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Teksavvy vs Voltage File Sharing Case Back in Court This Week

November 9, 2015 Leave a comment

Teksavvy and Voltage were back in court today exclusively over costs.  As some of you may remember, movie studio Voltage is seeking the identity of ISP Teksavvy users who allegedly shared the movie “The Buyers Club” over peer to peer file sharing networks.  Voltage wants to sue the Teksavvy users over copyright infringement, and Teksavvy was ordered to provide the info of users identified by Voltage sharing their movie.

This case will set a precedent for the telecom industry in Canada on how copyright complaints will be dealt with in the future.  As many of you remember I’ve commented a great deal on this case.  A summery of the policy debate I was a part of regarding this case, and how Teksavvy should have done a lot more to protect it’s customers privacy is here.

In this latest development, it appears that no technical challenge (or any legal challenge) of the evidence is going to be argued by Teksavvy.  Instead “new evidence” is apparently being filed to justify Teksavvy’s costs to take no position in court on the case.  Costs that the court found were excessively high.  IP Lawyer Howard Knopf’s most recent blog on this, is again another must read if you are following the case.  In it Knopf not just criticizes Teksavvy’s legal position but also questions CIPPIC’s role in the case stating:

Although CIPPIC is no longer actively involved on the file, the appeal material was eventually posted here by CIPPIC  late last week and this will be helpful to the public discussion generally and to law students in particular.  It will be recalled that CIPPIC stepped in earlier as an intervener, after Teksavvy took the position that it took no position, and sought adjournments so that CIPPIC could enter the fray. CIPPIC’s role was never entirely clear. It explicitly disclaimed any role in acting for Teksavvy or for the John or Jane Does. It did conduct some cross- examination and referred to the “hearsay” issue – the giant elephant in the room – in its written material in the disclosure motion but did not do so explicitly even once in its oral submissions before Prothonotary Aalto as confirmed by the transcript Teksavvy is trying to file. This may somewhat explain why Prothonotary Aalto’s decision does not once mention the word “hearsay”.

Knopf also went on to say:

According to the transcript of the substantive hearing before Prothonotary Aalto, CIPPIC was apparently more concerned more with broad “public policy” issues than with the more practical question of whether, in light of the BMG decision, there was arguably insufficient substantial, admissible, non-hearsay, and reliable evidence to justify denial of the disclosure motion and thereby stopping the case from even moving forward.

Questions on both Teksavvy and now CIPPIC as to why this case has gone this far when it didn’t have to, and Teksavvy customers privacy assured.

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Judge Issues Scathing Decision on Costs in Teksavvy vs Voltage

March 18, 2015 1 comment

The judgement around costs in the Teksavvy vs Voltage court case is now in.  This is one of the first copyright file sharing cases in Canada to make it to the courts since our new copyright laws were passed.  As some of you may remember Teksavvy was asking for court costs of $346,480.68 for the disclosure of subscribers names, while Voltage was asking to pay Teksavvy for just under $900 for those names.  Both parties also brought up this blog in court.  Teksavvy added time in its costs docket for reading it, while Voltage couldn’t look past one post I had criticizing the costs associated with IP correlation. I had some choice words in December for both parties, and today the Judge in this case weighed in ordering Teksavvy only $21,557.50 in total costs.

Micheal Geist wrote today on the cases in a blog titled: “Defending Privacy Doesn’t Pay: Federal Court Issues Ruling in Voltage – TekSavvy Costs“:

With TekSavvy now bearing all of those motion costs (in addition to costs associated with informing customers), the decision sends a warning signal to ISPs that getting involved in these cases can lead to significant costs that won’t be recouped. That is a bad message for privacy. So is the likely outcome for future cases (should they arise) with subscribers left with fewer notices and information from their ISP given the costs involved and the court’s decision to not compensate for those costs.

I disagree with this statement when looking at the whole picture and decision.   This seems to be a balanced decision on how both parties acted in this case. I believe Teksavvy could have done a much better job at defending its customers privacy than it has to date.  This decision seems to be a rather scathing view from the courts on the evidence, merits, and costs argued by Teksavvy. I don’t see how defending hearsay evidence can be beneficial to promoting subscribers privacy in court by both parties!  The judge in my view acted in a very balanced way as a result of the evidence presented in the case and the law in place surrounding costs.

The full judges decision is here.  Below I will be posting some points I found interesting in the decision with some commentary.

The prosiding judge was Prothonotary Aronovitch.  In her opening statement on the decision Aronovitch wrote:

 [9] TekSavvy’s interpretation of the Order’s meaning is too expansive, Voltage’s too narrow. Neither position, in my view, is justifiable on the evidence or at law.

