ARCHIVED -  Transcript of Proceeding

TRANSCRIPT OF PROCEEDINGS BEFORE

THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

SUBJECT:

Review of the Internet traffic management practices of Internet service providers

HELD AT:

Conference Centre

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

July 9, 2009

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Canadian Radio-television and

Telecommunications Commission

Transcript

Review of the Internet traffic management practices of Internet service providers

BEFORE:

Konrad von Finckenstein   Chairperson

Len Katz   Commissioner

Suzanne Lamarre   Commissioner

Candice Molnar   Commissioner

Timothy Denton   Commissioner

ALSO PRESENT:

Sylvie Bouffard   Secretary

Regan Morris   Legal Counsel /

Chris Seidl   Hearing Managers

Stephan Meyer

HELD AT:

Conference Centre

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

July 9, 2009

- iv -

TABLE OF CONTENTS

   PAGE / PARA

Canadian Association of Internet Providers   519 / 2956

Canadian Internet Policy and Public Interest Clinic on behalf of Campaign for Democratic Media   583 / 3306

Execulink Telecom   632 / 3574

Primus Telecommunications Canada Inc.   666 / 3779

   Gatineau, Quebec

--- Upon resuming on Thursday, July 9, 2009 at 0904

2949   THE CHAIRPERSON: Good morning. Bonjour.

2950   Madam Secretary, let's begin.

2951   THE SECRETARY: Thank you, Mr. Chair.

2952   Before we begin, I would like to note for the record that Cybersurf has advised the Commission that they will not be appearing at the hearing. They were Item 21 on the Agenda.

2953   I would now invite the Canadian Association of Internet Providers to make its presentation.

2954   Appearing for the Canadian Association of Internet Providers is Chris Tacit.

2955   Please introduce your colleague and proceed with your 15-minute presentation.

PRESENTATION

2956   MR. TACIT: Thank you, Madam Secretary.

2957   Good morning, Mr. Chair and Commissioners. My name is Chris Tacit, and I am counsel to the Canadian Association of Internet Providers, also known as CAIP in this proceeding.

2958   CAIP's mission is to foster the growth of a healthy and competitive telecommunications service industry in Canada through collective and cooperative action on Canadian and international issues of mutual interest.

2959   The CAIP membership includes independent-minded local exchange carriers and cable companies, internet service providers, also known as ISPs, and companies that provide services and products to the industry.

2960   With me is Mr. Tom Copeland, who is Chair of CAIP. Mr. Copeland will be making CAIP's oral presentation today.

2961   MR. COPELAND: Mr. Chairman and Commissioners, I am pleased to appear before you today to provide you with CAIP's views on the crucial issues surrounding internet traffic management practices, or ITMPs.

2962   In a letter dated June 5th of this year, the Commission set out a proposed framework for addressing the issues to be discussed at this hearing. I plan to follow that framework in making this presentation, but before doing so, I would like to highlight some facts from the record of this proceeding that are crucial in explaining the positions that CAIP is taking in this proceeding.

2963   First, the role of the independent ISP industry has been and continues to be crucial in increasing competition in the provision of internet access and the related services to Canadian consumers and businesses.

2964   For example, innovations such as Voice over Internet Protocol and IP trunking were adopted by independent ISPs, and only later, and reluctantly, adopted by the dominant carriers.

2965   Second, in providing competitive services to Canadians, the independent ISP industry faces enormous challenges due to the market power that the dominant carriers exercise in the markets for internet access services.

2966   That market power is the result of, primarily, two factors. The first factor is that independent ISPs must obtain the wholesale services that they require to reach their end user retail customers from the dominant carriers, while those same dominant carriers are the independent ISPs' largest competitors at the retail level.

2967   The second factor is that, as the Commission's own Communications Monitoring Report reveals, dominant carriers have an overwhelming market share of retail internet access, accounting for 88 percent of the total revenue market share for internet access service, and 95.5 percent of residential subscribers in 2007.

2968   Based on these considerations, it is clear that the application of internet traffic management practices by the dominant carriers to their wholesale access service impedes the ability of independent ISPs from being able to offer retail services that are differentiated -- in other words, services that have different attributes than the retail services of the dominant carriers.

2969   Such an outcome only serves to magnify the market power that the dominant carriers enjoy in the provision of internet access services.

2970   One method of bringing hope for balance to the market and ensuring that Canadians continue to have a variety of providers of service offerings from which to choose is for the Commission to prevent the dominant carriers from applying internet traffic management practices to their wholesale traffic. Such an approach will enable all ISPs to differentiate their retail services to a much greater degree.

2971   I now turn to the framework that was set out in the Commission's June 5th letter.

2972   The objective that the Commission set out in that letter for this proceeding is: To establish ITMP guidelines that maximize the freedom of Canadians to create applications and use the internet, while respecting the legitimate interests of ISPs to manage their networks consistently with privacy and other legislative constraints.

2973   CAIP certainly agrees with this objective, subject to two clarifications. First, the phrase "maximize the freedom...to create applications and use the internet," should not be interpreted in a manner that prevents the application of internet traffic management practices to retail-level internet access services if such practices form part of an ISP's business model, and that the customers of that ISP have come to accept those practices.

2974   In a competitive retail environment, it should be up to the end users to determine the extent to which they are prepared to have their services influenced by traffic management.

2975   This drives competitive differentiation, based on the service features that end users want and the price they are willing to pay.

2976   Similarly, the phrase "respecting the legitimate interests of ISPs to manage their networks," should not be interpreted in a manner that allows the dominant carriers to apply traffic management practices to wholesale traffic, particularly when other less intrusive methods for network management exist.

2977   For example, dominant carriers can build adequate network capacity and unbundle network components to make the transport facilities that wholesale customers require available on reasonable, Commission-approved terms.

2978   The Commission has proposed to define "internet traffic" as any traffic carried on the public internet, regardless of the underlying technology. Traffic that is carried on a service provider's network, but not on the public internet, such as a licensed IPTV service or a managed VoIP service, is not considered public internet traffic.

2979   CAIP agrees with this definition. However, in the interests of promoting competition, the applications of traffic management practices to wholesale services of any kind employing IP technology should not be allowed, even if such services are of the kinds excluded from the definition.

2980   The Commission has proposed three assumptions for the purpose of this proceeding. The first assumption is that unrestricted increases in internet traffic can lead to congestion in all or part of an ISP's network.

2981   These periods of congestion may lead to deterioration in service for end users who are clients of that particular ISP.

2982   CAIP does not agree with this untested assumption. Proper network engineering and planning can prevent significant congestion issues from arising in ISP networks and affecting end users adversely. This is particularly true, given that the rate at which internet traffic is growing is actually slowing down.

2983   In fact, a number of dominant carriers in this proceeding, including SaskTel, MTS Allstream, TELUS and Videotron, have indicated that they have so far avoided the application of any technical ITMPs, except to prevent network attacks. They have done this by applying sound network engineering and planning principles, and in some cases dealing with high-bandwidth consumers on an individual basis.

2984   More importantly, congestion can be avoided at the wholesale level by simply ensuring that dominant carrier wholesale services are sufficiently unbundled to provide independent ISPs with the option of purchasing the quantities of transport services they require to avoid congestion that adversely affects end users.

2985   CAIP does not believe that the network congestion considerations should drive policy determinations regarding ITMPs. If the Commission does wish to link traffic management policies to network congestion before any assumptions regarding network congestion are made or empirically tested, a common industry definition of "network congestion" in IP networks needs to be developed.

2986   Such a common definition could be developed either with the assistance of an inquiry officer, appointed pursuant to section 70.1 of the Act, or through a CISC process.

2987   The second assumption proposed by the Commission is that certain traffic management practices may be appropriate for ISPs to use in order to maintain the integrity of their networks. CAIP agrees that certain ITMPs may be necessary to combat malicious attacks against networks by way of viruses, spam, denial of service attacks, or other similar attacks.

2988   However, ITMPs should not be used at the wholesale level for other purposes.

2989   The final assumption proposed by the Commission is that the circumstances under which the Commission will grant approval under section 36 of the Act in relation to ITMPs and other practices are governed by the Telecommunications Policy Objectives set out in section 7 of the Act.

2990   CAIP agrees with this assumption, which is nothing more than an alternative articulation of part of the obligation imposed on the Commission by section 47 of the Act, which provides that the Commission shall exercise its powers and perform its duties under the Act, and any special Act, with a view to implementing the Canadian Telecommunications Policy Objectives and ensuring that Canadian carriers provide telecommunications services and charge rates in accordance with section 27.

2991   Pursuant to section 47 of the Act, section 36 must also be applied in a manner that is consistent with the Cabinet Policy Direction to the Commission dated December 14th, 2006.

2992   With this background in mind, I will now provide CAIP's responses to the questions posed by the Commission in its June 5th letter.

2993   The first series of questions posed by the Commission concerns the acceptability of internet traffic management practices.

2994   If ITMPs are applied solely at the retail level, there should be no restrictions on the type of technical or economic traffic management practices employed.

2995   Any ITMP chosen by an ISP would be based on the business model of that ISP.

2996   In a competitive marketplace, it can be expected that a wide variety of service options will be available, some of which may involve certain ITMPs, and others which may not. CAIP's view is that consumers should ultimately determine what is acceptable to them in the terms of the services to which they subscribe.

2997   The Commission has also posed a series of questions regarding ISP ITMP disclosure. CAIP is of the view that ISPs should disclose their use of traffic management practices to their customers. Since traffic management practices should not be applied to wholesale services, with the possible exception of instances required to prevent network attacks, there would be nothing to disclose except when an ITMP is employed for such a permitted purpose, in which case disclosure would be required.

2998   The scope of such disclosure to wholesale customers would include the nature of the ITMP and its technical characteristics.

2999   Such disclosure could be made by way of documentation, e-mails and website pages made available to wholesale customers on a confidential basis.

3000   In the case of retail services, traffic management practices should be disclosed fully upon customer sign-up, by way of provisions brought to the attention of customers in applicable service agreements.

3001   Updates to ITMPs should be disclosed by way of amendments to those terms of service, which would be posted online or through e-mails addressed to customers.

3002   The degree of disclosure required in the case of retail services should be the types of ITMPs employed, without the provision of the technical implementation details, in order to protect the confidential information of the ISP.

3003   The Commission is also exploring the relationship between ITMPs and privacy concerns in this proceeding. To CAIP's knowledge, there is no reason that personal information contained within a data transmission needs to be employed for traffic management. CAIP acknowledges that there is a theoretical possibility that certain ITMPs adopted at the end user level will involve data mining practices for purely commercial reasons, which would raise privacy concerns.

3004   However, the requirements for ISPs to comply with the requirements of the Personal Information Protection and Electronic Documents Act, and Commission determinations relating to the confidentiality and privacy of end user information, can adequately address such concerns without the imposition of new rules.

3005   The Commission has specifically asked whether the application of traffic management practices to wholesale services is appropriate, and, if so, under what circumstances.

3006   As I have indicated, CAIP is of the view that ITMPs to wholesale services should not be applied, except possibly in the case of a very narrow exception required to prevent malicious attacks.

3007   In fact, to the extent that a dominant carrier retains the ability to employ internet traffic management practices of its choice in its own network when providing services to retail end users, it must grant the same flexibility to its customers to manage their own retail service offerings. Otherwise, the dominant carrier's wholesale characteristics will determine the characteristics of the retail services that its competitors can provide, which is a violation of subsection 27(2).

3008   Such an outcome would also eliminate the service differentiation between dominant carriers and their competitors at the end user level, which is the very hallmark of vibrant competition.

3009   The implication of this is that dominant carriers must refrain from applying traffic management practices to wholesale traffic carried on behalf of competitors. The proper unbundling of access at COs, remotes, and at the transport level of the dominant carriers' networks would further ensure that competitors can have the flexibility to deploy their own ITM practices to their internet traffic, free of any constraints imposed by the carriers.

3010   To the extent that the ITM rules associated with an ISP retail service package are applied to any end user, as disclosed and represented to end users, generally no issue under 27(2) would arise. This is because each defined service package would constitute a separate telecommunications service, and all end users subscribing to that service package would, in effect, be treated according to the same rules as any other end user subscribing to the same package.

3011   The Commission has also asked whether there is a need for it to specify what traffic management practices are acceptable in relation to wireless carriers.

3012   In order to maintain technological neutrality, CAIP's view is that the same rules would apply to all carriers, regardless of whether they provide internet access services by wireline or wireless means.

3013   Finally, the Commission has asked for a description of the analytical framework that the Commission should adopt vis-à-vis ITMPs and section 36 of the Act.

3014   In CAIP's view, any technologically based ITMP that blocks or slows down internet traffic, either in an aggregate fashion, by end user, by time of day, by application, by protocol or otherwise, absent a customer's consent, is interfering with the meaning or purpose of "telecommunications", that meaning or purpose being the immediate communications that end users have come to expect.

3015   In all such cases, the consent of the Commission is necessary for the application of such ITM practices.

3016   For the competitive reasons already indicated, the application of technologically based ITM practices implemented by dominant carriers to wholesale traffic of other ISPs should not be allowed. Doing so would also contravene 27(2) of the Act.

3017   Accordingly, CAIP is of the view that the Commission should not grant its approval to the use of ITM technologies under these circumstances under section 36 either.

3018   However, as I have already indicated, the situation applicable to retail services is quite different. In this case, end users select the ISP service packages that they want, including the ITM technologies employed as part of those packages.

3019   In other words, consumers have consented to the ISP's network traffic management practices contractually.

3020   Moreover, the availability of such diversity in the availability of service packages would be an indicator of vigorous competition at the end user level.

3021   For these reasons, it is quite appropriate for the Commission to grant its consent to ISPs to influence the meaning or purpose of "telecommunications" under section 36 in the retail context, provided ISPs properly disclose all of the characteristics of their services, including the application of any ITM technologies, but not the corresponding technical details that may affect internet traffic.

3022   Based on all of the proceeding considerations, CAIP requests that the Commission apply the following principles in rendering its decision in this proceeding.

3023   Dominant carriers should be prevented from applying any ITM measures to the traffic of competitors under both subsection 27(2) and section 36 of the Act, except, and only to the extent necessary, to prevent malicious attacks by way of viruses or other similar means.

3024   Any modification by a dominant carrier that affects a wholesale service should be subject to a prior notification requirement that provides sufficient details to wholesale customers, so that they can fully appreciate the impact of the modification and any corresponding adjustment that they may need to make.

3025   Generally speaking, since ITMPs should not apply to wholesale services, this requirement would not apply either, except in the narrow situation where ITMPs are applied to wholesale traffic for the sole purpose of preventing malicious attacks.

3026   No regulation of ITM practices should be imposed at the end user level.

3027   Any changes that ISPs implement in terms of either economic or technological ITM practices affecting or defining a service received by end users should be disclosed to the end users in sufficient detail to enable them to make fully informed purchasing decisions.

3028   And finally, network congestion considerations should not drive policies relating to internet traffic management practices in ISP networks but to the extent that such issues are going to drive any telecommunications policies or rules.

3029   The development of uniform, quantifiable measures of congestion need to be developed, either with the assistance of an inquiry officer appointed by the Commission under section 70.1 of the Act, or through an expedited CISC process, and with full disclosure of all relevant information on the public record.

3030   CAIP also recommends that the Commission address any congestion and competitive issues by unbundling to a greater extent the broadband access and transport capabilities of the dominant carriers' networks; in the case of ILECs, making it possible for wholesale customers to subscribe to the maximum speed available at each ILEC location serving end customers; and unbundling the transport element to an extent that permits each competitor to subscribe to the capacity that it requires; and, in the case of cable BDUs, achieving greater unbundling through the allocation of channels reserved for competitors to employ in their own provision of their Internet -- retail Internet services.

3031   Mr. Chairman, we thank you for the opportunity to appear before you this morning and we would be happy to answer your questions.

3032   THE CHAIRPERSON: Thank you very much for your presentation.

3033   It's a pleasure to see an intervener systematically answering every question that we posed, even if the answers we don't necessarily agree with.

--- Laughter

3034   THE CHAIRPERSON: I'm going to have a lot of problems with your submissions, and my colleague, Mr. Katz, will do the main questioning.

3035   Let me clear up a couple of things. When you say a dominant carrier, you really mean a wholesaler; right, you don't mean --

3036   MR. TACIT: Pardon?

3037   THE CHAIRPERSON: When you say dominant carrier, you really mean a wholesaler, you don't mean dominant in the terms that you normally use it?

3038   MR. TACIT: We actually do mean dominant in the sense -- in this sense. In just about every market in Canada the overwhelming majority of the market at the wholesale and retail level is served by either an ILEC or a cable company.

3039   THE CHAIRPERSON: Yes, but --

3040   MR. TACIT: It turns out that in that situation, the duopolistic nature of the market makes them jointly dominant. They may not be individually dominant, but there is joint dominance.

3041   So, we do mean it in that competition like economic sense.

3042   THE CHAIRPERSON: You mean anybody who your ISPs buy their wholesale service from, which is then retailed to your customers.

3043   MR. TACIT: Pardon?

3044   THE CHAIRPERSON: I mean, in the markets there's more than one large ILEC, let's say you have an ILEC and you have Rogers in there, so you can buy it from both.

3045   The term dominant in this case is irrelevant, what you're meaning is a person from whom you buy your wholesale services that you then retail to your clients?

3046   MR. TACIT: Well, it's not irrelevant completely in the sense that it makes the problem worse.

3047   We don't think that we would be here at all in this proceeding if it wasn't for the joint market dominance of the cable companies and the ILECs.

3048   And the reason I say that is, that in a more competitive market the primary interests of those parties would not be to constrain capacity and price at demand but, rather, to increase and maximize capacity for users and lower price and, in that sense, there would be a lot less use of ITMPs.

3049   So, it does matter in that sense. But you are correct in saying that we would have the same issue no matter who the wholesaler is.

3050   THE CHAIRPERSON: That's your point.

3051   Secondly, on page 5 you make sort of the assumption saying, because it was a little bit facile:

"More importantly, congestion can be avoided at the wholesale level by simply ensuring that the dominant carrier wholesale sales are sufficiently unbundled to provide independent ISPs the option of purchasing the quantities of transport services they require in order to avoid the congestion that will adversely affect end users." (As read)

3052   THE CHAIRPERSON: That is quite a statement. You're basically suggesting that more unbundling will mean there's no congestion?

3053   MR. TACIT: We're saying it will be one of the solutions. There are multiple solutions.

3054   For example, we know that the ILECs -- Bell recently disclosed that it's increasing the use of layer 2 ethernet switches in its network to relieve congestion. Unbundling is another key element.

3055   On the cable side, for example, Comcast when it responded to the FCC's ruling in 2008 requiring it to change its ITMPs specifically indicated and acknowledged that traffic patterns are changing between download and upload requirements and that it will have to reconfigure its network to meet that demand.

3056   So, what we're saying is unbundling is one of a key number of solutions and the --

3057   THE CHAIRPERSON: You qualified yourself. What you said, simply unbundling is an answer, that's what I read and I said that's a bit facile. It may be one of the answers, but it's not the only answer.

3058   MR. TACIT: It's a critical one and a very significant one for the competitive industry.

3059   THE CHAIRPERSON: Now, your key point that you shouldn't have any ITMPs at the wholesale level, I just do not understand, and it ties in with your idea that we shouldn't make an assumption that congestion should drive our consideration of ITMPs.

3060   MR. TACIT: Well, let me give you an example.

3061   THE CHAIRPERSON: Let me just put the question before you answer.

3062   MR. TACIT: Yes, sorry.

3063   THE CHAIRPERSON: What I don't understand is, we are here because there is congestion, because certain applications will suffer jitter or latency, et cetera, if there is too much traffic. The question is how to sort this out, how to make sure that those people who have those kinds of applications don't suffer while others who may use up too much or use up a huge amount of capacity but it's not that time sensitive don't impair the use of those who are time sensitive.

3064   So, when you say congestion shouldn't be a consideration, I don't understand; why are we here if it's not congestion?

3065   We are here in order to make sure that everybody enjoys the maximum, the Internet has the freedom to put application and use them, et cetera, but that some people who are capacity hogs do not impair the use of those who use time sensitive applications.

3066   MR. TACIT: What I'm saying is that the paradigm of looking at ITMPs through the lens of congestion, certainly when it comes to wholesale is, in our view, the incorrect lens through which to view the problem, and I say that for a couple of reasons.

3067   First of all, wholesale users, as we indicated at the beginning, their customer base is a tiny fragment of the industry right now. Most -- 95.5 percent of residential consumers are served by the ILECs and the cable companies.

3068   So, if there's a problem with congestion relating to end users, it's their own end users and it's not necessarily the wholesalers that should suffer for that.

