CRTC reviewing controversial 'zero-rating' in internet plans

Telecommunication companies are increasingly offering customers attractive packages with unlimited music or video streaming.

On the surface, this seems like a great deal for the consumer — who doesn't like unlimited streaming?

But those advocating against this practice, known as zero-rating, say it seriously limits choice and stifles competition on the internet.

The Canadian Radio-television and Telecommunications Commission (CRTC) is wading into the debate with a new public review. The results could have a massive impact on how internet is delivered in Canada.

The review will examine differential pricing and zero rating for both wire and wireless internet. The commission defines these practices as "when the same or a similar product or service is offered to customers at different prices." It also applies to an internet service provider exempting certain services from data charges.

"This consultation will enable us to better understand the potential benefits and risks to consumers, application providers and internet service providers," said CRTC chair Jean-Pierre Blais in a news release earlier this month that announced the review.

What it comes down to is net neutrality: the idea that all traffic and all data on the internet should be treated equally.

"It's an arcane theoretical concept, but it has real implications for how we use the internet on a day-to-day basis," says David Christopher, communications manager with OpenMedia, a non-profit digital rights organization.

Videotron case

The CRTC review stems from a complaint against Videotron, the Quebecor-owned telecommunications company.

In August the company launched Unlimited Music, which allows its customers to stream music from certain third-party services without it counting toward their monthly data cap.

The Public Interest Advocacy Centre, which filed the complaint, says this allows Videotron to discriminate against other music-streaming services in favour of the ones it has agreements with.

John Lawford, the executive director and general counsel for the PIAC, says this practice essentially allows telecommunication companies to keep data caps forever.

"Nobody likes data caps and as long as this happens, there will perpetually be data caps because then telecoms can pick and choose what they want to make free, and everything else is charged data," he says.

Lawford says data caps create artificial scarcity. Telecoms can send prioritized data through their systems faster than other types of data they do not prefer, such as a competing music-streaming service.

"There isn't really any difference between the bits travelling along the tubes, but when you make some bits count more than others, you can charge for them," he says.

Videotron disagrees, saying the complaint is unfounded.

"Videotron is not conferring an undue preference on itself or anyone else," said a company spokesperson in an email to CBC News. "Participation in the Unlimited Music service is open to all streaming service providers that meet Videotron's technical criteria, and Videotron is not receiving any compensation from any provider."

While the company is not being paid by any particular service, some say it is still limiting choice by favouring specific services.

'Gatekeepers of the internet'

Reza Rajabiun, a research fellow at Ryerson University, says the Videotron case is a symptom of a larger issue.

"The essential problem is that the internet service providers — they've become gatekeepers of the internet."

This puts the telecoms in the driver's seat, instead of the customer, says Christopher, because customers will mostly choose the free service.

"So if you want to subscribe to Spotify but it turns out that Apple Music is the one that is zero-rated, then you're kind of forced down that direction."

Stifling innovation

Christopher, Lawford and Rajabiun all say this preferential treatment also stifles innovation.

If customers are funnelled to certain services, then the next Netflix, Spotify or Google won't be able to compete because it won't be able to afford to pay the telecoms to favour its services over others.

"One of the greatest things about the internet is that it's this engine for innovation and creativity … things that we take for granted today weren't even dreamed up 10 years ago, and that's really what we could lose if we lose on zero rating and if we lose on the broader issue of net neutrality."

Similar Bell case

This is similar to a case with Bell and its mobile TV service. In January 2015, the CRTC ordered Bell to stop giving preferential treatment to its own mobile television service, ruling that it created an unfair advantage for the company.

Bell is appealing the ruling.

The CRTC says the issues with Bell and Videotron are different.

"[Bell] had their own app," says Patricia Valladao, a spokeswoman for the CRTC. "Unlimited Music does not promote Videotron's own application, so it's a different situation."

But some disagree, saying the cases are fundamentally the same.

"In [Videotron's] case they're offering somebody else's content instead of their own, but you know, big deal — it's the same thing. They're exempting their own controlled or friendly data so they can allow users to use that without an effect on caps," says Lawford.

Have your say

Canadians have some options if they want to participate in the review.

The deadline to submit comments to the CRTC is June 17. The commission accepts submissions via its online system, by mail and even by fax.

After that, the commission will review all the information and hold a public hearing on Oct. 31.

It may seem technical, convoluted and confusing, but the implications of the review are huge.

"It's probably the most important issue related to the development of the internet," says Rajabiun.