Canada's competition watchdog is calling for a ban on some Internet data pricing practices that give customers access to certain content for "free," while charging normal rates to download or stream other content.
The Competition Bureau said on Wednesday that while certain types of "differential pricing" – when an Internet service provider (ISP) charges one price for subscribers to access some content and a different price for other types of content – are acceptable, others "should be prohibited."
The watchdog said that if an ISP is paid by a content provider to offer that content for a better price, it "can harm competition, stifle innovation and increase prices for customers."
Many telecom providers impose caps on the amount of home Internet or wireless data customers can use without incurring extra charges. To stand out from their rivals, some companies have introduced deals that offer a set amount of access (and in some cases unlimited access) to popular TV or music streaming services without that data use counting toward customers' monthly caps.
This practice – which is also known as "zero-rating" – will be examined by the Canadian Radio-television and Telecommunications Commission (CRTC) at a public hearing in the fall.
The hearing was prompted by a challenge to Videotron Ltd.'s Unlimited Music program, which lets subscribers of premium wireless plans stream certain services such as Spotify and Google Music on their mobile devices without dipping into their monthly data allotment.
The Competition Bureau outlined its position on the proceeding in an intervention it published Wednesday. It urged the CRTC to use the tools at its disposal under the Telecommunications Act to ban some practices, such as those where the content provider pays the ISP to promote its content.
"However, the bureau does not advocate prohibiting all differential pricing," it added in a statement. "The bureau found that competition is not likely to be harmed when ISPs do not receive a financial benefit from content providers for differential pricing."
That suggests the Videotron Unlimited Music program could be acceptable in the bureau's view as the company has said it does not receive any compensation from the music services that apply to be part of the program.
However, critics of zero-rating say the Videotron offer discriminates against customers of cheaper cellphone plans as well as other content that users must pay to consume.
On a broader level, consumer advocates say the practice of ISPs imposing data caps on Internet usage is the real problem. They question the technical need for caps to manage network traffic and argue that the practice should be restricted.
A coalition of public interest groups, including the Public Interest Advocacy Centre, said in an intervention that "data caps are an unnecessary evil," adding that they should be the focus of the CRTC review. "[Data caps] penalize customers for consuming digital content, they instill … 'fear' about financial penalties, and their existence is used to justify differential pricing."
Similarly, Internet advocacy group OpenMedia said it "calls upon the [CRTC] to ban the use of data caps in [land-line] Internet access, and ban or set high floors for data caps in mobile wireless Internet data plans."
In its detailed filing, the Competition Bureau suggested that the CRTC should consider banning the practice of ISPs favouring "affiliated" content, which it defines as when the ISP receives financial incentives but also situations where the ISP and content providers are part of the same corporate family.
In addition to the Videotron example of differential pricing, the bureau pointed to Bell's CraveTV, Rogers and Shaw's Shomi and Videotron's Club illico, and said certain ISPs exempt the traffic associated with use of these streaming video products from customers' data caps but still charge for the use of competing services such as Netflix.
However, the competition watchdog did not directly comment on whether those situations would run afoul of its proposal to ban favouring affiliated content.