Submission of eBay and Google to Canada's Digital Economy Strategy Consultation — July 2010

Submission

Introduction and Summary of Recommendations

The Government of Canada's public consultation regarding how Canada can improve its position in the digital economy, initiated by its consultation paper, Improving Canada's Digital Advantage: Strategies for Sustainable Prosperity, is an important and timely exercise. As that paper notes, it is clear that digital content and technologies will play an important role in Canada's future. Central to this development is the open Internet.

There is broad consensus that the open Internet is a significant driver of social, cultural, technological and economic innovation. It is for this reason that countries around the world are developing, or have already developed, comprehensive and integrated strategies to best harness its promise. With this in mind, we suggest that Canada's digital strategy include the following key elements:

1. Evidence-based Measurement

   An effective digital strategy should include specific, measurable objectives such that Canada's progress and success can be measured and evaluated. The strategy document should be specific enough so that we can answer the question in 3, 5 and 10 years time: "did we succeed?"

2. Open Broadband

   A key element of a digital strategy for Canada must be the development of a near-ubiquitous, robust, high-speed open broadband network. In order to achieve this central objective, governments should, at a minimum, begin:

   • Encouraging "piggyback" fibre builds. Fibre, or at least fibre conduit, should be installed as a matter of course during all public works projects that involve trenching, or breaking up of roadways and other public infrastructure;
   • Ensuring that the digital transition unfolds as scheduled, freeing up valuable and useful radio spectrum that can be repurposed to provide open broadband;
   • Ensuring that a portion of the spectrum available after full digitization of TV signals is available for unlicensed use; and
   • Directing federal policymakers and administrative tribunals to ensure that their decisions take into account any consequential effects on the open Internet.
3. Confidence in the Digital Market

   To fully leverage the promise of the digital economy, Canada must ensure that it maintains a legislative and regulatory environment that is most conducive to greater use of the open Internet, including:

   • Avoiding over-regulation: any legislative or regulatory interventions must be carefully targeted and effective, avoiding overly prescriptive or technology-specific measures that could artificially distort markets and thwart innovation;
   • Enhancing confidence in cross-border data flows, recognizing that Canadian businesses will want to serve customers globally and use service providers from around the world; and
   • Making Government a leader in using e-commerce strategies in providing services to the public, including using online payment processing, vending, auctions, etc.
4. Embrace the Cloud

   From a productivity perspective, cloud computing represents one of the most promising applications of the open Internet, offering reduced communication and storage costs and substantial scalability and security advantages over conventionally maintained systems and facilities. The Canadian Government alone could save billions of dollars in IT costs! In order to help facilitate the adoption of cloud computing by Canadian businesses, Canadian governments can help lead the adoption of cloud-based solutions by:

   • Recognizing that cloud applications are the next wave of computing and explicitly acknowledging their many benefits; and
   • Demonstrating leadership through early government adoption of cloud solutions, also realizing the associated costs savings and efficiencies.
5. Digital Media and Digital Literacy

   Digital media and technology is having profound effects on creativity and collaboration, providing low cost production tools and distribution platforms that facilitate creativity and allow creators to find new or expanded audiences for their works. Digital Media may be particularly important for the development of Canadian culture and creative expression. Yet, in order to fully realize this promise, all Canadians must possess the skills and confidence to engage with these technologies. The Government can assist in facilitating the use of digital technologies by:

   • Viewing digital literacy as a core skill for all Canadians, and an important element of achieving the objective of a nation of fully participating creator/consumers, not merely passive consumers; and
   • In partnership with Provincial Governments, incorporating digital literacy into public school curriculums.

Evidence-based Measurement

A sound business plan necessarily includes a statement of the objectives that the plan is designed to fulfil, as well as a means of monitoring and measuring the achievement of those objectives. This must also be the case with Canada's digital strategy. Without clear goals and metrics, it will be impossible to assess the effectiveness of the strategy. These objectives must be established at the outset, giving all stakeholders an unambiguous vision of what we, as a nation, are striving to achieve.

There is an important role for government here, not only in setting objective goals, but in establishing a baseline. The government ought to conduct a comprehensive and ongoing analysis of Canada's information economy, making this analysis available to all Canadians in a timely manner.

Part of this work ought to include opening vast riches of existing government data to the public. Efforts throughout the world and in various Canadian cities have already made the social and economic case for "open data". Such efforts are a natural compliment to the benchmarking, goal-setting and measurement that will be critical for the success of a national digital strategy. Moreover, open data is low hanging fruit in that it has a minimal cost impact for government.

