Large telecommunications companies like Bell and Rogers that own much of the content we consume and almost all of the networks we use to consume it are shaping the way Canadians use the internet to give themselves an unfair advantage in the growing marketplace of video streaming, a complaint to the CRTC suggests.
The complaint, filed Nov. 22, 2013, with the Canadian Radio-television and Telecommunications Commission by University of Manitoba graduate student Benjamin Klass, centres on Bell Mobility's Mobile TV service.
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For $5 a month, smartphone or tablet users who purchase the Mobile TV app can watch 10 hours of video (equivalent to about 5 GB, according to Bell's estimates) from more than 40 Bell-owned or -licensed television channels without affecting the monthly data cap that usually applies when users access content online.
Twelve of the 43 channels available on Mobile TV — including CTV, TSN and The Movie Network — are owned by Bell Media, a subsidiary, like Bell Mobility, of the media behemoth BCE, which recently expanded its television holdings through its acquisition of Astral Media.
Treating Bell content differently than content from other sources is just another form of traffic shaping, the complaint alleges, and violates CRTC regulations that require internet service providers to treat all internet traffic equally, including over mobile networks. It also violates the Telecommunications Act, which prohibits carriers from giving their own services "undue preference," the complaint claims.
"I think that it's pretty clear that Bell broke the rules here," said Steve Anderson of the advocacy group Open Media, which plans to submit an opinion on the CRTC complaint during the official commenting period, which ends Jan. 9, 2014.
"They're clearly making it so that their content is more affordable and competing content and services are more expensive, and that's just against the rules."
Disparity in data caps not justified
Exempting Mobile TV from monthly data caps is a de facto subsidization of the content Bell licences and owns. To get the equivalent amount of video that the $5 Mobile TV add-on provides, a Bell customer living in Ontario would have to purchase a $40/month 5 GB flex data plan for tablets or the $105/month 6 GB voice and data plan for smartphones (based on the plans currently advertised on Bell's website). That, the complaint says, amounts to a markup on non-Bell content of several hundred per cent.
'This disparity in data caps is tantamount to Bell reserving network capacity for its own content. Can there be any legitimate justification for such a practice?' - Benjamin Klass, complainant
Mobile TV users also get a better rate than those not using the app if they exceed their monthly quota. They are charged $3 per additional hour, or about 500 MB worth of data, compared to five cents per additional MB, or about $25 per 500 MB, for users who don't subscribe to Mobile TV.
"This disparity in data caps is tantamount to Bell reserving network capacity for its own content," writes Klass in the CRTC complaint. "Can there be any legitimate justification for such a practice?"
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Klass is working on a Master's degree in communications and public policy and said he decided to put together the complaint after coming across an advertisement for Bell's Mobile TV service.
"I thought to myself, 'Wait a minute, this isn't TV, this isn't broadcasting; this is the internet. And because they own the TV programming, they're giving themselves a benefit that … your YouTubes or your Vimeos or your Netflixes — they can't get this benefit," Klass said in an interview with CBCNews.ca.
Undermines net neutrality
Although the complaint targets Bell, Canada's largest telecom company, other media conglomerates, including Rogers and Vidéotron, offer similar mobile TV apps that prioritize their own content.
Such practices, Klass and others argue, stifle the open internet and undercut "net neutrality" — the idea that all content travelling over a network is treated the same regardless of its source or destination.
Much of the programming on Mobile TV is available elsewhere online or on competing services such as Telus's Optik TV On the Go but would be prohibitively expensive to view because it would deplete a user's monthly data allotment.
"If I watch the CBC app, it counts against my data. The very same CBC program can be found on Bell's app, but it doesn't count against the data," Klass said.
Klass and others say there is no justification for such a discrepancy, especially since Bell uses the same wireless spectrum and towers to transmit Mobile TV content as it does other data.
"It's all one pipe," Klass said. "It's not like a fast lane or something. This is something that takes up the same space on the network."
What's more, when the same Mobile TV content is accessed via a wired Bell network at home, it does count toward a user's monthly data cap, an approach that is not "technology neutral," Klass said.
Bell refused to comment on the complaint, saying only that it would be "happy to respond to any CRTC inquiries about the service." Netflix also declined to comment.
Telus has supported the complaint in writing to the CRTC and objected to a request by the Public Interest Advocacy Centre (PIAC) to expand the complaint to include other providers, arguing that a ruling against Bell would be enough to set a precedent that other ISPs would have to follow.
But PIAC president John Lawford is not so sure. He says that given the CRTC's case-by-case approach to telecom complaints, Telus might just be hedging its bets in case it eventually becomes a content provider itself or starts to earn greater advertising revenue from the TV content it licenses for mobile.
