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Bell argues that the CRTC mistakenly characterized the Mobile TV app as a telecom service, when really it is a broadcasting undertaking and should actually be exempt from the provisions of the Telecom Act.

Brent Lewin/Bloomberg

A federal court has dismissed an appeal by Bell Mobility Inc. from a ruling of Canada's telecom regulator on how the company charged customers for its mobile television app.

The Canadian Radio-television and Telecommunications Commission (CRTC) ruled in January, 2015, that BCE Inc.-owned Bell was offside in the pricing of its Mobile TV service, which lets customers stream live and on-demand television programming on their mobile devices.

Bell previously charged $5 a month for the app and allowed users to stream up to 10 hours of programming with no impact on their monthly wireless data caps.

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The CRTC found this gave Bell's own app an unlawful preference over other applications or Internet services, which do count against monthly data usage.

In a speech last year, CRTC chairman Jean-Pierre Blais commented on the case, stating it was "about all of us and our ability to access content equally and fairly, in an open market that favours innovation and choice."

"It may be tempting for large, vertically integrated companies to offer certain perks to their customers, and innovation in its purest form is to be applauded," Mr. Blais said. "But when the impetus to innovate steps on the toes of the principle of fair and open access to content, we will intervene. ... We've got to keep the lanes of our bridges unobstructed so that everyone can cross."

Bell won leave to appeal, but was forced to change the way it charges for data last spring. It now charges $8 a month for the app (after a fee increase earlier this year) and applies standard rates for time spent viewing programs while using cellular data.

A three-judge panel of the Federal Court of Appeal heard the case in January of this year and issued their ruling on Monday.

In two concurring sets of reasons, the judges wrote that the CRTC's determinations in the case were reasonable and upheld the commission's decision.

Arguments in the case revolved around whether the app should be considered a broadcasting or telecom service. Telecom providers – whether they sell Internet, home phone or wireless services – are generally expected to treat all of the content that flows through their networks equally.

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The CRTC in its ruling relied on a provision of the Telecommunications Act that bars telecom providers from giving themselves or any other player "an undue or unreasonable preference." The Broadcasting Act, which is aimed in part at promoting Canadian culture and programming, contains no such rule.

Bell argued that the CRTC mistakenly characterized the Mobile TV app as a telecom service, when really it is a broadcasting undertaking and should actually be exempt from the provisions of the Telecommunications Act.

But Federal Court of Appeal Justice Wyman Webb said it was reasonable for the CRTC to conclude that the activity in question – the Mobile TV service itself – related to the delivery of programs and not the content of programs.

"It is within the range of reasonable possible outcomes for the CRTC to conclude that Bell Mobility was not acting as a 'broadcasting undertaking' when it provided data connectivity and delivered its mobile TV services to its customers and, therefore, that the Telecommunications Act applied to such services," Justice Webb wrote.

Justice Webb's colleagues agreed with his reasons but wrote in a brief concurring decision that it was reasonable for the CRTC to find that the Telecommunications and Broadcasting Acts "may apply to different activities carried on in the same chain of program delivery."

CRTC spokesman Eric Rancourt said Monday that the commission was pleased the court upheld its decision, "which ensures that new platforms for viewing content are made available to Canadians in a fair and open manner."

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The CRTC announced last month that it plans to hold a public inquiry in the fall into the practice of "zero-rating," which is when Internet or wireless providers exempt certain services (such as streaming music applications like Spotify) from data charges, a review prompted by challenges to Videotron's Unlimited Music offering.

The Bell Mobile TV case is not exactly the same as the Videotron service, as it exempted its own product, Bell Mobile TV, from data charges, but it does fall into a range of marketing tools wireless carriers in Canada and elsewhere have been experimenting with as a means of standing out from their competitors. Critics complain, however, that they run afoul of the principle of "net neutrality," that all content flowing through networks should be treated equally.

Ben Klass, the communications graduate student who filed the initial complaint regarding the Bell Mobile TV product, said the Federal Court ruling Monday "represents a significant victory in the fight to preserve a fair and open Internet in Canada."

He said the court recognized the CRTC is in the best position to interpret and apply the regulations and laws that apply to the Internet and said the ruling "will prevent carriers like Bell from establishing a 'walled garden' approach to communications."

Bell spokesman Mark Langton said the company was still reviewing the decision after just receiving it Monday afternoon and was not immediately able to comment on the ruling or any further plans to appeal.

The court also ordered Bell to pay the legal costs of Mr. Klass and two other individual intervenors as well as the Canadian Network Operators Consortium Inc., which also participated in the appeal.

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