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Bell Mobility Inc. has lost a bid to keep the pricing model it uses for its mobile television application in place pending the outcome of a court challenge.Fred Lum/The Globe and Mail

Bell Mobility Inc. has lost a bid to keep the pricing model it uses for its mobile television application in place pending the outcome of a court challenge.

The Canadian Radio-television and Telecommunications Commission ruled in January that BCE Inc.-owned Bell can no longer exempt customers' wireless data used through the app from their monthly caps. (BCE also owns 15 per cent of The Globe and Mail.)

The wireless carrier charges $5 per month for the Bell Mobile TV add-on to their service, which allows users to stream up to five hours of live and on-demand television programming on their mobile devices with no effect on their monthly data caps. (The service originally gave users up to 10 hours of exempt streaming, but the company changed the terms in recent months.)

The CRTC said the way Bell priced the app gave its mobile programming an unlawful preference over other applications or Internet services. CRTC chairman Jean-Pierre Blais commented on the case in a speech and alluded to the principle of Net neutrality, the idea that telecom providers should treat all content that flows through their networks equally.

The commission directed Bell to eliminate the pricing practice by April 29.

Bell filed an application in February seeking leave to appeal the ruling to the Federal Court of Appeal. It argued that Mobile TV service is a broadcasting service and the CRTC was mistaken in concluding that the Telecommunications Act – which includes rules barring it from granting an unlawful preference to its own service – applied. Bell subsequently asked the court to stay the effect of the CRTC's decision pending the outcome of that process.

The company argued it would suffer irreparable harm if it were forced to change its pricing model, pointing to potential loss of market share without being able to use the Mobile TV perk to attract or retain wireless customers during a period of heightened competition for the industry. It also said its reputation would be damaged if it had to take the service away and it would have to spend $10-million to change its billing model.

The Federal Court of Appeal judge rejected that argument, noting that two of Bell's competitors – Rogers Communications Inc. and Videotron Ltd. – have already changed their pricing of similar mobile television apps to eliminate the exemption from data caps.

"Bell would therefore be the sole remaining provider of this service if the CRTC decision were to be stayed," Justice J.D. Denis Pelletier wrote in his decision on Monday. "This is the opposite of irreparable harm in that granting the stay would confer a competitive advantage on Bell by allowing it to continue to offer a product on a basis which its competitors have ceased to offer as a result of proceedings before the CRTC."

The judge added that Rogers and Videotron both had to deal with harm to their reputation when they terminated their own plans. "Bell would simply be in the same position as they are."

He noted that the $10-million cost to modify its accounting and billing system is significant, but added, "Having to modify accounting systems to reflect changes in the business environment is not irreparable harm. Considering Bell's resources, it is not an amount which threatens its corporate existence."

A spokesman for BCE declined to comment Monday. Bell has said in the past that the service has attracted 1.5 million subscribers and is an innovation the commission should support.

The CRTC itself cannot defend its decision in the Federal Court of Appeal, but last week, the Canadian Network Operators Consortium – an industry group that represents independent Internet service providers – filed a response to Bell's application for leave to appeal. CNOC was one of the parties that took part in the CRTC process challenging the pricing model.

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