Klass complaint to CRTC on Bell’s Mobile TV winds up – for now

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Subject: Part 1 application by Benjamin Klass requesting the fair treatment of Internet services by Bell Mobility (Klass application) and Part 1 Applications by CAC-COSCO-PIAC regarding Rogers’ Anyplace TV service and Vidéotron’s Illico.tv Service (CRTC files 8622-B92 201316646, 8622-P8-201400142 and 8622-P8-201400134). 

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Yesterday was the deadline for final reply comments on the Part 1 Application filed last November by Ben Klass. I wrote several posts on Ben’s initiative, starting with this one on November 24, 2013. My second and final submission is pasted in below (with a few copy edits; paragraph numbers remain).

The case brought by Ben is a good opportunity for the Commission to see how its ex-post regime for handling ISP and WSP misdeeds is working. Thus, while I hope the Commission gives Ben his due, I also hope it takes a long hard look at the bigger picture, i.e. the status of the mobile TV services operated by both Rogers (RAP-TV) and Vidéotron (illico mobile), in addition to Bell’s Mobile TV.

  • If you want to hear the original arguments from the horse’s mouth, visit Ben’s blog and have a look around, starting with his post on what he was thinking about Bell and the state of Western civilization last November – here.
  • You can then catch up with his last kick at the can, through the edited version posted yesterday: Net neutrality in Canada: we have a problem.
  • For the final reply comments from the big bad WSPs (which I refer to frequently below), they’re uploaded in a zipped folder here (Bell, Rogers, Vidéotron).
  • One other submission from yesterday, submitted by Jean-François Mezei of Vaxination Informatique: JF always has an interesting take, and in this case he like Ben talks a lot about network neutrality and how it’s being put at risk in Canada (pdf here).

Ever since Chairman Wheeler announced he was going to have the FCC create an Internet fast lane, net neutrality has been drawing vehement comments from every corner of the political landscape. A few opinions from the last 24 hours or so:

I’ll be getting back to net neutrality in the near future.

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My May 12 submission to the CRTC on the Klass Part 1 Application requesting fair treatment of Internet services by Bell Mobility:

1. I offer this submission by way of followup to my original filing of March 5, 2014. As with that filing, I am writing this note in support of Mr Klass’s application. Unless otherwise indicated, the opinions expressed herein are mine and do not necessarily represent the views of any third party.

2. After reviewing the April 25 responses to the Commission’s interrogatories from Bell, Rogers and Vidéotron, i.e. Québecor Média (“the companies”), I fail to see how anything said in the documents makes a cogent case against the claims outlined by Mr Klass in his original filing. While I appreciate that the interrogatory process is not intended to elicit new or expanded arguments, the companies in their April 25 filings have seen fit to defend deployment of their respective mobile TV services (Mobile TV, RAP-TV and illico) by resort to vague and unsubstantiated claims that their services do not create an undue preference because a) they are broadcasting services; b) they represent a fledgling business that should be given free rein, especially in light of the competitive “threat” posed by OTT services like Netflix; and c) they promote the policy objectives of the Broadcasting Act by making Canadian content more widely available.

3. In my view, however, the most serious shortcoming in the company responses, including the interrogatories, lies not in what they have said, but what they have not said. That omission concerns the very essence of Mr Klass’s complaint, namely that Bell’s Mobile TV platform is clearly in violation of the Commission’s Internet traffic management practices framework (ITMPs, the ITMP framework). Before I explain this observation, some comments about the points of agreement and disagreement between Mr Klass and the companies.

