Intervening in support of Ben Klass complaint on Bell Mobile TV

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Last Wednesday was the deadline for followup comments on Ben’s Part 1 application, more accurately described as a complaint. In the text below you’ll find the main body of my intervention, minus the top and tail. I wrote about Ben’s original filing back in November: Ben Klass asks CRTC to stop Bell’s deliquency on Mobile TV. As of today, Ben’s current filing hasn’t yet shown up on the Commission’s site: I’ve uploaded it here. Of the other interventions filed this past week, two were especially critical of what Bell is being allowed to get away with. Teresa Murphy starts her comments by suggesting that Bell’s whole argument is founded on a phony distinction (para 2: her pdf is uploaded here):

It makes no sense whatsoever to treat competing services differently when the underlying technology and distribution method is the same. This is allowing vertically integrated companies to behave by one set of rules, and allowing them to treat their competitors differently, and frankly unfairly.

In his equally hard-hitting intervention, Jean-François Mezei (Vaxination Informatique) reminds the Commission, while dismissing Bell’s absurd analogy between Mobile TV and its wireline BDU service, that the incumbents have already made video competition on wireline very problematic thanks to their unrestricted use of data caps – and in doing so are actually flying in the face of the Harper government’s own Policy Direction on market forces (para 24: his pdf is uploaded here):

The practice of exempting UBB charges for a carrier’s own content is not only a serious network neutrality issue, but also very anti-competitive because of the policy to provide undue preference to wireless customers who are also subscribers to the BDU operated by the same company. While some advantages conferred by “bundling” may be reasonable, there are some, such as this issue, which should be consider[ed] undue preference and which go against [the] Policy Direction by reducing market forces in an industry plagued by constant debates about lack of competition.

One other point that’s worth citing from Ben’s latest filing. After becoming a subscriber to Bell Mobility and combing carefully through his bill, Ben reports that Bell itself makes no distinction between mobile “Brwsr” data (i.e. delivered over the Internet) and the packets it delivers via Mobile TV (which Bell alleges has nothing to do with the Internet). Ben’s point also highlights the sleight-of-hand Bell has pulled in marketing its TV service by the hour, unlike all the other “Internet” video you can get on a Bell smartphone. How’s that for a distinction without a difference? (See Ben’s paras 8 through 23.)

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My intervention (with original paragraph numbering)

2. I am writing this note in support of Mr Klass’s application. I believe his application and the comments it has prompted deserve the Commission’s careful consideration for a number of substantive and general policy reasons, which Bell’s initial submission has failed to address in a meaningful way.

Canada’s converged communications environment

3. Mr Klass has pointed to a number of challenges facing current regulatory policymaking that arise from two directions: the discrepant policy objectives of the Broadcasting and Telecommunications Acts; and the disruptive effects of digital technology on the distribution of content, especially content from legacy media like television, and the difficulties that disruption has created for the Commission in crafting a framework for DMBUs that serves the public interest.

4. Since 1999, the Commission has revisited digital media broadcasting and the associated exemption orders several times, most importantly in relation to mobile delivery platforms and so-called point-to-point distribution. The net result has been a series of regulatory distinctions – especially that between a “broadcasting” service and a “telecommunications” service – that no longer make sense in the everything-over-IP environment.

5. Unfortunately, as Bell’s submission illustrates, these distinctions now serve a purpose more suited to defending the entrenched interests of the incumbents, rather than the interests of market forces or consumer welfare. As PIAC has noted, the problems described by Klass are not confined to Bell Mobility, but include the marketplace behaviour of both Rogers and Vidéotron as well. (I note with dismay that in the original submission by Telus, many of the comments are couched as ad hominem attacks on Mr Klass rather than as attempts to grapple with his arguments: e.g. (para 12) “…the Applicant merely demonstrates confusion and lack of understanding of the parallel regimes for broadcasting and telecommunications in Canada…” This tone is especially inappropriate given that the arguments Telus makes depend on many of the same unwarranted assumptions as those made by Bell.)