Lawford thinks the complaint as written is both too broad, in that it brings in a lot of issues that are not relevant to the key argument, which is that Bell violated the "undue preference" provision of the Telecommunications Act, and too narrow, in that it focuses only on one provider.
There is no doubt Mobile TV is a key pillar in Bell's strategy to promote its broadcast content on multiple "screens" and attract new viewers, he said, pointing to the company's announcement that it had reached one million subscribers for the service.
"It's fairly clear what they are intending to do by giving this particular deal," Lawford said.
Telus mobile TV app subject to data cap
Affordable and easy-to-use technology has made it easier than ever for small-scale creators and content owners to put video online, but when faced with the choice of viewing an independently produced video and having to worry about how much data you're using and watching an episode of American Idol that won't deplete your data, many mobile users will choose the latter, say Klass and other telecom analysts.
'Bell is making the whole internet more expensive to use in order to subsidize and basically push people to use their services.' - Steve Anderson, Open Media
"Bell is making the whole internet more expensive to use in order to subsidize and basically push people to use their services," Anderson said. "They shouldn't be able to manipulate how the internet is made available to people in order to promote their own services. It shows they're trying to use their control of the network to prioritize their own content. … The independent video producer on the internet can't do that."
Neither can some of the other telecommunications companies that don't have the media holdings that Bell or Rogers have. Telus, which has a similar mobile TV app but, unlike Bell, doesn't own the content on it, provides its app for free to subscribers to its home TV service, but content on it is treated like all other data and counts toward the monthly usage cap.
A Telus mobile user would have to pay about $50 a month to get a 5 GB data plan that would enable the same amount of video viewing that Bell offers for $5. If someone with a Bell phone plan and a Telus home TV plan wanted to use the Optik app instead of Bell's Mobile TV, it would count toward their data cap.
Media companies that do own content but not the networks that transmit it don't have the power that Bell does to give preferential treatment to their own content but are still reliant on companies like Bell to get their content to viewers.
"Netflix spends a lot of money on licensing content, and they can't exempt their stuff from the cap, and they can't sell their services to Canadians unless those Canadians can afford to buy the delivery," Klass said.
Mobile users' fear of exceeding data limits and the murky understanding the average person has of just how much data they're using works to Bell's advantage, and Bell feeds into that fear by advertising its Mobile TV content in terms of hours while its competitors' content is lumped into the abstract block of gigabytes that make up the overall data limit.
"Bell can't tell you how many hours Netflix uses, but they can tell you how many hours their service uses, and that's only because they own the network, so essentially, it's an unfair advantage," Klass said.
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One of Netflix's main selling points has been the relative low price of its subscription service and the fact that it can be accessed anywhere any time, but that advantage is undercut if the cost of accessing the service becomes prohibitive, says technology analyst Michael Geist of the University of Ottawa.
"Users are very likely to look at aggregate cost — not just the service itself but how much is it going to cost me to use the service," Geist, who holds the Canada Research Chair in Internet and E-commerce Law, said in an interview with CBCNews.ca.
"When I think of my kids, for example, there's some of this kids programming that may be available through a Bell channel and there's a tonne of similar content that's available through Netflix, and so that [price difference] would become a factor in terms of what I encourage them to use if they want to watch some streaming video in the car on a drive somewhere."
Eliminate data caps
Getting rid of data caps or switching to "soft data caps," which don't punish users who only occasionally exceed their limit, would be one way that Bell and other providers could level the playing field, Klass suggests.
Alternatively, Bell could offer users a data add-on to their mobile plans that is equal in size to the data provided through Mobile TV. Or it could make Mobile TV a subscription-based service like Netflix and subject it to the same data caps as other online content.
The fact that Bell is able to exempt 5 GB of its own data from the monthly limit suggests it has no operational need for data caps, Klass says, and does not really fear network congestion, which has long been the argument used to justify limiting data use.
'These are the kind of threats and concerns that were raised by many individuals as we moved toward a more vertically integrated marketplace.' - Michael Geist, technology analyst
According to a study conducted by the tech company Sandvine and cited in Klass's complaint, the average North American uses less than 450 MB of mobile data per month, and many telecom analysts believe recent expansion of network capacity has eliminated the need for data caps and that they are used mainly to keep prices artificially high and the competition at bay.
Whatever the ruling of the CRTC, Klass's complaint is unlikely to be the last word in the debate over the ever-expanding influence of the large, vertically integrated companies that dominate the Canadian telecommunications market.
"These are the kind of threats and concerns that were raised by many individuals as we moved toward a more vertically integrated marketplace, and since we've got that, it becomes really incumbent on the regulator to take a pretty aggressive approach in addressing those concerns," Geist said.
An earlier version of this story mistakenly stated that Bell's overcharge fee of $3 per hour equated to about $3 per 1 GB. In fact, one hour of viewing represents roughly 500 MB.Dec 16, 2013 12:50 PM ET