4. Two of the crucial definitional factors in the complaint concern a) whether Bell’s Mobile TV (and similar WSP offerings) are to be considered broadcasting services or telecommunications services; and b) whether or not these services are delivered over the Internet. Bell is at pains to argue that Mobile TV is a broadcasting service and thus subject to regulation (or exemption) under the Broadcasting Act. Thus, in Bell’s response to Question 5, we read the following:

“Rather than focus on the use of ‘data’ to determine whether a service is a telecommunications or a broadcasting service the Commission must instead look at whether the service in question meets the definitions set out in the Broadcasting Act.  As described in detail in section 4 of our 9 January 2014 Answer to Mr. Klass’ application, Mobile TV clearly meets the definitions of a broadcast service.  Accordingly, it is subject to regulation and the Commission’s policies and rulings under the Broadcasting Act and not the Telecommunications Act.

5. Bell’s insistence here is largely beside the point, however, since Mr Klass has not disputed the claim that Mobile TV is a broadcasting service. More importantly, Bell provides an unconvincing response to the question as to whether Mobile TV is delivered in whole or in part over the Internet. Bell tries to have it both ways by arguing that its service is not simply an OTT service like Netflix, but an unusual hybrid. In its response to Question 7 on network architecture, we read the following:

“[…] Bell Mobile TV is a mobile BDU which is also a DMBU but it falls under the second means of distribution (broadcast services delivered using point-to-point technology and received by way of mobile devices). Unlike an OTT provider Bell Mobile TV is a BDU which provides end-to-end service including through an access network […]”

6. What Bell seems to be suggesting is that its provision of an end-to-end service, along with its use of point-to-point delivery, means that Mobile TV is a so-called “managed” service (in the meaning used e.g. by Cisco in its Internet traffic forecasts), and is therefore not an Internet service. Yet this assertion is simply not consistent with others made by Bell regarding the means of delivery to Mobility subscribers. For example, Bell also says the following in response to Question 7:

“Rather than sending content to Bell Canada’s COs […] the Mobile TV servers instead send the content to a content distribution network (CDN) which hosts the content as broadly as possible within the Bell Mobility core network.”

7. Bell also seems to be suggesting, or would prefer us to believe, that its CDN is somehow part of Bell’s “core network” rather than comprising a very large, distributed platform operating independently on the public Internet. That will most definitely be the case if the CDN in question approaches the scale of an Akamai or Level 3. These are, of course, the very distribution platforms often used by competing content providers like Youtube and Netflix.

8. Bell’s case is further undermined by statements appearing in the responses from Rogers and Vidéotron. For example, in several passages in its filing, Rogers refers to RAP-TV and “other” Internet services. In replying to Question 11 (as to whether a mobile TV service is a telecommunications or a broadcasting service), Rogers, like Bell, insists that its service is a broadcasting service that operates under the Commission’s Exemption Order. But it then adds that these services are “delivered and accessed over the Internet in the manner described in the DMEO.”

9. The response from Vidéotron makes essentially the same point (with the proviso that the company is shifting its mobile TV offering away from the more limited service available to Blackberry and Android users, in favor of the more inclusive distribution model available until recently only to iPhone users). In its response, Vidéotron makes statements like the following:

“Les données associées au visionnement de contenu par le biais de l’application illico mobile sont traitées de la même manière que les données associés à d’autres services Internet ou applications tierces” (Demande No 8).

10. In its reply to Question 13, Vidéotron goes one step further than Rogers in identifying the nature of its illico service. It begins by noting that the mobile TV services at issue are indeed broadcasting services:

“Un service de télé mobile est un service de radiodiffusion puisqu’il offre des contenus télévisuels aux abonnés. Par ailleurs, il est exempté en vertu de l’ordonnance d’exemption relative aux entreprises de radiodiffusion de médias numériques (Ordonnance de radiodiffusion CRTC 2012-409).”

11. But in the passage immediately following, we read this pointed assertion that leaves little doubt about the role of the Internet in delivery to subscribers:

“Selon les faits versés au dossier public par les fournisseurs de services, on constate également que les trois services de télé mobile qui sont à l’étude dans cette instance livrent leurs contenus par le biais de réseaux d’accès Internet mobiles. Ces réseaux d’accès Internet mobiles sont des réseaux de télécommunication.”

