Everyone wants to regulate the internet

During the CRTC proceedings on “Let’s Talk TV” there was a lot of noise and rhetoric aimed at the CRTC and broadcast industry about the idea that somehow the internet should be “regulated” or “taxed”. While the genesis of the debate evolved out of the suggestion that internet broadcasting should, or should not be subject to broadcast jurisdiction and regulation, the level of debate descended quickly into a binary discussion around very simplistic propositions as to whether or not the internet should be regulated or taxed. Absent from the public discussion seemed to be any of the nuance that is often so critical for guiding public policy. Ironically while an open internet provides the vehicle to supply nuanced information, the nature of social media makes it increasingly easier to shoot first and often.

This is not meant to rehash what came to be referred to as the CRTC “Netflix” debate but rather to take a step back and look at whether, and for what reasons, the general public as citizens or consumers, may favour regulating the internet – which actually means businesses that use the internet – in certain circumstances. Because contrary to certain myths and misconceptions, businesses using the internet are subject to a lot of regulation already.

Context is important here. There are all kinds of reasons to regulate the internet, and we do regulate today. And even the most vocal opponents of internet content taxes or content regulation are equally vociferous proponents when it comes to regulating market behavior online where they see value. All of this is valid depending on the perspective of those seeking to intervene in the market or not. The debate in my view boils down to the public first perceiving value in increased regulation, and second, as social analyst Brue Anderson suggested at the recent International Institute of Communications conference in Ottawa, the belief that those imposing forms of regulation can be trusted to achieve positive outcomes.

Many persons who would oppose any form of content regulation and support open markets online are often very strong supporters of significant intervention when it comes to restricting physical network providers using rules like net neutrality or imposing wholesale price regulation to create opportunities for resale competition. Again, there are very valid reasons for such intervention by those that want to promote certain objectives like a guaranteed level of open access or regulation of carrier pricing. However, there are equally arguments against too much reliance on such interventions in terms of impacts on network investment or the creation of uneconomic entry. Not to say either side is completely right but merely to suggest there are tradeoffs in any form of intervention.

Issues of “market power” being a trigger for increased online regulation or intervention when certain players in the value chain start to reach a scale, suggests calls for even more regulation as those operating virtual networks or supply chains reach potential levels of market dominance well in excess of those that control communications networks today. Recent articles with respect to the role of Amazon in the publishing and distribution of e-books or on the power of Google on search and advertising or Apple with respect to wholesale pricing of apps, suggest the issues of market power online are becoming as significant and complex as in the network world.

Many small “c” conservative business people may react negatively to ideas that the government might seek to increase regulation of businesses using the internet or increase taxation of those businesses. But if it was suggested to the same people that businesses in the e-commerce world did not pay the same business and sales taxes their bricks and mortar businesses did, they may well support more intervention online to “level the playing field.” This is not a small point and the Government of Canada through the Department of Finance has a public consultation underway on the tax treatment of foreign e-commerce providers.

Many supporters of an open internet to support the free flow of information are likely open to censorship and surveillance when it comes to restricting child pornography or combatting terrorism. Many supporters of open content markets support limits on commercial forms of communications like spam. Similarly forms of internet regulation intended to combat fraud and invasion of privacy are seen by many as good things. And the internet is not unconstrained when it comes to being subject to copyright rules that enable creators and distributors to protect and monetize their intellectual property or exercise territorial exclusivity.

The internet is unique, innovative and extra-territorial in many respects but it is not separate from many of the values, norms and laws that exist in the countries and virtual communities it connects. That is not to say that all the rules that apply to business and behavior in a physical world can or should equally apply in the virtual. But we would be naive to assume that these can’t apply.

Complexity and nuance remain crucial to good policy decisions. That said, if there was one thing that also seemed clear from the CRTC debate, it was that just because something requires intervention in a bricks and mortar world does not automatically mean it should apply in the virtual. A demonstration of value to the public or consumer as your audience or customer is a prerequisite. Any proposals to further “regulate” still boil down to some segment of the public recognizing a positive value in intervention relative to the negative costs. And whether we are debating market power, access, price or content those answers are seldom clear without information. Luckily the internet is a great place to find more information. And a lot of it is accurate.


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