GATINEAU – Social media giant Facebook took the stand in the CRTC’s differential pricing practices (DPP) hearing on Tuesday and argued that zero-rated services don’t need to be anti-competitive and can be constructed to meet net neutrality rules.

Blair Levin, an advisor to Facebook, said under questioning that zero-rated services such as the company’s Free Basics offering (which has faced scrutiny around the world) don’t run amok of net neutrality because ISPs are prevented from acting as content gatekeepers.

“When companies use their position as the gatekeeper to essentially favour one kind of content or another, then you have a net neutrality problem,” he said. Free Basics “allows private sector entities not to violate net neutrality principles but rather to experiment given their own assets and their own motivations, how do we have a sustainable model for raising (Internet access),” he said in response to a question from vice-chair of telecommunications Peter Menzies (pictured in a CPAC.ca screen cap).

In his opening remarks, Levin noted that a flexible approach to zero-rated content is a better than strict rules as long as it follows some guiding principles. A key one is to ensure that the zero-rated package doesn’t favour an ISP’s affiliated content.

Asked whether it would be better from a regulatory lag perspective to have rules detailing what’s allowed and what’s not, Levin said no.

“I would certainly be opposed to any bright line forbidding of any kind of zero rating.” – Blair Levin, Facebook

“I would certainly be opposed to any bright line forbidding of any kind of zero rating. But there probably are certain practices particularly in terms of affiliated content or other things that this commission may choose to forbid,” he said.

The Facebook advisor explained that if an ISP wants to join the Free Basics program, it has no choice but to accept certain provisions around content availability.

“If the ISP chooses to participate in the program, the ISP cannot favour any content that meets that technical specification,” said Levin, adding that it can’t, as an example, choose to offer one music streaming service over another. “All of the content that qualifies is subject to the zero rating and the ISP either accepts that or they don’t participate. But they don’t make a content-by-content decision as to what’s on the platform.”

The Equitable Internet Coalition (EIC) – a group of five organizations including the Public Interest Advocacy Centre and the National Pensioners Association – also acknowledged that there may be instances where zero-rated pricing has a positive impact on all consumers. Customer care services is one example.

EIC has proposed a framework that would guide the Commission in determining what types of zero rated content would be allowable or not. It’s not calling for the establishment of bright line rules around DPPs.

John Lawford, executive director and general counsel at PIAC, noted though that the CRTC may want to possibly release some basic provisions around what’s allowed and what’s not. “After this hearing it’s very possible to throw out some bright line rules or some edge cases that almost on every occasion will be offside,” he said. “It might be possible to set a couple of bright line rules, for example, not favouring own content if you’re a VI (vertically integrated entity), and then use the engine that we’ve created for the middle cases.”

“Imposing regulatory guidelines related to zero-rating and sponsored data at this early stage in their development is not only unnecessary, it will discourage innovation and could distort the market.” – Jonathan Daniels, Bell Canada

Bell Canada rounded out the second day of the DPP hearing, arguing that the Commission should let zero-rated packages operate as they do now in the market and then deal with complaints on a case-by-case basis.

“Imposing regulatory guidelines related to zero-rating and sponsored data at this early stage in their development is not only unnecessary, it will discourage innovation and could distort the market,” said Jonathan Daniels, VP of regulatory law at Bell Canada, in his opening remarks.

In fact, the company said moving to a rules regime could lead to unintended consequences. For example, banning VIs from zero-rating their own content could result in Telus being able to zero-rate Bell Media content but Bell Mobility being prevented from doing so, explained Daniels.

The company maintains that DPPs are a competition-related matter and therefore the potential harm caused by them has to be evaluated in that light. Rather than a common carriage issue as some have suggested, Bell said this is one of unjust discrimination, if violations happen, and as a result must be viewed under competition principles.

In this case, the Commission must determine harm by markets. For example, does a zero-rated stock market tracking app substantially lessen competition in the retail wireless market? Does it decrease competition in the stock market tracking app market? If the answer is yes in either case, the CRTC must intervene.

“However, if it reaches neither of these conclusions, there is no need for regulatory intervention, and to do so would contradict the Policy Direction,” argued Daniels.

Under questioning, he said the same type of analysis could be done for Vidéotron’s Unlimited Music offering (which is the reason for this hearing). Is it decreasing competition in the wireless market? No, said Daniels, noting that Bell is still competing with Vidéotron and it hasn’t launched a similar zero-rated service.

The company also questioned the merit of some arguments suggesting that protections be put in place against DPPs because there is very little evidence demonstrating that actual harm is being caused by their use.

“Is that worth inhibiting [DPPs] by putting rules down which we don’t know how they’re going to play out?” he asked.

The hearing continues on Wednesday with Rogers Communications, Eastlink and others appearing before the CRTC. 

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