Open Broadband

Central to securing Canada's place in the global digital economy is the requirement for a nearubiquitous, robust and open broadband infrastructure. While a comprehensive national digital strategy for Canada will necessarily include plans and polices respecting a number of other important issues, some of which will be discussed below, the deployment and availability of broadband capability remains the single most important matter to be addressed.

In order to achieve the objective of a near-ubiquitous, robust and open broadband infrastructure for Canada, substantial efforts and resources will be required, both public and private. Given current economic realities, the vast majority of the nation's broadband network will likely continue to be financed primarily by the private sector. However, governments will have an important role to play in shaping policy, acting as a model user and providing some funding support – both direct, particularly for extension of broadband service to remote communities; and indirect, in the form of implicit public subsidies in the form of rights of way, "piggyback" fibre builds in public works projects and interconnection with other networks.

Canada' s objectives for broadband speeds must be ambitious if the overall digital strategy is to succeed. Residential broadband speeds today are typically measured in Megabits per second (Mbps); soon enough, they will be measured in Gigabits per second (Gbps). Setting specific numerical targets, given the pace of innovation in this area, is inadvisable. Sufficient bandwidth speed will always be a moving target; in that sense, we will never finish building our national network. The point is that Canada's Internet connections must be robust, capacious and open.

Moreover, it is important to acknowledge the type of broadband infrastructure that Canada will require: a core terrestrial network complemented by wireless access. We cannot assume, as some observers have urged, that wireless is the answer. Wireless will certainly be an important part of the answer, because of the growing power and ubiquity of mobile computing; however, looking to the future, demand for even higher speeds and scalability make terrestrial, fibre-based networks the most suitable core technology for high-speed networks, for reasons of cost (as compared to copper and other technologies for equivalent bandwidth), reliability and capacity. Moreover, even wireless access networks require a wireline backbone.

At the same time, given that wired and wireless networks perform increasingly complementary or overlapping functions, these technologies must receive symmetrical regulatory treatment. In this regard, it is appropriate that the CRTC's light touch regulatory solution to wired "net neutrality" should continue to apply equally to wireless service providers.

Encouraging Investment and Facilitating Deployment

Recognizing the importance of private sector funding to achieving broadband objectives, a key element of a national digital strategy will be for government to create an environment that provides the private sector with sufficient incentives to invest in terrestrial broadband networks, and that maximizes opportunities to build out broadband in coordinated and efficient ways. This does not mean that government should avoid placing important obligations on broadband providers, such as requirements for openness; rather, it suggests that governments should take steps to reduce costs and red tape associated with the construction of fibre-based networks.

With respect to streamlining logistical hurdles and reducing costs for constructing of such networks, it is important to note that some of the impediments to network builds include high deployment costs and the delay and disruption associated with building over public rights of way. The cost of physically burying fibre in trenches can be several hundred dollars per meter and right of way and support structure lease fees can add to these already substantial costs.^{Footnote 1}

In its ICT Regulation Toolkit, the International Telecommunications Union recommends that government can assist with the roll out of broadband networks by reducing right of way access costs and streamlining the process by which access to rights of way are secured, by:

• Simplifying rules for obtaining rights of way and mandating the sharing of passive infrastructure;
• Setting guidelines or prescribing prices for access to rights of way;
• Establishing clearing houses to coordinate trenching and ducting initiatives, to facilitate sharing between telecommunications service providers, as well as between telecommunications service providers and other utilities.^{Footnote 2}

On a related note, the U.S. Department of Highways has estimated that almost 90% of the cost of deploying fibre stems from digging trenches and repairing roads.^{Footnote 3} With this in mind, governments could also encourage broadband deployment through such measures as installing conduit – or even laying dark fibre – as a matter of course during public works projects such as construction or repair of roads, or during projects to construct or repair water, electricity or gas lines. Including fibre or conduit in such projects greatly reduces direct fibre deployment costs, piggy-backing on other public works projects. Moreover, such deployments minimize the associated indirect costs related to pedestrian and vehicular disruption, lost business, etc. Fibre or conduit installed in this way can be used to meet current needs, allow for competition and accommodate future network expansions.

Governments may also assist in broadband deployment by supporting the installation and extension of fibre to create community hubs in public institutions such as schools, libraries, community centres and community medical facilities, and public housing.

Spectrum

The mobile Internet is growing and mobile broadband connectivity is key to the Internet's continued development. Modernizing Canada's spectrum policy is an important means of driving mobile broadband deployment.