For it’s part, Teksavvy presented to the court as a defense of costs, that the case generated huge amounts of public interest.  Teksavvy wanted compensation as a result of their decision not to oppose the order, to which seemingly generated a huge uptake in calls into Teksavvy by angry subscribers:

[23] TekSavvy’s provides evidence to the effect that Voltage’s motion generated considerable interest and concern among TekSavvy’s then-current subscribers, potential subscribers, and the general public. This resulted in a massive increase in telephone and online inquiries, comments and complaints to TekSavvy. Gaudrault says that in the days before the December 17, 2012 return date of the motion, at one point TekSavvy was receiving 4,000 to 6,000 calls per day, of which 90 percent were related to Voltage, had as many as 200 telephone calls in queue for response, and had employees working overtime to field inquiries.

The above should be of concern to all ISPs.  Subscribers are very concerned about their privacy and how each ISP handles it.  It seems as though not opposing the court order really pissed off Teksavvy customers.  A wound in my opinion that was self inflicted.

Something that came out of this ruling as well, is that all three parties Teksavvy, Voltage, and Canipre were subjected to a DDoS attack on December 15th, 2012.  Teksavvy attributes this to the public interest generated in the case, thus has asked for compensation for it:

[24] Gaudrault attests to the fact that the attention and interest generated by Voltage’s motion was also manifested in a much more negative way. TekSavvy, Voltage, and Canipre were each victims of distributed denial-of-service (DDoS) attacks, in which hackers disable a website or online business by manipulating a huge number of computers to flood a targeted host with communication requests. Given the targets (TekSavvy, Voltage, and Canipre) and the timing of the attacks (which started on December 15, 2012), Gaudrault attributes the DDoS attack to the Voltage motion.

I strongly disagree with anyone who would use DDoS attacks to express frustration about this case.  Anyone disagreeing with the way all three parties have handled things, should speak up.  That’s what I’ve been doing throughout this whole process providing alternate views to the public on the case, which is something Openmedia started to do, then retracted.  I think those supporting Openmedia, should have voiced their strong concerns to this consumer group, and put this consumer group (who is supported by Teksavvy) in a position to negotiate with the ISP on it’s stance as it relates to public interest.  That is a much more proactive approach, and consumer groups need to learn they should not be influenced in any way by telecom providers!

The next bit is a bit of legalese.  From paragraphs 36-39 of the decision Teksavvy is trying to make an argument within law that they should be compensated for ALL costs associated with this case, not just the order to produce. Aronovitch stated:

[41] I find no support for that view in the jurisprudence or Prothonotary Aalto’s Order. More to the point, TekSavvy has produced no cases where, in similar circumstances, costs have been ordered to be paid, or assessed to be paid, on that basis.

So essentially Teksavvy’s lawyers didn’t convince the judge they should be entitled to all costs associated with this case within law.  On the now infamous Norwich orders, in which some Teksavvy supporters have stated publicly in the past was the reason why this case was different, and why Teksavvy could not oppose the motion (my emphasis added):

[49] While a Norwich order remains a discovery remedy that is out of the ordinary, orders requiring ISPs to provide contact information for their subscribers are not new or uncommon, whether in the context of the posting of defamatory materials (York University v Bell Canada Enterprises (2009), 99 OR (3d) 695 (Sup Ct) (York University); Pierce v Canjex Publishing Ltd., 2011 BCSC 1503, 27 BCLR (5th) 397 (Pierce)), or of alleged infringement of intellectual property rights (BMG; Voltage Pictures LLC v Jane Doe, 2011 FC 1024, 395 FTR 315 (Voltage 2011)). Indeed, TekSavvy acknowledges that the only uncommon aspect of Voltage’s motion is in the number of IP addresses that are identified.

Presumably, if the Norwich orders are not uncommon regarding subscribers information, there should be ample amount of case law out there to defend against them as well.

Paragraphs 54 – 55 the judge explains that the previous judge who ordered Teksavvy to disclose the information did not state that Teksavvy was entitled to full costs outside of the court order:

[54] I ascribe no special significance to the fact that Prothonotary Aalto identifies three heads of costs to be reimbursed. The legal costs, the administrative costs, and the disbursements he identifies are not independent costs, they are recoverable only insofar as they are directed to and incurred for the purposes of “abiding by this Order” to produce the requested subscriber information. There is no basis in the jurisprudence or in Prothonotary Aalto’s reasons to give any broader scope or meaning to the plain language of his order.
[55] Had Prothonotary Aalto intended TekSavvy to be compensated, in full, for any costs that it would have incurred “but for the motion” or “in connection with the motion,” I am confident he would have so ordered.

The judge goes on to explain that her decision on costs will than be based on evidence provided and what she deems as reasonable:

[56] I will proceed on the basis that the costs which Voltage is required to reimburse are limited to those incurred in abiding with the Order, that is, to locate and produce the required contact information of the subscribers identified by their IP addresses. It remains to be determined, on the evidence, what those costs are and whether they are reasonable, by which I mean “reasonably necessary” to give effect to the Order (Fontaine v Canada (Attorney General), 2012 ONSC 3552 at para 7).

