What the CRTC’s zero rating decision means for net neutrality in Canada

Net Neutrality canada zero rating data

With its decision on Videotron’s zero rated Unlimited Music service on April 20th, Canada’s telecom regulator took a strong stance in favour of net neutrality.

The Canadian Radio-television and Telecommunications Commission (CRTC) ruled that Quebec-regional carrier Videotron gives undue preference to certain customers and music streaming platforms that are supported through its Unlimited Music service, which allows premium-tier customers to stream music from select apps without being billed for data usage.

Additionally, the regulator took the ruling as an opportunity to lay out a new framework that severely restricts the grounds on which differential pricing is allowed.

Strict guidelines for zero rating

The four main criteria of the framework are the equal treatment of data regardless of source or nature, the exclusiveness of the offer to the customer, the impact on internet innovation and whether there is financial compensation. The first criteria, equal treatment of data, has a major impact on content-based zero-rating offers.

Using Unlimited Music as an example, the fact that it zero-rates data from certain content providers is more likely to raise concerns than zero rating that treats data ‘agnostically’ — a ‘time of day’ offering for instance.

Additionally, Unlimited Music ran into issues with the exclusiveness of its premium tier-only offer and the impact of its service on internet innovation, since it only supports large established streaming platforms, not smaller apps or new entrants.

The new rules will be enforced through complaints, though operators can also submit a differential pricing practice to be reviewed prior to offering it.

“A free and open internet gives everyone a fair chance to innovate and for a vast array of content to be discovered by consumers,” stated CRTC CEO and chairman Jean-Pierre Blais in a press release accompanying the decision.

“A free and open internet also allows citizens to be informed and engage on issues of public concern without undue or inappropriate interference by those who operate those networks. Rather than offering its subscribers selected content at different data usage prices, internet service providers should be offering more data at lower prices. That way, subscribers can choose for themselves what content they want to consume.”

Canada makes its stance on net neutrality clear

The significance of these strict regulations made headlines not only in Canada, but in the U.S. as well, which is currently moving in a very different direction — the current chairman of the State’s telecom regulator, Ajit Pai, recently called net neutrality “a mistake” at Mobile World Congress and stated he believes in a “light touch” to internet regulation.

Michael Geist, one of the leading voices for net neutrality in Canada and Canada research chair in internet and e-commerce law at the University of Ottawa, lauded the CRTC’s decision.

“When combined with the federal government’s clear support for net neutrality, the Canadian framework is now one of the strongest in the world, providing guidance for the providers and appropriate protections for users and innovative services,” wrote Geist in a blog post following the announcement.

Geist says he expects the new guidelines to be strictly enforced by the regulator, stating: “Given that Commission rejects the Videotron service, has already rejected the Bell Mobile TV service, and rejects many compromise proposals that were raised during the hearing, it is clear that the bar for approval of a zero rating or differential pricing plan is very high. ”

Other consumer advocacy groups were also pleased with the result. John Lawford, executive director and general counsel at the Public Interest Advocacy Centre (PIAC) — one of the initial complainants against Unlimited Music — called it a “two-handed slam dunk” for net neutrality in a phone conversation with MobileSyrup and OpenMedia campaigns director Josh Tabish stated in a press release that “with the U.S. having just backed away from its own investigation into zero-rating, and the future of its net neutrality rules hanging in the balance, Canada looks like an increasingly attractive place to foster innovation online.”

Wireless market ramifications

Financial analysts, however, see the scenario from a very different perspective.

“We wonder why a service that encourages usage that consumers enjoy (where the content or app is not owned by the carrier) requires regulatory intervention,” wrote Scotiabank analysts Jeff Fan and Matthew Lee in a report to clients on April 20th.

“QBR [Quebecor] is merely leveraging its network capacity and passing on that benefit to its users.”

The analysts further note that the decision is similar to a concern raised by the prior FCC administration about AT&T’s zero-rating of its DirectNow TV service, which has since been treated dismissively by Chairman Pai.

“The CRTC Chairman’s term ends June 17, 2017 so perhaps our next Chairman will be more open to competition,” wrote Fan and Lee, referring to current chairman Jean-Pierre Blais.

The Scotiabank analysts concluded that the CRTC decision removed one of Videotron’s differentiators, but stated that ultimately, they did not believe it was a “game-changer” in the Quebec wireless market.

A BMO report primarily authored by analyst Tim Casey told clients that overall it views the decision as “not meaningful for the incumbents” and that it “continues to view the regulatory environment as generally benign but noisy.”

As for Videotron specifically, Casey said “we do not believe this service was material in driving ARPU [average revenue per user] or subscriber growth for Videotron. Moreover, other carriers could have replicated Videotron’s offer, so we didn’t view it as particularly differentiated.”

Regardless of its long-term impacts on the brand, however, the decision has caused the stock of Videotron parent company Quebecor to significantly decline on April 21st, down by 1.22 percent as of midday.

As for Canada, the CRTC’s recent decision was a strong step towards establishing the country as a world leader in net neutrality policy. Unfortunately, it’s unclear whether that will translate to lower data rates for consumers that pay some of the highest rates in the world.



Comments

  • Usman

    If a provider is trying to compete via such offers, why does the government need to regulate?
    We can already see there is no competition present in the Canadian market especially in Ontario,BC. Offers such as this were improving competition in Quebec and the government will not allow it.????

    • dmcd

      The point is that if they can give this away for almost nothing, then they can lower their prices for data and compete on an even field.