3069   The second point is that because wholesale and retail traffic can actually be disaggregated and, for example, under the present situation in a DSL environment, if an ISP doesn't buy enough ASPI capacity, what will happen is its own customers will eventually get choked anyway. It's not going to cause Bell Canada a problem in its network.

3070   So, what we're saying is, congestion is sort of a driving force to justify the application of ITMPs to wholesale, we don't believe is logically connected and justified.

3071   And on the retail side, sure, let every carrier decide how it's going to manage its own network.

3072   My suspicion is that if the market were truly more competitive the ILECs and the cable companies would be much more interested in meeting increased demand and engineering and planning their networks accordingly than constraining capacity through the use of ITMPs.

3073   But it doesn't really matter. If they want to pursue that business model for their retail customers, so be it, and so may some other ISPs, but at the wholesale level, there just is no justification for it.

3074   THE CHAIRPERSON: If congestion is the wrong lens, what's the right lens?

3075   MR. TACIT: I'm sorry?

3076   THE CHAIRPERSON: You said congestion is the wrong lens to look at this issue. What is the right lens?

3077   MR. TACIT: ITMPs is largely -- if you look at it from a retail perspective, it's about consumer choice, it's about -- just, for example, on the wire line side this Commission has endorsed bill management tools. ITMPs can be used to provide the equivalence of bill management tools to consumers on the -- some people may only want to pay $5 a month and have e-mail, that's all they may want.

3078   So, the retail ISP should be able to shape their traffic so they can't do more than that if that's what they usually buy.

3079   THE CHAIRPERSON: I understand your fixation with retail. Do me a favour, follow my fixation with wholesale.

3080   MR. TACIT: Okay.

3081   THE CHAIRPERSON: What is the right lens to look at wholesale?

3082   MR. TACIT: The right lens to look at wholesale is to provide every ISP with the freedom to operate without that sort of constraint when it hasn't been demonstrated that the wholesale is causing any kind of problem.

3083   And that's why we take issue with this because there is no detailed evidence on the record of this proceeding that wholesale is causing any kind of congestion problem in the ILECs' networks.

3084   And, in fact, since you can separate out the traffic, there's a lot of evidence that there are other ways to manage that and that a lot of the traffic isn't even transmitted between the wholesaler and the retail ISP using IP protocol, it's all PPOE.

3085   So, there's no opportunity for IP congestion due to an ISP's behaviour.

3086   THE CHAIRPERSON: Len?

3087   MR. COPELAND: I think also, if I may, when -- the term band width hogs has come up numerous times this week, but the way we're seeing traffic management practices being implemented currently, it's not necessarily the hogs that are being throttled, being managed, it is people who are using a class of applications and those -- many of those particular people are not the hogs, they are not the people that are causing the problems on the networks.

3088   And as some of the large carriers have been doing, they address the problems, the behaviour of those large users, they don't penalize the larger subset of people who might happen to be using the same application for a very short length of time.

3089   COMMISSIONER KATZ: Thank you, Mr. Chairman.

3090   And good morning.

3091   MR. TACIT: Good morning.

3092   COMMISSIONER KATZ: I'm going to start with a very general question and then try and blow that out a bit more.

3093   Currently today how do your members differentiate their services and products from the incumbent or the dominant carriers, as you call them?

3094   MR. COPELAND: Well, I think what we're seeing is that quite a number of our members are using the underlying infrastructure to develop private networks for their customers. So, the traffic never touches the Internet, it goes from the customer to the provider's point of presence and then out to another customer's location that is also subscribed through that particular provider. It never goes to what we have come to think of as the public Internet.

3095   So, those applications are essentially internal, those -- the network's being used as a private LAN or a private WAN at that point.

3096   We're seeing providers, of course, doing voice-over-Internet protocol. Again, traffic that -- between two offices, so traffic that may never touch the public Internet but simply travels across the provider's network.

3097   Those are the types of things that we're seeing more and more as Internet providers find niche markets that they can address, just an example of how they're using the tools that have traditionally been Internet related but are being used for non-Internet purposes.

3098   COMMISSIONER KATZ: But basic Internet connectivity and utilization, you're telling me your members, you yourself, do not provide competitive services to the Cable cos and the ILECs?

3099   MR. COPELAND: Oh, not at all. I'm just suggesting that we are finding other ways to use the network.

3100   COMMISSIONER KATZ: But where you are competing with them, how do you differentiate yourself?

3101   MR. COPELAND: For a lot of them it will be on the fact that they're local to the customer, that the service that they render the customer is rendered in their home town, not in some far off place halfway around the world, the fact that they contribute to their local communities, a more personalized type of service.

3102   But, unfortunately, in some cases we can't guarantee that we can do any more or any less for the customer given the traffic management principles of our -- practices of our upstream provider.

3103   COMMISSIONER KATZ: This may not be totally analogous, but if I was in the wireless business and I was a reseller of wireless services, if I try and draw the distinction you're making here, you're saying that a wireless reseller should be able to provide a better grade or quality of wireless service than the incumbent who may have congestion or anything else as well on his network.

3104   Is that a reasonable analogy?

3105   MR. COPELAND: Well, I think, as you well know, the pricing structure of wireless services is significantly different -- traditionally has been significantly different than it has been for Internet services, where truly consumption is the driving -- or cost and consumption is the driving factor there where you pay for what you use, there's really no flat rate type of service as has been the tradition with Internet services.

3106   So, it would be hard to draw that analogy based on the market differences between wireless and --

3107   COMMISSIONER KATZ: That's why I'm looking at differentiation of product and service.

3108   MR. TACIT: Well, there's another issue, and that is that the pure resale model, whether it's wire line or wireless isn't really thriving anywhere these days.

3109   Industry Canada's real focus has been on opening up a lot of spectrum lately for broadband applications, the 2500 MHz, 3500, now the 3650 to 3700 band and there are new licensees coming in and using that spectrum and hopefully there will be more competition in that market.

3110   And similarly, in the -- you know, in the IP space and in the telecom market, a lot of the competition people are trying to employ is to provide their own services directly.

3111   And the whole impetus for the 261 proceeding is because existing competitors want to become masters of their own networks to a greater degree.

3112   So, in a way, the movement is away from resale anyway in the industry right now and more towards owning your own capacity, whether it be spectrum or unbundled connectivity and so on.

3113   COMMISSIONER KATZ: Okay. There's been some evidence filed I think by yourselves, but others as well, that if you look at other markets, the U.K. market, the U.S. market, it works better, more efficiently and more effectively because of a whole host of reasons. One of them seems to be that there is no distinction made between wholesale and retail.

3114   Is that your evidence as well?

3115   MR. TACIT: Well, first of all, I'm not sure that's the evidence of other parties, but I'm not going to speak for them. I don't think they're saying there's no difference between wholesale and retail.

3116   My read, for example, and I think you refer specifically to the MTS Allstream evidence, if -- the way I read that evidence -- and I must admit, it was some time ago that I read it -- was that what they're saying is that in the U.K. there's been a lot more unbundling of the wholesale components and, as a result of that, this issue has largely gone away on its own, which is somewhat similar to what I've been saying, when you increase competition in a market the whole ITMP net neutrality debate will naturally subside on its own because there will be more competitive choices.

3117   The issue will be, how do we offer more services, how do we build enough capacity to make sure we look after all our customers, not how do we constrain and regulate. So, I think that's --

3118   COMMISSIONER KATZ: But can't you take that statement you just made and turn it the other way.

3119   I mean, BT is the monopoly in the U.K., their retail arm has been forced to be treated the same way as all the other wholesalers or alternate providers that are out there as well.

3120   So, BT is providing a grade of service, quality of service that everybody has to subscribe to as well, there is no differentiation. You can differentiate at the wholesale level, and I guess BT retail is differentiating as well, but BT retail is being treated no differently than the resellers and the resellers are being treated no differently than BT retail.

3121   MR. TACIT: Well, if we stick to a resale model maybe what you say is true, but when you go to an unbundled situation where you can co-locate and buy as much transport as you want or, for example, in the cable situation where you can co-locate in the headend and apply your own CMTS, yes, you do have control over your own quality of service.

3122   COMMISSIONER KATZ: But all those issues you're raising are outside the scope of this proceeding.

3123   MR. TACIT: All I'm saying is, what we're saying is the Commission shouldn't just try to solve -- make its determination on ITMPs without a complete picture.

3124   It may be that a better course would be for the unbundling proceeding to run its course first.

3125   I don't know what the right solution is, but what we're saying is, we're trying to deal with this on a premise that we've got this big congestion problem, we've got to deal with wholesalers.

3126   And all I'm saying is, it's not the wholesalers that are causing a problem, if there is one, and if that's not true, then use of ITMPs is about consumer demand and not about other issues and, if that's true, then how do we make sure there's more competition in the marketplace.

3127   So, we're just saying the framework is a little bit broader in terms of the information that's required to arrive at a proper decision for the industry framework.

3128   MR. COPELAND: And if you look at the U.K. situation, the retail arm of BT was obviously split off for a reason and presumably the regulators saw that the vertical integration of British Telecom was causing a problem with the expansion of the network, with the deployment of broadband and causing issues that appear -- it's still early in their separation process -- but it appears to have been working.

3129   Competition is vibrant, broadband penetration in Britain has increased significantly and they're moving forward with an unbundled through separation type of model.

3130   So, it's -- you know, we'll have to wait and see what happens there and I guess the Netherlands to some extent.

3131   COMMISSIONER KATZ: And I know the answer to his questions, but do their ITMP practices there distinguish at all between their retail arm and their wholesale operations?

3132   MR. TACIT: The point is there's no controversy. I think that's the important issue. There's no controversy because the marketplace is taking care of it.

3133   And that's the message we're trying to deliver to the Commission as well.

3134   If you have the right market -- competitive market structure, this issue will take care of itself, there won't be a need for regulation of ITMPs.

3135   So, I don't know what they're doing, but the point is they're not doing something that's causing the public to -- some sort of outcry of either public or carriers.

3136   COMMISSIONER KATZ: Okay. Let me take your thought process one step further.

3137   You state in your submissions this morning and your evidence as well, that:

"There are some..." what you call,

"...dominant carriers in this proceeding, including SaskTel, MTS Allstream, Telus and Videotron, that have seen fit to not have any ITMP procedures except to prevent network attacks." (As read)

3138   COMMISSIONER KATZ: Videotron competes in Quebec with Bell Canada. Videotron offers TPIA service, Bell Canada offers ADSL service. It's a competitive market out there.

3139   You're saying that perhaps it isn't as competitive as it should be and I think you made some suggestions out there that I won't get to, but the point is, there's two players out there, they offer distinguishable services, where one of them does provide ITMP practices, the other one does not. The market's taking care of itself, some people would say.

3140   MR. TACIT: Well, first of all, I'm pleased that today Videotron hasn't applied traffic management practices.

3141   They did increase their capacity of their network significantly recently and that's a lot of what accounts for that. Obviously they're not going to spend money they don't have to if their methodology is to increase capacity.

3142   But at the same time there is, even in that market, a lot of evidence of duopolistic behaviour. For example, when Bell put in UBB charges, Videotron followed suit which didn't really make sense to me a lot given that they did just spend all this money increasing all this capacity, they don't need to be constraining their network to the same degree as, for example, Bell claims it has to, but they're doing it because in a primarily duopolistic market they can sustain that sort of pricing.

3143   That's what it tells me. I'm not saying they're colluding in any kind of room to do this, they're just following an example because it's a duopolistic market.

3144   COMMISSIONER KATZ: But I want to stick to the very narrow issue we're trying to deal with and that is traffic management practices, and it appears as though Videotron, for whatever reason, has got the capacity, has made a business decision --

3145   MR. TACIT: For now. For now.

3146   COMMISSIONER KATZ: Has made a business decision to distinguish and differentiate themselves from their competitor.

3147   MR. TACIT: Granted, but everywhere --

3148   COMMISSIONER KATZ: Who recognizes, I guess, that they're prepared to live with their traffic management practices at the expense of the marketplace or whatever as well. That's the market working.

3149   MR. TACIT: It is --

3150   COMMISSIONER KATZ: If Bell decides at some point in time they're losing market share, what they want to do is increase it, they'll remove some of those restrictions, invest their money and the shareholders will take the risk and hopefully bear the benefits.

3151   MR. TACIT: I fully agree with you, Commissioner Katz, at the retail level, let them decide what they want to do and how they want to handle their customers. That's exactly the message we're giving you.

3152   What we're saying is, just don't force all the wholesalers into a particular model, don't force us into Bell's traffic shaping, especially when Videotron isn't, or in another market where there is no choice. If it's a market where both are --

3153   COMMISSIONER KATZ: But to the extent Videotron isn't, your members can buy Videotron services.

3154   MR. TACIT: Well, first of all, if somebody --

3155   COMMISSIONER KATZ: -- on a wholesale basis.

3156   MR. TACIT: -- if an ISP has invested in a DSL infrastructure they're not going to overnight throw all of that away and build PPOEs for TPIA and get into that business, that's going to take two to three years to do.

3157   So, it's not practical to suggest that suddenly -- it's not just switching provider, you're switching technologies and, you know, there are very few independent ISPs that have made commitments to both technologies in a given market. Most ISPs either commit to DSL or commit to cable, so --

3158   COMMISSIONER KATZ: But those again are business decisions.

3159   MR. TACIT: And you're right, but what I'm saying is, you can't just say, well they can switch tomorrow because Videotron now's doing this and Bell's doing that. You can't just do that overnight.

3160   And if it flips the other way, are they going to go back to DSL overnight again. I mean, there's some practical implications of what's sustainable in the marketplace.

3161   COMMISSIONER KATZ: Okay. With regard to the traffic management practices, I want to spend a few minutes talking about a couple of services that are being offered today: HSA, high-speed access service and the Gateway Access Service for a few minutes.

3162   In reading the tariffs of these, it's clear to me anyways that one of them provides a quality of service guarantee, or a PVC dedicated pipe, and the other one does not.

3163   And what I'm hearing you saying is that you want certain guarantees in the service and you don't want traffic management practices imposing upon the quality of service that you are getting so you are free to engineer and package your products and services. Yet, the tariff doesn't allow for or doesn't clearly identify that flexibility. It doesn't say you get a guaranteed level of service, it doesn't say one cannot manage the network at the wholesale level. We are talking about wholesale tariffs here as well.

3164   MR. TACIT: Well, if that, you know, train of thought were taken to its logical conclusion, then I suppose, you know, retail ISPs could obtain a 2-kb per second service from Bell and that would still -- you know, that would still meet the requirements of the tariff, but that doesn't mean that is what the tariff was intended to do.

3165   The GAS Tariff was intended to recognize that that sort of Internet service is provided on a best-efforts basis. It wasn't meant to endorse ITMPs which were never contemplated as an additional method of constraining wholesalers' ability to provide -- sorry, ISPs' ability to provide their services to their customers.

3166   Things have changed. Maybe the tariff needs to be clarified. I mean that is a little bit beyond the scope of what we are doing here. But to say that simply because the tariff reads a certain way everything is fine, I don't think is the answer. That is kind of circular.

3167   COMMISSIONER KATZ: No, I'm just saying that that is what the lay of the land is right now.

3168   MR. COPELAND: Well, and to be clear on HSA, it is also an ADSL technology, it is a best-efforts service.

3169   COMMISSIONER KATZ: HSA?

3170   MR. COPELAND: HSA is. There are still problems with that technology. It uses a different platform to deliver the goods, but it is still -- we still run into the distance problems that we have with it. Many of the problems that GAS has, we also have with HSA.

3171   COMMISSIONER KATZ: But when I read the tariff, and I'm reading it verbatim here:

"HSA service provides a dedicated data channel from the end user's location to a Bell Canada Wire Centre." (As read)

3172   It means to me that traffic management practices would not impede that dedicated channel. There is nothing that they could do.

3173   MR. COPELAND: In the words of Bell when we discussed this with them, not yet.

3174   COMMISSIONER KATZ: Okay. Well, I guess we will take it up with Bell.

3175   Those are all my questions, Mr. Chairman.

3176   THE CHAIRPERSON: Thank you.

3177   Tim...?

3178   COMMISSIONER DENTON: Good morning, gentlemen.

3179   I'm thinking that we may have -- when a party comes in and says we don't accept the premises of the discussion, there is always a little bit of time gap between what you say and when we get it.

3180   For the last few days we have been told that the issue is congestion and that traffic management practices need to be established so that this congestion can be dealt with. You folk are coming in and telling us that well, it might be a problem but it's not a real problem and what I hear you saying about congestion is the following.

3181   I heard -- perhaps it was Mr. Tacit -- say that there is no evidence that wholesale is causing a congestion problem.

3182   Am I correct to interpret that in the following sense, that there is no opportunity for congestion to arise from the offer by the large carriers of wholesale services? Is that correct?

3183   MR. TACIT: I'm sorry, can you repeat the question just so I make sure I understand it correctly?

3184   COMMISSIONER DENTON: I heard, I think it was you, Chris, say that there was no evidence that wholesale was causing a congestion problem.

3185   Am I correct to interpret that to say that there is no congestion arising from the offer by carriers of wholesale services?

3186   MR. TACIT: No, what we are saying is that in terms of looking back into the upstream network of a Bell or a Shaw or whoever, the wholesale providers are not causing any kind of significant network debilitating congestion. First of all, their market share is way too small for that. Second, in the case of DSL --

3187   COMMISSIONER DENTON: You are talking about yourselves as wholesale providers?

3188   MR. TACIT: We are talking about ourselves as ISPs, as retail --

3189   MR. COPELAND: Wholesale customers.

3190   MR. TACIT: -- wholesale customers.

3191   COMMISSIONER DENTON: Okay. Because I heard wholesale providers. So is it wholesale customers you are talking about?

3192   MR. TACIT: We're talking about ourselves as wholesale customers. I apologize if that was not clear.

3193   COMMISSIONER DENTON: I think that's the magic word.

3194   MR. TACIT: I apologize if that wasn't clear.

3195   COMMISSIONER DENTON: Okay. So carry on.

3196   MR. TACIT: So what we are saying is, first of all, just based on sheer market size the logic would suggest that if there is a problem -- and in fact if you look at the sequence in which Bell applied its ITMPs, it applied it first to its retail customers and it took them some time to get around to applying it to wholesale. That says two things. It says, first of all, that their problem was on retail and, second, that they can distinguish between the two types of traffic.

3197   So all we are saying is, in that kind of situation where traffic can be segregated, you know, you really -- the Commission needs to look at a lot more carefully the issue of what is wholesale doing in terms of congestion before it makes a broad, sweeping decision that could affect the retail -- wholesale customers of telcos and the cablecos.

3198   COMMISSIONER DENTON: Thank you. Drawing on the example of British Telecom, where they have separated out the underlying carrier from the retail competitors, you have basically said that the competitive market structure will take care of the congestion problem. Is that correct?

3199   MR. TACIT: Well, yes, in a way it will, because in my mind the fact that we have this capacity constraint is largely evidence of the effect of a duopolistic market structure.

3200   Just as in a monopoly, you know, basic economic theory teaches you that monopolists constrain capacity, that is also true, although to a lesser extent, in a duopolistic market. So the classic -- this is just classic behaviour, is price it as high as you can and constrain capacity to get that extra increment because you don't have to price at marginal cost.

3201   MR. COPELAND: I think what we have seen also in the U.K. model where they have separated the underlying infrastructure is that that infrastructure company now has the sole goal of supplying services to all providers, to their own BT company or their former BT company, as well as all of the competitors.

3202   So even though there may not be competition in the wholesale market, the one wholesaler has one wholesale goal and that is to provide an optimal network for all providers, retail providers and not be constrained or influenced by the mother ship.

3203   COMMISSIONER DENTON: So then, if retailers were allowed to buy from the wholesaler without -- is it your proposition that if retailers were allowed to buy from the wholesaler without traffic management procedures that there would be significantly greater competition in kind and quality?

3204   MR. TACIT: It would facilitate that if at the same time there was the unbundling that goes with it. That's why it's so hard to look at this issue of ITMPs in isolation.

3205   Commissioner Denton, you have hit the nail on the head as to why we are having trouble looking at this issue as just -- you know, in isolation as just a congestion-related issue because we see it as a broader competitiveness issue.

3206   But there are a number of moving pieces and so what might end up happening is if a wrong policy is implemented on the ITMP, then even if later there is more unbundling, if the ITMPs persist it is going to -- and we have to overturn that -- it is going to interfere in what could otherwise be a more competitive marketplace.

3207   So there are a lot of steps to follow to get to greater competition and all we are saying is, we are cautioning the Commission to be very careful in not trying to solve a problem that may not exist on the wholesale end, and in doing so actually put out impediments to the greater competition in the marketplace, inadvertently albeit. I'm not suggesting the Commission would ever do that deliberately but inadvertently and unintentionally putting a roadblock to competition.