Teksavvy provided notice to affected customers.  Teksavvy supporters noted that the notice provided was separate from what other ISPs were doing and the ISP should be patted on the back for it.  Well, Teksavvy tried to claim costs on those notices stating that it was essential to weed out any false accusations, and to let affected customers obtain legal council.  Based on the evidence the judge disagreed with Teksavvy, however awarded Teksavvy for the costs of “rechecking” the IP addresses only if the identity of the affected subscriber can be proven (my emphasis added):

[64] While the Court has the discretion to order a party to give notice, the Rules do not require TekSavvy to have provided notice of the motion to its affected clients. TekSavvy acted voluntarily and on its own initiative. Whether it acted out of altruism or self-interest is irrelevant.

[65] I do not accept the argument that the notice served to verify the correlation as it led to a more accurate identification of affected customers, and that the resulting costs should therefore Page: 19 be subsumed in the costs of abiding with the Order. This appears to be an explanation after the fact. Notice was not given to ensure the accuracy of the correlation. There is nothing in the notices or in the exchanges of counsel to suggest that the purpose of the notice was anything other than to inform subscribers of the motion and to provide them with an opportunity to seek legal advice, or to appear at the motion.

[66] That said, the costs incurred from rechecking and correcting information following the notice would be recoverable, if identified and proven.

Teksavvy should be applauded for notifying its customers, however the court disagreed that they should be awarded full compensation for such.  That’s going to have interesting results going forward with future cases.  This is the only privacy concern I can see, however what sets apart others from the rest of the pack (and the more noble thing to do) on privacy should be those that incur costs to do the right thing, rather than leaving their subscribers in the dark. Unfortunately the telecom industry is increasingly less likely to do that as a whole, so this does become a concern.

Regarding Teksavvy’s legal costs.  The judge took exception of how Teksavvy’s lawyers were billing, and award only $4,500 in legal fees (my emphasis added):

[77] Finally, I need not comment on the entries to Stikeman Elliot’s bill that are on account of “Reviewing draft and revised press releases,” “Reviewing and revising draft blog posts,” and “Review talking points; interviews; conference call re media lines,” to name a few. These and other similar items are irrelevant to the implementation of the Order and not recoverable.

I’m glad that the court agrees that Teksavvy isn’t entitled to costs for reading my blog!

[78] I also need not comment on the evidence of Philpott taking issue with the manner in which TekSavvy or its counsel allegedly drove up these costs as I have had no reference to the evidence.
[79] Having reviewed the bill of legal costs, I am satisfied that the following legal costs alone fall within the scope of the Order: the costs of McHaffie’s communication with counsel for Voltage concerning time zones or timestamp information necessary to carry out the correlation and those of reviewing and providing advice on Prothonotary Aalto’s Order. I fix these at $4,500.00.

The judge goes on to question the administrative costs associated with the order, citing only “estimates” were provided, and a lot of those costs were not related to the implementation of the court order.

[81] Gaudrault says that Tacit’s retainer by TekSavvy “in the relevant period” was monthly rather than hourly. Tacit did not himself provide a bill of costs or time sheets in relation to his services. Rather, Gaudrault attaches “estimates” of Tacit’s monthly costs for advice with respect to Voltage’s motion, including representing TekSavvy in the litigation as co-counsel, and giving advice related to customer communication, IT issues, call centre issues, and privacy matters. Neither specific tasks, nor the time at which they were performed or the length of time it would have taken to complete them, are identified.

[82] Most of the items identified are unrelated to the implementation of the Order. Tacit’s advice or involvement related to the performance of the look-up or correlation exercise required to locate accurate contact information for TekSavvy subscribers cannot be identified or determined on the evidence. I do not comment on whether any cost items might be excluded due to overlap with items also claimed by Stikeman Elliott. VI.

Voltage had objected to the “estimates” provided by Teksavvy on administration costs.  Teksavvy employee’s apparently didn’t submit time sheets (my emphasis added):

[97] On the first ground regarding hearsay, Voltage makes several points. First, Gaudrault and Tellier did not themselves do the work of correlating the IP addresses. As revealed on crossexamination, it was Misur, not the affiants, who created the appendix setting out the hours of work. Gaudrault’s and Tellier’s evidence is therefore inadmissible hearsay. Additionally, the times noted in the appendix as well as the hourly rates are merely estimates as TekSavvy employees did not keep time sheets or time logs of the work that was done. Finally, the individuals who carried out the work did not produce their own evidence even though they had direct personal knowledge of the facts.

