In Canada at the moment a fight has been engaged between Bell Canada, a major carrier, and a recent decision of its regulator, the CRTC, concerning whether the CRTC (the Commission) made the correct decision when it said that the underlying transport system was “telecommunications”, while the “app” that was carried was “broadcasting”.

The decision appealed from (the Klass decision) is important because it marks the first time the CRTC has made a decision on the idea that lies at the core of Internet thinking: that an application floats on top of transport layers. The carriers assert that if the “service” on top is broadcasting, then a) it is broadcasting all the way down the protocol stack (to use Internet terminology) and b) by virtue of the Broadcasting Act, they are obliged to discriminate in favour of Canadian programming content, and therefore, in favour of themselves. By contrast, if the transport is “telecommunications” then by law the carrier may not discriminate unjustly in favour of itself. If “broadcasting”, then discriminate; if “telecommunications” then do not discriminate unduly.

I have criticized the legal habit of placing a label on something and thinking that the phenomenon has been understood. Thus, if labelled “common carrier”, then the rule is non-discrimination. If “broadcasting”, then discrimination is both lawful and desirable. More, if the “service” is “broadcasting”, then, according to some interpretations, it is broadcasting all the way down through its underlying transport mechanisms. This is the basis of the appeal by Bell in the Klass decision of the CRTC.

I have been at pains to reject this approach to labelling technologies without understanding how they work, and have been told time and again that no one is interested in the technology, especially lawyers, and that the technology is irrelevant to the legal analysis. In essence the labelling exercise is intended to produce consequences, not understanding, to win the case by fixing a legal label on something.

I am reminded of the statement I heard one time by David Reed, that “The last time spectrum policy and science intersected was 1912”. I feel the same way about legal understanding of the Internet.

What I relate below is the start of something important for understanding what apps are doing, and therefore of the relevance of the argument that if the “service” is broadcasting, then it is broadcasting all the way down.

Geoff Huston is the Chief Scientist at APNIC, one of the world’s five Regional Internet Registries, and he is my source for the following information. All errors of interpretation are mine. Geoff blogs at potaroo.net from his home in Canberra.

First, the device is becoming less tethered to its network. Second, the app on the device is becoming less tethered to its device and the network which subtends it. Here is how. First, the device.

Huston writes:

“What we are seeing is that the mobile device is no longer tethered to a mobile network operator, and the device is able to react opportunistically to use the “best” network, whether it’s the greatest available capacity or the lowest incremental cost to the consumer. From the device’s perspective the mobile network is just one possible supplier of transmission services, and other options, including WiFi, Bluetooth and USB ports can also be used, and the device is able to make independent choices based on its own preferences.

This has profound implications. While the device was locked into the mobile network, the mobile network could position itself as an expensive premium service, with attendant high prices and high revenue margins. The only form of competition in this model was that provided by similarly positioned mobile service operators. The limited number of spectrum licences often mean that the players established informal cartels and prices remained high. Once the device itself is able to access other access services, then the mobile data network operators find it hard to maintain a price premium for their service.

The result is that mobile service sector is being inexorably pushed into a raw commodity service model. The premium product of mobile voice is now just another undistinguished digital data stream, and the margins for mobile network operators are under constant erosive pressure. The unlicensed spectrum open WiFi operators are able to exert significant levels of commercial pressure on the mobile incumbents in the mobile service environment. This means that the premium prices paid for exclusive use spectrum licenses are exerting margin pressures on operators whose revenues are increasingly coming from commodity utility data services.”

Got that? The value of the spectrum licence exerts a pressure driving the device to use unlicensed spectrum. If I am only offering commodity data services over expensive spectrum, then either spectrum prices must come down or I will seek to use unlicensed spectrum to transport my services. In fact, Huston observes that AT&T is using unlicensed 802.11 bandwidth in the United States and crowding other uses and users.

But the second untethering which Huston observes is that of the app from the device. He was referring to the Netflix app inside Android-driven devices. The usual way that an app connects to the Internet is for the device to find the domain name system (DNS) such as www.device.net and drill down from the domain name to obtain an IP address assignment (for example a hypothetical IPv4 address 034.6.98.004).

As hand-held computers are subject to Moore’s Law, so are the apps, which means that the app can do more work. Now, what if the app had an incentive not to trust the device, or the carrier, but rely on its own capacities to find the DNS and thence get its own IP address? For instance, Netflix might have incentives not to trust the device or the network if either would prevent the app from getting access to Netflix’ worldwide source of programs. (Hypothetically, of course). So if the app could be designed to reach the DNS independently of the device or the network supplier, then it could offer the app-user a better customer experience.

This is what is now happening, says Mr. Huston. Some apps are able to get their own IP address independently of the device, and work unconstrained by contracts or rules binding the device maker or the network owner.

Let us return to the argument that if the “service” is “broadcasting”, then it is broadcasting all the way down. Once the app has its own intelligence, and routes traffic to itself independently of the device or the carrier, the argument is made nonsense, or a willful denial of reality.

To maintain the argument that service, device and carrier are a “single system”(magic legal words from our Broadcasting Act), or that the label “broadcasting” bears a coherent relationship to an Internet-based delivery system, is an approach intended to preclude understanding.