The smell test

6. Klass argues that, as a vertically integrated conglomerate, Bell has both the motive to protect revenue from its own services and the opportunity to apply price discrimination against competing services. Motive aside, the plain fact is that Bell has constructed a mobile delivery system which offers its subscribers two starkly different ways to consume online video: on one hand, Mobile TV, priced at $5, and on the other hand, a roughly equivalent amount of “Internet” data not available via Mobile TV, priced 800% higher, i.e. $40.

7. Notwithstanding the many legal and technical niceties that will be debated as part of this proceeding, I would like to offer one basic observation at the outset. Bell’s claims for Mobile TV do not pass the smell test. For consumers (like many of the students I talk to), Bell’s service simply provides streaming TV shows on a smartphone, just like the TV shows from the CBC app or the Netflix app.

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8. The upshot of Bell’s approach is that it is trying to have it both ways: it acknowledges, inescapably, that it is applying a preference to its own service but not to services that are not part of Mobile TV. Yet it dismisses the preference on a technicality, i.e. that Mobile TV is a broadcasting service that has nothing to do in regulatory terms with any of the other services carried over Bell Mobility’s network, which are deemed to be telecommunications services. Bell resorts to the use of wireline transmission as an analogy for its wireless services to support its claim that Mobile TV is (by analogy with BDUs) a DMBU and thus an entirely separate service from those delivered over the Internet. The problem here is Bell’s argument doesn’t need analogies; it needs evidence. Yet the evidence to support Bell’s distinction, and its regulatory interpretation, is simply not forthcoming.

Hours vs gigabytes

9. Ironically, Bell does make an unusual distinction between Mobile TV and other data offerings, in addition to the gap in price. That distinction appears in Bell’s mobile marketing, according to which its subscribers may consume 10 hours of TV shows on Mobile TV (for $5), or 5 GB of other data, video or otherwise (for $40). The decision to use these two very different measures, hours and gigabytes, raises suspicions as to the underlying motive (the happenstance that 10 hours of video is roughly equivalent to 5 GB is immaterial here).

10. I know from long experience that mainstream onliners recognize perfectly well what watching an hour of TV is like; but very, very few have any idea how many gigabytes of data they might consume watching an hour of TV or video. In fact, very few people (even graduating Communication Studies majors) have any idea what a byte is, what it measures, how it relates to bitrate and compression ratios, how these in turn translate into SD and HD, and so on. Since Bell knows this as well as anybody, why did it choose two different metrics rather than sticking with just one? A cynic might say its marketing was intended to highlight the distinction between Mobile TV and other video, to make them appear to be different, when for practical purposes, they are the same kind of service offering essentially the same kind of experience. As Kenwick McKelvey of Concordia University noted in his submission (para 5), “Bell’s hourly billing model introduces competitive inequity by being easier to understand than its competitor’s data usage billing models.”

The consumer perspective

11. Klass also raises questions from the consumer perspective that deserve attention as much as the issues related to Bell’s anti-competitive behaviour. Bell’s behaviour is not merely inimical to the interests of other corporate actors, like YouTube and Netflix, which do not benefit from being packaged with Mobile TV. It is also inimical to the interests of Canadian consumers.

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12. Bell describes its Mobile TV in glowing terms, calling it among other things an “innovative, consumer-oriented broadcast service.” It’s difficult to see what is consumer-oriented about Mobile TV, unless the consumers in question are happy to confine all their online video consumption to Bell’s service. Otherwise, Mobile TV is simply another in a long line of ISP-controlled walled gardens that began in the late 1990s with AOL, hardly what deserves to be described as “innovative.” In any case, the Commission’s policy goal that Canadian end-users should have the freedom to use the Internet in ways of their own choosing is certainly not being met by the arrangements Klass describes in his application (Telecom Regulatory Policy CRTC 2009-657, para 7).

Delivery over the Internet?

13. Contrary to Bell’s confident assertions, the transmission status of its Mobile TV service is less than crystal clear. These assertions, to the effect that Mobile TV is a broadcasting service, do not by themselves confirm that it is not delivered over the Internet; and that it is ipso facto not subject to the ITMP provisions covering ISP traffic management. Given how little Bell has to say about the way Mobile TV is distributed, this is, to say the least, an unconvincing argument (while at the same time being the loophole Bell uses to escape the prospect of any regulatory constraints on its behaviour).