3208   MR. COPELAND: And I think we need to -- there is a difference between increased competition and increased differentiation of services. Right now we have a limit to the differentiation of services that we can deploy given the traffic management practices of the carriers.

3209   COMMISSIONER DENTON: Now, supposing we arrive at a world more congenial to your business interests, where should traffic management procedures lie, at the retail level, you're saying?

3210   MR. COPELAND: Correct.

3211   COMMISSIONER DENTON: And therefore you're saying, is it near -- is publicity and competition at the retail level sufficient to handle congestion problems that might arise?

3212   MR. COPELAND: I think we have to remember that congestion is not caused by the technology, it is caused by the user of the technology.

3213   The way current traffic management practices have been implemented, they are best suited to managing behaviours and that is not what is occurring.

3214   We are actually penalizing some behaviours in that if a peer-to-peer flow into a home one night is throwing up red flags that caused the traffic management practices to be -- well, we know that between 4:30 in the afternoon and 2:00 a.m. it is going to cause a problem, but if it's causing a problem for that household we are going to see problems, other problems in that household for other types of traffic.

3215   So we need to remember that what we are trying to address with traffic management practices as they are currently implemented is behaviour and it seems extreme to me to be managing the behaviour of all Canadians or all Ontarians and Quebecers that use a particular platform when many of those folks are not -- do not have a problematic behaviour that needs to be addressed.

3216   MR. TACIT: And I think with greater market differentiation, what will happen is that competitive ISPs will find innovative ways where they do have to manage users that exceed the specifications of the services of dealing with those customers without penalizing the others, because they are going to want to generate revenues from all the other customers, they are not going to want to constrain everybody and have everybody have a poor service.

3217   So in a competitive marketplace -- a more competitive marketplace there will be that natural incentive. So this whole ITMP debate, provided there is proper disclosure of what is happening and what each ISP is doing, and we fully support that, I don't think there are going to be a lot of consumer issues.

3218   I mean I understand your concern, you are concerned about potential consumer impacts, but I think -- I really think this will take care of itself, as will the congestion issues. You know, the unbundled retail -- unbundled ISPs will have the incentive to provision to meet demand if they can in a competitive marketplace. If not, the customer will go to another ISP who can do it.

3219   COMMISSIONER DENTON: So therefore you would be -- is it fair to characterize your views to say that the traffic management problem is sort of a slight misconception of the issue in terms of the real underlying problems of unbundling and customer choice?

3220   MR. TACIT: Absolutely.

3221   COMMISSIONER DENTON: Thank you.

3222   THE CHAIRPERSON: Candice...?

3223   COMMISSIONER MOLNAR: Thank you.

3224   I have a couple of questions. I will just start with the question I asked MTS yesterday and I would like your views as well and that is while I understand that there are more unbundling issues to deal with with the wholesale service available today, the GAS, the GAS Tariff, if that traffic was not throttled or managed through traffic management, could you guarantee that the wholesale service would not interfere with the retail services provided by the carrier, the underlying carrier today?

3225   MR. COPELAND: I think with the current market share --

3226   COMMISSIONER MOLNAR: As it exists.

3227   MR. COPELAND: With the current market share as it exists it would be hard to imagine that 4.5 percent of the market could cause a problem to 95.5 percent of the market. It is not impossible, granted, but --

3228   COMMISSIONER MOLNAR: Right, because you are talking in an aggregate. But, of course, traffic management or congestion can occur at any link or part of that network.

3229   MR. COPELAND: Therein lies the problem.

3230   COMMISSIONER MOLNAR: So can you guarantee from a network perspective?

3231   MR. COPELAND: To the best of our knowledge, the way traffic management practices are currently being implemented, they are implemented across the whole network, not simply on a node by node or central office by central office basis.

3232   So again, it is hard to imagine that 4 percent, 41/2 percent of the market in Cobourg, Ontario, where I operate, will cause a problem in Toronto. But the way that traffic management is being implemented at this point, it is being implemented across the whole network regardless of where or if a problem exists at any given point in time.

3233   MR. TACIT: But more fundamental than that, the Bell network, like the MTS network, is capable and does separate out the GAS and the retail traffic and we know that the Bell network does that because the Bell network initially only applied ITMPs to its retail subscribers and only later applied it to wholesale traffic. So we know that they can segregate the impacts in the same way that MTS Allstream.

3234   So perhaps the question would be best put to The Companies as to whether they are capable of doing that and could do that readily or whether they had some other reasons for applying wholesale ITMPs to the wholesale traffic later.

3235   COMMISSIONER MOLNAR: I will be asking The Companies that question but I was asking from your perspective. You know, you are provided this service, you want it unthrottled and --

3236   MR. TACIT: We think there is no -- like I said, we think that the traffic is and can be separated and there is no issue, and it is not even IP-to-IP traffic and that the market share is so small in any event that we are unlikely to have a real significant impact at the link level.

3237   MR. COPELAND: Certainly we have been presented with no evidence that we are part of the problem.

3238   COMMISSIONER MOLNAR: I am going to turn to a different subject and that is your submission that there should be no restrictions on retail and that competition -- ITMPs essentially are a form of competitive differentiation. Essentially with customer can send anything, I believe your position is that with customer can send any form of ITMP should be allowable, including -- and you lay out a number of them and I'm just going to focus on the fact that including ITMPs that focus on particular applications.

3239   MR. TACIT: Yes. If a customer only wants -- you know, people have dial-up accounts which, as we all know, you couldn't really use them to download video. The Commission doesn't force everybody to get a high-speed account if they don't want to. It is a competitive choice. You know, I happen to like high-speed, and the higher the better, but some people are happy with just doing e-mail on their dial-up connection.

3240   So all we are saying is consumers should have the same choice even if they are high-speed customers and if the way to give effect to that is for the ISP to apply some form of QLS or traffic-shaping rules in order to achieve that end, that is a competitive market choice.

3241   COMMISSIONER MOLNAR: Let me ask, because we had the Open Internet Coalition and others here speaking of the virtuous circle and that there are three important parties in this, there is the consumer, there is the ISP and there is also the application provider, and that there can be unjust discrimination under 27(2) by prohibiting access to applications.

3242   MR. TACIT: Well, we think in a competitive market there will be enough choices. Not every ISP is going to do that. And even the ISP that only offers the five dollars a month package for e-mail only is also probably going to have a high-speed package.

3243   The fact of the matter is traffic-shaping is already being -- sorry, ITMPs are already being used today to create those differentiations. The fact that you have tiered speed services offered by Bell and the cable companies, that's a matter of programming in a line card or a CMTS.

3244   COMMISSIONER MOLNAR: Right.

3245   MR. TACIT: It's a rule.

3246   COMMISSIOINER MOLNAR: And I understand that different speeds allow different applications to run more effectively or not, but it has not been the case in the past where a carrier whose job is to provide access in a non-discriminatory manner to all applications, to all content, to not interfere with the content, has used the content as a means of competitive differentiation.

3247   I'm a bit concerned by that concept, that all of a sudden we are going to use access to applications as a means of competitive differentiation. Is it not the job of an ISP to provide access to the Internet and the customers who have --

3248   MR. COPELAND: I agree, but we already have many ISPs who provide, for instance, parental controls and is that not a form of traffic management in preventing access to certain types of content?

3249   COMMISSIONER MOLNAR: But you are not the parent.

3250   MR. COPELAND: No, I'm not.

3251   COMMISSIONER MOLNAR: You're not the parent.

3252   MR. COPELAND: No, but the parent does subscribe to it, it's a differentiator of the service. I don't offer it but another ISP may. So that differentiates our services. And by contract, by service terms, it's very clear that they offer something different or that the parent subscribes to it. So we are already doing some of these things but just under a different context.

3253   COMMISSIONER MOLNAR: I see that as very different. You as an ISP are delivering the content to that home. That consumer may choose whether or not it chooses to access that content but you are not there choosing what content goes to that home.

3254   MR. TACIT: But the choice is based on competitive considerations. The only reason such a package would exist is because consumers are saying we want a package that gives us this. I don't think this is going to be a big problem. I guess what I'm cautioning the Commission is not to anticipate a problem that may not exist.

3255   Again, if we want to draw from the U.K. experience, I don't hear that in an environment where there is really no big debate about ITMP and net neutrality that all these applications are being blocked by ISPs. I don't think it's going to happen at that sort of level. You know, when you are meeting consumer demands you want to give them as many options as you can, not start whittling away at their choices. So you are going to increase --

3256   COMMISSIONER MOLNAR: I entirely agree, we don't want to whittle away at their choices.

3257   MR. TACIT: Right.

3258   COMMISSIONER MOLNAR: To me an open Internet means the Internet is available to that end customer and making that a competitive differentiator of an ISP, to me, as quite concerning.

3259   MR. TACIT: I appreciate that. We happen to think that consumers are intelligent enough to make their own choices and demand what kind of packages they want and don't want from ISPs. If some ISP is ingenious enough to come up with a way of doing parental control at its network level and there are a whole bunch of concerned parents who want to buy that service to protect their children from content that's harmful on the Internet, all the power to that ISP.

3260   I don't think you're going to start seeing packages that specifically bar people from using Google or Yahoo! I don't think that's going to happen. It just doesn't seem logical to me that consumers would ask for that and that ISPs would expend resources. And if it does happen, the Commission can deal with that if and when it happens rather than trying to set a broad rule now to anticipate something that there is no evidence will be a problem at this point.

3261   COMMISSIONER MOLNAR: Okay. Those are my questions.

3262   THE CHAIRPERSON: Suzanne...?

3263   CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.

3264   I must say I am a little bit concerned about the way you are approaching the privacy issue here and that concern derives from what you're stating on page 8 of your presentation. About the middle of the page you say:

"However, the requirement for ISPs to comply with the requirements of PIPEDA and Commission determinations relating to the confidentiality and privacy of a news or information can adequately address such concerns without the imposition of additional rules." (As read)

3265   Now, PIPEDA is an Act that has a general application to several types of industries, ISPs being one of them. Moreover, PIPEDA was adopted and came into force many years after the Telecom Act and under the Telecom Act the Commission has a duty under section 7(i) to make sure that the decisions, the policies it takes contribute to protection of privacy.

3266   So are you, by saying what you are saying on page 8 of your presentation, suggesting that if we were to find that a specific Internet traffic management practice infringes on the privacy of customers that we should just ignore the duty under 7(i)?

3267   MR. TACIT: No, that's not what we are saying. What we are saying is there is no need for an a priori additional rule because there are already laws on the books that deal with these. If an ISP wants to break the law, it is going to break the law no matter whether it is PIPEDA or a Commission rule.

3268   All we are saying is the rules already exist to deal with this, law-abiding ISPs will abide by the law, so there is no need for an overlay of yet another general rule.

3269   Those ISPs who in fact breach the rule may face double jeopardy. They may be held to account before this Commission and before the Privacy Commissioner under different regimes.

3270   So we are not suggesting that this Commission yield its powers to deal with complaints relating to privacy, all we are saying is we don't need another rule at the outset because there is already a law to deal with this.

3271   COMMISSIONER LAMARRE: Okay. Thank you.

3272   THE CHAIRPERSON: Coming back to your discussion with Commissioner Denton, you said the problem is not with the wholesale providers like yourself -- wholesale customers you called yourself -- you only make a small percentage of the market and from that you make the conjecture since you are so small it can't possibly be you that is the cause. And you say the only evidence we have is that Bell applied it to us lately or started with their own customers first and they can actually differentiate the GAS, so we can't be the problem.

3273   On the same basis of fact I came to exactly the opposite conclusion, saying they applied it to themselves, it didn't work, it wasn't enough, the problem was you, that's why they extended it to include you. Both of them are equally feasible on that set of facts. Why should I take your interpretation rather than Bell's?

3274   MR. TACIT: Well, first of all, Mr. Chair, as I said, it's not -- certainly on the DSL side at least, the connection is not IP-to-IP, it is PPPoE. And there is a certain amount of capacity that an ISP buys and if it exceeds that capacity, its own customers get degraded. That's what happens physically in the network. That is the net result, not upstream problems.

3275   The second, though, more fundamental issue is that's the problem, is we don't know enough to make a decision. There isn't enough information on the record to jump to a conclusion and simply making an inference one way or another might be the wrong course of action until there is more information.

3276   THE CHAIRPERSON: That is the first point that you made. Your colleague -- I'm sorry, I forgot your name -- you say you operate in Cobourg.

3277   MR. TACIT: Mr. Copeland.

3278   THE CHAIRPERSON: If your customers are bandwidth hogs and use too much, it degrades, obviously, your network. That degradation is not passed on to the Bell network?

3279   MR. COPELAND: Only a very small portion given my relative market size. So if Bell and the local cable company have 95 percent of the market and I and several other independents constitute 41/2 percent, and not all of my customers will be using P2P, not all of them will be bandwidth hogs, it is hard to imagine that I am part of the problem.

3280   If I am, then the only people who have seen that evidence are the Commissioners because it was not on the public record.

3281   THE CHAIRPERSON: But Mr. Tacit said the problem stays with you, it doesn't pass upstream onto the Bell network.

3282   MR. COPELAND: Well, it's constrained to me to some extent because I buy capacity from Bell Canada to get that traffic from them to me and I buy that based on what I perceive to be my peak periods.

3283   THE CHAIRPERSON: Yes.

3284   MR. COPELAND: So I have to engineer that portion of my network --

3285   THE CHAIRPERSON: Right.

3286   MR. COPELAND: -- the same as I would hope the phone company would. If my predictions are wrong and my customers are saturating that connection, their activities are degraded by that saturation.

3287   THE CHAIRPERSON: But you don't place a higher demand on the Bell network? It doesn't work like electricity where a customer basically --

3288   MR. COPELAND: We don't think so. Again, based on the percentage of market share that I may hold in my market, I would doubt it.

3289   MR. TACIT: No, not just percentage. We don't think that technologically we do.

3290   THE CHAIRPERSON: That is the point that Commissioner Molnar --

3291   MR. TACIT: Yes, and I think --

3292   THE CHAIRPERSON: We asked it for the network, but from your understanding it does not pass on?

3293   MR. TACIT: We don't think so and if it does, if we are wrong in that, we certainly don't think it is a significant impact. So it is a two-tiered response.

3294   THE CHAIRPERSON: Well, the second is a conjecture, clearly, so let's talk about evidence. I want to know, does it pass on or not?

3295   MR. TACIT: Ask The Companies, I guess would be my suggestion.

3296   THE CHAIRPERSON: Ask The Companies, okay.

3297   MR. COPELAND: As I said, we have been presented with no evidence in that regard.

3298   THE CHAIRPERSON: Secondly, I guess your fallback position is, if there are ITMPs that have to be applied because you are the problem, et cetera, they should be applied on a node basis or on a point of contention basis rather than throughout the whole network?

3299   MR. COPELAND: Again, it is hard to imagine that the whole network throughout Ontario and Québec is congested universally at every node, at every CO, at every point from 4:30 in the afternoon until 2:00 a.m.

3300   THE CHAIRPERSON: Okay. Thank you very much. We will take a five-minute break before we go on to the next one.

3301   MR. TACIT: Thank you.

--- Upon recessing at 1015

--- Upon resuming at 1030

3302   THE SECRETARY: Order, please. À l'ordre, s'il vous plaît.

3303   LE PRÉSIDENT : O.K. Commençons.

3304   THE SECRETARY: I would now invite the Canadian Internet Policy and Public Interest Clinic, or CIPPIC, on behalf of the Campaign for Democratic Media to make its presentation.

3305   Appearing for CIPPIC and the Campaign for Democratic Media is Mr. David Fewer. Please introduce your colleagues and then begin your 15-minute presentation.

PRESENTATION

3306   MR. FEWER: Thank you, Mr. Chair, and my thanks to the Commission for providing CIPPIC and the Campaign for Democratic Media with the opportunity to appear before you today.

3307   My name is David Fewer, I am the Acting Director of CIPPIC, the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic at the Faculty of Law at the University of Ottawa.

3308   We act for the Campaign for Democratic Media, which is a network of public interest organizations and people pushing for media democracy in Canada.

3309   I am joined today on my right by Stephen Anderson, co-founder of the Campaign for Democratic Media and SaveOurNet.ca coalition.

3310   I am greatly pleased that the following three individuals were willing to provide their time and expertise to our panel and to the Commission: on my left, Dr. David Reed, Dr. Andrew Odlyzko and Mr. Bill St. Arnaud.

3311   Dr. Reed is currently Adjunct Professor at MIT's Media Lab. He played a significant role in the development of the underlying architecture of the Internet, contributing to the design and development of IP, TCP and UDP, the protocols central to today's Internet. Dr. Reed is co-author of the seminal paper establishing the end-to-end networking principle.

3312   Dr. Odlyzko is a Professor in the University of Minnesota School of Mathematics. Dr. Odlyzko heads the Minnesota Internet Traffic Studies project, a research project that collects information about Internet traffic from a variety of sources that continuously monitor traffic on a variety of networks. The MINTS project is, we submit, one of the leading independent sources for rigorous tracking and assessment of global Internet traffic patterns.

3313   Bill St. Arnaud is the Chief Research Officer of Canada's Advanced Internet Development Organization, CANARIE Inc., where he has been responsible for coordination and implementation of Canada's next generation optical Internet initiative.

3314   We appear before you today one simple objective: to convince you of the value of the open Internet, an Internet that is neutral as to source, destination, content and protocol.

3315   The Telecommunications Act provides the Commission with the tools it needs to address traffic management practices that undermine the open Internet. The tests we propose in our comment permit the Commission to establish a normative and prospective framework that will do two things.

3316   First, this framework will guide ISPs in how to implement acceptable traffic management practices and, second, this framework will provide Canadian consumers and businesses and competitive ISPs, including those in the wholesale market, with trust and certainty that the Canadian Internet will continue to serve as a platform that supports innovation and competition.

3317   Our submission will proceed as follows.

3318   First, Mr. Anderson will provide a social context and a broad citizen's perspective on the matters raised in this public notice.

3319   Second, I will provide brief comments on the manner in which the Commission has framed the relevant issues in its Schedule 2 and provide a substantive response.

3320   Mr. Anderson...?

3321   MR. ANDERSON: Thanks, David. And thank you for having me and for holding this important hearing. I'm thrilled that the CRTC has taken on the issue of traffic management.

3322   I am here as part of the Campaign for Democratic Media and I am the coordinator of the SaveOurNet.ca coalition.

3323   The SaveOurNet.ca coalition is a broad-based coalition of citizens, businesses and public interest groups fighting to protect our Internet's level playing field.

3324   The coalition has over 115 member organizations as diverse as non-profit organizations like the Canadian Federation of Students and the Council of Canadians, to media organizations like Now Public, to businesses like Tucows Inc., to ISPs like Acanac and Teksavvy, to labour organizations like the National Union of Public and General Employees and CEP.

3325   I think it is important to acknowledge that this issue -- this is an issue with a few Internet service providers and their partners on one side and nearly everyone else in Canada on the other. Businesses, civil society, cultural groups, everyday people, social, cultural and economic innovation and consumer choice are on this other side.

3326   The main issue at stake here is who will determine the way we use the Internet, will it be the users or will it be ISPs?

3327   You have received over 11,000 public comments in this hearing. That should tell you where the Canadian public stands. The values inherent in the open Internet are the values that are attracting widespread citizen support and I am here as one of those Canadians.

3328   The positions this panel puts forward correspond with what I have read from citizen submissions and what I have heard at the open Internet Town Hall events we organized in several cities.

3329   As you work for the Canadian people, I hope you will give these submissions due weight. I also encourage you to go through the citizen comments yourselves and come up with your own synthesis, which I'm sure will closely match our positions here.

3330   In this hearing Canadians are looking to the CRTC to establish guidelines for ISP traffic management practices that will ensure ISPs do not stifle innovation and that will safeguard emerging technologies.

3331   A Canadian citizen named Terrill put it succinctly in his submission and I quote:

"Canada has a long history of Internet-based innovation. It may not have been possible if it weren't for the open, unbiased characteristics of the Internet." (As read)

3332   The Commission's policy objective in this hearing should be to ensure ISPs can manage their networks, reduce congestion and keep the Internet open at the same time. If we fail to create the right balance and ISPs are allowed to determine access conditions for applications, it could have unintended consequences for innovation and consumer choice. I would argue that those consequences are already being felt.

3333   If we don't adopt the right rules, the main way -- or if we do adopt the right rules the main ways ISPs will compete is by increasing their bandwidth offerings. This is what we want.

3334   If we allow ISPs to slow down certain applications, as they are now, we actually create an economic incentive for bandwidth scarcity. If you can slow down and control traffic you can make more money if the resource is scarce. It's like allowing bottled water companies to control public water systems. Of course, they will have an incentive to keep the water scarce and expensive.

3335   This is not a good path to take if we want ubiquitous bandwidth and the economic, social and cultural innovation that comes with it.

