell Canada’s targeted traffic management by disguising the nature of its traffic as latency-intolerant (like voice over IP (VOIP))and therefore given priority over other traffic. You can see some discussion of this as a response to the CRTC decision to allow Bell Canada to manage traffic here at DSL Reports.

As I observed only last week, the CRTC decision presents a splendid opportunity to grab some popcorn and watch some other country play games with its critical infrastructure. Mind, since the internet is a global “network of networks,” what happens in Canada is likely to impact me here in the U.S. as well. But I can’t do anything about that. So pardon me whilst I munch my popcorn and enjoy a good dose of Cassandrafruede (a term of my own invention which means “the bitter pleasure experienced when something awful you predicted that could have been avoided if people had listened to you comes to pass, even though you also get screwed through no fault of your own”).

More analysis to go with my popcorn below . . . .

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Pass the Popcorn! CRTC Offers Great Opportunity To Watch Someone Else Play With Critical Infrastructure.

According to this official news release, the Canadian Radio-Television and Telecommunications Commission (CRTC) denied a request from the Canadian Association of Internet Providers (CAIP) to stop Bell Canada from throttling without notice the traffic of rival ISPs leasing access to Bell Canada’s network. Instead, CRTC punted to a general inquiry on traffic shaping.

According to Michael Geist, expert on all things telecom and Candian and general super-smart guy, this is not the last word from the CRTC on the question. But since — according to the public notice — the first public hearing on the subject is scheduled for July 9, 2009, Canadian ISPs can look forward to a considerable period of time when they live at the mercy of their largest rival.

This does not depress me, as I do not live in Canada. Rather, I am excited at the prospect of some other country (for a change) deciding to make offerings to the Gods of the Marketplace and play games with its critical infrastructure while I get to watch. Until now, Canada has generally been outranking us in the international rankings on penetration, although it ranks less well on affodability and only so-so on speed (as compared to countries with real broadband). Those who see such things as relevant (and not everybody does, the situation is complex and the data messy, hard to come by, and subject to multiple interpretations) generally regard this as a consequence of bad policy choices by the FCC (again, not everyone agrees, the data — to the extent we even have data — is very messy and complex). In particular, a lot of us think that the decision to eliminate mandatory wholesale access and rely on “intermodal” competition was a phenomenally bad idea.

Now we may get a chance over the next few years to test this hypothesis, and at someone else’s expense! Go Canada!

More below . . . .

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ESPN360.Com Locks Up It's Content — Let The Fragmentation Games Begin!

There’s been a lot of back and forth over whether letting broadband providers lock up content, or content providers lock out ISPs, is a good thing or a bad thing. And now, ESPN360.Com is going to kick off the fragmentation games and let us all find out.

It is a fine old Republican free market anti-deregulatory tradition to deregulate critical infrastructure and hope for the best, pooh-poohing doomsday predictions as ignorant exaggerations and fear mongering by business-hating regulation-loving quasi-commies. And since this philosophy worked so well with our financial sector, we have now moved it to the next major engine of the economy — broadband.

I am so excited! For those who have developed a taste for Lehman Bros-type thrill rides, the deal will bring back fine memories of your first subprime derivative. You (and the rest of us along for the ride) can look forward to the thrill, the excitement, the dramatic highs and lows of playing high stakes roulette with our digital future. True we’ve lost our mortgage money (literally and metaphorically) playing “follow the Subprime queen.” But don’t worry. As any economist will tell you, the combination of a lack of information, high transaction costs, complex interrelated markets, and poorly understood network effects is just tailor made for that wild west anything goes atmosphere that made all them miners rich in the Sacramento gold fields!

Bet our critical infrastructure? How can we afford NOT TOO!!!

Details below . . .

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Of Bandwidth Hogs, QoS, and Regulatory Chameleons

I can live with the internet as a best efforts network. I can live with the internet as a regulated utility. What I absolutely cannot stand is the idiocy of the current regulatory scheme that allows broadband access providers to justify the deregulated state of a competitive best efforts environment because they need to provide a public utility.

Case in point, Comcast’s recent actions of cutting off “bandwidth hogs” and purportedly throttling BitTorrent traffic to its subscribers (Comcast denies it targets BitTorrent traffic). Comcast in its user agreement explicitly reserves the right to cut off users using “too much bandwidth” — although Comcast refuses to say how much bandwidth is “too much.” Comcast defends its actions (including the secrecy of the bandwidth limit) on the grounds that “bandwidth hogs” overload the system capacity and thus slow down everyone’s use of the system.

As I discuss below, Comcast and the other broadband providers are speaking out of both sides of their mouths. They claim they have no liability for anything and should not be regulated because they are providing “best efforts” services and everyone knows it. But when they want to cut off users, tier traffic, or indulge in other behavior that sticks it to subscribers they haul out the “Quality of Service (QoS)” and “critical infrastructure” arguments. “What about voice?” They cry. “What about poor crippled Tiny Tim and his medical monitoring unit, cut off by some bandwidth hog downloading pirated child pornography and Al Qeda instructional videos (which, we will admit, makes a very interesting mash up when viewed via deep packet inspection)? You have to let us do whatever we want and charge whatever we want because people are relying on us for critical services.”

Of course, historically, companies that provided critical services were “public utilities.” At which point, the telcos and cable cos amazingly morph back into laissez faire “best efforts” providers and subscribers need to know there are no guarantees and that which we tell you three times may or may not be true.

My further analysis of the amazing regulatory chameleon, the private public utility, below….

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But Do Spectrum Auctions *Really* Suck? According to Center for American Progress Report, You bet!

In all the hustle and bustle, it rather blew by that my friends Dr. Gregory Rose and Mark Lloyd have written this analysis of ten years of FCC spectrum auction data.

Summary — FCC auctions turn out to be great ways for incumbents to exclude new entrants and to bilk the government. They do not yield the promised efficiencies of distribution or even maximize revenue to the government. There are ways to improve the process, but the FCC open ascending auction systems just about ensures that a collection of incumbents can keep out any genuinely disruptive competitors and collude to minimize revenue to the government and maintain the status quo.


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