Videotron goes on defence as differential pricing hearing wraps

GATINEAU, Que. — Those who innovate shouldn’t be penalized because their competitors can’t keep up, the CRTC heard Friday from representatives of the telecom company partially responsible for this week’s public hearing on differential pricing practices. Quebecor Inc. appeared in front of the five-commissioner panel on the final day of the week-long hearing on net neutrality issues, including zero-rating and sponsoring data. For the majority of its nearly three-hour appearance, chairman Jean-Pierre Blais grilled the company’s reps over Videotron’s Unlimited Music service, which has served as the catalyst for the broader hearing on differential pricing. Launched in 2015, it exempts various music streaming services from wireless data caps. “Videotron is an innovator,” said Dennis Béland, Quebecor Media’s vice-president of regulatory affairs for telecommunications, in French. “How have we collectively decided that when one player is able to implement some kind of innovation, they should have to wait until all the other players are able to do the same?” Béland pointed to Videotron’s introduction of a single billing system for bundled services some years ago, saying that the company was one of the first to offer it, and asking whether they should they have stopped since others couldn’t also make the same offer. “It’s hard to accept that our innovation should be rejected according to the analysis under because there are other players in the industry who would not be able to copy us, who have other priorities or other innovations that Videotron would not have put forward,” Béland said. The company also placed emphasis on its position in the market, with Hugues Simard, Videotron senior vice-president and CFO, saying in French that they “are not a big player” and that if they could go through the necessary steps to launch a zero-rated service that has agreements with major music-streaming providers, such as Spotify AB and Apple Inc.’s Apple Music, there’s nothing stopping others from doing the same. Simard disagreed with a comment from Blais that an Internet Service Provider (ISP) would need to be a certain size to nail down agreements with major music companies. “As Dennis said, it’s very important for us, if we are to align with everybody else before we can launch new products, well, that goes against the very definition of innovation,” Simard said. “Of course, some of our competitors could be slower or quicker to copy and launch something similar, but that’s the dynamics with markets and that’s a good thing — that’s a good thing if competitors, be they small or big, are able to launch services that are newer, more innovative and going to target audiences and get revenues competitors cannot get.” In their opening remarks, representatives from Quebecor — which still faces undue preference complaints over the zero-rated Unlimited Music service — noted that they agreed with the principles put forward by Sandvine Corp. during its appearance on the first day of the hearing. Sandvine stipulates that any analysis of differential pricing practices be based on the principles of openness, the same commercial terms, no prioritization and transparency. Videotron’s Unlimited Music Service would pass that test, reps said. Barbara van Schewick, director of Stanford Law School’s Centre for Internet and Society, disagreed, and during her appearance in front of the panel Friday morning, said that Videotron’s music service was worse than T-Mobile US Inc.’s Binge On video streaming service, in terms of its effect on freedom of choice. “It seems they have made even less of an effort to add providers, but I think it has exactly the same deficiencies and inherent problems, stemming from how the category is defined over the guidelines,” van Schewick said. Videotron’s Unlimited Music service currently has 17 music providers. Van Schewick’s testimony, which Blais said would go down as a highlight of his time as chairman of the CRTC, also featured discussion of a common thread through Friday’s witnesses: whether smaller ISPs were disadvantaged by allowing zero-rating. “We generally don’t make a distinction between large and small providers when we think about net neutrality rules,” van Schewick said, adding that sometimes differential pricing practices are looked at as helping smaller providers differentiate themselves and compete more easily in the market. “But if you look at the administrative and operation complexity of setting up these programs, that might really tax the capabilities of the smaller provider,” she said. “At the same time, it is much less likely that all of these providers, the application providers, will be willing to interact with those smaller ISPs and make the changes to their programs that are necessary to work with the zero-rating program.” Shaw Communications Inc. also acknowledged that there could be some hurdles for smaller providers in a zero-rated environment, especially if costs are high. But Paul Cowling, Shaw vice-president of legal and regulatory affairs, reiterated that the company favours a complaints-based approach to differential pricing practices (DPPs) and not one that, as was phrased in the company’s opening remarks, has “unjustifiable asymmetries.” Blais laid out a scenario in which smaller content, application or service providers might look to the larger ISPs for zero-rated or sponsored arrangements because they will be exposed to more of the market. If a smaller ISP felt disadvantaged “because they didn’t have an arrangement with the small content provider, if they wanted to participate in a similar DPP and weren’t able to engage the smaller content provider, would engage the CRTC in that case,” Cowling said Friday, which also included appearances by the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic, Competition Bureau and Alberta resident Ben Christensen. “I put it to you though that the likelihood is that the small content provider won’t even bother, won’t even be present and will throw up their hands and what we will have are differential pricing for large multi-nationals,” Blais said. “In fact, one could suggest that’s what the concrete case in front of us suggests is likely to occur moving forward.” — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Videotron goes on defence as differential pricing hearing wraps

Broadcast | November 4, 2016

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Videotron goes on defence as differential pricing hearing wraps

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