3336   As Canadian citizen Paul aptly put it in his submission:

"Allowing discriminatory traffic shaping creates a disincentive to upgrade networks and provide faster, better service." (As read)

3337   It's part of the problem and not the solution.

3338   What's more, with the U.S. and others supporting the open Internet, if we do not move in the right direction Canada could end up as a backwater of online innovation. In these tough economic times we can ill afford such a fate.

3339   If Americans have permission-less innovation, so must we.

3340   As a Canadian named Roland submitted to you, and I quote:

"As a small business owner/operator we rely on the Internet. I am deeply concerned that a non-neutral Internet will harm my ability to compete on a level playing field with larger companies. Net neutrality is what has made my company possible. Please do not allow the Internet revolution we have seen in the last decade to be stifled by the interests of big business especially at a time when President Obama has declared his intention to defend net neutrality in the United States." (As read)

3341   So the vote from the Canadian public is in and they want an open Internet. With that, I will let David Reed and the rest of the panel detail our specific recommendations. Thanks for having me.

3342   MR. FEWER: Moving on to the substantive portions of our presentation, we offer three preliminary comments.

3343   First, this hearing ought to establish a forward-looking result. We ought to be -- this ought to be a norm-setting exercise. It ought to set bounds on permissible ISP behaviour with the objective of providing ISPs with competitive security and Canadian consumers and businesses with confidence that they can rely on the continuing openness and neutrality of the Canadian Internet. It ought not merely establish a reactive remedy for violations of the Act.

3344   Second, contrary to the claims of some of the participants in this proceeding, establishing these rules for managing an open and neutral network does not amount to lawyers building the Internet instead of engineers. First of all, ISPs build their networks further to business decisions, not simply to engineering decisions. If the engineers were really in charge, then Dr. Reed would be somebody else's witness, not mine.

3345   Third, there are public good aspects to the Internet. That is something that has been underlying a great deal of the submissions in this proceeding but it needs to be stated. The Canadian Internet is not simply the private property of retail ISPs, it's more than that. It is greater than the sum of its parts. It is a platform that Canadian businesses, innovators, entrepreneurs and citizens rely upon every minute of every day.

3346   Now, Canada has made a policy choice early on to rely upon the marketplace, on private parties to facilitate the construction of this critical resource, but we can't allow the private to trump the resource. We may talk of an ISP's facilities but it is Canada's Internet and I submit that this is reflected in the Telecommunications Act.

3347   Now, we have a few short comments with respect to the manner in which the Commission has framed the issues in Schedule 2.

3348   We believe that the objective as stated is a good one:

3349   - it shows a willingness on the part of the Commission to treat this process as a forward-looking process instead of simply a reactive one;

3350   - it acknowledges that the Internet is a network for the public good;

3351   - it recognizes that the Internet fosters innovation and creativity;

3352   - and while it does recognize that there may be legitimate management practices that ISPs can employ, it also limits these practices to protecting legitimate interests;

3353   - and finally, it recognizes that there are privacy concerns and legislative constraints that apply to invasive traffic management processes.

3354   It is a good start. We do, however, have some concerns about the stated definitions and assumptions.

3355   The definition draws a distinction between the public Internet and the private services. We worry a little bit about creating regulatory incentives for ISPs to carve out ever larger chunks of the public Internet for private services and provisioning the private at the expense of the public.

3356   We also recognize that this is an issue that goes beyond the scope of this hearing but we see it as an appropriate subject matter for a future CRTC proceeding. This is an issue that is not going away.

3357   We believe that the assumptions made in Schedule 2 are functional but miss key elements that would assist the Commission, we submit, in making a decision that better meets its objective.

3358   So the first assumption is essentially that unrestricted traffic increases lead to congestion and congestion leads to a deterioration in services.

3359   A simple economic truth: when there is an increase in demand without a matched increase in supply, there will be shortages. However, the assumption as stated completely ignores the supply side of the equation.

3360   The assumption would be better stated as: "Unrestricted increases in Internet traffic can lead to congestion in all or part of an ISP's network if these increases are not met with adequate provisioning."

3361   The ISPs argue that they are provisioning to the best of their ability and that this provisioning cannot meet the demands of all the new traffic being created by P2P applications.

3362   We argue that the evidence suggests differently. When Comcast, for example, was required to throttle traffic to meet this uncontrollable growth in demand, it found in fact that it was enough to throttle less than 1 percent of users for no more than 15 minutes at a time. This doesn't seem like unmanageable traffic to me.

3363   Provisioning is directly related to the requirements for traffic management practices. Functional marketplaces meet demand with supply, not by squashing demand.

3364   Now, this is how the Internet has always worked. Historically other bandwidth crises have been met by building capacity. That is how today's crisis will be met too. We invite you to speak to Dr. Odlyzko on that point.

3365   The second assumption fails to define what is meant by traffic management practices or integrity of the network.

3366   Now, in our comment we distinguish between acceptable traffic management practices that respect the open Internet and traffic interference, invasive practices that interfere with end-user traffic such as application-based throttling or RST insertion -- injection.

3367   Traffic interference should be permissible only transparently as a last resort where finely tailored to target congestion, to target the problem we're talking about here, and where implemented in a manner that minimally impairs the user experience and is justified by congestion metrics on an appropriately provisioned network.

3368   The failure to define integrity of the network is troubling because it glosses over the fundamental threshold issue, when may an ISP intervene in traffic.

3369   We would argue that traffic interference practices are not appropriate for ISPs to use in order to maintain the day-to-day integrity of the network. However, we do agree that in extreme cases what we have been calling the Obama inauguration type moments or Mother's Day type scenarios that certain traffic management practices may be appropriate.

3370   The last written assumption states that in order to grant approval under section 36 the Commission is governed by the policy objectives in section 7.

3371   We agree that this is relevant. However, we don't agree that the Commission should ignore the content of section 36 itself. The purpose of section 36, which is to prevent any influence by a carrier on content or the purpose of communication should be taken into account.

3372   The Commission should also then consider the degree to which content is controlled or the meaning or purpose is influenced and whether there is a less intrusive method for the ISP to accomplish its objective.

3373   Now, the unwritten assumption here. Before we move on we would like to address the non-inclusion of section 27(2) in any of the assumptions or the questions.

3374   At the very least we would like to see a standard developed for determining if a management practice is a violation of section 27(2). This will prevent an overly high hurdle for complaints under section 27(2) and provide greater guidance to ISPs going forward.

3375   Moving on to the substantive comments, we have three key points here:

3376   First, P2P-specific traffic management is discriminatory. It's a prima facie violation of section 36 and it conflicts with the policy objectives.

3377   Second, we argue that P2P-specific traffic management is simply unacceptable.

3378   And finally, that the Commission must provide a principled framework to guide ISPs in the future.

3379   The framework that we have proposed in our comments will lead, we submit, to cost-effective solutions that are compliant with the Act.

3380   Our bottom line is this: Currently ISPs have no incentive to tailor their practices to the requirements of the Act. Let's say an ISP has two options, each equally capable of achieving the ISP's objective, option one interferes with telecommunications to a greater extent than option two. Currently there is nothing to push the ISP to pick option two, the less invasive practice over option one.

3381   Our framework will give ISPs guidance so that they can find new and innovative ways to meet their legislative objectives in ways that are sensitive to the requirements of the Act.

3382   The effectiveness of this paradigm, we submit, is evident from what happened in Comcast in response to the FCC ruling. In that response, Sandvine and Comcast together were able to create, within a matter of months, a solution that is far superior and at the same time cost-effective.

3383   In the Canadian context this solution is also far less invasive of section 27(2), 36 and the principles in section 7. It also preserves the carrier's role of ISPs in that it doesn't require them to make decisions based on information not traditionally available to them.

3384   CDM is confident that given proper guidance from the Commission, Canadian ISPs will likewise develop solutions that are cost-effective in line with their respective management philosophies and also tailored to the requirements of the Act.

3385   As a result of this hearing there may be some minimal short-term costs to some ISPs as they update their practices to comply with the Act. Comcast faced similar costs and did not find it necessary to significantly raise prices to defray related costs.

3386   In the future, ISPs and network equipment providers will know at the development stage to factor in the statutory requirements of the Act when crafting network management practices. Once these factors are accounted for in the planning stage, the costs associated with them will be even lower.

3387   The resulting benefits will be far more innovation, less discriminatory -- a far more innovative, less discriminatory open Internet that is more responsive to the needs of Canadians.

3388   P2P-specific traffic management is antithetical to the principle of common carriage generally, and specifically with the principles enumerated in 27(2) and 36. It also strongly conflicts with the policy objectives.

3389   First of all, it is discriminatory. It discriminates against a class of applications. While slowing down a file transfer application doesn't necessarily prevent the application from functioning, it does put any such application at a competitive disadvantage relative to a file transfer application that is not throttled.

3390   Proprietary P2P protocols like BitTorrent are also placed at a competitive disadvantage, as application developers will hesitate to rely on these protocols when deciding how to solve their own file distribution issues.

3391   It also discriminates against ISP users who wish to use such applications to view content.

3392   In these hearings you have heard from a number of groups who rely on such applications to distribute their content.

3393   Finally, it sets up incentives for ISPs to confer undue preference on their own distribution services, especially with respect to wholesale customers. This is a very problematic but difficult issue to monitor.

3394   Application-specific throttling is also a prima facie violation of section 36. It controls content to the message, and, more to the point, it influences the purpose and the meaning of the telecommunication.

3395   In the case of a peer-to-peer file sharing application, the purpose of the telecommunication is to transmit data as quickly as possible. Slowing down the rate clearly influences the meaning and purpose of that telecommunication. Doing so can easily amount to defeating the purpose altogether if it causes users to abandon peer-to-peer file sharing applications or the BitTorrent protocol in favour of other forms of file transfer.

3396   Finally, application-specific traffic management conflicts with the policy objectives, detracts from the ability of independent Canadians and other artists to distribute their content, and hinders any other future innovation based on the P2P file sharing system or the BitTorrent protocol. It provides ISPs with strong incentives to rely on traffic management instead of investing in provisioning, and this will further degrade Canada's internet infrastructure.

3397   It is a privacy invasive solution, because it requires ISPs to consider which application customers are using, information that ISPs, again, traditionally, don't have access to.

3398   Since peer-to-peer-specific management prima facie violates 27(2), 36 and 7, an ISP implementing such methods must justify such a practice. It must, first, target a legitimate ISP objective, and second, it must adopt a practice that is proportional to that objective by being rationally connected to the objective, minimally intrusive, and provide benefits that outweigh the detrimental impact.

3399   Peer-to-peer-specific management practices, we submit, fail to do this.

3400   CDM has stated in its comments and maintains now that, in the context of traffic management, a legitimate objective is one that targets congestion that cannot be met through provisioning alone, such as the Obama-type moments.

3401   Throttling to meet normal peak traffic is not a legitimate objective.

3402   ISPs have claimed that, in the near future, traffic growth will be so great that it cannot be met with provisioning, but that's not yet occurring, and there is no reason to abandon provisioning based on these kinds of extremist projections.

3403   We would submit that these projections aren't consistent with the independent evidence, in any event.

3404   Targeting peer-to-peer is not a rational response to this legitimate objective. Peer-to-peer traffic can be addressed through provisioning alone. It currently produces a disproportionate amount of traffic, and this is due to its popularity as an application and its newly emergent status.

3405   Some have said that peer-to-peer allows 5 percent of ISP users to generate 50 to 60 percent of traffic. It should be noted, first, that this figure does not directly reflect peak traffic periods created by that 5 percent. In other words, this is not a true correlation to congestion, the problem that we are supposed to be looking at in this hearing.

3406   Only peak period traffic contributes to congestion.

3407   More to the point, penalizing an entire application platform isn't a rational response to the practices of a small number of its users.

3408   Targeting peer-to-peer is not tailored to the requirements of the Act. More tailored solutions are available, and others can be developed. The Comcast solution and various IETF processes mentioned in our comments are examples. There are others on the record in this hearing. These don't single out specific classes of applications, and so are less discriminatory. Instead, they directly target users actually causing congestion.

3409   It is not peer-to-peer applications that produce disproportionate traffic, but specific users of peer-to-peer applications.

3410   That is a point that I have heard made over and over at this hearing.

3411   Secondly, these solutions interfere with telecommunications to a lesser extent. They operate only in the presence of actual congestion, and so are less intrusive of section 36.

3412   Finally, an application-agnostic approach doesn't impact detrimentally on content distributors, it doesn't hinder innovation based on targeted application protocols, and it raises fewer privacy concerns, as it need not track which applications customers are using.

3413   Given that peer-to-peer-specific traffic management isn't minimally impairing, its salutary benefits can't outweigh its judgmental impact.

3414   Some have raised concerns -- this is at paragraph 76 of our submission -- that the proposed justificatory framework will be too stringent in the context of private companies, as it was developed for the protection of rights.

3415   I don't agree that this is the case. It has been applied in the private context to determine what is just, acceptable, or reasonable. It is merely a means of analysis, and its stringency is in the application. It's a flexible framework.

3416   Others have claimed that the justification framework is overly subjective and will substitute value judgments for those of ISPs, or that it will force one-size-fits-all solutions onto ISPs.

3417   This misconceives the nature of the minimally intrusive requirement, and that requirement is a method for adjudicators to defer to the legitimate objective of others.

3418   It allows ISPs to choose from a range of options, only requiring that these be tailored to the legal principles found in the Act.

3419   With some guidance from the Commission as to what these principles require, CDM anticipates that most ISPs will, from hereon in, adopt methods that meet this criteria from the start, and will have no trouble gaining approval from the Commission.

3420   The proposed paradigm is an ideal method for the Commission to implement its statutory requirements under the Act, while respecting the policy directive.

3421   This test essentially requires the Commission to interfere with an ISP practice only when it is clear that market forces have already failed to ensure the policy objectives, or sections 27(2) and 36 of the Act are accounted for.

3422   When an ISP adopts a method that makes no reasonable attempt to minimize discrimination or to influence the purpose of a telecommunication, or to hinder innovation or privacy, that signals such a failure.

3423   This is what we have been seeing here with application-specific throttling. No effort has been made to develop targeted solutions. The incentive to do so comes from the statute, and the CRTC must make sure that that is respected.

3424   Those are our comments, and we look forward to your questions. Thank you.

3425   THE CHAIRPERSON: Thank you very much for your submission.

3426   I presume you were here when the previous parties were before us, and yesterday when this whole issue came up, to which we can't get a clear answer, and since you have some eminent experts with you who have no stake in this debate, maybe I can get one.

3427   The whole idea is, when the ISP sells to a wholesale customer and, through them, further sells to the retail market, and there is congestion in the wholesale customer because, let's say, for argument's sake, using the jargon, most of its customers are bandwidth hogs, et cetera, and cause congestion clearly on that ISP's network, is there an ability for the congestion to affect the rest of the network, so that the wholesale provider suffers the consequences, or is it basically the problem of the wholesale customer who provides to the retailers?

3428   MR. FEWER: Bill, you are probably in the best place to take a swing at that one.

3429   MR. ST-ARNAUD: I wish there was an easy answer. It really depends on the technical details and the relationship between the wholesale customer and the wholesale provider.

3430   In some situations, where they have a dedicated pipe and port, the effect of the congestion on retail will not propagate into the wholesale network.

3431   In other cases, where they are just reselling DSL, for example, it may be possible that that congestion could propagate into the wholesale market.

3432   But without the technical details and the market relationship, it is very hard to say whether it will occur or not.

--- Laughter

3433   THE CHAIRPERSON: That is not a helpful answer. It could, you say.

3434   MR. ST-ARNAUD: Yes, I know.

3435   DR. REID: Let me try to bring it down one more level, so we can dive into the depth of the technology, which is probably where you don't want to go.

3436   THE CHAIRPERSON: Absolutely not.

3437   DR. REID: An access network, such as the network that the DSL wholesale customer is using to deliver its service, by whatever means -- PPOE or whatever -- it has some fundamental capacity within that access network, and what can bleed over is, if the wholesale customer's customers -- the retail customers -- are using more aggregate capacity than that wholesale customer had purchased, or whatever, at a point in time, then that will degrade that access network.

3438   It is much less likely, depending on market share, as in the earlier presentation, that it will degrade anywhere upstream from that access provider, so it will dissipate relatively quickly.

3439   But because the arrangement, the business arrangement in that circumstance, doesn't actually amount to purchasing capacity, but sort of purchasing the right to use capacity, there can be errors in that contracting situation.

3440   I suspect that a far better remedy -- rather than just interfering with traffic, a much simpler remedy would be coming and saying: Hey, you are exceeding what you contractually agreed to limit your capacity to, or limit your consumption to.

3441   So the wholesaler would speak to the retailer and say, you know, "In aggregate, your customers are using more than you said they would use at this point in time, do something about it," and they would either do something about it by implementing protocols at their end users, or they would be asked to pay more.

3442   And that would lead to more provisioning.

3443   As Bill said, it depends on the business arrangement and the particular technology that is underlying that arrangement.

3444   But, from a technical point of view, you could actually implement, entirely within the retailer's resources that it has access to, a mechanism that would throttle its customers, so that it stayed within the bounds it had negotiated with its wholesale provider.

3445   THE CHAIRPERSON: Secondly, one of the principles that you are advocating to us is that there shouldn't be any application-based throttling. If you do throttling, you throttle the capacity, or use other means, but don't single out a particular application because, if I understand you correctly, you may punish innocent users of that application, as well as the bandwidth hogs.

3446   It may also have an asymmetrical impact, you know, impacting some wholesale customers quite differently from others, depending on what type of customers they have, et cetera.

3447   If I buy the assumption, and I buy your analytical framework, which is based very largely on what we do in terms of Charter evaluations -- section 1 of the Charter -- I guess, theoretically, there could be an instance where an application-based discrimination was justifiable, if you go through all of the steps of analysis.

3448   Or, are you going from the assumption that in no case ever should -- by using application-based throttling, you are automatically offside?

3449   MR. FEWER: Offside.

3450   THE CHAIRPERSON: I'm sorry?

3451   MR. FEWER: I would say, using application-based throttling, that you are automatically offside, for the reasons that we went through in our submission.

3452   The real issue for me is rational connection and minimal impairment.

3453   In imposing application-based throttling, you are going overbroad. You are going to be throttling people who aren't contributing to a problem.

3454   And you are not tackling the problem. The problem is congestion, and there can be many sources of --

3455   THE CHAIRPERSON: No, I understand. You are saying, a priori, no matter how you apply the framework, or what the facts are, you could never come up with a solution which would say yes.

3456   MR. FEWER: Yes. It will never be sufficiently tailored to the problem.

3457   And, really problematically, it has downstream network effects that are very problematic from an innovation perspective.

3458   THE CHAIRPERSON: Would it make sense, let's say, assuming that we adopt your analytical framework and we apply it -- we say, "That's what we will do," and that is, in effect, the method by which we look --

3459   And we are complaint-based, so our examination is always ex post facto.

3460   If you put an exception in, if you try to do something application-based, you need ex ante approval.

3461   According to you, you would never get it, but I am not going to make an absolute ruling. God knows what the technology is, et cetera, but because of the likely -- the most likely outcome being unjust discrimination of anything that is application-based, you come ex ante.

3462   If you want to try it, be my guest and try it. Anything else, you do whatever -- here are our principles. You have to be neutral. You have to be technology-agnostic, et cetera. However, if somebody complains, then we will apply this analytical framework to decide whether you are onside or not.

3463   Does that make sense to you?

3464   MR. FEWER: Yes, that is the framework we are proposing, and that would be the result that we would expect, that an application-based traffic management practice is going to have so much difficulty getting over that rational connection and minimal impairment hurdle, and there are so many other options available. Really, that is the key.

3465   THE CHAIRPERSON: Okay, thank you.

3466   MR. FEWER: David, did you want to respond to that at all?

3467   DR. REID: Just perhaps on a slightly different angle on the same question you asked. I think there is a specific response that has to do with the fact that we are talking about internet service, not just any communication service. Internet service has a fairly well defined meaning, which includes delivering all packets all the time.

3468   Beyond whatever legal framework you have in Canada, it is accepted across jurisdictions that traffic will get through, and that there is a definition of internet service that supports all applications equally, or at least fairly among each other.

3469   So as long as you are talking about regulations that apply to someone who claims to be offering an internet service -- and this came up in the FCC hearing, where I testified on this -- there may be a distinction between internet service and other communication services that is quite important from a market point of view, which is that if you claim to be offering an internet service, you have to offer what you claim, and if you take the word "internet" out, you have a lot more freedom.

3470   So when someone claims to offer that, that could be a crucial distinction -- an additional reason not to distinguish among applications.

