Rogers Communications Inc. has abandoned a pricing model for its mobile-TV application that critics said flew in the face of net neutrality.
The move comes as Canada's telecom regulator reviews these apps and how Rogers and other major cellphone carriers charge for live and on-demand television programming on smartphones or tablets.
The apps, typically priced at $5 per month, have drawn fire for the fact that the wireless data they use to stream up to 10 hours of TV programming does not count against monthly data caps while watching similar content on sites like Netflix or YouTube does. At issue is whether this violates the principles of net neutrality, which is the idea that a byte is a byte and telecom providers should treat all data that flows through their pipes equally, not favouring one type of content over another.
The Canadian Radio-television and Telecommunications Commission has asked Rogers as well as BCE Inc. and Quebecor Inc.'s wireless business Videotron written questions about the apps, and the carriers filed their most recent responses on Thursday. (BCE owns 15 per cent of The Globe and Mail.)
In its submission Rogers said it stopped offering the $5 add-on for its mobile-TV app last Monday. As of that date the company said it now requires its mobile television users to pay standard charges for any wireless data consumed.
Rogers reiterated what it has said in earlier submissions, that the market for online video content is still emerging and its offering was intended to encourage consumers to become comfortable viewing content over wireless networks.
It said the decision to change the app was based on a regular review of its pricing and a desire to "simplify" the experience by applying standard data charges.
"We continue to believe that, in competitive markets, the commission should not stifle experimentation by regulating the development of innovative services such as the mobile TV services offered by wireless service providers," Rogers said.
BCE has not changed pricing for its app, which had 1.5 million subscribers as of the second quarter. Company spokesman Mark Langton said Friday BCE's position is that the app is in compliance with regulatory rules, adding, "We have no similar plans to increase the cost of our mobile video service."
Manitoba graduate student Ben Klass filed the initial application about BCE's Mobile TV last year. In January, the CRTC combined that application with two similar complaints launched by the Public Interest Advocacy Centre over the Rogers and Videotron apps.
Since that time, Videotron has launched an iPhone version of its app that bills users based on the amount of data consumed and said it is considering a similar course for other versions of its app.
Barclays Capital Inc. telecom analyst Phillip Huang said the three vertically integrated companies – which control both content and distribution arms – face little financial risk due to the CRTC's inquiry as the revenues generated by the apps are relatively minor.
He estimates BCE brings in less than $50-million annually, or 0.2 per cent of consolidated revenues from its mobile TV app. If the commission forced BCE to eliminate the pricing difference, that could actually increase prices for heavy users of the app.
The real negative impact for the carriers could come from their inability to leverage their broadcast assets to differentiate their wireless offerings, Mr. Huang wrote in a research report Friday.
"From this perspective, we believe Rogers may be the most disappointed given its significant recent investments in both content ($5.2-billion for the 12-year NHL deal) and spectrum ($3.3-billion on 700-megahertz licences), and its planned strategy to leverage mobile video to set apart their wireless services from the competition," he said.