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Report On Business Videotron bets on mobile streaming future, eyes new users with ‘Unlimited Music’

Musician D'Angelo, left, plays a private concert at a media event announcing updates to the music streaming application Spotify on May 20, 2015 in New York City.

Andrew Burton/Getty Images

Quebec telecom provider Videotron Ltd. is removing one of the biggest barriers to streaming music services, the fast-growing subscription platforms that let consumers listen to as much music as they want.

Starting immediately, Videotron will no longer charge some of its mobile consumers for data consumed while streaming music through a select group of leading services, including Spotify, Rdio, Google Music and Montreal's own expert-curated Stingray app.

With its new "Unlimited Music" service, a Canadian first, Videotron is hoping to remove streaming music's barriers and attract more users to its mobile services.

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While downloaded music is on the decline, consumers are increasingly turning to streaming, which lets them listen to catalogues of millions of songs and curated playlists in exchange for a flat fee or occasional advertisements. Streaming users are increasingly turning to mobile usage, but that can come with hefty data charges. Unlimited Music is a bet on streaming as the future of music and an investment to attract more music-hungry consumers to Videotron, a subsidiary of Quebecor Inc.

There is, however, a hitch: In giving an advantage to certain partner streaming services and users – the ones with generally higher-cost-packages – Videotron's program may run into problems with a Canadian net-neutrality precedent. Last January, the Canadian Radio-television and Telecommunications Commission ruled that Bell Mobility Inc. and Videotron were giving unlawful preference to their TV services by exempting some of those services from mobile data usage, bolstering their own business as a result. While the Unlimited Music program is designed to complement the natural evolution of music consumption, Videotron may have to put up a fight to make it work.

"It might be advantageous to certain consumers, but it's being built on the back of discriminating against other consumers," said John Lawford, executive director and general counsel of the Public Interest Advocacy Centre, which filed one of the original complaints against Bell's Mobile TV app that led to last January's CRTC decision.

"If I stream my local FM station straight from their website, like a lot of people do, and I use more than my two gigabytes a month, I will pay overage," Mr. Lawford said in an interview. "But if my friend who likes Rdio better uses 10 gigabytes, he will not pay overage. There's a clear discrimination."

Myrianne Collin, Videotron's senior vice-president of strategy and marketing, said the program is fundamentally different than those quashed by the CRTC because they're open to partner with any streaming music service. She said the newly launched Apple Music, for instance, should become data-free on Videotron within a few months.

"From a music perspective, we're not discriminating one platform versus the other," Ms. Collin said in an interview. "All platforms are welcome to join the program. Hopefully the CRTC will see this the way we are seeing this."

Music industry analyst Mark Mulligan said that by partnering with a wide variety of services such as Spotify and Rdio, "you're accounting for the vast majority of streaming music out there," which approximates net neutrality much better than working with a single service.

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CRTC spokesperson Patricia Valladao said it was "too early" for the regulator to comment on the issue.

Quebecor is betting on its Videotron division, which has about 700,000 customers across Quebec, for growth. The company has publicly mulled expanding to the rest of Canada, although it has recently been more coy on such an expansion.

In 2014, subscription streaming service revenue grew 39 per cent worldwide, offsetting the industry's loss from declining paid downloads, and a growing number of streaming customers use mobile devices to hear some or all of their music. Dropping data charges for streaming music services, Ms. Collin said, is an acknowledgment that the music format is here to stay.

"It only makes sense for us to embrace the trend and develop a service that wouldn't only be innovative, but also respond to customer needs and facilitate the consumption of music," she said.

The lack of exclusivity for a given service could mean other Canadian wireless providers could follow suit. "Imitation is the best flattery," Ms. Collin said.

With music listening rapidly shifting to mobile, Mr. Mulligan said, "there's very clear perceived value to the customer" with the Unlimited Music package.

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Stingray Digital, the Montreal-based global provider of TV and mobile-based music stations, has partnered with Videotron to offer its mobile app for free. On top of cutting data costs, this will encourage Videotron's Quebec user base to use the home-grown service. The company recently added a new suite of curated music channels, called Vibes, bringing the total to nearly 1,000.

"It's super exciting," said Mathieu Péloquin, Stingray's senior vice-president of marketing and communications. The deal with Videotron, he said, had been in the works for about six months, and doesn't preclude the company from partnering with other telecoms for unlimited data usage.

In an e-mail, Rdio chief executive Anthony Bay said the company is thrilled that users will go through less hassle to use the service, giving it a chance to expand its userbase there. While it's Rdio's first such deal in Canada, Mr. Bay hinted of future partnerships: "We are working with other wireless providers around the globe to remove data caps for music lovers everywhere."

The multiservice offering is the first of its kind in Canada. Rogers subsidiary Fido offers bundling plans with Spotify, but they're tethered only to the single service. A few similar programs have popped up in the United States, including through T-Mobile, which allows users to stream through a variety of programs including Apple Music without consuming their monthly cellular data.

The program will be offered to subscribers of Videotron's premium Canada-wide mobile packages with two gigabytes of data a month, and those with bundled Internet-and-mobile packages with one gigabyte of mobile data a month.

Mr. Lawford said his consumer advocacy group, and likely many others, will be studying the Unlimited Music program "closely" in the coming days.

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