CRTC’s ruling banning data freebies blasted: ‘Dumb pipes it is!’
Regulator takes opposite path from U.S. in reaffirming net neutrality position
With its ruling that Internet providers can’t give free data to consumers who stream certain music or video content, Canada’s telecom regulator broke from its American counterpart by reiterating its position that carriers should simply act as pipes.
The Canadian Radio-television and Telecommunications Commission reinforced its position on net neutrality rules Thursday with a decision that confirms Internet providers will be treated as common carriers that cannot pick favourites among the content that travels across their networks.
“Dumb pipes it is!” reacted Desjardins analyst Maher Yaghi, writing in a note to clients that the requirement for content-agnostic data pricing effectively bans the practice known as differential pricing or zero rating.
This means no more data freebies such as Quebecor Inc.-owned Videotron’s unlimited music service, which let customers stream as much music as desired without it counting toward their data caps. Yaghi sees this as slightly negative for the industry, calling the unlimited music package an “important selling argument” given the growing number of customers who stream music.
“By closing the door on differential pricing, the CRTC is yet again forcing providers to compete on price and service quality, and away from innovative product segmentation offerings,” Yaghi wrote.
Sparking competition on core network services was precisely the CRTC’s goal, chairman JeanPierre Blais said Thursday.
The ruling comes months after the U.S. Federal Communications Commission went in the opposite direction. While the U.S. introduced similar common carrier rules during the Obama era, U.S. President Donald Trump’s pick to lead the FCC ended an investi- gation into wireless carriers’ free data offerings.
“These free- data plans have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace,” chairman Ajit Pai said in a February statement. “Going forward, the FCC will not focus on denying Americans free data.”
Such packages are thriving south of the border, where AT&T exempts DirectTV from mobile data charges, Verizon exempts its football streaming service Go90, and T-Mobile offers unlimited music similar to Videotron.
But the CRTC argued such practices hurt customers in the long run by steering them to a handful of providers picked by a gatekeeper. It stated its new framework “supports the freedom of consumers and citizens to access the online content of their choice without being unduly influenced by the marketing strategies and pricing decisions of Internet service providers.”
RBC analyst Drew McReynolds viewed the decision as neutral for Canadian telecoms, writing in a note to clients that use of differential pricing is limited.
“Bigger picture, this decision clearly puts a bigger onus on Canadian Internet service providers to continuously establish network advantages (i.e., speed, capacity, security, reliability, availability etc.) in order to differentiate ISP services, ‘decommoditize’ the pipe and maintain a degree of pricing power,” he wrote.