3471   THE CHAIRPERSON: My whole question was based on -- you are asking me to make an a priori ruling that application-based throttling is offside. I am really reluctant to do anything a priori, when I can see saying, "No, you need ex ante approval," et cetera, because it is so contrary to the principle of internet, as your colleague just said. Therefore, you come first, et cetera.

3472   But you never know what the situation may be, so rather than making it a priori, I would categorize: those are ex ante, the other ones are ex post.

3473   And, from my understanding, you would see that that would be an acceptable or a logical way to proceed.

3474   MR. FEWER: Yes. I see now what you are getting at.

3475   You don't have a complaint in front of you right now that a given ISP's behaviour -- that a particular ISP's application-based throttling is a violation of the Act, so you are expressing your reluctance to, basically, rule that in this hearing. I understand that.

3476   Our view is that, by adopting the framework and saying, "This is the framework by which Canadian ISPs must be guided when considering and implementing internet traffic management practices," it would be readily apparent that an application-based approach is going to be offside. It is going to fail that test.

3477   So ISPs would have the opportunity, then, to revisit their practices and get back onside the Act.

3478   THE CHAIRPERSON: But, also, for future -- I mean, if you actually think you are in such a dire strait that you have to do an application-based approach, you don't even contemplate, you need ex ante approval.

3479   I would sort of put that out, clearly, as a benchmark.

3480   MR. FEWER: Yes, I think, if you can get ex ante approval in those circumstances, then, go for it.

3481   I am just trying to think of what circumstance an ISP would be in that --

3482   THE CHAIRPERSON: None of us has a crystal ball.

3483   MR. FEWER: Yes, that's true, you never know what is going to happen.

3484   THE CHAIRPERSON: Tim...

3485   COMMISSIONER DENTON: Good morning, gentlemen. If some of our questions seem a little focused, it is because, I think, there is broad agreement on some of the principles that have been advocated by several parties here, so I want to get into the issues of tests, criteria and what standards to apply, rather than broad principles.

3486   I notice, for example -- and it is one of my micro nightmares that it might arise here -- that carriers, users and internet types might all have exactly the same idea as to the principles to follow.

3487   It is illustrative, for example, if we look at the Open Internet Coalition, they had three principles: Does the traffic management practice in question further oppressing and substantial objective.

3488   Second, is the traffic management practice narrowly tailored, et cetera.

3489   And, third, is the traffic management practice the least restrictive to reach the objective.

3490   Now, this is remarkably similar to what you have come up with in your paragraph 18.

3491   Where do we go with this?

3492   As I hear you talk, and read what you have written, there seems to be a sense that some of the criteria and procedures developed in the Internet Engineering Task Force might be relevant guides to what we ought to be doing, or how we ought to be applying rules here.

3493   Can you comment, please, about the adequacy, pertinence, and applicability of IETF rulings, procedures and standards?

3494   DR. REID: I am happy to comment. I am not sure that my views are universally held to be truth, so this will be personal and based on my experience, and so forth.

3495   The IETF is a remarkably good organization at vetting technical alternatives. If you have a problem to solve --

3496   I think one of the principles that was mentioned here was the idea that you ought to subject it to scrutiny, try to decide whether it is the least invasive approach, whether it really solves the problem, whether the problem has been characterized properly, and so forth, and, as an organization, the IETF does a pretty good job, as do some other organizations like it in providing a very broad set of inputs.

3497   Its output is not regulatory in any sense, so the IETF has some standards that it produces that are technical standards that have been agreed to, and they tend to be fairly conservative.

3498   And then there is a whole collection of recommendations and other kinds of things that don't hold any sort of legalistic weight.

3499   But what they do hold is, actually, a lot of weight because of their content and the fact that all of the parties who are involved in engineering the internet participate in that process, just as all of the parties that are involved in legal issues participate in a process like this one.

3500   So it does provide a counterpart to a regulatory process of surfacing issues, discussing them, and munching over them, and that sometimes takes some time.

3501   For example, the task force that started dealing with the problem that Comcast was having in the U.S., there has been a quiet and fairly active group trying to say: Well, what is really the problem?

3502   There was probably some problem that caused Comcast to spend some money to buy equipment and install it. Let's look at the problem and get out of the political domain and see if we can solve it.

3503   And they, actually, have made a great deal of technical progress that has influenced Comcast's decision, and so forth.

3504   So my sense is that it has a role to play. It's role can't be king of the internet, but it plays a very important role in providing a place for technically neutral discussion among parties who may have economic -- who may be, actually, competitors, or otherwise have serious problems.

3505   COMMISSIONER DENTON: Would anyone else care to venture a view on this?

3506   MR. ST-ARNAUD: Following Dave's comments, I think the Engineering Task Force has an important role in defining the technical issues here. In fact, there are meetings in Stockholm as we speak on network neutrality, and so forth.

3507   But I think the issues facing the Commission here are much more business and regulatory issues on this topic. There are technical things that we could contribute, but I think the real problem is something that the Commission has to address.

3508   COMMISSIONER DENTON: It has been presented to us that a considerable portion of the traffic management problems that we are focused upon are sort of a creation of inadequate capacity caused by insufficient competition.

3509   I would appreciate your comments on this view.

3510   DR. ODLYZKO: It's very hard for me to tell what's causing it in particular since we're talking about the Canadian situation which I'm not as familiar with.

3511   However, in almost all cases any congestion that arises is a result of kind of collision of two factors, supply and demand and kind of the supply not being adequate to the demand.

3512   And the question then is, kind of, how do you handle it, to what extent do you throttle the demand and to what extent do you pull the supply and to some extent that's regulatory policy or a business decision.

3513   From standpoint of studies I have done I've observed that demand is not growing very rapidly, it's growing at rates that are sort of comparable to the rates at which technology is improving.

3514   You can look at, say, the Notebook computer that you bought this year, it probably has four times the memory of the one you bought three years ago and you probably didn't pay any more for it than you paid for a previous model.

3515   Similarly, the technology suppliers to telecom companies like Nortel or Alcatel, Lucent, Cisco and so on are boosting the capacity of their products, and as far as I can tell at the moment, maintaining a steady rate of capital investment is adequate to provide increases in capacity that handle the increasing demand that exists.

3516   What happens in specific cases for particular ISPs and so on, well, that really depends on local situation, I cannot really kind of address it, this kind of very large, very global kind of observation for the industry as a whole.

3517   COMMISSIONER DENTON: But, Professor Odlyzko, given that global observation, can you just repeat that second to last sentence I think it was, that you're saying that a steady increase of capacity is what, sufficient to meet...?

3518   DR. ODLYZKO: A steady increase of capacity that's provided by using the latest technology at the current levels of investment is sufficient to meet the current levels of increasing demand.

3519   COMMISSIONER DENTON: And I know your studies, but perhaps you could elaborate on how you have arrived at that conclusion.

3520   DR. ODLYZKO: Well, so the main part of the project that I'm running, MINTS Project, is to monitor trends in traffic growth. This is a part I can address most directly, have greatest amount of expertise on and we just observe that traffic growth has not -- has been declining.

3521   Still we have very vigorous traffic growth, but it has come down from a level, say, a hundred percent per year say half a dozen years ago, down to a level of more like 50 percent per year in many places, in particular based on the data that was released by the Commission based on what was supplied by the Canadian ISPs. In Canada it's down to around 35 percent, at least it was last year.

3522   If now I draw the conclusions from data from other sources, kind of what suppliers are quoting for their equipment or so, it appears that that level of growth in traffic can be handled by the increases in capacity of equipment that's provided by the suppliers to telecom.

3523   In other words, a kind of -- as far as I can tell at the moment there is no need to increase the capital investment of telecom sector, therefore, no need to increase the prices to consumers in order to accommodate the traffic growth that we observe in most places, including Canada.

3524   COMMISSIONER DENTON: Thank you.

3525   What I'm going to ask you to do is, in any order among Reed, Odlyzko and St. Arnaud, if you gentlemen had a message to leave us with, I would like you guys to give us each your particular message that you really want us to absorb in the context of this proceeding.

3526   Take it in any order you like.

3527   DR. REED: I was hoping to have a couple of seconds to think.

--- Laughter

3528   DR. REED: That's a very broad question.

3529   I guess the message that I would leave you with, because we've clearly spent a lot of time with David Fewer and other CIPPIC people and so forth and pretty much I would sort of look at the top line of a forward-looking process that doesn't react so much to this point, the crisis of the moment, over react is probably where the Internet has been well served as have other sort of businesses that are based on technology growth and rapid adoption.

3530   There is a crisis perhaps in some ISPs, it may be a crisis partly of their own making, they didn't anticipate demand or surprised by take-up in some area, but the general principle of sort of standing back and letting the -- you know, helping the problem get sorted out at the technical level before, you know, taking a regulatory move to enable some new technique that sort of violates a lot of boundaries perhaps, is where I would try to stay.

3531   I think the whole engineering community is very interested in what is happening with video, for example, and there's clearly been a shift in the delivery of what you might call asynchronous video from peer-to-peer networks where -- that was largely because the main suppliers of video weren't willing to play their content on the Internet at all, to services like Apple TV and Hulu and so forth.

3532   And I would at least argue that peer-to-peer will continue to play a role in video distribution, maybe not as large, and that all of those are traffic hogs.

3533   When my kids watch Apple TV every night and Hulu at their dorms and I know that's the dominant part of capacity now, maybe more than the other things.

3534   So, I would say, you know, video may be a big problem, it may not be peer-to-peer that form takes and trying to focus on peer-to-peer to stand for the fact that video is gradually moving over to that space might be a premature solution and might privilege the video providers, the Hulus and the Apple TVs against, say, Canadian independent film makers to take a sort of an extreme example, who might not have access to Hulu or Apple TV and from a market point of view.

3535   So, you can have very big side effects in this space and I would say go slow and think forward.

3536   DR. ODLYZKO: So, one point I would like to make is it would be worthwhile to collect data on a continuous basis, for example, on things like traffic levels, also distribution of traffic among different applications.

3537   Much of the kind of hype about kind of the flaws of video swapping and has basically been hype, there's been kind of no substantiation for it, goes contrary to what we observe is happening out there.

3538   On the other hand, there is growth, there's continuing growth which I think is very healthy in many ways and there's certainly potential for substantially greater growth in the future.

3539   I cannot kind of totally discount the concerns industry expresses about video files on the Internet. If all of the video that is now being watched over cable networks or over-the-air TV was suddenly to show up on the Internet, it would definitely, you know, crash the network.

3540   However, if you observe previous rates of adoption of other technologies, you seldom see kind of this big quantum jumps.

3541   I think, again, instead of anticipating things or kind of approving intrusive traffic interference methods, a priori, it would be better to have a continuing effort to measure, you know, to better measure what is going on to be able to make informed decisions.

3542   The other point is just kind of essentially to reiterate what I said before. One of the things actually that has caught me by surprise over the last few years is I've observed traffic growth slowing down.

3543   Back about 10 years ago when I first got into this game I kind of was expecting that we would see continuation of a doubling of traffic each year, which would have required architectural changes, increases in investment, et cetera, which I felt would, again, be healthy for the industry, but I saw sources of potential additional traffic which might feed this doubling of traffic each year that has been kind of -- that prediction has been proven false, traffic growth has come down and I'm kind of somewhat puzzled by it. Again, reinforces the need to actually watch what it is that people do as opposed to reacting to some fears that are stirred by somebody without direct kind of data.

3544   MR. ST. ARNAUD: Yes. I just want to echo my colleagues' points.

3545   One I think is not to focus on peer-to-peer. We've seen data, I think Sandvine reported here earlier that peer-to-peer traffic is around 20 percent now and there also is another study from the coalition -- research group in the United States that peer-to-peer traffic's dropped substantially on our networks.

3546   Now, there's a number of factors to that. Some of it may be hidden under other protocols, but there's also some suspicion that, you know, people now are buying legitimate music and videos, on the sites now they're publicly available, now that the content providers are making it available on the Internet people are naturally gravitating to legitimate sites, and also probably some of the pressure of the RIA and MPA on piracy.

3547   So, I think it was concerns not to fight yesterday's war and the new applications, video in particular is now the big driver, but to focus on -- so to focus on application of peer-to-peer I think maybe it's misleading us.

3548   The other thing is, in these new applications, particularly video and Canadian content and so forth, the early adopters are going to be the big users. So, you know, when you see individual users taking big traffic, this is not necessarily a bad thing, this means this is a new market opportunity and so forth and to recognize that -- and to sort of encourage that type of development because that's where, hopefully, some day we'll have new growth in the traffic.

3549   And so, it's really -- it has conditions that do not restrict that innovation and adoption of new practices I think is very important.

3550   COMMISSIONER DENTON: Thank you, Mr. Chairman. Those are my questions.

3551   THE CHAIRPERSON: Len?

3552   COMMISSIONER KATZ: Thank you, Mr. Chairman.

3553   Just one question. Having just prominent university scholars in front of me forces me to ask this question.

3554   Universities in general have a reputation of consuming high band width for many reasons, academia, research, students, everything else as well.

3555   What are universities doing today, if anything, to control the use of their infrastructure, given that it has been growing as quickly as it has?

3556   DR. ODLYZKO: Well, it's hard for me to tell about universities as a whole. There are some associations of university IT directors who might be able to provide you with such data.

3557   I can talk about University of Minnesota more specifically. We have a very large, very high capacity network. The part of it that goes to the dorms that is capacity controlled, there are rules against, you know, controlling peer-to-peer, students are all warned, you know, against pirated content and we have attorneys on our staff who respond to -- take down notices from RIA or MPA constantly.

3558   And actually one of the problems is that, you know, they obtain a notice about some peer-to-peer application, some suspicious application running, they often have to go down and contact the users because in a large fraction of the situation it's a totally legitimate scientific peer-to-peer applications.

3559   One of the problems -- a little kind of aside -- one of the problems of public discourse, peer-to-peer has been identified with pirated music and video. It might be true that the majority of peer-to-peer traffic is such, but in a university environment as ours that is not the case, there's a lot of totally kind of legitimate scientific kind of or other approved users.

3560   So, in that case, university staff do have to worry about it and it's kind of bothersome in terms of being...

3561   COMMISSIONER KATZ: There isn't user prioritization or controls that are being put in place?

3562   DR. ODLYZKO: No, there's no prioritization, other than throttling for dorms in general. For the academic unit, there is no prioritization whatsoever. So, the network is very lightly loaded, the connections to the Internet are lightly loaded and it's actually a very good illustration of effect that demand does not jump and fill all of the pipes.

3563   And much of what you often hear from industry is a claim that you just boost capacity, then users will simply boost their usage. That doesn't seem to happen. There are lots of counter examples to that.

3564   COMMISSIONER KATZ: Thank you.

3565   THE CHAIRPERSON: Okay. Thank you very much for a very useful and thoughtful commentary.

3566   Thank you.

3567   We'll take a five-minute break before we deal with the last intervener for the morning.

--- Upon recessing at 1126

--- Upon resuming at 1139

3568   LE PRÉSIDENT : Bon, commençons, Madame la Secrétaire.

3569   LA SECRÉTAIRE : Merci, Monsieur le Président.

3570   I would now invite Execulink Telecom to make its presentation.

3571   Please introduce yourself for the record and proceed with your presentation.

--- Pause

3572   THE SECRETARY: Your microphone.

3573   MR. STEVENS: I'm sorry.

PRESENTATION

3574   MR. STEVENS: Good morning, Mr. Chair and Commissioners.

3575   My name is Keith Stevens and I'm Chairman of Execulink Telecom.

3576   Execulink is a small TSP operating primarily in southwestern Ontario. Execulink offers local telephone, both as a SILEC and a CLEC, cable TV, long distance and Internet access services.

3577   Our roots as a small independent telephone local exchange carrier are over a hundred years.

3578   Execulink owns and operates its own facilities including twisted copper telephone cables, co-axial TV cables, fiber optic cables, fixed wireless radios, telephone switching equipment, cable TV distribution equipment and Internet routers and servers.

3579   Execulink also uses essential services and wholesale facilities from other TSPs to deliver services in areas where it is uneconomical or impossible to use our own facilities.

3580   Execulink provides broadband services using several different methods, both as a retailer and as a wholesaler. We utilize, (1) DSL -- Execulink own DSL facilities, both central office and our local loops; we use co-located DSL central office together with wholesale local loops from other suppliers, we use wholesale DSL, in particular Bell's GAS product, we use Execulink's cable TV facilities, we use Execulink's fixed wireless facilities, we use our own fiber optic cables and we use leased fiber optic cables.

3581   Providing a wide range of sometimes competing telecommunications services utilizing both our own facilities and as well as those of other TSPs, compels Execulink to continually consider often competing positions.

3582   Purchasing wholesale services from some TSPs, providing wholesale services to other TSPs, forces Execulink to understand the issues from both points of view.

3583   Hopefully this balanced perspective will be beneficial to the Commission when reaching their decision.

3584   In its June 5th communication, the Commission stated its objective for this hearing was:

"To establish Internet traffic management guidelines that maximize the freedom of Canadians to create applications and use the Internet, while respecting legitimate interests of ISPs to manage their networks consistently with privacy and other legislative constraints." (As read)

3585   MR. STEVENS: The Commission listed six areas of focus. My presentation will concentrate primarily on the wholesale services, with some additional comments on the acceptability of Internet traffic management practices or referred to as ITMPs and privacy.

3586   But, first, I'd like to talk about wholesale versus retail versus resale.

3587   And I think it important to take a moment to define wholesale and to further differentiate between wholesale service when used as an input for a distinct service and as resale.

3588   The term wholesale is generically used to describe the sale in bulk of services or products to retailers, in contrast to retail which is used to describe the sale to the end customer.

3589   The term wholesale is used to refer to services that are either (a) resold to the end customer with little or no transformation, which I refer to as resale; and, (b) services that are significantly transformed or used as an input for a distinct service.

3590   Generally Execulink believes that resale services should be regulated the same as retail, their retail equivalent. In contrast, however, wholesale when used as an input should be regulated uniquely.

3591   Those unique regulations should take into account the effect the regulation could have on the transformed service, the ability of the supplier to limit the differentiation of the service and the market dominance of the supplier as well as being symmetrical and competitively neutral.

3592   The regulation of wholesale that is used as an input has had a unique regulatory treatment in previous Commission's decisions. An example is the Regulatory Framework Decision, 2004-34, section III on Competitive Services.

3593   Now that I've provided a definition of wholesale, here are my comments on the issues.

3594   Privacy. Does the use of ITMP technologies raise privacy concerns? My short answer is no. TSPs have always had access to customer's private information. ITMP makes it slightly easier, but does not change that ability.

3595   Since the earliest days of telephony it has been illegal and unethical to eavesdrop on voice conversations. I think the same applies to data conversations and I don't believe any additional rules are required.

3596   Acceptability of Internet traffic management practices. Internet traffic management practices, ITMPs, can be divided into four categories: technical, economic, network capacity and acceptable use policy.

3597   Technical solutions to Internet network congestion include throttling, caching, prioritizing and filtering.

3598   Economic solutions to network congestion include band width limits, excess band width charges and time of day usage pricing.

3599   Network capacity solutions to network congestion involve increasing the capacity of the network component that are congested.

3600   And acceptable use policy solutions to network congestion involve personal interaction, either warnings or disconnection with the customers whose network use of the Internet is contrary to the acceptable use policy.

3601   For the nature of the questions and comments, the focus of this proceeding appears to be on the technical solutions and subsequently I will so restrict my comments, except for the following general observation.

3602   The three non-technical ITMPs I referred to are not nearly as controversial or subsequently are often the solution that should be solution of choice.

3603   It is preferable to increase capacity than to technically restrict usage and it is preferable to use an economic solution rather than throttling to change the time of day congestion.

3604   Technical solutions. Technical solutions are effective when dealing with spam, security threats or attacks. As well as they can be used to mitigate the effects of network incapacity.

3605   I began this presentation by differentiating between retail and wholesale including the necessity for different regulation. Hopefully the reason for the differentiation will now become obvious.

3606   For retail customers, Execulink believes that ITMPs are generally acceptable and should not be restricted. Undoubtedly there are exceptions and they should be dealt with on a case-by-case basis.

3607   The success of those ISPs who rely on ITMPs to relieve their network congestion rather than increasing capacity will be determined by the marketplace. ISPs should clearly disclose the limitations of their offering but not necessarily the technical details. In other words, if a certain type of traffic is restricted, it should be so disclosed but how the restriction is technically done need not be.

3608   Wholesale services. The remainder of my presentation will deal with wholesale services.

3609   Earlier I explained the difference between retail and wholesale and why there was a need for unique regulation. I will use Bell's Gateway Access Service, referred to as GAS, to demonstrate why it requires different regulatory treatment than retail broadband and what that treatment should be.

