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Net neutrality, differential pricing debated in CRTC hearing

Net neutrality, differential pricing debated in CRTC hearing 

“Simply put, differential pricing for Internet services occurs when the Internet service provider sets different prices for Internet access in different circumstances,” said Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission (CRTC) yesterday. “…If you only look at one or two individual practices in isolation, it may seem like certain service providers are giving some Canadians a good deal. However, there is a lot more to this issue than saving a few dollars.”

Examples of differential pricing include specific applications that are exempted from monthly data allowances, a practice known as zero-rated data, and sponsored data.

Supporters of these types of practices generally contend that they enable consumers to benefit from free or discounted services.

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Opponents argue that they are inconsistent with the common carriage requirements of Internet service providers to provide their telecommunications services to all subscribers without undue or unreasonable advantage or preference.

Opponents argue that differential pricing practices enable Internet service providers to act as “gatekeepers,” resulting in an undue advantage to certain application providers over others, and influencing a subscriber’s choice of content, said Blais. Most parties recognized that differential pricing practices involve a preference or advantage in favour of the Internet service provider, the content provider or the subscriber; or, discriminate among content providers and subscribers.

The chairman said this phase of the hearing aims to answer questions such as:

Can it be demonstrated that any preference and advantage conferred by these practices is not undue or unreasonable? And that any discrimination is not unjust? How and with what evidence? What regulatory measures, if any, should the Commission implement?

The CRTC’s 2016 Communications Monitoring Report on the communications industry and on the telecommunications sector in Canada indicates that data consumption in the country has grown incredibly in recent years.

“Canadians’ appetite to access mobile applications, multi-media services, social networks, and do other data-intensive activities like music, video and television streaming to personal electronic devices is increasing rapidly,” according to the CRTC.

For example, wireless and fixed data usage has skyrocketed over the last year (across all subscribers) and more than two-thirds of all wireless subscribers have a data plan, the majority of those featured at least 1 gigabit of data usage per month. Data usage increased by 44 per cent for wireless and approximately 40 per cent for residential Internet services from 2014 to 2015.

Canadians are shifting the way in which they use their mobile devices, by placing an emphasis on data usage rather than voice services. This shift is increasing mobile device ownership yet again this year, with 73 per cent of Canadians having a smartphone and 52 per cent a tablet.

Younger Canadians (30 and younger) spend more than three times the amount of money on mobile wireless services than other Canadians do. Those aged 65 years and older spend the least amount of money per month on mobile services.

Right now Canadians pay some of the highest prices in the industrialized world for lackluster telecommunications services due, in large part, to market concentration — a small handful of companies have a stranglehold on 90 per cent of Internet service offerings,” according to Josh Tabish of OpenMedia.corg. “…In fact, Canada is one of the only countries in the OECD to impose data caps on residential Internet subscriptions. And, unfortunately, the majority of Canadian businesses and residents face data caps that are as low as their costs are high.”

In a recent blog, he cited a report by Digital Fuel Monitor which shows that Canadians are paying more per gigabyte of data than almost anywhere else in the world.

Open Media is advocating for net neutrality. This is the concept that all Internet users be treated equally by telecom providers. It means any user should be able to access all information online. This also means that just because some sites or organizations are able to pay a higher price they would be given priority for faster downloading times, according to Open Media.

Differential pricing is a hurdle for net neutrality. For instance, telecoms can decide which downloads will count towards a user’s data cap. This means the telecoms can decide which services or companies are exempt from users’ data cap.

While this sounds arbitrary and unfair to some, telecom companies argue that it’s good for the economy.

For example, a report in the CBC says that Bell believes the practice will “directly benefit consumers in the same way that toll-free long distance, promotional coupons, waived internet installation fees and free previews of television broadcasts do.”

On the other hand, David Watt, senior vice-president of regulatory matters for Rogers, says the company is net-neutral. “The customer should make the choice.”

The CRTC hearing comes at a time when the country is seeing its largest ever shift to mobile communication. Broadband service now also reaches almost all of the country’s population

According to the CRTC, Internet subscription rates have increased 3.3 per cent from 2014. Subscription for plans 50 Mbps and higher have double in the last year.

“The Internet and wireless sectors continue to be the drivers of growth in the telecommunications sector as well as for household expenses,” according to the communications regulator.

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