Two consumer advocacy groups have launched challenges with Canada's broadcast regulator over CraveTV and Shomi, video streaming services offered by three of the country's largest media and communications companies.
The Public Interest Advocacy Centre and Consumers' Association of Canada (PIAC-CAC) filed applications with the Canadian Radio-television and Telecommunications Commission Friday complaining about the "tied selling" used by the two services.
BCE Inc.'s Bell Media launched CraveTV in December, while Rogers Communications Inc. and Shaw Communications Inc. announced their joint venture Shomi in August and made the service available in November.
(BCE owns 15 per cent of The Globe and Mail.)
Unlike Netflix Inc., for example, which offers a standalone video streaming product, both CraveTV and Shomi require subscriptions to other communications services such as television or Internet.
PIAC-CAC argues that tying the streaming services to existing TV or Internet subscriptions runs counter to legislation around broadcasting and telecommunications as well as the CRTC's rules.
"The tied selling of streaming services, designed to favour legacy business models and to discriminate against customers who wish to only view programming through an Internet service provider of their choice, is something PIAC-CAC believe cannot be supported in the current rules, nor by Canada's broadcasting policy objectives," Geoffrey White, counsel to PIAC-CAC, said in a press release Friday.
Shomi launched in what it called a "beta," or test, phase and is only available to Rogers or Shaw Internet or television customers, while CraveTV is only available to television customers of Bell or distributors it has struck agreements with, such as Eastlink and Telus Corp. Both services charge an additional monthly fee.
"It's unfortunate that PIAC and CAC are complaining about Canadian creativity and investment with an innovative product that is offered at a very competitive price," Bell Media spokesman Scott Henderson said Friday. "CraveTV is pro-consumer in that it provides a superior collection of premium TV programming for just $4 a month."
Mr. Henderson added that CraveTV was meant to "strengthen the Canadian broadcasting system by offering a complementary, value-added service. He said it has been made available to all Canadian distributors and four additional television providers that have signed on to offer CraveTV will launch next week.
"Our objective is to make CraveTV available to as many Canadian TV subscribers as possible."
Representatives for Rogers and Shaw both sent the following statement Friday: "We are currently in beta for Rogers and Shaw Internet and cable customers and are in discussions with other BDUs [broadcast distribution undertakings or television providers] to carry the service. We are focused on delivering innovative services and world-class content, and as we stated at launch, during the beta phase, we are evaluating various distribution models."
The applications raise the broad question of how vertically integrated communications companies – that own both media and distribution businesses – can use media content to benefit their own television and Internet services.
PIAC was recently involved in another CRTC challenge that involved similar issues where cellphone providers offered an exemption for television content streamed through certain mobile apps from customers' monthly data caps.
The commission ruled last week that Bell and Videotron Ltd. were giving an unlawful preference to their own mobile TV services by offering plans that excluded the wireless data the apps used from standard monthly data caps. The CRTC directed Bell to eliminate the pricing practice by April 29 and directed Videotron to confirm it has withdrawn its illico.tv app by March 31.
Following the commission's decision on the mobile TV application last week, Mr. White said the CRTC has grappled for years with issues raised by the vertical integration of broadcasting and television distribution companies. The increasing consumption of traditional television content online through streaming services has compounded those issues as those same companies often also control Internet and wireless businesses.
"There's all sorts of creative thinking going on in terms of how to get around the rules, which are ultimately designed to promote competition and ensure content is treated fairly, no matter what its origin is," Mr. White said.
Bell, meanwhile, argued the product offered its customers good value for money and was a service many people enjoyed.
"Bell has led the world in mobile TV and we've worked to keep the price low. More than 1.5 million Bell mobile TV subscribers across Canada responded to that kind of innovation and affordability," BCE spokesman Mark Langton said last week, adding the service offered programming from all of the country's broadcasters and only 20 per cent of the content came from Bell Media itself.