The CRTC unveiled its new rules Wednesday, a day ahead of its U.S. counterpart.

Big telecommunications companies such as Bell and Rogers can interfere with internet traffic only as a last resort, the CRTC says. Instead, they should use "economic measures" such as new investment and usage limits to combat congestion on their networks.

The Canadian Radio-television and Telecommunications Commission on Wednesday issued a new framework by which it will judge whether internet service providers are discriminating against certain kinds of traffic and content.

"Canada is the first country to develop and implement a comprehensive approach to internet traffic management practices," CRTC chairman Konrad von Finckenstein said in a statement.

"More and more, the internet is serving as the backbone for communication, commerce, governance, health, education and entertainment. Our framework will foster an environment where ISPs, application providers and users have the utmost freedom to innovate."

Under the framework, the CRTC will require ISPs to provide retail customers with 30 days' notice of any changes to network management, and wholesale customers with 60 days' notice.

The moves must be posted prominently on the ISP's website and consumers must be informed of how and when they will be affected, with a particular emphasis on how the speed of their service will change.

The CRTC is also requiring ISPs to institute economic measures to control usage such as charging "consumers rates based on how much bandwidth they use each month, or offer discounts during off-peak hours."

"These practices are the most transparent as they are clearly identified on monthly bills," the CRTC said. "With this information, consumers can compare between different internet services and match their bandwidth needs with the amount they are willing to pay. Technical means to manage traffic, such as traffic shaping, should only be employed as a last resort."

Internet providers will still be able to use network-management practices such as traffic shaping and slowing of certain applications, and limiting bandwidth usage of heavy downloaders. When implementing such a technical measure, ISPs will have to prove that:

• It is designed to address a specific purpose, such as preventing congestion.
• It is as narrowly tailored as possible to achieve its intended purpose.
• It causes as little harm as possible to the customer, application or wholesale internet provider.
• Economic measures such as download limits would not achieve the same result.

The CRTC also said it intends to review traffic management on the wireless internet at a future date. The new framework will in the meantime also apply to wireless services, it said.

Ruling provokes mixed reactions

The Public Interest Advocacy Centre, a consumer watchdog group, said the CRTC's framework is a big loss for internet users. The framework is not binding and leaves decisions as to whether economic or technical measures are required up to ISPs.

"It approves all of the throttling practices that ISPs currently engage in," said John Lawford, counsel for the centre. "It requires consumers to prove something funny is going on and consumers don't have the means to figure out what ISPs are doing and they don't have the resources to bring that to the commission's attention.

"There's a lot of fine-grained double-speak here. There is no requirement for any of it."

NDP digital issues spokesman Charlie Angus, who last year introduced a net neutrality private members bill to the House of Commons, also criticized the framework.

"Basically the CRTC has left the wolves in charge of the henhouse," he said in a statement. "ISPs have been given the green light to shape the traffic on the internet toward their corporate interest. This decision is a huge blow to the future competitiveness of the internet."

'Canada could be taking the lead in being the country of the open internet, but it's instead leaving that to the United States.'—Columbia University professor Tim Wu

Tim Wu, a Canadian professor at Columbia University in New York who is often credited with originating the concept of net neutrality, said he was disappointed by the ruling. The CRTC has taken a counterproductive step by allowing network management practices such as throttling to continue.

"It's in the Canadian tradition of compromise. I would have liked to see something stronger," he said. "Canada could be taking the lead in being the country of the open internet, but it's instead leaving that to the United States... there is more leadership here in the United States to make these principles permanent to preserve the open internet than there is in Canada."

Ken Engelhart, head of regulatory affairs for Rogers, said the new framework is not necessary, but it is one the company can live with. The requirement to try economic measures followed by technical measures is one the company is already employing, he said.

"We're constantly being accused of things that we haven't done," he said. "All of the concerns and fears and anxiety are a certain amount of hysteria. CRTC is saying that, 'if you do any of these things, we'll stop you.'"

Bell also liked the decision and said it could serve as a model for net neutrality frameworks around the world.

"Bell's existing internet traffic management practices are already compliant with it. It addresses fundamental policy concerns around consumer issues in an appropriate manner, in particular regarding transparency and disclosure," said Bell spokesperson Jacqueline Michelis.

"It is a well considered framework for addressing issues in the future and gives everyone, providers and consumers alike, a much needed measure of certainty."

Jacob Glick, head of regulatory affairs for Google Canada, was measured in his read of the framework. Google has been outspoken on the need for strong net neutrality protections in both Canada and the United States.

"We're pleased that the CRTC has adopted a principle-based approach designed to protect the open internet for Canadians and preserve flexibility for ISPs," Glick said. "We hope these guidelines will be applied in a way that ensures Canadians can continue to innovate online."

Michael Geist, a professor at the University of Ottawa and prominent internet commentator, said the framework is a step in the right direction but will inevitably stir up more battles between consumers and ISPs.

"Today's CRTC decision signifies that traffic management is not a free-for-all and the days of ISPs arguing that they can do whatever they please on their networks is over," he wrote on his blog.

"That said, it also guarantees that traffic management practices such as throttling will continue and it is going to take more complaints to concretely address the issue."

Battle started with throttling

The battle over net neutrality in Canada found it roots in late 2007, when Bell began slowing down the internet connections of customers using peer-to-peer software such as BitTorrent. Bell kicked off the fight when it extended the practice to its wholesale customers in early 2008.

Small ISPs, with support from internet heavyweights including Google and Skype, complained to the CRTC and said Bell had violated its wholesale agreements with them. Hundreds of internet users also rallied on Parliament Hill to support the small ISPs.

Bell said the throttling was necessary because a small percentage of users were causing congestion, thereby slowing down service for all customers.

The CRTC, while stating that it did not endorse Bell's actions, found that the company was not in violation of its agreements and could continue its throttling.

At the same time, the regulator launched a public review of all ISPs and their network management practices. The question at the heart of the probe conducted this summer was whether Canadian telecommunications laws are sufficient to prevent unfair discrimination of internet traffic and content, or whether new rules are needed.

The review drew unprecedented interest from the public, with more than 12,000 individuals submitting comments. Consumer groups, business organizations and technology companies voiced their support for stronger rules, while large internet providers and network equipment suppliers cautioned against regulatory interference.

Neutrality gaining steam in U.S.

The CRTC 's ruling comes as its U.S. counterpart, the Federal Communications Commission, is expected to officially recommend six new net neutrality laws to Congress on Thursday.

President Barack Obama and FCC chairman Julius Genachowski are supporters of net neutrality. In Canada, opposition parties have called for net neutrality laws, but the government has been silent on the issue.

The ruling also comes as Canada has come under criticism for the state of its broadband infrastructure.

Recent studies from Harvard and Oxford universities and the Organization for Economic Co-operation and Development found that Canada rates poorly in terms of broadband speeds and prices compared to other industrialized nations.

Another study funded by the nation's biggest ISPs, however, found that Canada is a world broadband leader in four key areas: availability, user adoption, speed and price.