Paragraphs 107 – 113 deal with the judge basically throwing out Voltages notion on the very low cost amount of administration costs of close to $900, stating that Voltages experts were not familiar with Teksavvy’s systems.  One of the main admin costs I objected to on this blog that Teksavvy filed for what was the purchase of a new computer system to handle the court order.  The judge on that:

[114] The Order does not distinguish between the correlation and the systems necessary to carry it out. The adaptations to TekSavvy’s look-up process were necessary to effect the required correlation and, in my view, its costs are thereby encompassed by the Order. Put another way, in this respect Voltage has to take TekSavvy as it finds it.
[115] While TekSavvy may have derived a benefit from the situation, TekSavvy will not be able to claim the costs of its upgraded correlation process again in the context of future requests. What’s more, if such costs are to be excluded, it is up to the parties to see that the cost order reflects their intentions.

Finally the court arrived at a sum of $17, 057.50 for administration costs provided to the court by Teksavvy, and flat out rejected the notion that Teksavvy be allowed to recover costs associated with not opposing the motion and having to deal with upset consumers.  The court finds that to be a regular business expense:

[118] In sum, having reviewed TekSavvy’s claim for technical administrative costs, I find that it has proven costs in the amount of $17,057.50. In arriving at this sum I have excluded costs of “Preparation of information for court” and one half of the costs of “Second check/QA verification” as these were not identified and supported by evidence. Moreover, at the hearing of the motion, TekSavvy failed to explain what was meant by “QA verification.”

A. The “operational” administrative costs of implementing the Order
[119] Under this heading, TekSavvy seeks to recover the sum of $81,524.12 for expenses incurred in communicating with affected and non-affected subscribers and the public; creating an online portal tool for the use of subscribers; and responding to a higher volume of inquiries and complaints. The claim, including overtime, is on account of the work performed by supervisors and staff in the e-services department, at the call centre, and in the marketing department.

[120] These tasks, which Gaudrault refers to as “work relating to TekSavvy’s reputational impact,” are, in effect, TekSavvy’s costs of marketing, promotion, and customer relations, which I consider to be TekSavvy’s costs of doing business. Consequently, I disallow these costs. I do not consider them recoverable as they are unrelated to the identification and production of the required customer information, and fall outside the ambit of the Order.

In conclusion the court has found that both parties were way out there on their costing of disclosure.  It’ll be interesting to see how or even if there will be an appeal and on what basis.  The court quite clearly called out Teksavvy here for the evidence provided for costs.  To my non-lawyer eyes, the judgement on costs (while low) seems to fit with the evidence provided in the case, and the decision seems balanced within that respect.

CRTC vs Netflix: The Fight For Survival Is On

September 24, 2014 Leave a comment

The regulatory process in telecom and broadcasting in Canada is badly broken, and under the new chairman Jean-Pierre Blais it’s very existence as a regulator is about to be put into question by new media companies. From allowing companies like Bell and Rogers to get away with internet throttling for years with no recourse, to excessively high phone bills, and now Blais has picked a fight with Netflix over his assumption that new media companies are regulated under a public mandate in which the not only the Government doesn’t agree with, but companies like Facebook, and Google are surely to take exception too as well as future media distributors.

There is a very interesting presentation about the future of telecom from a market analyst I’ve come to trust over the years when it comes to media. His name is Gerd Leonhard. Below is an embedded talk on the future of telecom to ITC leaders in the EU.

What’s about to take place in media is another technological disruption in content distribution channels. It happened over music, and it’s starting to happen in video content as well.  Over the next few years Africa and the Middle East will be wired up fully with satellite wifi, bringing about 3 billion more users to the net. In these places cell phones dominate and the net will be the medium of choice to consume media. As a result, there is going to be a huge demand on what is known in the policy trenches as “over the top media” (in which Leonhard explains in detail how this currently affects telecom providers in the above embedded video), or in more English related terms “internet broadcasting” services like Netflix.

The next evolution in content distribution will be in the form of social media. Social media companies mine your information on your social media profile to sell you advertising on that site. As a result Google and Facebook will be getting into content distribution within the next 5 years to not only service the needs of the 3 billion coming online in the near future with media, but also to fulfill a market need in media advertising which would be more targeted ads over content through social media. What this will essentially do is set up an entirely new global content distribution network.  This change (due to the needs of the new 3 billion internet users) will be quite rapid.

Telecom companies in Canada currently have an artificial monopoly on Canadian content distribution rights, in which the suppliers of that content will be looking towards the social media distribution channels as more lucrative compared to traditional over the air distribution networks through Rogers, Bell etc. As a result these big telecom companies stand to loose a ton of money, and will have to reinvent themselves, or at least try to minimize the damage.  This technological change will completely disrupt telecom business models in Canada.

For a long time on this blog, I’ve been quite strong on privacy issues regarding all telecom providers on your private information.  The reason being is that telecom providers hold a lot of personal information on websites visited etc.  Social media, is a gold mine of information, but Internet marketers know it’s not completely accurate.  The information from your telecom provider is more accurate regarding the profiling of their users.  With social media gaining content distribution and stealing it from the telecom providers; the next logical step in market and business transition would be the sale of your information at the telecom provider level, with investors hungry for accurate analytics.