3610   Bell's GAS is a wholesale service that is used as an input. ISPs combine GAS with additional inputs to create their own unique products. These additional inputs include, but are not limited to: e-mail, web access. data storage, static IP addresses, filtering, speeds, volumes, quality of service guarantees, redundancies. pricing, traffic prioritization and virtual private networks.

3611   The resulting unique products vary from providing access to the web for individuals to connecting ATMs for banks.

3612   GAS is clearly an input into the solution provided to the consumers and not a resale product and should be regulated distinctly.

3613   Technical solutions when applied to wholesale customers can have significant negative consequences. They include; the decreased ability of the wholesale customer to manage their network; the decreased ability of the wholesale customer to differentiate their product from the wholesaler; the decreased ability of the wholesale customer to effectively offer economic and other unique solutions; and the decreased ability of the wholesale customer to meet quality of service commitments to their customers.

3614   Combining the negative consequences of wholesalers imposing their technical ITMPs with the market dominance of the very large wholesalers can put small ISPs at a significant disadvantage.

3615   Section 27(2) of the Act prohibits the Canadian carriers from unjustly discriminating, subjecting any person to an undue or unreasonable disadvantage or giving an undue or unreasonable preference towards any person, including itself, in relation to the provision of a telecommunications service.

3616   When a wholesaler technically manages the Internet, the wholesale customer is put at an undue and unreasonable disadvantage and the wholesaler has a retail offering with an undue or unreasonable preference.

3617   The following are instances that further illustrate this.

3618   Applying technical ITMPs to a wholesale customer's traffic interferes with the ISPs ability to manage that network, differentiate their product and apply economic solutions for traffic management.

3619   To manage a network requires the ability to diagnose problems and modify configurations. Much of this ability can be lost when the wholesaler and the competitor technically modifies that traffic.

3620   To apply economic solutions for traffic management requires the ability to manage or set the speed and volume of consumption. Where there are bandwidth limits, excess bandwidth charges or time of day usage pricing, they are all impractical if the wholesaler technically interferes with the traffic.

3621   Implementing the Telecommunications Policy Objectives, 14 December 2006 -- which I will refer to as the Policy Direction -- requires the Commission to, among other things, rely on market forces to the maximum extent feasible and, when relying on a regulation, to use measures in a manner that interferes with the market forces to the minimum extent necessary to make the policy objectives.

3622   Policy Direction also requires the Commission to ensure that non-economic measures are implemented to the greatest extent possible in a symmetrical and competitively neutral manner.

3623   Market forces can only be relied on to the maximum extent feasible if competitors are able to differentiate their services. Applying throttling or filtering to a wholesale customer's traffic restricts the ISP's ability to do that differentiation and thus reduces reliance on market forces.

3624   It is the duty and right of every ISP to manage their network. How they choose to manage is their responsibility. Allowing one competitor to dictate or restrict how another competitor manages their network, their traffic, is neither symmetrical nor competitively neutral.

3625   For all the reasons and examples cited, the application of technical ITMPs to wholesale Internet traffic is contrary to section 27(2) of the Act and the Policy Direction and should be prohibited.

3626   To summarize:

3627   (a) The use of ITMP technologies does not raise additional privacy concerns.

3628   (b) For retail customers ITMPs are generally acceptable and should normally not be restricted by regulation.

3629   (c) ISPs should clearly disclose the characteristics and attributes of their offering but not necessarily the technical details.

3630   (d) The wholesale Internet traffic should be regulated uniquely and distinctly for retail and resell.

3631   (e) The application of technical ITMPs to wholesale traffic should be prohibited.

3632   To conclude, I would like to thank the Commission for the opportunity to participate in this very important proceeding and we would be pleased to answer your questions.

3633   THE CHAIRPERSON: Thank you very much for your presentation. I am interested to see you are both, if I understand, a wholesale customer and a wholesale provider to other ISPs?

3634   MR. STEVENS: Correct.

3635   THE CHAIRPERSON: That should uniquely qualify you to answer the question that I posed to the two preceding parties.

3636   MR. STEVENS: I will do my best.

3637   THE CHAIRPERSON: Okay. Where you are a wholesale provider and you have wholesale customers, is it possible that the wholesale customers, due to bandwidth overconsumption, et cetera, cause problems upstream to you as a wholesale provider?

3638   MR. STEVENS: They can cause problems but it's not because of overconsumption. I guess the difference -- I should differentiate between the wholesale and retail again.

3639   Retail usually only has a limit on speed. You can buy 11/2 megs, 3 megs or whatever. Wholesalers have a cap on speed and volume. We are capped on speed on each customer, 11/2, 3 megs, et cetera. And on volume we buy an aggregate of volume, whether it is 100 megs, 5 gigs, 10 gigs, but we have an overall aggregate cap on volume.

3640   So if our customers -- if we try to exceed Bell's or our customers try to exceed our cap on speed, we don't let it happen. We cap it and it just doesn't go any faster. If they try to exceed our capacity on volume, we don't let it happen. I mean you start getting collisions.

3641   So no, they can't cause us a problem if we have delivered what we promised to deliver them, you know, whatever it is, 11/2 megs, and aggregately we got 10 gigs. If we don't exceed the 10 gigs, you know, now -- so there is no problem if we aren't doing that.

3642   That's why, I guess, your comment about this proceeding really being about capacity, and I understand from a retail point of view there is a problem with capacity and Bell's network is a lot of the reason this proceeding is going forward, but from a wholesale point of view we are not exceeding what we contracted to do.

3643   Now, where the problem comes in is if you can't deliver what you contracted to do, then it can cause problems. As our volume -- as our usage increases but they haven't designed their network to meet their commitment, yeah, we are going to cause problems.

3644   THE CHAIRPERSON: Who designs it? I mean if I can take the analogy to electricity overuse, your consumption goes -- there is usually a switch that gets -- there is no breaker switch here, is there, or the equivalent of a breaker switch? Do you implement that or does the wholesale provider, let's say Bell or so, put that in?

3645   MR. STEVENS: The wholesale provider puts those limits in on the routers and the equipment. I mean if you as a customer have a contract for 11/2 megs, it is not going to run faster than that. There is a governor on that.

3646   THE CHAIRPERSON: Even if you are a wholesale customer?

3647   MR. STEVENS: Yes. Yes. And the same for the capacity, where we contract through the aggregate -- where we interconnect with Bell or our customers interconnect with us, they have contracted for 100 megs, you know, once they go 101 megs they are not going to get it. There is a governor on it.

3648   THE CHAIRPERSON: So any contention by wholesale providers that part of their congestion comes because of their wholesale customers, you say it just cannot be true, they must have contracted to sell more than they can deliver?

3649   MR. STEVENS: That's correct.

3650   THE CHAIRPERSON: That leads you to your recommendation (e) which is saying the wholesale Internet traffic -- ITMPs on wholesale Internet traffic should be prohibited?

3651   MR. STEVENS: That's right. And by doing that, the restriction on the ITMPs on wholesale traffic, it means they won't deliver what they have contracted to deliver. They want to restrict it even further. So they will underdeliver what they -- you know, they are not even meeting their commitment for delivery. That is why we are saying that, absolutely.

3652   THE CHAIRPERSON: Okay. Candice...?

3653   COMMISSIONER MOLNAR: Thank you, and welcome here today.

3654   MR. STEVENS: Thank you.

3655   COMMISSIONER MOLNAR: Just a couple of questions first to ensure I understand better your business.

3656   MR. STEVENS: Sure.

3657   COMMISSIONER MOLNAR: You mentioned that you have a blend of your own facilities and a wholesale facility --

3658   MR. STEVENS: That's correct, yes.

3659   COMMISSIONER MOLNAR: -- with fixed wireless and cable and DSL. So it is quite a mix.

3660   Could you help me just to understand to what extent, for example, would you rely -- without giving away any competitive information -- but to what extent are you relying on wholesale facilities versus your own facilities within your network?

3661   MR. STEVENS: For the Internet access, we have more customers that are using wholesale than we are providing directly ourselves. That is shifting. We are doing more and more implementing of our own facilities but right now there is more on wholesale than we do directly provide ourselves.

3662   COMMISSIONER MOLNAR: Okay. Thank you.

3663   MR. STEVENS: By the way, it is not an order of magnitude difference, it is just more. It is not like it is 20 times more, it's just slightly more.

3664   COMMISSIONER MOLNAR: So it is roughly 50-50?

3665   MR. STEVENS: Yes.

3666   COMMISSIONER MOLNAR: Something like that, yes. Okay.

3667   And do you use any ITMPs today within your network?

3668   MR. STEVENS: We have Sandvine equipment running in our network. We are not implementing any -- we are not using it right at this point. It is there, we are collecting data on the usage. It is there if we need it for an attack, et cetera, but we are not applying any ITMPs on our customers.

3669   COMMISSIONER MOLNAR: Just to be clear, you noted that there are four different types of ITMPs --

3670   MR. STEVENS: Yes.

3671   COMMISSIONER MOLNAR: -- technical, economic and so on. Do you use economic traffic management?

3672   MR. STEVENS: Everybody uses economic because you have your various packages, you are charging for that. But no, we are not even charging for usage, most of our packages are just by speed.

3673   COMMISSIONER MOLNAR: So you have no bit caps are anything else?

3674   MR. STEVENS: No, we don't. We don't.

3675   COMMISSIONER MOLNAR: Okay.

3676   MR. STEVENS: We do use the quality of service -- except for use policies, of course. We all do that because if somebody abuses what they are supposed to by the policy, well, we will deal with them.

3677   COMMISSIONER MOLNAR: Okay.

3678   MR. STEVENS: And of course we are increasing capacity. I should comment on that, by the way. It came up from a previous person.

3679   Our experience on capacity, by the way, is that we have been reinvesting our -- by reinvesting our depreciation for the last several years we have been able to keep up to the capacity requirements of our customers.

3680   COMMISSIONER MOLNAR: Okay. Very good. Thank you.

3681   I thought perhaps what I would do is just use your summary (a) to (e) to frame the questions or as a point of following.

3682   The first issue you bring up is that ITMP does not raise privacy concerns. I think we have had a number of parties here saying certainly there are certain technologies, such as DPI for example, that do raise privacy concerns.

3683   When I read what you say in here, you comment that:

"Since the earliest days it has been illegal and unethical to eavesdrop on voice conversations. The same applies to data conversations." (As read)

3684   So in fact there can be privacy concerns?

3685   MR. STEVENS: That should probably be additional privacy concerns. I guess my background, having been in the telephone business for 40 some years, and going back to the telephone analogy, which is often easier for me and I hope for others, I mean the telephone repairman has always had a butt set or a telephone set with two clips on it, he could clip on the person's phone lines in the box at the side of the road and listen to conversations. It has always been illegal to do that since I think it's back in the 1920s. I think it was the Telephone Act in Ontario said it was illegal to do that in 1920. I'm not a lawyer, so I don't want to be quoted on that.

3686   So it is -- I mean there are concerns on privacy. We as telecommunications providers have the ability to have access to private information of our customers and we have a real responsibility to make sure that we don't abuse that ability.

3687   I guess all I'm saying is I don't think ITMPs have raised the bar any higher than they were before. They are still there, we should not do it. I mean we take that very seriously and maybe there are some other providers that don't and maybe they need to be reminded of that requirement, but I just don't think it added any higher level of concern.

3688   COMMISSIONER MOLNAR: So additional legislation and Acts and so on are all sufficient and the practices and policies in place?

3689   MR. STEVENS: I believe so. Maybe from my point of view we have taken it very seriously because it is also our responsibility as a good corporate citizen to do that as well. You people would know better whether the rules are there but I don't think it has raised any issues that the telecommunications industry hasn't had for a long time, responsibilities.

3690   COMMISSIONER MOLNAR: Moving on to point (b) for retail customers ITMPs are generally acceptable and should normally not be restricted.

3691   If you were sitting in the room today you heard the party before you speaking of --

3692   MR. STEVENS: Yes.

3693   COMMISSIONER MOLNAR: -- the fact that there are concerns, it should be restricted, we should be concerned with any ITMPs that would prohibit or discriminate against applications or protocols.

3694   MR. STEVENS: I guess where I am coming from in that -- and I tried to come at it from our customer's point of view, trying to meet the needs or wants of the customers.

3695   If a customer comes to me and says, you know, I use the Internet primarily for e-mail and surfing the occasional site to find out information, I don't download movies, I don't download music, I'm not interested in that, can you give me a product that is a bit more economic, that saves me some money, you know, to meet those needs.

3696   Well, one thing we could do, if we put a restriction saying hey, you can't download movies but we can make your e-mail and your Web surfing really fast. I would like to be able to meet that customer's need and to do that I could use an ITMP to do that from that customer asking for that.

3697   Or I'm asking for a business that says I don't want our employees gaming during work hours on their computers at work. I could put a restriction on it that says you can't access gaming sites or some of that gaming-type traffic for that.

3698   So I guess that's where I'm saying there shouldn't be those restrictions. I understand where the people's concerns -- and that's why I said it should generally, because you could find examples that really discriminate against a particular business or whatever and I think that's why there could be exceptions and they should be dealt with on a case-by-case basis.

3699   But I don't think there is any need for general restrictions because, if not, you are going to restrict maybe what customers want.

3700   COMMISSIONER MOLNAR: Mr. Stevens, you mentioned that you are a telephone guy --

3701   MR. STEVENS: Yes.

3702   COMMISSIONER MOLNAR: -- and so you know very well that it has always been a responsibility of the telephone guys not to influence the content that is transmitted over the communications system. So how do you see that different?

3703   MR. STEVENS: Well, yes and no, because we use telephone and right now when people want toll restriction that says I don't want any long distance calls made from my phone, we have a tariff to say no long distance made from my phone.

3704   So how is that different from saying, hey, as an Internet user, I don't want anybody in my house accessing movies. That's how I guess it is the same way. I think we have had that right all the time.

3705   You know, again from the customer's demand and saying, hey, I don't want to access long distance from my house. Okay, we put total restriction on. I don't access movies from my house, can you put on restrictions so you can't access or download movies. I see them at the same. So I don't think it's -- I think there is an obligation there to meet what the customer wants too.

3706   THE CHAIRPERSON: But isn't the point we are talking about not customer-requested ITMPs but network-imposed ITMPs? You as a customer didn't ask for for it but it is being imposed for whatever reason from the ISP. That's what this whole hearing is about.

3707   MR. STEVENS: And I guess that's where the -- when I say exceptions, because then, you know -- I guess where I'm coming from -- I wouldn't want to blanket -- I mean I think generally from customer-requested or customer packages, you think the customer would want a package there they could choose from, it should not be restricted to do that.

3708   Should we as an ISP be able to say, no one in our whole -- any of our customers can access movies? I wouldn't choose to do that because I use that as a business opportunity to be able to provide that service to them.

3709   So I understand, Mr. Chairman, where you are coming from there but I don't see as an ISP doing that.

3710   COMMISSIONER MOLNAR: Okay. I need to think of the "toll restrict" thing a little bit more. So I will continue.

3711   Moving on your list, in (c) you talk about disclosing the characteristics and attributes of their offering --

3712   MR. STEVENS: Yes.

3713   COMMISSIONER MOLNAR: -- but not necessarily the technical details.

3714   I would like your thoughts on something that was suggested to us, and I forget the name of the panel that came forward. Mr. Jason Roks was one of the panellists and they talked about the fact that they felt it would be appropriate if an ISP was to market their available speed that they also market their throttled speed with it.

3715   That, you know, it's not just about disclosing it in some obscure terms of service you sign when you first -- you know, when you are looking for a pricing plan and you sign up to a service and then two or three months later you are all of a sudden throttled or something else, but that, as part of ongoing marketing and advertising, any comments on speeds, any marketing of speeds would include both the traditional or burstable speed or whatever kind of speed they want to market as well as the limited speed, the throttled speed.

3716   MR. STEVENS: Two comments on that. I don't disagree with that, that if we are limiting speed, you know, let's say you were saying our speed is 11/2 megs, but, by the way, in the evening it's only half a meg, we should absolutely say that.

3717   Throttling doesn't usually limit speed though, it usually limits -- or it can, you can slow speed down, but it usually limits -- it just slows down the traffic, it doesn't really limit the speed. It is a very technically funny way they do that.

3718   But I would comment -- I think he mentioned one other thing too as well. He was trying to raise the issue about the up to 11/2 megs, concerned about the up to capacity. I had some very conflicting thoughts when that happened through my mind.

3719   One is, as a provider, I get very concerned sometimes when some competitors are advertising a speed I know they can't deliver, but they say up to. But I know unless, you know, you've got a good tail wind it is never going to happen.

3720   But at the same time I know why from a network design you can't -- well, it gets very expensive to guarantees speeds and that's why when you go to the retail consumer product that is maybe $40 and you go to the business product that guarantees a speed, the price is $400. It's 10 times the difference because the one is using a private network, the other one is using a shared network. So when you have a shared network you always have to say up to.

3721   It is the same back to the telephone type example. No one is guaranteeing you will always get dial tone. We have come to expect we will have dial tone when we pick the phone up, but if everyone on the telephone exchange picks the phone up at the same time they won't all get dial tone. It's not designed that way.

3722   So I understand why you have to say up to but I'm also concerned that some don't necessarily -- use that as an out to be able to deliver an inferior -- their product is not as good as they are implying.

3723   COMMISSIONER MOLNAR: That actually flows very well into my next question and that relates to the wholesale services, the wholesale service you referred to here as GAS --

3724   MR. STEVENS: Yes.

3725   COMMISSIONER MOLNAR: -- the GAS service.

3726   MR. STEVENS: Well, I use that as an example. That's one, yes.

3727   COMMISSIONER MOLNAR: It is an example and it is a shared service?

3728   MR. STEVENS: That's correct, yes.

3729   COMMISSIONER MOLNAR: So when you say that you should have access up to the speeds and capacities that you have been -- that have been made available, I mean really I don't understand how what you are saying to me about the wholesale is any different than --

3730   MR. STEVENS: The retail.

3731   COMMISSIONER MOLNAR: -- than the retail.

3732   MR. STEVENS: Well, one main difference there. In retail it is only the speed, so they are saying the speed is up to 11/2 megs. Well, we have contracted with Bell. Our other customers who contract with us are saying the speed is up to, for each individual customer and, by the way, our over aggregate volume that we can have is up to -- it has a limit on it as well. So there is a volume limit as well as a speed limit on that.

3733   I understand absolutely from a capacity point of view that if it is a shared network and if, you know, there is an event happening that the speed will be slowing for all customers. We make sure our end customers understand that and we understand that when we contract from the wholesale point of view. We understand that.

3734   But it is then putting a cap on the -- throttling on the volume when we have already contracted the volume. That is where our concern comes in and where it is different, is our customers have not contracted volumes and, if they did, then you have to try to meet that. So if we have contracted that we can do 100 gigs, then that's what the cap should be, is 100 gigs. We already have a contract for -- or we have one cap on it, we have already paid for a cap and it is the imposition of another cap that is a concern.

3735   COMMISSIONER MOLNAR: Okay. I don't want to get, as I did yesterday, into a detailed discussion of GAS and how it works, so I won't do that.

3736   But a question I asked to others yesterday and will ask to you today is: If there were no traffic management practices applied to the wholesale GAS, could you guarantee, as it is configured today, with the service you buy today, that your use and your customers' use of that network would not interfere with the quality, speed or otherwise of other users of that shared network?

3737   MR. STEVENS: I can guarantee that we won't exceed what we contracted Bell for, the speed and the volume, both the volume of that. All of our customers though, when customers are on a node or whatever and they are all sharing that, it's a shared network, absolutely whatever one customer does affects everybody else. There is no doubt because you are sharing that. We are all sharing the Internet in this room, we all share it and we all affect each other.

3738   So yes, we will affect each other, but again it is back to the contracts and where they are at, you know, for that. I am not trying to hang up on contracts, it's just -- your real question, I think, is why should not Bell be able to put the ITMPs on us as a wholesaler when we came on a retail? Why is the difference on that?

3739   And it is for two things, our ability to manage our own network but also the fact that we have already contracted for the volumes. But it also really interferes with our ability to diagnose and manage our own network.

3740   Will our customers impact everybody else? Yes, it is a shared network, so therefore by definition they will impact each other. It also means that if our customers --

3741   COMMISSIONER MOLNAR: And in your view that is not discriminatory? Where you say we should not discriminate against wholesalers, I'm looking at an end customer and there is -- you know, your customer and his neighbour is a Bell customer and the speeds of one customer are influenced, throttled or otherwise, and yours is not --

3742   MR. STEVENS: Well, it's busy.

3743   COMMISSIONER MOLNAR: -- or with yours not being, their speed is slowed down, they have packets lost or whatever. You don't see that as discrimination?

