This morning, the Canadian Radio-television and Telecommunications Commission (CRTC) issued its much-anticipated ruling in the CAIP v. Bell case, the first major case to test the legality of Internet throttling. The Commission denied CAIP’s application, ruling that Bell treated all of its customers (retail and wholesale) in the same throttled manner. This points to the challenge in this case—it was not about discriminatory network practices per se, but rather about wholesale shaping in a specific context.

Bell comes out a winner in this round. The Commission found that there was network congestion due to P2P usage and that some network management is required to address it. Moreover, it rejected the competition concerns noting that there was no evidence that Bell’s action had lessened competition and it concluded that reducing speeds does not rise to the level of controlling content.

While the CRTC’s decision to permit Bell’s throttling practices is disappointing in the short term—and seems to place Canada on a different track from the U.S.—the decision is not a total loss for net neutrality supporters as the Commission made a clear commitment to addressing the issue of net neutrality and network management in a formal proceeding in July 2009. Indeed, it is important not to lose sight of how much has changed in the past year.

Just over one year, I wrote a column noting the need for greater ISP transparency in the wake of Rogers’ admission that it engaged in traffic shaping. At the time, net neutrality was viewed as a fringe issue in Canada without much political traction. In the span of 13 months, there has been a major CRTC case, a private member’s bill on net neutrality, a rally on Parliament Hill, the emergence of BitTorrent as distribution tool for broadcast content, a more vocal business community supporting net neutrality, and a gradual shift of this issue into the political mainstream. In the United States, the change has been even more dramatic—an FCC ruling on the throttling activities, proposed legislation, the shift of net neutrality to wireless, and a President-elect who has been outspoken on the need to preserve net neutrality.

In other words, today’s CRTC decision is not the final word on net neutrality in Canada, but rather the first word on it. The Commission itself has opened the door to broader hearings on the issue next year, which may come alongside the new media hearings that also offer the opportunity to raise net neutrality concerns. Moreover, if the Commission comes to the conclusion that these practices are consistent with current Canadian law, there is the likelihood of growing calls from within Parliament to change the law.

A year ago, the net neutrality debate focused on whether rules were needed. Today, the debate is changing from whether there should rules on network management to what those rules should be. In fact, the Commission notes that as part of the hearing it “will try to establish the criteria to be used in the event that specific traffic management practices need to be authorized.” There is an emerging consensus on the easy issues—no content blocking and better transparency of network management practices (the CRTC today required Bell to provide its wholesale customers with advanced notice of its plans). We are in the early stages of the more difficult questions of what constitutes reasonable network management practices and the opening of a formal proceeding puts those tougher questions squarely on the table.