Facebook, AT&T defend differential pricing in CRTC review

Facebook Inc. and AT&T Inc. have waded into the CRTC’s review of differential pricing practices, arguing that the commission should allow carriers to offer zero-rated services and sponsored data. In its intervention, Facebook argued that “it is axiomatic that well-functioning services offering popular consumer benefits should not be restricted without concrete proof of harm. There is no justification to impose a ban on differential pricing practices because there is no concrete evidence of harm.” The company said that it’s not inconsistent to allow zero-rating while upholding net neutrality principles, which include prohibitions on blocking and throttling content. Zero-rated services are a valuable tool to encourage more people to begin using the Internet, and to serve “as an on-ramp for users to begin paying for data to access the broader Internet,” it said. The company’s Free Basics service, which offers access to some websites and services at no charge in developing countries, has been criticized for violating net neutrality. AT&T, whose intervention was filed by its Canadian division AT&T Mobility Canada Co., argued sponsored data benefits new providers in a marketplace. “Sponsored data programs give less established competitors a cost-effective way to expand their customer base — because by definition those providers’ costs grow only in direct proportion to their business,” it said. Zero-rating offers increase product differentiation in the marketplace, which benefits consumers, it said. Zero-rating also benefits customers because it increases the amount of data they can use, “thereby increasing output and consumption of online data,” the company argued, adding that the practice doesn’t “pick winners and losers.” “It is simply an efficient way for providers to meet consumer demand for particular data, while increasing the consumers’ ability to access all the content they wish to access.” Zero-rating also helps the development of the Internet of Things (IoT), given that some IoT applications already “effectively rely on sponsored data traffic,” AT&T said, giving the example of e-reader manufacturers paying for data used for the delivery of ebooks. “The pricing models for this wireless connectivity are as varied as the IoT devices themselves and regulatory action that proscribes pricing plan options for this emerging market would stifle innovation to the detriment of consumers,” AT&T argued. “An uncertain, incoherent or regressive regulatory climate could undermine incentives for continuing this critical investment, irretrievably dampening the prospects for IoT innovation.” It added: “We urge the Commission to reject this kind of regulation that could make Canada less attractive for some IoT applications in the future.” Both companies declined to appear at the public hearing, which is scheduled for Oct. 31. Interventions were due Tuesday. Telus Corp. and Shaw Communications Inc. also defended differential pricing, joining BCE Inc. and Quebecor Inc. Rogers Communications Inc. stood alone among the largest Canadian telecoms in calling for all applications and content to be subject to the service provider’s standard data charges. Telus argued that with the exception of vertically integrated companies zero-rating their own affiliated broadcasting services, which the CRTC should prohibit, “for the most part differential pricing is generally in the public interest and does not warrant new regulatory measures,” citing the example of potentially zero-rating video relay services for hearing-impaired customers. Shaw said “differential pricing practices and other innovative packaging attributes that yield consumer benefit do not threaten the open Internet and should be given the opportunity to flourish. Given the known and unknown consumer and competitive benefits of product and service innovation, any regulatory intervention should be surgically focussed on practices that have been shown to harm consumers or competition.” Characteristics that are more likely to lead to harm include cases where carriers “unduly or unjustly favour affiliated content/products/services by blocking competitive offerings,” Shaw added. Smaller ISPs suggested a more middle-of-the-road solution, with the Canadian Network Operators Consortium (CNOC) saying the CRTC should balance the benefits of differential pricing with the risks by allowing ISPs to “apply differential pricing practices to broad categories of content or applications, or to all content or applications uniformly, but not to specific applications or content.” That would mean an ISP couldn’t only exempt its own video streaming application, but could exempt all video streaming apps. The Canadian Media Producers Association (CMPA) said the CRTC should consider how differential pricing practices can be used to “promote discoverability of and consumer access to Canadian programming.” The CRTC could, it suggested, eliminate charges for Canadian programs. Citing the growth and the increasing popularity of over-the-top (OTT) services, the CMPA said “broadband Internet services will increasingly become vehicles which can — and should — present new and effective opportunities to advance Canada’s broadcasting policy objectives.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Facebook, AT&T defend differential pricing in CRTC review

Broadcast | June 30, 2016

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Facebook, AT&T defend differential pricing in CRTC review

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