Last week the CRTC got into a spitting match with Netflix over it’s subscribers data. All broadcasters in Canada are required to hand over their “ratings” information to the CRTC. Netflix doesn’t provide this information publicly, and refused to give this info to the CRTC. The CRTC then came up with an implied threat of regulating Netflix if it didn’t cough up that info.  Who regulates the disclosure of your private info collected by online broadcasters is the current question before the Canadian public and government, and it’s a big one since it will impact how your information is handled in the future by telecom, online broadcasters and how will the flow of our personal online data be monitored, and by whom?  In my opinion the CRTC is not mandated to handle this information.  It flows through the Privacy Commissioner, which pretty much puts the CRTC in a very tight corner in the near future regarding it’s ability to regulate anything.

The one thing to be optimistic about is that our regulator and our telecom industries are about to be kicked in the pants by companies that out pace Rogers/Bell by a large margin.  If the CRTC moves forward on pushing Netflix, Rogers/Bell/CRTC will not be controlling that conversation.  That’s going to be interesting.  If I were Bell/Rogers or other creative unions, I’d be very careful what you wish for right now.

To Be Continued….

UPDATE: September 29th, 2014 -> The CRTC has backed down from the Netflix spitting match.  Wise move considering the above info. Worthy to note that the CRTC still thinks it has regulatory power over internet content, it will now not enforce, however even backing down from this public spitting match has significantly weakened that presumption. It would have to be legislated in, and I don’t think any government would be willing to do this considering the power of Google and Facebook.

Canadian Cyber Bullying Legislation a Threat to EU Data Privacy

A few months ago, I blogged about the possibility that the EU would be reviewing our privacy laws due to the NSA disclosures and Canada’s role in US surveillance. Since that date, there have been staggering disclosures regarding warrant-less access to subscribers’ information by the telecommunications companies in Canada, legislation drawn up that is a blatant attempt to expand warrant-less access, and a lawsuit launched this week on the constitutionality of the misuse of our current privacy laws by government and telecommunications companies.

Conveniently Canada for the most part has entered this debate under the radar of the EU Justice Commission most likely as a result of the EU being busy dealing with the US disclosures of its citizen’s data, and being in an election campaign for EU Parliament. Politically this would be the best time for the Canadian government to try and squeak surveillance legislation through under the noses of the EU Justice Commission. Judicial redress has been a big sticking point for US and EU trade negotiations, something the cyber bullying legislation seeks to dismiss for Canadian telecom and is most likely a result of heavy lobbying by the telecom industry to avoid accountability for essentially being accessories to constitutional crimes against the Canadian citizenry, and quite possibly breaking EU and international law.

The last review of our privacy laws by the EU was in 2006, in which found no evidence of abuse at the time. Abuse has certainly occurred over the years, and the EU Parliament in recent months have been steadfast on curtailing warrant-less disclosures that are being abused by the US Government and US law enforcement. I have a hard time believing that EU Parliament and the EU Commission would agree to such abuse that has been now disclosed. Simply put recent comments that were made in the media by Canadian government officials over the months regarding the adequacy of our laws with the EU are out of date, and sorely inaccurate considering recent disclosures of current warrant-less access by our telecom companies. From following the diplomatic stance the EU Justice Commission has taken in recent months with the US that the EU will have stark issues with what the Canadian Government and Canadian Law Enforcement have been up too.

This week I’ve tweeted out a few links to Paul Nemitz who is a director at the EU Justice Commission making him aware of the situation and public debate in Canada in hopes to put pressure on the government to abide by the constitutional rights of not just Canadians but ensure that going forward, any breaches of EU law are dealt with accordingly. Next week is when Vice President to the EU Commission Viviane Reding returns back from paid leave. Reding has been extremely outspoken regarding data privacy in recent months with the US, and I would find it hard to believe that if the information sent to Nemitz landed on her desk, that Reding wouldn’t pipe up either through diplomatic channels or publicly on the abuse and subsequent adequacy of our privacy laws.

Next week is when a large portion of our legal community in Canada will be also speaking out on the current lack of privacy on the cyber bullying bill C-13 in committee in which I’m expecting calls from the legal community to have government split the bill. Pass the cyber bullying portion of it, and separate the surveillance portion of it for further study. That maybe a wise move, in order to ensure that Canada’s economic trade isn’t put at risk with the EU under the leadership of Defense Minister Peter McKay and Prime Minister Harper.

The Price For Internet Providers To Look The Other Way On Privacy

March 11, 2014 2 comments

Do Internet providers profit from disclosure of subscribers information?  It shouldn’t cost very much to get a low wage data admin to search a database full of IP addresses and correlate those assigned IP addresses to a subscriber.  Being a qualified database admin myself, setting up such a system would be relatively easy, and extremely cost effective.  Most ISP’s should already have a system like this in place to ensure the normal day to day operations, so essentially all that would be needed would be to have someone search a database of the IP addresses to find assigned subscribers.  Let’s take Teksavvy for instance.

