The Open Internet: International Comparisons

Internet development in Canada has significantly declined over the past decade. Compared to other developed nations, broadband penetration has stagnated, and Canadians continue to pay some of the highest prices for comparatively slow speeds.

The Organization for Economic Co-operation and Development (OECD) reports on a range of Internet data from thirty-four developed nations worldwide. The most recent of this data from 2010 shows Canada slipping to 12th place in the rankings of broadband subscribers per 100 inhabitants, a considerable decline since 2002 when it ranked second place.¹⁶⁶ In terms of pricing, Canada placed 27th with average monthly subscription rates of $64.72.¹⁶⁷ Only Turkey and Luxembourg pay more. Despite these telling statistics, “Canada continues to see itself as a high performer in broadband, as it was early in the decade, but current benchmarks suggest that this is no longer a realistic picture of its comparative performance”.¹⁶⁸

High pricing and low speed, as well as other problems associated with the broadband market, stem from the way our market is structured. While five companies dominate the telecommunications landscape in Canada, they are comprised of two major groups: incumbent telephony companies (Bell and Telus) and incumbent cable companies (Rogers and Shaw, and Vidéotron in Quebec). This structure is referred to as inter-modal competition, where in order to enter the market, entrants must be able to 1) build their own infrastructure, or 2) have fair (regulated) access to incumbents’ infrastructure. Thus, high barriers to entry exist, which are only exacerbated by the government’s unwillingness to support competition through either of these requisites. Instead of safeguarding against anti-competitive behaviour and ensuring a level playing field through regulatory measures, the government has relied heavily on this market structure for sufficient competition.

It is essential to call attention to how this affects the quality of Internet service and the issue of net neutrality. With inter-modal competition, telecommunications markets are less open, and incumbent carriers are less inclined to provide competitive services. Indeed, “the majority of companies that offer the highest prices for the lowest speeds... operate in countries that rely on inter-modal competition: the United States and Canada ... ”.¹⁶⁹ Furthermore, they have the power to carry out unfair traffic management practices, give preferential treatment to certain content, and perform other discordances with net neutrality.

The U.S. is not unlike Canada when it comes to its market structure and regulatory approach to telecommunications. Since we increasingly follow the path of the U.S. on many regulatory issues, we begin here by exploring the trajectory of net neutrality in the U.S. to get a better picture of the potential future of net neutrality in Canada.