Significant quantities of spectrum remain unused or under-used, offering incredible opportunities to deliver broadband to Canadians. This issue is alive in countries around the world as regulators decide what to do with spectrum previously reserved for analog TV channels, and unused spectrum in the broadcast TV band (white spaces). Canada faces important choices with respect to spectrum reallocation.

In May of 2007, the CRTC established the deadline of August 31, 2011 for television stations to shut down their analogue transmitters, in favour of exclusively digital transmission.^{Footnote 4} At that time, the Commission noted that the pace of the digital transition in Canada had been slow, particularly in comparison with the U.S.^{Footnote 5} Even today, concerns remain about the pace of Canada's digital transition, so much so that the CRTC is concerned that the digital transition deadline may not be met.^{Footnote 6}

The Government should ensure that these spectrum resources are freed up by 2011, as planned, paving the way for the reallocation of the spectrum in question to provide for open wireless broadband access.

In addition, at least a portion of the spectrum formerly used for analog broadcast television and the related "white space" used to separate channels should be made available for unlicensed use. The benefits of allowing for unlicensed spectrum include dramatically lower network costs, quicker technical deployments and increased innovation in products and services. Advances in technology, such as spectrum sensing, allow spectrum to be made available to a multiplicity of devices and users, rather than exclusively licensed or sold to one entity.

The innovative potential for unlicensed spectrum is demonstrated by the history of Wi-Fi, the wireless networking technology found commonly in homes, coffee shops, airports, trains and other locales to connect users to the Internet.

Wi-Fi devices and services were developed without seeking permission from, or paying rent to, any spectrum owner since the relevant spectrum was unlicensed and not owned by anyone. Notably, the rules underlying the radio spectrum used by Wi-Fi were written years before Wi-Fi technology itself was developed.^{Footnote 7} If those rules had been contingent on the pre-existence of Wi-Fi, one of the most successful uses of spectrum in the history of wireless communications would likely never have happened. Instead of tailoring policies to the technology of the time, and instead of trying to play favourites among incumbents or established business models based on technology-specific spectrum allocations, a small part of spectrum was left unlicensed, open to use by anyone who met certain minimum technical standards. This open, unlicensed segment of spectrum provoked incredible innovation.

Ensuring Openness

As noted above, in order for Canadians to realize the full benefits of a thriving digital economy, it is not just enough that broadband Internet available, it must also be open.

As the CRTC observed in its decision on Internet traffic management practices, "The Internet has given people the freedom to innovate without permission,"^{Footnote 8} pushing innovation from the core of networks to the edges, from large incumbent carriers to new entrant innovators and application developers.

The government should explicitly indicate that the concept of openness is an important cornerstone of Canada's digital strategy. Moreover, it may want to consider instructing policy-makers and administrative tribunals – through legislative amendment, regulation or policy direction – to take into account, when rendering decisions, the consequent effects on both innovation and openness. The regulators to be subject to such a requirement could include the CRTC, the Copyright Board of Canada, the Privacy Commissioner of Canada and others. This would – at no cost to the public purse – ensure that the concept of open innovation becomes an entrenched element of the Canadian regulatory environment.

In addition, governments can help ensure openness by tying the receipt of any government funding, incentives, or benefit of any kind to the requirement that the recipients or beneficiaries adhere to maintaining an open Internet. Such conditions not only provide an incentive to network providers to maintain openness, but ensure that public funds and measures continue to be focused on public, as opposed to private interests.

Confidence in the Digital Market

The discussion paper suggests that governments have a role to play in ensuring the appropriate legal and regulatory frameworks are in place to protect consumers and business in the online world. While this is undoubtedly true, if Canada is to retain and augment its capacity to innovate using digital technologies, such legislative and regulatory interventions must be carefully targeted and effective, minimizing market distortions.

Overly prescriptive or technology-specific measures should be avoided, as they can needlessly restrict the organic growth and rapid innovation that has characterized the digital world, tying the development of the Canadian digital economy to particular structures, technologies or even service providers.

Given the rapid pace of innovation online, technological neutrality is a vital feature of any regulation or legislation. No one – governments included – can predict how the digital marketplace, or the technologies underlying this economy will unfold; accordingly, attempts to legislate based on current or predicted technology paradigms will almost certainly result in market distortions that may compromise achieving the full promise of the digital economy. All new legislative enactments, or amendments to existing legislation, must strive for technological neutrality.

It is also important to note that not all problems require government solutions. Given the pace of change, as well as intense competition in many sectors of the ICT industry, the market may solve issues better and more adeptly than government. In this context self-regulation and co-regulation are viable alternatives to direct government action.