2000 IP addresses were searched through this database to find the matching subscribers.  Manually inputting the IP addresses shouldn’t take more than a few hours, however getting a digital list of IP addresses, and running an SQL script to automatically search the database should take no more than 15 minutes for the development of the script (assuming you’re not using MS SQL and manually inputting the script and running test searches).  It should only take a few seconds once the script is run to query the database and come up with subscribers tied to those IP addresses.

I’ll be conservative here with the numbers.  This can easily be done with 2000 records manually within one 8 hour working day.  At $20/hour x 8 hours = $160. This cost gets even lower when the database system gets automated.  An estimated initial cost of maybe $500 would be required to automate this type of database search, secure the database, and send e-mails out automatically.  After that, it should take maybe less then 10 minutes from receiving IPs in digital form to send notices out to customers.  I’ve actually developed this type of database system for a small business client over a decade ago to handle his account receivables on payment due and automatically notify his clients through e-mails and texts of past due accounts (by using businesses records not IP addresses).  This can be easily adapted to the copyright notice to notice regime, in fact most businesses, let alone telecommunication companies are already using this type of system.

What exactly are the legitimate expenses incurred by an ISP when having to search through their databases to identify subscribers?  This question should be kept in minds of Canadians when looking at the current situation within copyright law, and mass surveillance.  Torrentfreak did an excellent article today regarding getting a system like this in place for copyright in Canada, which will allow for copyright trolling, as long as the internet providers are paid a good profit out of the deal:

“The notice-and-notice law permits the government to set a fee for sending a notice that an ISP can charge. At the moment, it does not look like the government will establish a fee, preferring to wait to see how the system develops. Were this [business model] to come to Canada, the government might face increased pressure from ISPs to allow them to charge for their participation in the process,” Geist concludes.

Things get even scarier when looking at Telus’s response to the Teksavvy vs Voltage decision, comparing this with the prospect of future lawful access legislation:

“We respect our customers’ privacy and would not voluntarily provide such information,” said Telus spokesman Shawn Hall.  ”That said, we fully support law enforcement’s need to access information to conduct investigations, and would comply with proper court-ordered warrants or any changes in privacy legislation.”

In my opinion, upping the costs associated with identifying subscribers will not deter abuse of privacy rights of Canadians, in fact what we’ve learned with the NSA disclosures, is that technology companies seem to be looking the other way regarding net citizens privacy. At least in Canada it comes with a cost, however what would be way more effective, would be to strengthen our privacy legislation to deter abuse, and profitability of that abuse of subscribers rights and allow for more targeted investigations by law enforcement.

Profiting from the abuse of the legal system, and abuse of users rights should be the last thing on the minds of our telecommunications providers. As Edward Snowden suggested yesterday in his presentation, it erodes trust within our digital communications network, and makes us less secure when those who would profit on such activities, are thinking more about their bottom line than actively participating in the democratic values of the society they serve.  In order to build that trust back, those telecommunications and technology providers have to step up to the plate.  Many already have from Microsoft to Yahoo, however Canadians need to be comfortable this is not going to happen within our telecommunications companies considering their position within copyright laws, let alone positions they have taken regarding government surveillance.

The equilibrium will be established through emerging technology currently in development.  Technology innovation cycles are around 18 months, and we are now in the 10th month of the NSA disclosures.  This means that tools being developed to secure communications due to the failure of the communications industry to date, will be soon available with ease of use to the regular net citizen.  These tools will essentially force an end to mass surveillance used by governments and the copyright lobby.  Not even you’re ISP will know what you are doing.  The only way to route around that would be through installed spyware or malware, making it extremely hard to mass surveil anyone, and force law enforcement and government towards targeted investigations.

As a technology developer myself, I cannot wrap my head around technology companies not thinking about securing their customers information from abuse, let alone making a profit from such abuse.  That to me is a breach of the fundamental trust of the principles most developers and service providers are taught. It’s made us less secure,  and a huge uphill battle to regain that trust, when profitability and the bottom line comes first above everything else.

How to Make our Indie Telecom Providers Competitive

January 15, 2014 2 comments

This is a continuation of my last post on Why The Government Will Only Make Cosmetic Changes To Telecom.

I’ve been highly critical of all in the telecom industry over the past several months, primarily with indie telecom providers.  I used to sit in the board room of one indie provider when the government first fragmented the telecom monopoly the last time around, so I know the challenges faced by indie providers when it comes to our regulatory frame work, and have had to deal with this as an advocate, only to see the CRTC lightly tap the wrist of Rogers and Bell for not following through with telecom policy.  Essentially there has been a brick wall that’s in place through our regulatory system at the CRTC that will most likely not bring in any significant changes (nor will government) to ensure the survival of Canadian indie telecom providers.

