A Primer on Net Neutrality

The Canadian Perspective

Imagine if McDonalds was also in the business of building and maintaining the roads and highways in Canada. They’d naturally want to recoup the costs of these McRoads, so they’d charge tolls. That’s completely understandable and defensible. It’s not like they’d work it into the price of the Big Mac because most people who use the roads aren’t going to McDonalds and they’d have to charge hundreds of dollars for a burger. So tolls on the roads it is.

But then, what if McDonalds decided to offer discounts on tolls if you ate at their restaurant (I use that term loosely)? In fact, what if they decided that they’d wave all the tolls every time you ate there? So eating a Big Mac at McDonalds would only cost you the price of the Big Mac and you wouldn’t have to pay a cent to get there! Awesome, right? But what if every once in a while you wanted to eat at Lorenzo’s pizza, which even happens to share the same parking lot as McDonalds? It would have to be a special occasion because it would not only cost you the price of the food but also the $5 to $40 you paid in tolls to get there.

What would happen to Lorenzo’s Pizza, a local, owner operated store that has fantastic tomato sauce and is always generous with the cheese? They’d eventually, and rather quickly I’d imagine, go out of business. Consumers would naturally choose the less expensive food option. And after Lorenzo’s closed, what would open in the empty space left behind? A new, innovative food establishment run by an up-and-coming chef? No way. It would be a new McDonalds (or a subsidiary thereof) or another business that decides to cut a deal with McDonalds. Competition would be completely eliminated because McDonalds would not only control the price of their own food, but they’d also directly control the price of everyone else’s food. And if consumers are still going to Lorenzo’s and McDonalds feels they could make a bit more money if those people come to McDonalds instead? Maybe McDonalds decides it’s time to increase the price of the tolls, I mean there’s maintenance to the roads right? I mean they did built the roads, it’s only fair that they should be allowed to charge whatever they want, right? Lorenzo’s didn’t build the roads, why should McDonalds suffer just because Lorenzo’s can’t run a profitable business? It’s not like McDonalds should be giving the roads away for free! Right? Goodbye Lorenzo’s and that sweet sauce.

That is the world that Bell Canada and the big Canadian Telco’s (not to mention the Toronto and Ottawa Mayors) want to live in. They want to control the price of Internet pipes to and from our homes (the roads) while at the same time owning the content (Big Mac). They want to lower the price for the content they own (Big Mac) and charge extra for any bandwidth that goes to content they don’t own (Lorenzo’s Pizza). Why would a consumer stay with Netflix and pay $10/month for the service + $100/month for extra bandwidth when you can get the Bell owned CraveTV at no extra cost as long as they’re a Bell subscriber? Why would a consumer pay extra each month in bandwidth overages to stream video’s on Vimeo when YouTube’s deal with Bell means YouTube streaming doesn’t count towards your monthly limit? Why would you pay to use Apple’s FaceTime for video calling when Skype comes free with Bell?

Netflix, Vimeo, FaceTime and anything else that isn’t bundled in with Bell will go away (from Canada at least) and nothing new, that isn’t either a Bell service or big enough to strike a deal with Bell, will fill their place. New, innovative services won’t be able to find a market in Canada because the price of using any service not provided by Bell will be prohibitively high.

Bell should be allowed to charge whatever they want for Internet service, but they should not, and cannot be allowed to also control the price of the individual services that flow through those pipes.

That’s why Net Neutrality is so important. Let the carriers compete on carrying, and content providers compete on content but never should the two become one.

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