The government should also consider measures to facilitate seamless cross-border data flows. The reality is that the digital economy is a global economy. In fact, this is one of the prime benefits of the digital age, opening up new cost-effective opportunities for international trade. If Canada is to achieve maximum productivity, businesses and governments around the world must be able to take advantage of the best and most efficient processing and storage tools available, while ensuring the privacy and security of user and customer data. Restrictions on cross-border data flows artificially constrain this efficiency, harming Canadian companies that strive to succeed beyond Canada's borders, or who seek efficiencies from using the services and facilities of companies outside Canada. Limits on data flows may serve to act as protectionist barriers that inhibit the achievement of increased productivity, innovation and competitiveness. Potential government initiatives to eliminate such barriers – real and perceived – may include re-examining legislative barriers to cross-border data flows set up by some provinces, as well as working with other countries to ensure the security, privacy and integrity of Canadians' data.

Finally, government cannot fault Canadian business for not embracing the digital marketplace if it does not use the latest tools – or even decades-old tools – in delivering services online. Being a "model user" of services is not just about buying the latest e-widgets from vendors; it is about providing the best service to Canadians – in an efficient and cost effective manner. Why can't Canadians use alternative payment tools in paying for government services? Why are surplus government materials sold off in essentially the same way they've been sold for decades when online sales and auction tools are better? Why is it so hard to search government websites? What is the government's mobile strategy? What is the government's social web strategy?

Embracing The Cloud

One of the most promising applications of the open Internet is the advent of cloud computing, a concept where software applications, storage, processing capability and other resources are located and accessed from remote servers located within the Internet "cloud," obviating the need for businesses to operate and maintain software, systems, storage and processing facilities. Software, platforms or infrastructure provided through the cloud are available as needed, on demand, from any location, and can be rapidly adjusted to meet changing demand needs, allowing organizations to optimize their required capacity and maximize their IT efficiency. Cloud computing offers many benefits to Canadian businesses and governments.

First, cloud computing can provide improved security. Under legacy computing models, data is stored on local computers – this is the equivalent of keeping cash under your mattress. Government, business and consumers alike face significant challenges with lost or stolen laptops and USB memory-sticks containing sensitive data. The cloud enhances security by enabling data to be stored centrally with continuous and automated network analysis and protection. When vulnerabilities are detected they can be managed more rapidly and uniformly. Cloud security is able to respond to attacks more rapidly by reducing the time it takes to install patches on thousands of individual desktops or hundreds of uniquely configured on-premise servers.

Second, the cloud can save taxpayer dollars. The US-based Brookings Institution found that US government agencies that switched to some form of cloud computing saw up to 50 percent savings.^{Footnote 9} The cost savings to the federal government alone could be measured in the billions of dollars.

Third, in addition to securing data and lowering costs, cloud computing can improve efficiency and collaboration in ways that are simply not possible under the legacy IT model. Millions of Canadians are already enjoying these benefits at home and at work. It used to be that federal public servants, for the most part, had better, more powerful computing systems at work than they had at home. Increasingly, the reverse is true. How can the federal government expect to recruit and retain the best people if it does not provide them access to productivity tools at least as good as the ones they use everyday at home?

Copyright, Digital Media, and Digital Literacy

The Internet has been a boon to creativity, democratizing the production promotion and distribution of culture, as well as offering tools for collaboration. Low cost production, promotion and distribution are enabling professional and amateur creators alike to tell their stories and exhibit their works without the "shelf space" limitations of the bricks and mortar age. As one notable example, the breakout success of Canadian teen sensation Justin Bieber has been attributed to a music video uploaded to YouTube, which garnered some 55 million hits by the time the artist signed his first record deal.^{Footnote 10} Moreover, the Internet and digital technology are making creators out of ordinary citizens. The unfiltered nature of the Internet is creating a golden age for democratized content creation, promotion and distribution, an age that may prove to be particularly important in nurturing and developing Canadian culture and creative expression.

Much ink has been spilled discussing copyright reform. We will not opine further on the subject here, only to say that we support the notice-and-notice regime set out in the Government's Bill C-32. It represents an innovative balance between the need to prevent piracy, protect free expression, recognizing the proper roles and responsibilities of Internet intermediaries and the privacy interests of Canadians. Consistent with the position expressed above regarding appropriate legislative approaches, it must also be emphasized that Canada's copyright regime must be technologically neutral, failing which it will quickly become out of date, leading to uncertainty, inequities between older and newer technologies and consequent market distortions.