Openmedia is being sold to the public as a grass roots fight for the little guy organization.  In fact what it’s really doing on the telecom front is providing a regulatory lobby for the indie telecom providers, with the help of public donations.  Their mandate essentially is to assist in bringing in more telecommunications competition, however is doing it in a why that will not be successful in ensuring their mandate is fulfilled.  Essentially they keep chipping away at this brick wall in which the indie telecom providers have for almost 20 years, with very little to show for it in the form of actual meaningful competitive environment.  There is only so many times when you can blame Bell, Rogers, Government or the CRTC for these problems before it hits home and you are left in the dust.  The UBB issue was only an annoyance to Bell and Rogers, and didn’t alter the telecom landscape in a significant way to produce  meaningful changes to our telecom sector that is very badly needed right now in the form of greater competition.

Essentially Openmedia can only provide very small inroads for consumers in the regulatory process.  The ideology that simply chipping away at this great brick wall, that the wall will eventually come down has had almost 20 years experience in failing, and the time for the indie providers in Canada is limited as a result of failing to innovate, and follow market demands.  Taking over grass roots organizations to essentially help in fighting Bell, Rogers, Telus, Government and the CRTC in the regulatory system, hasn’t produced substantive changes to competition in the telecom landscape that’s current needed to ensure indie survival. Basically all of the small victories haven’t produced much and only extended the life line of our indies in inches rather than in miles.

There’s an old saying that if you hit a brick wall, you go around it.  All Openmedia is doing on behalf of indie providers is continuing to hit their heads on this brick wall, without breaking through.  That’s a continuation of almost 20 years of failed business practices by the indie providers, and will continue to fail, due to the reasons on my last post on this.

If my projections are correct, the indie market will be consolidated within the next 5 years, and gobbled up by the artificial monopoly we have in place now.  The indie telecom market hasn’t stepped up to the plate in figuring out a way to be competitive in today’s marketplace outside of telecom.  Internet and mobile providers roll has changed in the past 6 years, and our indie providers need to be on top of that and in front of that change, rather than following the rest of the pack.  What I’m about to propose is essentially one idea of many that should be thought of by at the board rooms of these indie internet providers.  They now have an obligation to Canadians and to their own investors to step forward and walk around the brick wall of the CRTC.  Indie board rooms need to start developing out of the box thinking to compete in their new roles in digital media.

The digital revolution has essentially split the old monopolies in the media industry.  The video industry is still going through this change, however the music industry in Canada is primary indie.  Just as the indie telecom providers hate the telecom monopoly we have now is as much as the indie music producers hate the old monopoly in the music industry.  Some of these indie musicians are big names in the industry and make up the majority of musicians in Canada.

Rogers recently is picking up major distribution rights from the major production studios to form it’s version of netflix.  Some indie providers have followed suit with netflix like services.  Music is next. Internet providers offer a very good and direct way of distribution for the content industries.  The major labels and producers essentially will be doing business with the major internet providers.  This essentially will give the upper hand in the media industry to big content providers. Smaller producers and musicians as a result will have much harder time breaking into that market since essentially the big labels will own and direct distribution to the big providers.  This is an expected competitive move by content producers to try and consolidate the media industry again.  Internet providers are slowly turning into media distribution companies.

The Indie telecom market needs to start learning and innovating around the media industry in order to become competitive.  This could mean, not just providing a distribution channel for content providers, but may also include handling things such as media promotions for content producers, concerts, sponsored media events, even getting into media representation.  Essentially they need to become a one stop shop for media (both in the consumer market, and within the content industries), and make inroads into the media industry and start learning now. Bell, and Rogers are both media distributors, yet the indie telecom market in all this time has done very little in learning how to compete in this market.  As a result, both Bell and Rogers have a very huge competitive edge over our indies right now, and within the next 3 years if the indie telecom market doesn’t start looking outside of telecom in a meaningful and competitive way, I predict indie providers will start folding and closing their doors.  They are going to start loosing money fast.  Most in the indie board rooms probably know this, however due to the lag in predicting where the media market is heading by the CEO’s, they are far behind on this and they need to start innovating in the media market fast.

Other ways of innovating for the indie telecom market could also include mobile app and game development offering secure open source communications through mobile devices along with targeted adverting (no choice Bell has gone that way).  Business and enterprise app and software development offered exclusively to clients that sign up to the ISP.  The list of brainstorming can go on here, but right now it’s important for our indie CEO’s to start brain storming and transforming their companies.  They have very little time left to do so.

Why The Government Will Only Make Cosmetic Changes To Telecom

January 15, 2014 1 comment

When I think about our telecom industry in Canada it reminds me of slimy grease haired used car sales men/women who will say anything under the sun to sell you that lemon on the lot and get their commission.  It makes me personally and a lot of would be investors sick.