3744   MR. STEVENS: No. Well, I don't think it's unjust discrimination. Bell has contracted with us to provide a service and a volume of --

3745   COMMISSIONER MOLNAR: And they have contracted with the other customer to provide a service as well.

3746   MR. STEVENS: Yes. But it's a different contract though. It is a different contract with different terms and conditions. The other customer says they will provide up to 11/2 megs, for example. Ours says it will provide each customer up to 11/2 megs and that we can use up to 100 gigs of traffic. There is a difference on that.

3747   COMMISSIONER MOLNAR: So have they throttled your 100 gigs? Have they not allowed you to go to the maximum capacity? They haven't changed that, have they?

3748   MR. STEVENS: They slow it down at the customer. We don't get to the 100 capacity because they have slowed down at the customer's end.

3749   COMMISSIONER MOLNAR: Just a couple of other questions.

3750   You are the first fixed wireless provider, I believe, that we have had in front of us.

3751   MR. STEVENS: Okay. All right.

3752   COMMISSIONER MOLNAR: So I'm interested to know if you see that there would be anything particular related to the fixed wireless technology that needs to be taken into account here as it regards acceptable ITMPs or otherwise?

3753   MR. STEVENS: I guess the only thing about fixed wireless that's a little bit different is nodes are very small. Often like 30 or 40 customers are all that would be on a tower or on one sector of a tower. So their ability to affect each other can be that much greater.

3754   So I could see as things change that you may -- you know, we may want to, some of us may want to put ITMPs on fixed wireless before you necessarily put it on cable network or the DSL-type facilities, only because of the -- it's harder to manage because it's smaller. Other than that there is not a lot of difference. It's just being a smaller node makes it harder to manage.

3755   COMMISSIONER MOLNAR: So then it's just the timing or the need for ITMPs versus the type technologies or otherwise?

3756   MR. STEVENS: It is shared but only shared by -- I mean it is shared by, say, 40 people rather than 4000. So the effect that one or two people can have on that can be greater on the others. So it's harder to manage.

3757   COMMISSIONER MOLNAR: Okay. Thank you. Those are my questions. Thank you for coming.

3758   THE CHAIRPERSON: Tim...?

3759   COMMISSIONER DENTON: Good afternoon. You mentioned that maintaining -- ploughing back your depreciation into investment was sufficient to carry your traffic, increase of traffic.

3760   MR. STEVENS: Yes.

3761   COMMISSIONER DENTON: Are you allowed -- is it possible to ask you just what is that depreciation rate?

3762   MR. STEVENS: Well, it varies. I mean we base our depreciation rate on the estimated life of the equipment. So if we think a router is good for three years, we depreciate it over three years, which means three years from now we will be buying a replacement one or probably will. So we adjust our depreciation rates on the useful life of the equipment.

3763   COMMISSIONER DENTON: So basically that is sufficient to cover the increase of capacity that you need to --

3764   MR. STEVENS: By continually ploughing that back in each year with new and more routers and more capacity, yes, we have been able to do that.

3765   COMMISSIONER DENTON: And is it roughly around a third for most of your equipment?

3766   MR. STEVENS: For that type of thing. I mean obviously we have -- you know, fiber cables are like 20 years type thing on those things --

3767   COMMISSIONER DENTON: Right.

3768   MR. STEVENS: -- but for routers, yeah, they are usually 3 to 5 years. Some are a little bit less, but 3 to 5 years.

3769   COMMISSIONER DENTON: Thank you very much. Those are my questions. That is my question.

3770   THE CHAIRPERSON: Okay. Thank you very much for your presentation.

3771   I think we will break for lunch now. What time do we resume, Madam Secretary?

3772   THE SECRETARY: We will resume at 1:30.

3773   THE CHAIRPERSON: Okay.

--- Upon recessing at 1215

--- Upon resuming at 1337

3774   THE CHAIRPERSON: Madam Secretary, let's begin.

3775   THE SECRETARY: Thank you, Mr. Chair.

3776   I would like to note for the record that the Independent Film and Television Alliance has filed, in response to an undertaking, a comparison between regulatory actions taken in Canada and the U.S. with regards to internet traffic management practices, and a list of IFTA members' films that have received an Oscar for best picture. Copies are available in the Examination Room.

3777   We will now proceed with the presentation by Primus Telecommunications Canada.

3778   Please introduce yourself for the record, and proceed with your 15-minute presentation.

PRESENTATION

3779   MR. STEIN: Thank you.

3780   Good afternoon, Mr. Chairman, Commissioners and CRTC Staff. My name is Matt Stein, and I am the Vice-President of Network Services for Primus Canada. Thank you for your invitation to attend this hearing and the opportunity to present Primus' perspectives on the issues at hand.

3781   Primus Canada is the largest alternative telecommunications service provider in Canada, and provides a full suite of telecommunications services to over one million Canadians.

3782   Although Primus Canada is a wholly-owned subsidiary of Virginia-based Primus Telecommunications Group Incorporated, it operates independently in Canada. It is a Canadian corporation, with a completely Canadian management team.

3783   Due to foreign ownership restrictions, Primus is restricted in the investments it can make in transmission facilities, and is required to operate as a reseller rather than as a facilities-based carrier.

3784   However, despite these restrictions, Primus has invested over $300 million in telecommunications network infrastructure, including significant investments in DSLAM and broadband aggregation equipment.

3785   Primus also has a history of innovation in Canada. We were the first to roll out a national Voice over IP service. We were the first to widely deploy ADSL2+. And we also offer multiple other innovative features on our retail services, such as our popular Telemarketing Guard service, which prevents the receipt of telemarketing calls whether or not the customer has signed up for the Do No Call List.

3786   Continuing this innovative trend, we have recently implemented a deep packet inspection-based quality of service traffic management practice, which I will discuss in detail momentarily.

3787   First, I will briefly set out the foundations of Primus' views in these proceedings, and discuss Primus' views on some specific concerns that have been raised throughout this proceeding. I will then address the issues of specific interest to the Commission.

3788   As an ISP, Primus offers a high-speed internet service, through an arrangement with a CLEC, that permits Primus to locate DSLAM equipment in their co-location spaces. This arrangement permits Primus to offer its own retail internet service, and enables Primus to fully control the characteristics and quality of this internet service, which I will refer to as Primus' ON NET Service.

3789   In addition, Primus also offers high-speed internet service through the use of ILEC aggregated DSL service, such as Bell Canada's GAS service.

3790   Primus has deployed a deep packet inspection-based quality of service technology on its ON NET Service. Primus has implemented this technology as part of a process to alleviate congestion that occurs on its network.

3791   This process has two parts: first, the part that determines the nature of the traffic; and second, the part that applies to quality of service policy in the moments of congestion.

3792   This first technology, which is a deep packet inspection-based technology, prioritizes traffic based on its time sensitivity and popularity with our users. Very time-sensitive traffic, such as internet games, Voice over IP, video conferencing or Skype is given the highest priority.

3793   Very popular applications and protocols, such as web browsing, e-mail, instant messaging and streaming media are given an elevated priority.

3794   Finally, all other types of traffic that are used by a comparatively small percentage of Primus users, such as peer-to-peer file transfers, are classified as normal.

3795   Once this classification of traffic is complete, it is left to the rest of the network to manage congestion appropriately.

3796   In moments when an individual link or an individual network path is congested, the prioritization policy is applied, favouring traffic in the manner I have just described. In any moments that path is not congested, there is no application of policy whatsoever, and all traffic passes just as if nothing had been prioritized.

3797   These moments of congestion could be several hours, several minutes, several seconds, or less.

3798   As a result, if we have network capacity available, applications will use it, and we are not forced into static one-size-fits-all throttling.

3799   Similarly, in these moments of congestion, neither time-sensitive applications, such as Voice over IP, nor popular applications, such as web browsing, e-mail and so forth, are affected by this congestion.

3800   It should be noted that in regards to Voice over IP, all Voice over IP traffic is given this highest priority, regardless of who the service provider is or what protocol this service utilizes. This is not only used for Primus services.

3801   The benefit of this traffic management practice is that it only takes effect during the moments of congestion. If no congestion occurs, all applications take their share.

3802   However, if congestion is occurring, the prioritization method ensures that time-sensitive and popular applications will not be impeded and will not be affected by latency or jitter.

3803   Finally, it is in Primus' interest to address and resolve all issues of congestion that arise from the internet usage of its end users, regardless of whether the end users are served via Primus' ON NET Service or through an ILEC aggregated ADSL service, and regardless of the type of application in use by Primus customers.

3804   Accordingly, Primus has a significant interest in the outcome of this proceeding.

3805   Before turning to the issues of specific interest to the Commission, I would like to address some specific reoccurring points of contention regarding the internet traffic management practices of ISPs.

3806   First, it is not Primus' intention to cease building capacity and rely solely on traffic management practices moving forward. We understand the need to continue to build capacity on our network. However, building capacity is a time, capital and resource-intensive process.

3807   We implemented our deep packet inspection-based quality of service technology as part of a holistic network management strategy. We believe that building capacity and utilizing network traffic management practices are complementary. We do not believe that the choice is as simple as either build capacity or implement traffic management practices.

3808   Second, our decision to utilize traffic management practices was based solely on the need to alleviate the congestion in our network that occurs when traffic demands surge past our expectations, and our network upgrades have not yet been completed.

3809   Some parties to this proceeding voiced concerns regarding the potential ability of ISPs to use traffic management technology to discriminate against certain content providers for the purpose of giving preference to their affiliates. Primus is not a broadcaster, we do not produce content, and we are not affiliated with any broadcasters or content creators. Our decision to implement our deep packet inspection-based quality of service technology was based on what we believe is the most effective solution to resolving congestion in the network, and what we believe is most acceptable to end users.

3810   Third, we use deep packet inspection technology for the sole purpose of traffic management, in order to alleviate congestion in our network. We do not collect, store or analyze unaggregated end user-specific information. Further, we have no interest in doing so.

3811   The only information that is collected and stored is aggregate information about network usage. This information is used for network planning purposes only.

3812   Finally, traffic management practices have other benefits besides addressing the issue of congestion. One such example is ensuring quality of service for Voice over IP users.

3813   For the past few years, the Commission has been focused on ensuring that VoIP end users are provided with the same 9-1-1 capabilities as wireline end users. In our view, the benefits of ensuring that all VoIP users have access to E9-1-1 is diminished if there is a possibility that a VoIP 9-1-1 call will be unintelligible or interrupted due to congestion on an unmanaged network.

3814   Accordingly, by implementing a traffic management practice that prioritizes VoIP traffic in order to ensure that it flows unimpeded and is unaffected by latency and jitter, public safety is advanced. Therefore, the utilization of traffic management practices has benefits apart from addressing congestion in an ISP network.

3815   I will now speak briefly about the issues of specific interest to the Commission.

3816   In our view, all ISPs should be permitted to manage their networks and implement traffic management practices in the manner they deem most appropriate.

3817   In regards to the specific applicability of internet traffic management practices, it is Primus' position that all of the traffic management practices are generally acceptable.

3818   To paint with a large brush, there are two forms of traffic management practices: commercial and technological.

3819   Commercial traffic management consists of practices such as setting monthly bandwidth limits, excess usage charges, and time of day usage pricing. Provided that end users are made fully aware of these measures, there is nothing fundamentally problematic with these commercial practices.

3820   Technological traffic management practices consist of the utilization of technology, such as, but not limited to, deep packet inspection to manage internet traffic. Provided that these practices are transparent, and used for the purposes of managing traffic, there is also nothing fundamentally problematic with technological traffic management practices.

3821   To use Primus' DPI-based QoS traffic management practice as an example, the technology inspects the packet, and classifies and notes the priority of the packet so as to resolve congestion when or if it occurs. General information about traffic amounts and protocol usage is stored in an aggregate manner for network planning purposes only.

3822   It should be noted that ISPs face a delicate balance when determining what traffic management practices to implement in order to resolve congestion. While commercial traffic management practices may be application and protocol-neutral, if users do not change their habits, these practices do little to resolve congestion.

3823   If end users do not change their habits or usage patterns, the implementation of these commercial traffic management practices may do little more than result in a price hike across the board.

3824   On the other hand, if technological traffic management practices are implemented in a manner that is not preferable to end users, then the ISP will face customer dissatisfaction. Therefore, we believe that all ISPs should be given leeway to determine what traffic management practices will be most effective and acceptable to their own end users.

3825   For our part, we believe that we have achieved an acceptable balance at the present. Our deep packet inspection-based quality of service technology has been met with positive reviews by our end users, and has not been subject to the significant criticism or negative reactions that have characterized the implementation of traffic management practices by other ISPs. That is not to say that we will not continue to adapt our practices in the future.

3826   However, we do believe that the positive feedback from our end users evidences that we have achieved an appropriate balance.

3827   Accordingly, Primus believes that all internet traffic management practices are acceptable, provided that the traffic management practices of ISPs are transparent, that technology such as DPI is deployed for the purpose of managing traffic, that any specific packet information is utilized solely for immediate traffic management purposes, and that only aggregate information is stored for network planning.

3828   Turning to the issue of disclosure, Primus believes that all ISPs should disclose their internet traffic management practices that are implemented on both retail and wholesale services.

3829   In regards to retail services, ISPs should disclose how their internet traffic management practices will affect the internet service experience of their end users.

3830   Such information will ensure that end users are fully informed and aware of how their service may be affected.

3831   However, Primus believes that this disclosure should be limited to the customer-facing internet traffic practices.

3832   In addition to traffic management practices implemented to resolve congestion, ISPs also use security-related traffic management practices to protect end users from viruses, spam and malware. We do not believe that ISPs should be required to disclose specific information about the security-related traffic management practices.

3833   In regards to wholesale services, Primus believes that upstream ISP wholesalers must be required to properly notify the downstream wholesale ISP customers about the implementation of any practices that would impact the performance of their wholesale service. This notification should occur well in advance, provide specific details of the implementation, and detail how the implementation will affect service.

3834   The implementation of traffic management by wholesale ISPs without prior notification does not permit downstream ISPs to prepare for inquiries, complaints, or notify its customers in advance.

3835   When Primus implemented its DPI-based QoS traffic management system, we announced it to our users and disclosed the practice through our website in advance.

3836   In contrast, when Bell Canada implemented its DPI-based peak period traffic management practice on its Gateway Access Service without providing prior notification, Primus was unable to provide such notification to our end users and properly prepare for customer inquiries. This was harmful to our relationship and reputation with our end users.

3837   Accordingly, we believe that wholesale ISPs must be required to provide advance notification and specific details regarding any implementation of traffic management practices that will affect the levels of service provided to downstream ISPs.

3838   In regards to internet traffic management practices and privacy, it is Primus' view that the use of internet traffic management practices does not raise privacy concerns. We note that the most significant privacy concerns relate to the use of technology such as DPI; however, provided that technology such as DPI is used solely for traffic management, technological traffic management practices do not raise privacy concerns.

3839   To again use Primus' DPI-based quality of service traffic management practice as an example, while Primus' traffic management practice inspects packets for the purpose of prioritization, this specific information is used for the sole purpose of traffic management. We do not store unaggregated information, we do not sell usage information to advertisers, nor do we utilize usage information to provide targeted advertising. We use DPI solely to ensure that when congestion occurs, our network has the appropriate intelligence to ensure that both time-sensitive and popular applications are able to flow unimpeded, and we use aggregate network usage information solely for network planning.

3840   It cannot be denied that technology such as DPI could provide the capability to collect a significant amount of end user-specific information. However, an ISP must explicitly choose to implement technology in such a manner.

3841   In Primus' view, the collection of end user-specific information is not necessary for internet traffic management.

3842   While Primus does believe that additional rules are needed to protect end user privacy, we would be amenable to a requirement that restricts the use of any information gathered via internet traffic management technologies such as these to be used for the sole purpose of internet traffic management.

3843   As stated earlier, Primus believes that all ISPs should be permitted to manage their networks and implement traffic management practices in the manner they deem most appropriate. Accordingly, we believe that upstream ISPs should not be permitted to impose traffic management practices, whether economic or technological, upon their downstream ISP customers.

3844   First, such practices remove any incentive for downstream ISPs to invest in and implement innovative traffic management practices.

3845   Second, even if downstream ISPs invest in innovative traffic management practices, their efforts will likely be made redundant or ineffective if the upstream ISP continues to impose its traffic management practice upon the downstream ISP's traffic.

3846   Also, such practices prevent ISPs from developing unified traffic management policies. For example, in Ontario and Quebec, where Primus offers high-speed services through its ON NET Service and Bell Canada's GAS service, Primus end users are subject to separate policies. Primus ON NET end users receive prioritization, while Primus end users served by GAS receive static throttling of their peer-to-peer application, regardless of how much extra capacity is available in the Bell network at the time.

3847   THE SECRETARY: Excuse me, Mr. Stein, your time is almost up. Could you conclude, please.

3848   MR. STEIN: Yes.

--- Pause

3849   MR. STEIN: In the interest of time, this concludes Primus' presentation.

3850   In summary, we are of the view that all internet traffic management practices are acceptable, provided they are applied in a transparent manner by ISPs and that they are used solely for traffic management purposes.

3851   In regards to privacy, technological traffic management practices do not raise privacy concerns, provided the traffic is inspected only to the extent necessary to manage traffic, that unaggregated data is not stored and aggregate network usage data is used solely for the purpose of traffic management.

3852   In regards to the application of traffic management practices on downstream ISPs, we believe that the practice hinders innovation and prevents an ISP from being able to present a consistent service across multiple geographies.

3853   In contrast, permitting all ISPs to manage their networks and implement the necessary traffic management practices will encourage innovation in traffic management practices. This will also increase customer choice, which will resolve many other concerns regarding internet traffic management practices.

3854   Finally, we believe that only practices that block, alter or redirect content should give rise to concerns regarding section 36.

3855   Thank you again for your invitation to attend this hearing and the opportunity to present Primus' perspectives, abbreviated though they are, on these important issues. I look forward to answering any questions that you may have.

3856   THE CHAIRPERSON: Thank you.

3857   I presume that you have been listening to the rest of the proceedings in this room, and you have heard lots of people voicing grave concerns about application-based ITMPs; essentially, more or less, that they would have unintended consequences and would treat users differently. They could also be encrypted, and therefore you don't necessarily detect all of the peer-to-peer applications. Lastly, they may have a very asymmetric impact, depending on who the users are.

3858   They have basically suggested to us that we should never -- some have said that we shouldn't allow any application-based ITMPs. Others have said that they should require ex ante approval, or something like that.

3859   You don't share that view, if I understand correctly. You say that you should be able to use any kind of ITMP?

3860   MR. STEIN: I think that's between an ISP and its end customers. I think that a customer will, in the end, choose the ISP that is most appropriate for their needs. That is comprised of many things -- value, price, speed, availability in the region -- and it may ultimately include ITMPs and so forth.

3861   In the case of Primus' use, I think it is unique in two ways. First, we do not throttle at any point. We don't set a static limit that an application or a subset of applications can use.

3862   The second --

3863   THE CHAIRPERSON: No, but you reserve the right to do so.

3864   You just told me that any methodology could be used. It's between you and your end user, so the implication is that you reserve for yourself the right to do that.

3865   MR. STEIN: That's correct. I am suggesting that any ISP should be able to do that with their users. It's neither our plan nor our intention. That is not what we have built our relationship with our customers on.

3866   The other aspect that is important to consider, which, I believe, is unique, is that our protocol selections and how we have ranked them are based on the needs of an application and its real-time nature, as well as the popularity.

3867   If an application were very highly popular on our network, it would receive priority.

3868   In the case of the ones we were referring to here today, they are not popular on our network.

3869   THE CHAIRPERSON: Now, you are talking primarily as an ISP, but I believe that you are also a wholesale customer in some jurisdictions, aren't you?

3870   Do you buy capacity from ILECs on a wholesale basis and then sell it to end users?

3871   MR. STEIN: That's right. We are an ISP in both senses of the term.

3872   THE CHAIRPERSON: In that sense, when you are a wholesale customer, let's say, of Bell or something, the fact that Bell is allowed to throttle peer-to-peer applications doesn't bother you?

3873   MR. STEIN: Oh, it does, in fact --

3874   THE CHAIRPERSON: Well, you just told me that any kind of ITMP is acceptable.

3875   MR. STEIN: Between an ISP and its customers -- its direct customers.

3876   Our customer is not a customer of Bell.

3877   THE CHAIRPERSON: Right, but you are a customer of Bell.

3878   MR. STEIN: We are a customer of Bell.

3879   THE CHAIRPERSON: So with the end customer it's okay, but not if you are a middleman.

3880   MR. STEIN: That's right.

3881   We are able to differentiate our service in a number of ways. Some of those ways I have outlined here, some of them will be in the written comments. Unfortunately, I went quite long, and I apologize for that.

3882   As a wholesale customer -- remember that Bell only provides part of the service. They provide the connection that goes to the customer itself, but I am still the ISP. We are still the ISP. Not only do we maintain the relationship, but the great majority of the service being provided to the customer is being provided by Primus, not Bell, even in the situation as a wholesale DSL connection.

