My regular Law Bytes column (freely available linked version, Toronto Star version, homepage version) focuses on the CRTC’s VoIP decision. I begin by noting that when the Internet burst onto the public stage in the mid 1990s, legal scholars initially relied on analogies to identify an appropriate legal framework. Likening the Internet to the “Law of the Sea” or the “Law of Outer Space, their hope was that an existing body of law would provide a ready made solution to the Internet’s inevitable legal challenges. The approach failed, however, as the complexity of the Internet, as well as the genuinely novel issues it raised, rendered each successive proposal unsatisfactory.

I argue that last week marked the return of the Internet analogy, as in its search for an appropriate regulatory framework, the CRTC was guided by a single analogy, its belief that the provision of local VoIP service is most like traditional local phone service and that similar rules should therefore apply. Unfortunately, much like the earlier Internet analogies, this one is not a perfect fit.

 

Focusing primarily on the incumbent telcos (as this analogy does) is a mistake. Unlike traditional local phone service, VoIP dominance is not dependent upon local phone service control. Rather, the real danger lies with insufficient competition in the provision of high speed Internet access, which serves as the prerequisite to effective VoIP services.

I fear that by regulating only one of the two choices, the CRTC has opened the door to cable dominance of the VoIP market while neglecting two preferable policy choices. First, the Commission could have established price regulation for both phone and cable, thereby creating a level playing field as between the two dominant modes of VoIP delivery and as against third party providers. Alternatively, it could have dispensed with price regulation altogether, secure in the knowledge that with open access will come widespread competition.

 

Even more importantly, the CRTC declined to establish a prohibition on highspeed Internet access providers that engage in packet preferencing by either blocking or impairing competing VoIP service as requested by third party VoIP providers. The CRTC concluded that there was no evidence that packet preferencing represents a real risk, but today the opposite is certainly true.