    • Sudbury_Saturday_Night

      Yep, but no body is going to close a gold mine by letting you know how cheap it is to move data, not today, tomorrow or the next day. Somebody has to pay for those executive job bonuses. LOL

  • TomsDisqusted

    Zero rated content is in many ways like exclusives – they seem attractive at first glance, and the big corporations and their marketing departments certainly like them, but they are bad for consumers.

    The fact that Trump’s administration, which has quickly shown itself to be the best friend of big business against consumers, is against net neutrality – that says a lot right there.

  • Jeff Thibert

    Videotron only had it for it’s big plans. I have a 4Gb plan. The problem is I typically only use 2GB a month for day to day use. I then use maybe 1-1.5 GB for music. So even with the zero-rating, I never got to take advantage of the Unlimited Music to save any data.

    The dirty truth is when companies offer these types of ‘benefits’, they only do it for their upper-tier of services and then increase the price of those services (think cable and HBO). I was very likely paying more for a benefit that I never really used anyway. Their goal was to lure folks to the higher (more profitable) plans.

    Don’t be fooled into thinking that Videotron did this for the love of their customers. If they really wanted to act in our interest, they’d remove data caps entirely. Canada is among only 4-5 countries that have them.

    • David Markx

      I used 30gb per month of Music Unlimited with my 3gb plan, is was absolutely amazing not having to cherry pick what music I wanted to listen to weighting if my enjoyment was worth the megabytes.

      If the CRTC had shutdown zero-rating while forcing carriers to do away with datacaps I could have understood that they stood for customers’ best interests but here they just enforced the status quo allowing Robellus to NOT compete with Videotron and keep plan prices as high as ever while offering as little as possible. This ruling is pure cancer where the only ones who “benefit” are those who don’t live in Quebec.

      I hope Videotron rips up their tower sharing contract with Rogers over this. They’re not welcome in Quebec anymore.

    • dmcd

      That’s the trick, 30gb is worth what you pay for 3gb. They are overcharging for data.

    • David Markx

      They’re ALL overcharging for data and that will never change. This was a breath of fresh air and it’s gone.

    • bigshynepo

      “the only ones who “benefit” are those who don’t live in Quebec.”

      God forbid.

    • Sudbury_Saturday_Night

      OK, have you ever seen a case where the CRTC makes a change to anything in the auspices of helping the people and the rates have gone. I’m only 70 plus and I haven’t yet. I have always seen an increase in my costs or a decrease in service that effectively is the same as an increase to the user.

  • Ipse

    “We wonder why a service that encourages usage that consumers enjoy (where the content or app is not owned by the carrier) requires regulatory intervention,”

    …simple: because Robbers wanted to make that happen and CRTC obliged.

    • Brad Fortin

      Because it doesn’t treat all data equally. If Videotron wants to offer unlimited music streaming they can do it by offering unlimited data rather than cherry-picking which types of data are allowed to be unlimited.

    • kaostheory

      They don’t “leverage” data for free. If they are giving data to one user for free, that means it’s subsidized by the all the other users. I actually wish they would do this with cell phone subsidies, those cheap iPhone deals are paid for by all the other customers plans.

  • dmcd

    “QBR [Quebecor] is merely leveraging its network capacity and passing on that benefit to its users.”

    Then they should leverage that capacity for lower prices to benefit its users.

  • Rimtu Kahn

    Good decision. Supporters of so called exclusive offerings need to understand some folks who don’t care about such content are getting shafted.

    • Sudbury_Saturday_Night

      But aren’t all the ones that do use it, going to be a little disappointed, well probably extremely?

  • Sudbury_Saturday_Night

    Well now that all App data has to be treated equal, I suspect that MMS messaging data included in most Voice Plans and excluded from your Data Cap, will now be able to be billed to the customers Data Plan, which is a big win for the big three with all the pictures and videos that are shared in texting. Data Billing becomes much simpler with no exclusions. This is when the Telcos will start to look at Voip so you pay the data for every call. Luv it! NOT. The gold mine just opened a new shaft, literally.

  • Leszek Nowosielski

    So does this mean that every iPhone owner using iMessage over data will no longer get free iMessages and will have to use green bubble SMS? As soon as all those users realize it I’m sure support for the ruling will drop.

    • K_p0w3r

      Your iMessage Data has never been exempt from your data just as bbm was never exempt from your blackberry’s data plan back in 2005 (presumably). The amount of data exchanged in a iMessage conversation is minuscule (less than 1/4 of a Mb if were talking just text). search around. some of the mac forms were saying something like 29,000 text iMessages take up about 26 Mb. As for images, lazer shows, whatever else you do in iMessage, Assuming iCloud is on and backing up photos when you share a photo it probably just shares a link to your iCloud photostream (a small line of text) and is just downloaded from there for the reciever while just showing your local copy to you. anything else is most likely a special code or programming object that gets passed across as text. the recievers iPhone gets this text (1 maybe 2 kb)and fires off the lazershow effect thats part of imessage already.

      TL;DR : there will be no change to your iMessage. the amount of data used in an iMessage is insignificantly minimal. Anyone who told you it didn’t cost data is either a liar or doesn’t know whats their talking about.

  • Velizar Shibilev

    I agree with the decision but at the same time the big three will just play ignorance and again shaft their customers. Dear CRTS everyone should have unlimited internet. If they want to keep limits on LTE at least give people unlimited on legacy networks like 3G until LTE capacity or ability to handle customer needs. We are constantly worry over Data overage. In Europe 2euro’s will get you two GB of data. Which is $3. The only company that was closest to unlimited was Wind/FreedomMobile. #DoSomething

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