3883   So we do differentiate in that respect. We believe that by being allowed to use our traffic management practices, not only could we have a consistent service right across the country, but we would be in a position to differentiate ourselves better, and offer different things than Bell is able to offer, which, in turn, is better for the consumer.

3884   THE CHAIRPERSON: Okay. Now I want to address the issue, not between you and your end customer, but between you as a middleman and the supplier, let's say Bell or Rogers, or whoever you buy it from.

3885   MR. STEIN: Sure.

3886   THE CHAIRPERSON: What ITMP may they use? And you said between you and your end customer anything is possible. What's possible between you and the ILEC or from whom you buy the service?

3887   MR. STEIN: We propose that if the ILEC does feel that our customers have created material amounts of congestion and they should address it with us, we should take steps, not them.

3888   In cases where we are unwilling or unable to, perhaps only then they should be able to address that and then go deal with the issue.

3889   But we weren't given the chance in this case, so we would like that chance and we would have addressed it ourselves, as we've had with the rest of our service.

3890   THE CHAIRPERSON: Len, I believe you have some questions.

3891   COMMISSIONER KATZ: Thank you, Mr. Chairman.

3892   As the customer for Bell, have you asked Bell if they would be prepared to provide you with a guaranteed level of service, irrespective of what they may be doing to their network and under what terms and conditions they would make that available to you?

3893   MR. STEIN: Yes, we have.

3894   COMMISSIONER KATZ: And what have they said?

3895   MR. STEIN: They said -- a long time ago they told us they'd consider it. We haven't heard further, but we've asked.

3896   COMMISSIONER KATZ: Okay. You've introduced the Q of S service for your customers. Can you explain how your service is impacted by Bell's decision that they may or have impacted management practices that might affect you?

3897   MR. STEIN: When Bell made the change to the wholesale service they made it prior to our implementation of DPI quality of service.

3898   So, while our plans had been to implement that, we haven't implemented it on the links that go to Bell, and the reason is, they are already providing DPI there, they are taking different ITMPs, they are taking different Internet traffic management practices.

3899   We don't want to have conflicting practices in place at the same time. Frankly, it would only compound the situation of confusion amongst our users; wherein the same serving area, such as a city like Ottawa, we have some customers served via OnNet and some served via Bell and different rules being applied.

3900   COMMISSIONER KATZ: So, you're only applying your Q of S on your own infrastructure?

3901   MR. STEIN: That's correct, on the OnNet service. We don't apply it on the Bell one.

3902   COMMISSIONER KATZ: And do you give your customers a choice as to whether they want OnNet service or an ADSL offnet service?

3903   MR. STEIN: In serving areas where it's both available, they can choose, yes.

3904   COMMISSIONER KATZ: Do you charge the same amount for both?

3905   MR. STEIN: I believe we do, yes.

3906   COMMISSIONER KATZ: So, you can have a customer paying the same amount of money who is subscribing to your, what I'll call, an enhanced guaranteed Q of S level of service versus an ADSL best efforts service?

3907   MR. STEIN: If I could clarify. Both services are best efforts services. The nature of the Q of S is how we apply ITMP.

3908   We're not offering, for example, guaranteed rate of service across such as the Bell HSA service which was brought up earlier.

3909   We do offer that as well for commercial customers, but today we're mostly speaking about residential.

3910   COMMISSIONER KATZ: Okay.

3911   MR. STEIN: But the answer to your question is that, yes, we do have a customer who's paying the same amount of money for a Bell -- for the Bell GAS-based DSL service and the Primus OnNet-based DSL service. That's true.

3912   COMMISSIONER KATZ: Does your customer see a difference or have you had customers call up your call centre and say --

3913   MR. STEIN: Absolutely. Yes, we have, without question.

3914   COMMISSIONER KATZ: And what have you done, you've moved them from the offnet to the OnNet?

3915   MR. STEIN: It's a little bit complicated to do, so we've struggled to juggle. We have moved some from the Bell service to our own OnNet service, that's true.

3916   COMMISSIONER KATZ: What's involved in transferring them from one to the other?

3917   MR. STEIN: We've got to move the loop. There's a number of technical things that we have to do. It's not flicking a switch. We have to actually do an LSR, move the loop, so on, so that...

3918   COMMISSIONER KATZ: There's no trunk roll involved, there's no extra hardware involved; is there?

3919   MR. STEIN: No, activity does have to be performed in the Bell CO and hardware at the customer prem, so their DSL modem is no different, but now that loop, that copper loop that runs to their home now connects to our equipment at the Bell CO rather than Bell's DSL service.

3920   COMMISSIONER KATZ: How long ago was it that you asked Bell for --

3921   MR. STEIN: I think we first raised -- specifically what we asked was to allow us to do the traffic management. We said that we had a way that was going to insight a lot less customer uproar and that we had a way that was about to be implemented. Specifically we asked them the very day that we had the conversation about the changes to wholesale.

3922   So, forgive me, I don't remember the exact date that was, but it was within a day or two of the implementation of throttle.

3923   COMMISSIONER KATZ: Have you been able to differentiate the two products when you market to customers where you actually offer both products?

3924   MR. STEIN: In fact we do find it a challenge to explain to customers why there's a difference. We have certain areas that are not served by one but are served by the other so, as a result, unfortunately our marketing has to target a wide base and, therefore, it doesn't really touch this issue.

3925   Customers that have read about it, whether it be through online forums or through perhaps some of the press write-ups on it who have called, they know about it, but we don't market the difference of these specifically, no.

3926   COMMISSIONER KATZ: Are you only an ADSL shop or do you also sell TPIA service?

3927   MR. STEIN: We don't currently offer TPIA.

3928   COMMISSIONER KATZ: You don't. Is there a reason why you don't that you're prepared to share with us?

3929   MR. STEIN: I'll have to look into it and get back to you, which we can file with our final comments.

3930   COMMISSIONER KATZ: Okay. I appreciate that.

3931   MR. STEIN: Yeah.

3932   THE CHAIRPERSON: Done?

3933   COMMISSIONER KATZ: Yes. Thank you.

3934   THE CHAIRPERSON: Tim?

3935   COMMISSIONER DENTON: Mr. Chairman, I have no questions.

3936   THE CHAIRPERSON: I'm sorry. Candace?

3937   COMMISSIONER MOLNAR: I have a couple of questions.

3938   I just want to go back to your ITMP practices, and you say that you provide priority to streaming media and that peer-to-peer file transfers are classified as normal priority.

3939   MR. STEIN: That's right.

3940   COMMISSIONER MOLNAR: So, if two people wanted to watch a movie, depending on how they were accessing it at their home, they would have a different experience?

3941   MR. STEIN: I think it's important to note that they would have a different experience just based on the technology type.

3942   When you go with streaming media, you click on it, the video begins almost instantaneously.

3943   COMMISSIONER MOLNAR: M'hmm.

3944   MR. STEIN: In the case of downloading a movie or a TV show via BitTorrent, that's not the case, it doesn't begin immediately. Even with the fastest connection in the world you're at best many, many minutes, at best, in fact likely a couple of hours before you can start to watch that.

3945   So, a customer who's looking for streaming video clicks a button, they do expect the video to begin within a few seconds and it does. For that, that's important that not only does it come to you quickly but that it keeps a consistent rate of speed.

3946   In the case of BitTorrent, that's not the case. In the case of these peer-to-peer file sharing protocols -- we could talk to you about BitTorrent, but I'll generalize and say peer-to-peer file sharing, it doesn't begin immediately, you've got to wait for it to finish downloading.

3947   Most often you wouldn't be sitting at the computer waiting for it, you certainly aren't clicking, has it started, has it started.

3948   Whereas with flash or streaming media technologies, you would notice immediately because your expectation is that it's immediate.

3949   COMMISSIONER MOLNAR: Hmm...

3950   MR. STEIN: So, in that respect, I suppose I'm trying to answer that, yes, there is a different -- there's a different calibre being offered in that respect, however, the application and the usage pattern of a customer expects that to be different, not based on the traffic management practices of Primus or any other ISP, just based on how those applications work.

3951   COMMISSIONER MOLNAR: Fair enough.

3952   MR. STEIN: And I suppose the simplest analogy that comes to mind is, when I send you an e-mail and I say I've sent it, you expect that you've got it. But if I send you a letter and I tell you it's in the mail, you're not even going to check for it for a couple of days.

3953   COMMISSIONER MOLNAR: Fair enough. I think that that wasn't maybe the best analogy that I put forward or comparison.

3954   You know, at the end you will watch a movie one way or the other.

3955   MR. STEIN: Yeah.

3956   COMMISSIONER MOLNAR: And if you're the content provider offering it through one protocol versus another, it's a very different experience for the end user as to how they receive that.

3957   MR. STEIN: And as a content provider, by your selection at a peer-to-peer distribution mechanism, which personally I think is very smart, I think it's a great technology, you've already set forth that it won't be immediately starting, it will start at some point down the line.

3958   COMMISSIONER MOLNAR: M'hmm.

3959   MR. STEIN: Whereas with streaming media, your expectation and, therefore, your customer's would be it starts right away.

3960   COMMISSIONER MOLNAR: Right. I'd like you to help me understand. You have said that ITMPs should be part of the competitive differentiator between different ISPs, or could be.

3961   MR. STEIN: Could be.

3962   COMMISSIONER MOLNAR: Which I find actually quite troubling and I've asked a couple of parties about that because how you access content, what content you access in what time frames, in my view, should not be a competitive differentiator.

3963   An ISP should deliver content.

3964   MR. STEIN: M'hmm.

3965   COMMISSIONER MOLNAR: You compete on quality, you compete on price, you compete on your customer service, but to suggest that you compete on what content is available and when moves you from being what, in effect, has always been the role of a communications carrier to be -- you know, an independent semi-downpipe to being controlling what a customer receives and when.

3966   MR. STEIN: So, I certainly don't feel that it is our place to limit the customer from seeing certain things, blocking them, restricting them or in any way really impeding them getting it relatively quickly.

3967   Our plan is to continue to build capacity. The only time that our ITMP takes effect is on some link somewhere in some place or on some router that is over capacity for that moment.

3968   That really may only happen for a few seconds or a few minutes.

3969   In terms of downloading something with a file-sharing peer-to-peer protocol that takes two hours, if it impacts you as the customer by delaying you 15 minutes. Two hours plus 15 and two hours to our customers don't seem to be that different, and that is the magnitude we're talking about here.

3970   We're not talking about turning a two-hour download into a 12-hour download. We would had we been talking about a static throttle.

3971   A static throttle doesn't allow you to download at 200k per second any more, now you've only got 30, so it's now it's going to take five or whatever times as long, and that's something that we would not do.

3972   So, we are continuing to build capacity to make sure that even when our ITMP is taking its effect, right in that moment the capacity is there so that that is a very rare occurrence, and that is our plan.

3973   COMMISSIONER MOLNAR: You commented that you disclose your ITMP to customers.

3974   MR. STEIN: Yes. It's explained on our website.

3975   COMMISSIONER MOLNAR: And to be honest, I have not checked what's on your website.

3976   MR. STEIN: Okay.

3977   COMMISSIONER MOLNAR: So, if I was to go to your website it would tell me that at certain time frames you would give lower priority to a set of applications and protocols and give higher priority to others and it would explain that?

3978   Would it explain what it would mean to that customer, what it means to the speeds that would be delivered to that customer in a way that a customer could understand?

3979   MR. STEIN: It is -- I did review the wording when it went up months ago, I haven't reviewed it in the past few weeks -- I will again -- and will include a copy of what it is as of this moment in our final.

3980   However, yes, it was written with the intention of explaining what's happening and explaining to the customer what's happening in a way that they will understand.

3981   It was written in a way, frankly, to show what we're doing and why and how it helps.

3982   COMMISSIONER MOLNAR: Okay. Those are my questions.

3983   Thank you.

3984   THE CHAIRPERSON: Suzanne?

3985   COMMISSIONER LAMARRE: Merci, Monsieur le Président.

3986   I'd like to touch on two points and really on the retail side of your business; one is innovation and the other one is privacy.

3987   The way you're prioritizing the packets or the traffic when there is congestion, you did mention that what you will do is that you will make sure that the most popular applications get higher priority than applications that are less popular will.

3988   This is going to inevitably put a customer who is, you know, using more marginal applications at a disadvantage as compared to his neighbour who uses more popular applications.

3989   And, moreover, new applications, emerging applications, innovative applications are going to start out as marginal applications.

3990   So, don't you see this as being counter productive to trying to bring new types of systems, new type of, you know, traffic shaping in place?

3991   MR. STEIN: So, two comments. First, is to point out that most of the applications that will move across the network will do so unimpeded, in fact pretty much most of the time all applications are unimpeded.

3992   There's no set period of the day which we've deemed as congestion and so forth. It really is minute-to-minute in just that specific little piece of the network in that one place, not blanket.

3993   Specifically with respect to new applications, new applications are not necessarily viewed on the network, it's really new protocols.

3994   So, if a new protocol were to come out that we had never seen before, it really would not be classed, it's true, any differently from any one of the many, many, many thousands of unclassed protocols that are out on the Internet now.

3995   We were very particular to look at things that were the most popular, or required that very real-time delivery, such as voice-over-IP.

3996   But we wouldn't be specifically classifying that and, therefore, yes, those brand new protocols would run as normal priority on our network. And in moments of congestion, they might be impacted so that popular protocols can continue to pass.

3997   COMMISSIONER LAMARRE: And you did make the point that you're really targeting within your network where you will be, you know, putting in place traffic management practices at moments of congestion.

3998   How do you define congestion?

3999   MR. STEIN: Okay. And thank you for that, I can explain that.

4000   We've set this up on the whole network. So, the entire network is at any given point ready to sense congestion. It knows it's congestion when it simply does not have any more availability to pass the packet from one side to the other; so, in other words, to pass the packet through unrestricted.

4001   COMMISSIONER LAMARRE: So, once it has reached one hundred percent of its capacity at one point in the network?

4002   MR. STEIN: Only that point in the network will apply the ITMP.

4003   COMMISSIONER LAMARRE: Okay. And it's --

4004   MR. STEIN: Only at that point in the network and only until it's no longer at a hundred percent. Once it drops back to 99, everything's going across it again.

4005   COMMISSIONER LAMARRE: Okay. You did mention that, you know, your customers were notified when you decided to implement deep packet inspection practices.

4006   Now, for a customer who would have disagreed with the implementation of this practice, did this customer have a choice of having another package, another marketing package, another product that did not use deep packet inspection with Primus, or was the only choice for this customer to go to a competitor?

4007   MR. STEIN: No, we did not offer additional packages that were not being -- that did not have our traffic management applied to them.

4008   COMMISSIONER LAMARRE: Okay. Now, you did mention at the end of your presentation, a little bit before that, you know, that traffic -- in your view, traffic management practices do not raise privacy concerns.

4009   Well, I take your point they may not raise concerns for you, but it does for a number of people and especially with deep packet inspection.

4010   And privacy being a personal right, I think we have to concern ourselves with the point of view of people whose privacy is actually being infringed on.

4011   That means that I take your point that you do not collect the information in a nominal way, you do it in aggregated fashion, you only use it for traffic management purposes and all of that, but the fact still remains that by doing deep packet inspection you are, excuse the expression, you're snooping in what your customers are doing online and that, in itself, is an infringement of privacy.

4012   So, where do we get the comfort that this was absolutely necessary and that you could not have resorted to other measures before doing that?

4013   Do you understand? You said you're working hard at deploying your infrastructure.

4014   MR. STEIN: M'hmm.

4015   COMMISSIONER LAMARRE: But you talked about that and then you talked about Internet management practices with deep packet inspection.

4016   Isn't there anything in between that you could do to reduce your congestion on your network before resorting to that?

4017   MR. STEIN: Because of the way that we have applied it, the decision that we made was that this was the least customer-affecting option available to us.

4018   There were far more customer-affecting options available such as setting band width caps or over use billing, billing different times of day and so forth, and we felt that that would affect customers and they would be dissatisfied quite a bit more.

4019   Our feeling was that because this -- if there are a hundred points on the network, it doesn't make sense to us if only one of them is congested to start applying ITMP across all of them. We only apply it at the one and only for the number of seconds that one is congested.

4020   As part of deploying it, we did consider a great number of other solutions and we felt that this one was the least affecting to customers and because we don't store any unaggregated data about individual customers or what they're doing and so forth, we didn't feel that it was affecting their privacy.

4021   COMMISSIONER LAMARRE: Those are all my questions, Monsieur le Président.

4022   THE CHAIRPERSON: Okay. One last question, Candace.

4023   COMMISSIONER MOLNAR: Thank you.

4024   It occurred to me after I had completed my questions that we had in front of us someone with a network services background who actually deployed DPI, and I had a question the first day related to DPI that I think you can answer for me.

4025   MR. STEIN: Okay.

4026   COMMISSIONER MOLNAR: I just want to understand with the technology, my understanding of it is, I mean it's essentially software and you load in a set of policy rules and it works within that set of rules. Would that be true?

4027   So, how difficult is it to change your policy rules?

4028   MR. STEIN: To be honest, I don't think the technology is the limiter in changing your policy rules. Being from a network services background as you said, I would say that we spend more time making sure that it won't upset our customers and that it won't in any way lessen or dampen their Internet usage than we spend on the time it takes to actually modify the policies.

4029   COMMISSIONER MOLNAR: Okay, fair enough.

4030   And so, it doesn't matter where --

4031   MR. STEIN: It's quite flexible.

4032   COMMISSIONER MOLNAR: -- in your network, like physically where in the network the DPI is deployed; does that matter as it relates to how the -- you know, traffic management is deployed?

4033   MR. STEIN: Well, when deploying it you'll have to make some architectural decisions and once that's done that will limit how easily you change your policies.

4034   But specifically to your question about it's software with policies, wherever you've deployed it, you'll be able to change the policies you'll apply at that point.

4035   However, if you've deployed it, for example, in a very distributed way, only at the points where you thought you would have congestion and you did it in advance and you set a very rigid, this time to this time, and this much and this big, and no different than this, then you absolutely would be in a situation where you'd have to make some big changes to change that around.

4036   On the other hand --

4037   COMMISSIONER MOLNAR: Physical changes or --

4038   MR. STEIN: You may have to --

4039   COMMISSIONER MOLNAR: -- or program changes?

4040   MR. STEIN: You nay have to move equipment, you may have to move it around a building or around the country, and that really depends on how it's been deployed.

4041   On the other hand, if you've gone the other route and you've centralized everything, you may have to move it out.

4042   So, there are those kinds of things that do differ. It's not a quick thing to deploy, it took us quite some time and a lot of thought.

4043   COMMISSIONER MOLNAR: Not quick to deploy, but would you say it is relatively simple to change the policy rules --

4044   MR. STEIN: I would say --

4045   COMMISSIONER MOLNAR: -- once you have it in place?

4046   MR. STEIN: Once it's in place, the policy rules, yes, the product that we use is quite simple to change the policy rules. The vendor does supply updates on a regular basis that improve the system and so forth, they get put in place on a very regular basis and so forth.

4047   But it is the policy rules that both you're asking about and that form the basis of what we've done with our service. Those are also very easy to change and we haven't had the occasion or requirement to do so.

4048   We did have a number of conversations this week. I know we've talked a lot about the Michael Jackson sort of thing, I don't mean to get into that, we did have a lot of conversations about that, but luckily in our network the way that we deployed it when the Michael Jackson memorial was happening all the people watching all that streaming media weren't affected.

4049   COMMISSIONER MOLNAR: Received priority.

4050   MR. STEIN: They did, they received priority and, as a result, maybe the fact that our network was more congested than it had ever previously been, our customers didn't feel that. The overwhelming, far greater than 95 percent of our customers didn't notice that it was congested at all, and that really speaks to how it was deployed and in a customer centric way.

4051   COMMISSIONER MOLNAR: Okay, thank you.

4052   That is the end of my questions.

4053   THE CHAIRPERSON: Okay. Thank you very much. I think this is all our questions for you. Thank you.

4054   MR. STEIN: Thank you.

4055   LE PRÉSIDENT: Madame la Secrétaire, à quelle heure est-ce qu'on commence demain?

4056   LA SECRÉTAIRE: Merci, Monsieur le Président.

4057   We will reconvene tomorrow morning at 9:00 a.m.

4058   Demain matin à 9 h 00.

--- Whereupon the hearing adjourned at 1424, to resume on Friday, July 10, 2009 at 0900

   REPORTERS

____________________      ____________________

Johanne Morin         Jean Desaulniers

____________________      ____________________

Sue Villeneuve         Beverley Dillabough

____________________      ____________________

Monique Mahoney         Madeleine Matte

Date modified:

2009-07-10