Canada's telecom regulator is set to take a sweeping look at a key Net neutrality issue at a public inquiry on "differential pricing" of home Internet and wireless data plans in the fall.
Word of the new hearing comes amid uncertainty over the legitimacy of so-called "zero-rated" services, such as Videotron Ltd.'s Unlimited Music program. The Quebecor Inc.-owned telecom provider allows subscribers of certain premium wireless plans to stream select services such as Spotify and Google Music on their mobile devices without dipping into their monthly data allotment.
Telecom operators see such offers as a chance to stand out from the competition and entice consumers with the freedom to use popular services without worrying about data overage charges. But proponents of Net neutrality say zero-rating violates the principle that Internet and wireless providers should treat all of the content that passes through their networks equally.
The Canadian Radio-television and Telecommunications Commission (CRTC) received multiple complaints after Videotron introduced the Unlimited Music program in September and the commission said Wednesday it would rule on the Videotron case on the basis of the broader record.
The CRTC said it will hold a public hearing beginning Oct. 31 and is asking for public comments by June 17 on "differential pricing," which it says "occurs when the same or a similar product or service is offered to customers at different prices. An example is when an Internet service provider exempts a particular application, such as a music or video streaming service, or a set of applications, from data charges."
CRTC chairman Jean-Pierre Blais says differential pricing is "emerging in Canada and elsewhere as a more common practice," and the commission wants to "develop a clear and transparent regulatory approach that will provide certainty."
"Service providers appear to be attempting to distinguish their services and attract customers through such practices. This consultation will enable us to better understand the potential benefits and risks to consumers, application providers and Internet service providers," he said in a statement, adding that the CRTC "like other regulatory agencies in other jurisdictions, continues to be concerned about the impact of such practices on Net neutrality."
Critics have argued that the Videotron service is in breach of telecom rules and discriminates against customers of cheaper cellphone plans as well as other content on the Internet that users must actually pay to consume.
But Videotron says it is a legitimate product offering borne out of an effort to stand out. During a quarterly earnings conference call last week, Videotron chief executive officer Manon Brouillette said the Unlimited Music program has been a "key differentiator" for the company's six-year-old wireless division, which is fighting to win subscribers away from the Big Three carriers, Rogers Communications Inc., Telus Corp. and BCE Inc.
The service is automatically available to any customer who subscribes to a wireless plan that costs $65 or more a month, she said. While Videotron has not provided numbers on how many of its close to 800,000 mobile customers take advantage of the music streaming offer, Ms. Brouillette said it has helped drive subscriptions to higher-priced plans.
"I could tell you that it's popular enough that subscribers, instead of going for packages of $55 or $60, when we talk about that service, they just jump to the $65 level," she told analysts.
A similar debate over zero-rated services is ongoing in the United States, where the Federal Communications Commission is formally scrutinizing T-Mobile U.S. Inc.'s Binge On service, which allows users to watch video content from select providers with no effect on their data consumption.
Complaints over the Videotron offer followed a CRTC ruling in early 2015 that ordered BCE's Bell Mobility Inc. to change the pricing of its Mobile TV application. The regulator said the company was giving its own television programming an undue preference by exempting up to 10 hours of viewing time from mobile data usage charges. Bell appealed the ruling and a federal appeal court heard arguments in January but has reserved its ruling on the case.
CRTC spokeswoman Patricia Valladao said Wednesday that the commission cannot speculate on how the federal court's decision could affect the new regulatory proceeding. But she added that it was different from the Videotron Unlimited Music service because in the Bell Mobile TV situation, the company "provided an undue advantage to their own content services."
While Bell Mobility did exempt its Mobile TV service from up to 10 hours of data charges per month, the product allows customers to watch television content owned by Bell Media (such as CTV and TSN, for example) as well as channels owned by competitors such as City, Global and CBC.
Videotron has emphasized that its program is open to any streaming music service that wants to participate. However, it has also faced complaints from radio broadcasters after saying it would be prohibitive from a cost and administrative standpoint to include every radio station website in the service.
Editor's Note: This story has been updated to indicate that the Bell Mobile TV product includes Bell Media-owned television content as well as content owned by competitors.