While the recommendation that a levy be placed on Internet service providers to fund the creation of online television content will likely attract the greatest attention, the most compelling conclusion of a new study released by the CRTC is the underlying suggestion that the future of media exists online.

The independent report released on Sept. 9 entitled ‘TV or Not TV: Three Screens, One Regulation?’ suggests that any regulatory rules imposed for the Internet – or deliberately not imposed – will become the de facto rules for the entire media system in Canada, making the upcoming CRTC hearing concerning new media the one for everyone to watch.

The study was commissioned to help determine whether the current regulatory exemption orders relating to new media should remain in place or be revised. Its author, Eli Noam, is director of the Columbia Institute for Tele-Information in New York, and as author of 25 books and more than 500 articles on the subject, is considered a leading expert on the communications industry.

‘Television,’ writes Noam in his report, ‘is caught in the cross-currents of change… the question is whether the system of government policy and law directed at the ‘first screen’ of TV should also apply to the second and third screens [of the Internet and mobile]; or whether the regulatory system that applies to those new screens should also cover the first screen; or what other new system should be created.’

Noam concludes that regulatory treatment of television should, in fact, be harmonized across all screens of distribution. But he does not suggest that this should happen by placing more regulation on broadcast new media, rather that ‘The rules for television content will be essentially those of film: free in content and diversity, but supported by public funding or direct production and distribution.’

The true implications of this recommendation may be lost in the heated debate that will no doubt spring from Noam’s recommendation concerning where this public funding should come from: ‘an excise tax on ISPs and carriers that would be harmonized with the existing levy on cable and satellite TV providers; and the use of spectrum sales revenues.’

The idea of a new levy is sure to have its detractors, not the least of which are the ISPs themselves. The major broadband carriers – Quebecor, Rogers, Cogeco, Telus, MTS Allstream, Shaw, Sasktel, Eastlink, Bell and Bell Aliant – have already banded together to form the Canadian ISP Alliance to fight the CRTC over this potential levy.

James Lewis, executive director of the Canadian Interactive Alliance – comprising eight new media associations across Canada – similarly disagrees with taxing ISPs.

‘The ISPs have already said flat out that any such levy would be passed directly on to consumers through higher access fees,’ he says. ‘Most Canadians aren’t even watching video online. It just wouldn’t be fair to consumers. Instead, we’re convinced that ISPs want to work with content providers and would like to come up with a way to support content together that’s better than regulation.’

But the way in which television is economically supported in the future pales in significance to the potential loss of net neutrality in Canada. The hands-off approach Noam recommends with respect to the CRTC could potentially leave the door open for ISPs to implement barriers against not only how their customers access the Internet, but also what parts of the Internet they are able to access.

The throttling of Internet bandwidth to limit the use of peer-to-peer services or choke the speed of online video – a practice euphemistically called ‘traffic shaping’ – is already implemented by nearly all Canadian service providers.

The matter is currently under review by the CRTC as possible anti-competitive behavior, but without specific regulation against the practice, it would be difficult to prevent these companies – nearly all of which are also conventional BDUs – from applying traffic shaping to any content that does not provide them with direct economic benefits.

At this point, Noam’s ideas are simply recommendations. The issues covered in his study will be not be decided on until after the CRTC hearing to be held in early 2009 concerning the possible regulation of broadcasting over new media.

Hopefully, the issue of net neutrality will not be lost in a smokescreen debate over ISP levies. It should help that players that are even bigger than the ISPs are getting involved.

In a submission to the CRTC in July, Google contended that ISPs should ‘be prohibited from throttling lawful applications. The Internet is simply too important to allow them to act as such a gatekeeper; the Internet’s myriad benefits can only be fully realized when Canadian carriers allow end users to choose the applications and content they prefer.’

CRTC chair Konrad von Finckenstein acknowledges that net neutrality ‘is one of the polarizing issues of the day. It will have to be addressed and debated by all of us.’

Only time will tell which side wins that all-important debate, since nothing less than the future of the Internet – and the media industry that will increasingly rely on it for content distribution – is at stake.