GATINEAU – Smaller broadcasters warned the CRTC on Wednesday that it must guard against differential pricing practices because they could have a significant negative impact on their content.
The Independent Broadcast Group told the Commission Wednesday morning it has to consider potential abuses from media companies which own both content and ISPs.
Brad Danks, CEO at OUTtv, noted in his opening remarks to the IBG’s appearance in the DPP hearing that it’s pretty clear that vertically integrated (VI) media companies are able to prefer their own content in ISP distribution. In addition, once the VI’s affiliated broadcast distribution arm gets ISP access negotiation rights, it gains even more power in “an already imbalanced relationship.”
Under questioning Danks added another big concern for the independent broadcasters relates to complementary marketing practices where content could be used as a sales and marketing instrument even if not outright preferred in customers’ data streams. This means the ISP has an additional benefit because of its ownership or through cross-deals with other ISPs.
“We’ve seen it before and that’s the area we see opening up that could be problematic for us,” he said.
Asked if giving consumers greater control over the content available in a zero-rated packaged could represent a solution, Danks said no. History demonstrates that the independent broadcasters have to fight to get better carriage agreements in channel lineups already, so it stands to reason the same will happen in a DPP universe.
“There has been abuse in the past and we expect there will be abuse in the future if they have that opportunity.” – Brad Danks, OUTtv
“So long as the ISPs are delivering it to the consumer directly, which they will do, there will be room for abuse. There has been abuse in the past and we expect there will be abuse in the future if they have that opportunity,” he said.
IBG argued in its appearance that the Commission could best serve the industry by establishing some guiding principles on what types of DPPs are allowed and those that aren’t. That would be the preferred approach rather than having a complaints-based, case-by-case process, noted Joel Fortune, legal counsel for IBG.
The group of small broadcasters wasn’t the only witness to call for DPP guidelines on Wednesday. Halifax based TV, broadband and wireless carrier Eastlink also suggested the Commission adopt some basic principles that would indicate the types of DPPs that would be permitted. One of the key aspects of such a policy would be non-exclusivity of content.
Nathalie MacDonald, VP of regulatory, noted that as long as there isn’t any favouring of affiliate content then DPP is fine. “What we don’t want to see are larger companies using their size or the fact that they are vertically integrated and have some leverage somewhere else to get exclusive access or prohibit us from having an economic arrangement whatever it is,” added Lee Bragg, Eastlink’s CEO.
While two groups called for the establishment of guiding principles for DPPs, Rogers Communications argued that they should be banned from the outset. Its approach “is intended to limit the ability of ISPs to act as gatekeepers, choosing which content and applications receive discounted or zero-rated data rates,” said David Watt (pictured above), senior VP of regulatory at Rogers, in his opening remarks.
There are two guiding principles to the company’s proposal: all applications and content should be subject to a carrier’s standard data charges; and customers should pay the standard charge regardless of the content or application.
Pam Dinsmore VP of regulatory for cable at Rogers, described them as “ex ante guidelines” because “they don’t open the door very wide as to what might filter through.”
Any ISP pricing that doesn’t comply with these principles would be considered an undue preference or disadvantage. The ISP would then have to demonstrate why its offering is not undue or a reverse onus approach.
Even though Rogers is opposed to DPPs, it supports giving applications to customers for free as long as they pay for the data use. “These are offers to inspire people to purchase our Internet service or to remain loyal to our Internet service. It’s part of the commercial world,” argued Watt.
“Just because we don’t fully understand what’s coming down the pipe tomorrow is no reason not to address the discrimination we’re seeing today.” – Howard Slawner, Rogers
Bell Canada argued Tuesday that because DPP is so new the Commission needs to leave it alone and let it develop. Howard Slawner, VP of regulatory telecom at Rogers acknowledged that this is an emerging practice and flexibility is required but said this doesn’t mean anti-competitive behaviour can’t be dealt with now.
“Just because we don’t fully understand what’s coming down the pipe tomorrow is no reason not to address the discrimination we’re seeing today and that we’re concerned about happening,” he said.
Satellite carrier Xplornet Communications was the lone witness of the day to suggest that the Commission should just leave the market alone, let the use of DPPs evolve and only intervene to a minimum extent, if at all. When there isn’t any harm from the use of DPPs on retail Internet access, content aggregation and content creators, then the CRTC should remain on the sidelines, the company said.
If a party believes it’s being affected by anti-competitive behaviour, then it can turn to the Commission to seek relief.
“Xplornet does not believe that a new regulatory regime is necessary to regulate differential pricing practices. These practices are a normal part of a competitive market and the Competition Act will apply if they result in a substantial lessening of competition,” said C.J. Prudham, the company’s executive vice president and general counsel.
Data caps were again raised on Wednesday as well. Rogers noted that they are simply an economic form of traffic management, necessary to deal with congestion on the network. To illustrate why they are required, Watt noted that unlimited customers use about four times more data than those on the next highest tier on its wired side. For its wireless customers, usage would jump 100 fold if data was uncapped, according to Donavan Beth, senior director of product management – wireless, completely clogging the network.
Telus, TekSavvy and Cogeco are among the witnesses to appear before the CRTC on Thursday.
