The Bell website blocking coalition includes several Internet providers, but there are no smaller, independent ISPs. The absence of smaller ISPs that are essential to the government’s aspiration for greater Internet access competition is unsurprising given the costs associated with site blocking that can run into the millions of dollars with significant investments in blocking technologies and services, employee time to implement blocking mandates, and associated service issues. A mandated blocking system applied to all ISPs in Canada would have an uneven impact: larger ISPs will face new costs but may find it easier to integrate into existing systems (some already block child pornography images), whereas hundreds of smaller ISPs would face significant new costs that would affect their marketplace competitiveness. In fact, larger ISPs might ultimately benefit from higher fees passed along to subscribers and reduced competition.

The government has long emphasized the need to address Internet affordability concerns through greater competition. Earlier this month, Prime Minister Justin Trudeau told the House of Commons that “Canadians pay enough for their Internet.” Innovation, Science and Economic Development Minister Navdeep Bains echoed the same concerns in a speech last year:

Low-income Canadians spend a higher share of their household income on cellphone and Internet bills than high-income Canadians. So it’s not surprising that only 6 out of 10 low-income households in Canada have Internet service.  By contrast, virtually all households that earn $125,000 annually have it. This digital divide is unacceptable. It represents a real barrier to continued prosperity for Canadians. Every child who’s unable to do school assignments or download music online is one less consumer of your products and services. Each one of these children is potentially one less software developer for your industry – and one less job creator for our country.

The increased ISP costs arising from equipment, employee time, and service provider obligations (blocking-related and monitoring services often come from the same companies actively promoting website blocking) bears a strong resemblance to the earlier Canadian debates over lawful access. In a 2005 bill, the government identified the need for specific technical capabilities and acknowledged that the requirements would create new costs. In fact, the government chose to establish a three-year grace period for smaller ISPs with less than 100,000 subscribers due to concerns “the costs would have an unreasonable adverse effect on the business of the service providers.” While that lawful access bill did not pass, several years later, independent ISPs warned that reviving mandated network requirements would have major cost implications that could result in some being forced to shut down.

Estimating the costs of the site blocking plan is made more difficult by the lack of detail in the Bell coalition proposal. However, the experience elsewhere suggests that it could run into the millions of dollars. First, the risks of blocking increase with certain blocking technologies. A 2010 Ofcom study identified the correlation between cheaper blocking systems and a greater likelihood of overblocking (IP address blocking and shallow packet inspection blocking), while more targeted systems were more effective but also significantly more expensive for ISPs to implement (deep packet inspection is expensive, more targeted, and privacy invasive).

Larger ISPs in the UK disclosed their approximate costs in a 2014 case. For example, Sky Broadband spent over 100,000 pounds (costs described as “six figures”) to develop a website blocking system solely for IP right infringing website injunctions in 2011 and spent thousands more each month on monitoring costs. British Telecom spent over a million pounds on a DNS web-blocking system in 2012 and required more than two months of employee time on implementation. EE spent more than a million pounds on its web-blocking system and over 100,000 pounds every month for operations.

Canada already pays some of the highest fees for Internet and wireless access. The government has recognized universal, affordable access as a critical policy goal. While companies such as Bell and Rogers would stand to gain from blocking with higher fees passed along to subscribers and reduced marketplace competition, smaller ISPs would face a difficult economic challenge, with mandated website blocking risking the possibility of all Canadians facing higher monthly Internet bills.

Related posts:

The Law Bytes Podcast, Episode 186: Andy Kaplan-Myrth on the CRTC’s Last Ditch Attempt to Fix Canada’s Internet Competition Problem