Rogers, Telus on opposing sides of zero-rated music case

An undue-preference complaint against a music streaming service offered by Quebecor Inc.’s Videotron has Rogers Communications Inc. arguing that zero-rating the service is a net-neutrality violation, while Telus Corp. is supporting Videotron and saying the service does not harm consumers. Rogers argued the pricing structure of the service amounts to an undue preference under the Telecommunications Act, and is contrary to the CRTC’s net-neutrality rules and regulations on overage charges in the commission’s wireless code. “The decision to favour certain types of audio services carried on wireless network and to treat the data from those services differently than the data of other audio and audiovisual services, and online services in general, represents ‘the thin edge of the wedge’ in ensuring the integrity of Canada’s net-neutrality rules,” Rogers said. It filed the intervention Wednesday in support of undue-preference complaints brought to the CRTC by the Public Interest Advocacy Centre and Vaxination Informatique (which were later combined) following Videotron’s launch of Unlimited Music in late August. The service allows mobile customers to listen to music streaming offered by Stingray Digital Group Inc., Google Inc.’s Google Play, Deezer, Spotify AB, Songza Media Inc., Microsoft Inc.’s Groove and 8tracks without incurring data charges. Rogers said the same “legal analysis” the CRTC used last year to find that BCE Inc. and Videotron had given themselves an undue preference in exempting their mobile-TV services from data caps applies in this case. Videotron is giving an undue preference to customers that subscribe to Unlimited Music and to the streaming services included in it, Rogers argued, while giving an undue disadvantage to customers that use other streaming services, to audio services that aren’t included, and to other wireless carriers that “have respected the Commission’s determination in and are now at a competitive disadvantage in the marketplace.” The company also filed a joint submission with other Canadian radio station owners, who argued Videotron’s service subjects other audio services to an undue disadvantage. Rogers, Corus Entertainment Inc., Golden West Broadcasting Ltd., Newcap Inc., Jim Pattison Broadcast Group Ltd. and Vista Radio Ltd. said that together they hold 280 radio licences and that “the vast majority of these stations stream their signal on-line and have deployed apps for use on mobile devices,” the usage of which by Videotron customers would incur data charges. The hours Canadians spend listening to over-the-air radio “continue to decline as Canadians have more choices for audio programming much of which is sourced on mobile devices,” the broadcasters said. “With this increasing competition from new digital sources of audio programming, most of which are unregulated and do not have contribution requirements, it becomes increasingly important that radio broadcasters have access to an even playing field on internet and mobile platforms,” they said. Radio broadcasters have sought out solutions to this problem, including discussions with wireless service providers to activate FM chips in mobile devices, they noted. “These efforts are all aimed at ensuring Canadian radio stations have a strong presence on mobile devices to ensure they continue to serve the objectives of the Broadcasting Act,” they said. Telus Corp., which doesn’t own any radio stations or other media, supported Videotron in its intervention. Both PIAC and Vaxination “fail to understand that Videotron is merely making available a competitive offering to consumers. No consumers are harmed by this offer being made available in the market and some might be significantly better off as a result of it,” it argued. The Unlimited Music service is evidence that there is sufficient competition in the market, Telus said. “The arguments of both Applicants fundamentally miss the point of competition — that in competitive marketplaces will offer subscribers unique services and differentiated service offerings at reasonable prices,” it said. Removing Unlimited Music from the market would only have the effect of driving up prices, Telus added. Telus said that while PIAC and Vaxination “characterize the zero-rating of music services as an undue preference causing detrimental effects on subscribers, Unlimited Music is better described as an additional service offering that is part of Videotron’s competitive pricing and service strategy.” Quebecor also filed a response on behalf of Videotron Wednesday, arguing that a key difference between the mobile-TV case and Unlimited Music is that Videotron is not giving a preference to its own content. None of the streaming music providers participating in the service are affiliated with Videotron, it said. “Participation in the service is open to all reputable music streaming providers, and Videotron has put in place mechanisms to attract a growing number of providers,” it said. Additionally, in the mobile-TV decision the CRTC was concerned that “encouraging subscribers to use mobile television services might result in a degradation of other services through network congestion, thereby materially impacting the broader customer base,” Quebecor said, noting Wednesday that the risk of such degradation is much smaller for music streaming than for mobile video. It added that “the principal policy concerns that drove the Commission’s Mobile TV Decision — the potential impact on the quality of unrelated services and the leveraging of owned content — have been largely or completely eliminated in the case of Videotron’s Unlimited Music service.” The company also said that the advantage Unlimited Music confers on subscribers who take advantage of it and services that participate in it is not undue. “In a rivalrous marketplace, service providers adopt innumerable strategies to enhance and differentiate their services, thereby attracting new or more varied clienteles,” it said, giving the example of free long-distance calling between Videotron customers, or wireless companies that only subsidize the purchase of mobile devices for customers who sign up for plans at a certain monthly price or higher. It noted that Rogers has also recognized the importance of streaming music, choosing to offer free Spotify subscriptions to customers of some of its high-end smartphone plans. “This, we submit, is how the competitive marketplace should work: different providers with different approaches trying to make their offers as attractive as possible to a common target clientele,” Quebecor said. The Canadian Network Operators Consortium (CNOC) also filed an intervention in the case, arguing that the model Videotron uses for Unlimited Music, in which only those music streaming services that choose to “opt in” are included, is “inherently discriminatory against competing music services and preferential in favour of those that are included,” and will remain so as long as the opt-in process remains the same. “One way of addressing the issue is for the Commission to establish principles governing the use of an opt-in model to ensure that the use of such a model in the development of a retail package is not unduly discriminatory/preferential,” CNOC said. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Rogers, Telus on opposing sides of zero-rated music case

Broadcast | October 15, 2015

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Rogers, Telus on opposing sides of zero-rated music case

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