GATINEAU – After four and a half days of a hearing on differential pricing practices, Quebecor Media Inc. took the stand on Friday to defend its Vidéotron Unlimited Music offering. In a nutshell, the company said it’s not acting as a gatekeeper and therefore not contravening the Telecommunications Act, but rather using innovation to offer its customers more services.
Unlimited Music is nothing more than a marketing instrument at aimed at growing its subscribers and targeting a younger demographic, QMI said in its opening remarks. It added the service doesn’t contravene the Internet Traffic Management Practices (ITMP) framework just because it bills different data at different rates. As well, Unlimited Music doesn’t run amok of section 36 of the Telecom Act because discounting data is neither managing nor influencing it.
QMI argued the Commission should deal with DPPs on an ex poste basis (a case at a time, when complaints come in) as opposed to establishing a framework under which all ISPs would have to submit prior to the introduction of a DPP program. The lone exception would be for affiliated content offerings from vertically integrated players.
Under questioning, QMI noted that allegations the company is blocking, throttling, prioritizing or degrading content are false.
“It’s extremely important for us to make this clear, Unlimited Music doesn’t involve any technical traffic management. None.” – Dennis Beland, Quebecor
“It’s extremely important for us to make this clear, Unlimited Music doesn’t involve any technical traffic management. None,” Dennis Beland, VP of regulatory affairs for telecommunications at QMI, said in French.
CRTC chair Jean-Pierre Blais suggested that the company is acting as a gatekeeper because it’s only offering less than 20 streaming music services, chosen by Vidéotron, when there are many thousands of them available. Beland noted that’s not the case. In many instances, these streaming services wonder who Vidéotron is, where it comes from and why they should be engaging in negotiations with the wireless and Internet company.
Besides, Beland added this goes to the heart of the issue at hand which is innovation. The ISP shouldn’t be judged against the imperfection of its services but rather on whether Vidéotron has brought choice to the market and value to customers.
“In our view, the answer is yes,” he said.
Blais pressed the QMI panel of the appropriateness of doing section 36 analysis on Unlimited Music. Beland argued this stretches reality and is nothing more than legal spin. That section doesn’t say Canadian companies are prevented from developing a tariff which creates an economic incentive to offer a service.
The company is convinced that part of the Act can’t be involved when talking about a commercial arrangement between an ISP and some streaming music service providers, he added.
Friday’s session also heard from a noted Stanford University law professor who argued any form of differential pricing is harmful. Zero-rating content or sponsored data applications all do the same thing, said Barbara van Schewick, an international expert on net neutrality who also holds a PhD in computer science. They harm the innovation ecosystem by favouring firms with significant financial backing, she explained. Smaller firms are faced with the financial barrier of having to pay for the privilege to be included in zero-rated or sponsored-data packages.
“Anybody who can’t afford to pay the fees will find it harder to compete or be heard.” – Barbara van Schewick, Stanford University
“When they offer sponsored data plans, ISPs use their position as a gatekeeper to their subscribers to put up a toll booth. Edge providers pay to get a competitive advantage. Anybody who can’t afford to pay the fees will find it harder to compete or be heard. This tilts the Internet is favour of companies and speakers with deep pockets, harming start-up innovation, all sectors of the economy and free expression,” she said.
The Canadian Internet Policy and Public Interest Clinic (CIPPIC) noted in its appearance that there is perhaps one common element from nearly all parties to the proceeding, DPPs involve some form of discrimination and disadvantage. The question remains though whether that discrimination is undue or unjust.
”If we accept as inevitable that at least some of the ISPs some of the time will want to offer some form of DPP, then a clear DPP framework is necessary. The alternative, of course, is to engage the Commission in a case by case analysis,” said Colin Lachance, a lawyer with Momentum Law.
CIPPIC hasn’t called for an outright ban on DPPs, but suggested a framework with a set of principles such as applications being content agnostic, no gatekeeping and no pay for play. An ISP implementing a DPP should also be required to indicate how content providers can participate in the program. As well, the Commission should stay away from categories based on content and adopt some sort of mechanism that groups content based on bandwidth usage, it added.
Shaw Communications kicked off the final day of the hearing, arguing against the adoption of guiding principles as a first filter to determine the fairness of practices. Because differential pricing is so new in Canada, ISPs and innovators should be afforded the opportunity to experiment.
“If we prohibit or significantly limit a broad category of practices without considering the circumstances, we would worry about potentially throwing out the good with the bad,” said Sanae Takahashi, senior VP of products and analytics at Shaw.
This is why the company believes using guidelines as has been suggested by other parties in the proceeding could be problematic, added Paul Cowling, VP of legal and regulatory affairs at Shaw. Determining whether a particular DPP package is unjust or undue should be a complaints driven process, he added.
Even in the case of affiliated content, which the company believes would be anti-competitive, the Commission should undertake an analysis to assess whether it confers undue preference or disadvantage.
“It would still go through a 27(2) analysis in the sense that the ISP could present mitigating circumstances, depending on the facts, that could alleviate concerns. As you can see from our submissions and our remarks, we agree that favouring affiliate content would be inconsistent with 27(2),” said Cowling.
A decision from this hearing should come sometime in the first quarter of 2017.