I’ve done a lot of research over the years on how our economy works due to what has been taken place in the digital revolution.  Essentially what happens is that our economy goes through cycles.  When monopolies get too big, there’s usually some kind of technological innovation that comes along and basically dismantles the monopolies and makes innovation cheaper.  At the time of the cheap cost of innovation, we have an influx of start ups, and new jobs are created by doing things a new way.  There is also an explosion of  new technologies and innovations that occur during this time. Then these start ups start to become bigger as the market adapts, and some are weeded out by the markets, some are bought by competitors, and soon enough new monopolies are born by the new start ups, and the cycle repeats. This is how capitalist markets work.  When you have an artificial monopoly, you need to artificially create that environment if the motive is to bring in lower prices for a while, and create more competition.

Here are the issues around foreign investment in Canadian telecom.  If we are to follow free market principles, the government is worried about letting some foreign company owned or at a later date nationalized by another government climb to the top, become a monopoly in the Canadian market and essentially take over our network infrastructure.  That essentially gives a bargaining chip politically to countries who want to influence or sway political beliefs or our national security. Right or wrong, that’s the thinking behind foreign investment regulations.

There has been a lot of debate recently around foreign investment rules, and a 4th player.  Simply creating a 4th player in our current artificial monopoly of our telecom sector only adds one more to the big boys club.  It may lower prices on the very short term, but will do nothing to make the short term gains sustainable. What’s needed is a complete dismantling and disruption of the old monopoly, and at least 50 – 100 start ups if not more.  This would require the government nationalizing the networks, limiting the purchase power of Bell, Rogers, and Telus, and essentially give the priority over spectrum to new entrants at rock bottom prices (or better yet free initially and paid back later) and unregulated. If the government were to nationalize the networks, than government owns the networks, and the issues around foreign investment become mute.  And no I haven’t lost my marbles; well maybe a little bit.

So why will we not nationalize the networks?  A lot of this would be due to a public perception of government intervention in the market place.  This idea makes Conservatives not only see red, but vomit.  It won’t fly with the Conservative base.  However what most don’t understand is our system is currently regulated so government is already intervening, and current regulations go far beyond the stated approach of nationalization.  Another big issue is that government doesn’t want to make Bell investors mad.  A lot of Canadian money has gone into BCE, and large number of Canadians nest eggs rely on BCE including those who are about to retire. If we were to dismantle the current monopolies that would put in jeopardy Canadian economic investments.  These guys are too big to fail economic wise to a government focused on the economy, and I don’t think the government has the brass balls to essentially devalue their worth in the name of lowering Canadian cell phone bills, or internet.

So where does that leave Canadians?  Well foreign or even domestic investors looking at the telecom side see the attempt to be seen as pro-consumer by government for what it is, a pipe dream and not reality.  Therefore, foreign and domestic investors look at the situation, learn about it, then leave.  Unless Canadians are prepared to dismantle the current monopoly, and devalue BCE and Rogers, any changes to our telecom market will essentially be lipstick on a pig.

So what can government do besides nationalization, imploding and devaluing economic nest eggs? Not much, other than appear to be consumer and competition friendly by maybe courting outside investors for a 4th player willing to loose capitol for political gain, which essentially does NOTHING to solve the problems in our current telecom market.  The other option would be to heavily regulate the current telecom market we have now, which will cause even more problems since any regulations will appear consumer friendly on the outside, but on the inside, made sure to protect those retirement nest eggs in BCE and Rogers, by not focusing on competition.  No telecom provider in Canada indie, Bell, Telus, or Rogers can claim to be “consumer friendly” until the monopoly implodes, and free market principles are applied to this artificial market.  The devaluing of the big 3 must happen on a massive scale in order to attract sustainable telecom investment into Canada.

All of this is being sold by indie providers in Canada as an excuse not to innovate and create new ways of doing things, and attracting investment outside of the telecom sector to a reasonable degree that would offer different services than what the monopoly already offers.  They claim to be shackled by regulation protecting BCE and Rogers.  Some of that is true, but there are massive problems with the indie telecom market outside of telecom regulation concerning how they refuse to innovate and create new ways of doing business in telecom that don’t require regulation. There are always ways to innovate around regulation rather than just offering the same service for a reduced price.  There’s little to no incentive for consumers to switch other than price, however the Canadian consumer gives up superior technical support (to name one problem) in the process, so switching often becomes a negative for Canadian consumers, and the indie telecom industry in almost 20 years hasn’t innovated around regulations to create the needed positive. That’s not a problem with BCE or Rogers, that’s called business 101. We don’t have enough qualified CEO’s in the indie telecom market, and as a result, they are essentially bottom feeding off of BCE and Rogers due to no fault but their own.  To be continued in part 2 of this post.

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