A final, but important element of a national digital strategy must be directed at the development of a core "digital literacy" among Canadians of all ages. Digital literacy goes beyond ensuring that Canada has a sufficient number of qualified ICT workers to support business and government initiatives in this sector. It includes ensuring that all Canadians, from all walks of life, are familiar not only with the tools and applications of the information age, but are also savvy about the social and economic connections and benefits of the open Internet. True digital literacy implies an ability to find and organize digital information and to communicate, create and conduct business using online applications and services. Importantly, digital literacy also includes the ability to understand and critically evaluate digital content and applications.

While full digital literacy for Canadians will involve a broad range of public and private sector organizations making efforts to educate and develop their employees and customers/users, the most logical and influential place for government to focus in developing digital skills and literacy is within the elementary and secondary school systems. Digital literacy, ranging from familiarity with basic computing concept and skills to adeptness at navigating the social and economic opportunities presented by the digital economy, should be included in the core curriculum for all students – from kindergarteners to high school seniors. In this way, Canada can best ensure that future generations of Canadian workers, consumers and citizens will be savvy, enlightened and thoughtful participants in the digital economy.

Governments can also play an important role in promoting the development of digital literacy within their own ranks, through skills-development training initiatives and the provision of online resources to assist workers in adapting business processes and organizational structures to meet the ongoing challenges and opportunities of the digital age.

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Footnotes

1. ^{1 back to footnote reference 1} See, e.g., cost estimates contained in TeraSpan Networks Technology Profile, Industry Canada, 31 March 2010: http://www.ic.gc.ca/app/ccc/srch/nvgt.do?sbPrtl=&prtl=1&estblmntNo=234567048169&profile=cmpltPrfl&profileId=501&app=sold&lang=eng; See also, Kai Mao, "3.65 GHz WiMax provides broadband access in rural areas," EE/Times.network, 2 November 2008: http://www.eetimes.com/showArticle.jhtml?articleID=206100763
2. ^{2 back to footnote reference 2} http://icttoolkit.infodev.org/en/PracticeNote.aspx?id=3245#_edn1. A good example of such coordination efforts is the Round Table on Fibre-Optic Development convened by the Swiss telecommunications regulator, the Federal Communications Commission (ComCom). The Round Table has established a number of principles and procedures to coordinate fibre installations and prevent infrastructure duplication among telecommunications service providers, cable companies and electricity companies, establishing a common operating platform, established standards and an open access model. See "Fibre to the home: cooperation takes shape", Federal Office of Communications Press Release, 5 February 2010: http://www.bakom.admin.ch/dokumentation/medieninformationen/00471/index.html?lang=en&msg-id=31519
3. ^{3 back to footnote reference 3} Telecommunications Handbook for Transportation Professionals, U.S. Department of Transportation, Federal Highway Administration, September 2004, at 41: http://ops.fhwa.dot.gov/publications/telecomm_handbook/telecomm_handbook.pdf
4. ^{4 back to footnote reference 4} Determinations regarding certain aspects of the regulatory framework for over-the-air television, Broadcasting Public Notice CRTC 2007-53, 17 May 2007.
5. ^{5 back to footnote reference 5} Ibid, at paragraph 50.
6. ^{6 back to footnote reference 6} See "Crisis looms in switch to digital TV: von Finckenstein," The Globe and Mail, 14 June 2010:http://www.theglobeandmail.com/report-on-business/crisis-looms-in-switch-to-digital-tv-vonfinckenstein/article1603598/
7. ^{7 back to footnote reference 7} See: "A brief history of Wi-Fi" The Economist, (10 June 2004).
8. ^{8 back to footnote reference 8} Review of the Internet traffic management practices of Internet service providers, Telecom Regulatory Policy CRTC 2009-657, 21 October 2009, at para. 2.
9. ^{9 back to footnote reference 9} Darrell M. West, Saving Money Through Cloud Computing, Governance Studies, The Brookings Institution, 7 April 2010: http://www.brookings.edu/papers/2010/0407_cloud_computing_west.aspx
10. ^{10 back to footnote reference 10} Leena Rao, "Lady Gaga's Manager: We Make Music Videos For YouTube", TechCrunch.com, 26 May 2010: http://techcrunch.com/2010/05/26/lady-gagas-manager-we-make-music-videos-foryoutube/?utm_source=feedburner&utm_medium=feed∓utm_campaign=Feed%3A+Techcrunch+(TechCrunch)

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