14. Generally speaking, it is far from obvious that there is an expert consensus on what Bell may mean by delivery over “the Internet.” Without dwelling on technical details, I fail to see anything in Bell’s submission that shows definitively that Mobile TV is not delivered over the Internet, and if it is not, exactly what special arrangements Bell has put in place, such as a separate, managed IP network, whether logical or physical, or both. If Bell cannot sustain such an argument on the basis of real evidence, then the relevant provisions of the Telecommunications Act, and the ITMP regulations, would certainly apply.

15. That would mean in turn that Bell’s use of discriminatory pricing as between Mobile TV and other Internet services would indeed constitute the application of an economic ITMP; and that would put these ITMPs in violation of CRTC policy for being unduly preferential to Mobile TV and/or unduly discriminatory to services delivered outside the Mobile TV package. If, on the other hand, Bell wishes to argue that these ITMPs are being used to manage congestion, then it is certainly obliged to demonstrate how and why the goal of managing congestion has been achieved.

16. Even on the assumption Bell might demonstrate that it is in fact using a so-called “managed network,” it cannot escape the responsibility to behave fairly. That is, if Bell continues to construe Mobile TV as a broadcasting service handled on separate distribution facilities (a claim, I repeat, that is far from obvious), then under provisions of the Broadcasting Act, Bell would still be obliged to demonstrate it has taken measures to ensure it does not create congestion by reserving spectrum that would otherwise be available for all traffic. Indeed, this line of reasoning puts Bell on the horns of a dilemma. If there is no congestion problem, why would Bell bother to reserve spectrum for Mobile TV when it could be delivered just as easily using Bell’s general-purpose Internet platform? Unless of course Bell’s service has been arbitrarily separated from other data services precisely to allow for price discrimination.

The ITMP framework

17. In the ITMP framework, the Commission recognized that “[g]overnments around the world are taking actions intended to establish the Internet as a fundamental part of society and a preferred means by which citizens engage with one another” (CRTC 2009-657, para1). Bell’s view on this matter, however, is different, if we are to judge by the pride of place it has given to its Mobile TV service, compared to the countless other services delivered over the “open” Internet. Rather than allow open access on the Internet to foster the “freedom to innovate without permission,” Bell’s argument amounts to saying it has the sole authority to decide the uses to which its network is put, and by implication that innovation emanates from the core, not the edges of the network.

18. That view, regardless of its putative legal rationale, flies in the face not only of the arguments made by many Internet pioneers and visionaries. It also flies in the face of the position taken by the Commission in its ITMP framework, where it expressed the earnest hope that rapid and uncontrolled innovation in computer communications will continue to originate from the edges of networks, without permission from network operators (CRTC 2009-657, para 4).

Conclusion: how the Commission should respond to the Klass complaint

19. On the basis of what I have said in this document, I believe one of the most pressing responsibilities for the Commission in the next stages of this proceeding will be to insist that Bell put forward clear empirical evidence in support of the legal and marketing claims it has made thus far. Let me provide three examples by way of illustration. Bell should be asked:

20. What evidence can Bell adduce that Mobile TV is paying for itself and is not being cross-subsidized by other Bell Mobility subscribers or affiliated broadcasters?

21. What evidence can Bell adduce that the data caps applied to Mobile TV and to Bell’s general Internet services have a legitimate role to play in preventing or lessening traffic congestion on Bell’s network?

22. Why does Bell believe that, if Mobile TV is truly innovative and consumer-oriented, it is in the public interest to restrict its distribution to a single wireless platform, access to which is restricted to Bell Mobility subscribers who must first pay for an ongoing subscription?

23. I would like to add two parting thoughts. First, PIAC has made a convincing preliminary case that the problems of undue preference discussed here in relation to Bell Mobility likely apply to similar services offered by both Rogers and Vidéotron. Although the Klass application clearly has merit on its own, the Commission would do well to take the broadest possible view of these matters, in order to determine whether conflicts of interest associated with vertical integration are harming both competition and consumer welfare.

24. Second, the Commission has had little opportunity in the past to consider complaints from private citizens like the one at issue here, especially where broad policy issues are under debate. Mr Klass has given the Commission an important opportunity to show that its ex-post complaints regime can be made to work in the public interest.

D.E.