Vidéotron thus notes that all three of the services here – Bell’s Mobile TV, Rogers RAP-TV and Vidéotron’s illico mobile – are delivered by means of the Internet, a conclusion that is ascribed to the WSPs themselves in each case (“Selon les faits versés au dossier public par les fournisseurs de services…”).

12. As I noted above in paragraph 3, all three companies have an omission in their responses that is conspicuous by its absence. In each and every case, they have failed to address the arguments made by Klass as to whether or not their mobile TV offerings conform to the Commission’s ITMP framework. Unless I’ve missed something, neither the Bell nor the Rogers replies contain a single mention of the ITMP framework as it applies to the use of discriminatory pricing based on mobile data caps. So too with the Vidéotron reply, which is also devoid of equivalent mentions of “PGTI” (“pratiques de gestion du trafic Internet”).

13. Why is this omission significant in assessing the case made by Bell that its Mobile TV is in conformity with all applicable Commission regulations? First of all, the companies are clearly dodging a damaging argument made by Klass that happens to be central to his case (I note that in his March 5 filing, Klass makes explicit reference to ITMPs approximately 19 times).

14. Second, he reminds us that regardless of how Bell or Rogers may wish to interpret the notion of delivery over the public Internet, the interpretation that counts is the Commission’s. Thus, in its 1999 new media ruling, the Commission made it clear that parties to that proceeding “assumed new media to be services delivered over the Internet,” and that this assumption needed no further dissection (see Klass’s March 5 filing, para 25).

15. Furthermore, as Klass says, the fact that a service happens to be a broadcasting service does not automatically mean that the operator is entitled to exercise an undue preference (Klass, para 37). Bell for its part cannot seem to paper over the awkward fact that a preference is applied to Mobile TV, under which customers are charged $5 a month for 10 hours of Bell’s TV content, as opposed to all other forms of video (and other Internet-based data), for which they are charged 800% more. Yet as Bell insists in its answer to Question 9: “Bell Mobility’s data plans are irrelevant to subscribers of Mobile TV.”

16. On the contrary, the relevance to subscribers is perfectly clear: if I want to access video streams on my Bell phone, and my choices all fall outside Mobile TV, then either I’m going to pay 800% more than other subscribers, or I’m going to join them and be very unhappy with the preference accorded others. That is exactly what is meant by harm to consumers.

17. Bell makes an equally unconvincing argument with regard to harm to competition. In its response to Question 10, Bell reiterates its view that Mobile TV cannot possibly have harmed competition because a) no one has demonstrated that harm has been done; and b) traffic and market share for YouTube and Netflix have both gone up, according to its redacted information. In the absence of empirical evidence to the contrary, however, it seems safe to assume that an 800% price differential is going to dampen demand for competing services. (Note the role of a possible countervailing factor: mobile customers might elect to stick with a service like Netflix, despite higher costs, because of good service, a well designed UI and attractive content.)

18. As to the missing discussions on ITMPs, Bell fails to explain anywhere in the interrogatories why it needs to apply discriminatory pricing to Mobile TV in the first place. The Commission is owed an explanation from Bell on at least two ITMP-related points. First, the purpose of applying an economic ITMP is the control of traffic congestion. Yet neither Bell nor the other two companies make any mention of the need to control congestion on their networks, to say nothing of whether they have used investment in network upgrades as a first resort to handle congestion. As Klass puts it in his March 5 filing (para 52):

“Unless Mobile TV is delivered over a separate network, the implication of the existing arrangement is that current data caps that apply to services which use that same network cannot be within the ‘legitimate interests of ISPs to manage traffic’ on their networks – in other words, the existing data caps unjustly interfere with the freedom of Canadians to use the Internet for various purposes under the ITMP framework and section 7 of the Telecommunications Act.”

19. Further to this ITMP issue, the framework detailed by the Commission in CRTC 2009-657 requires that, over and above a legitimate traffic management purpose, ISPs must apply mechanisms like data caps in a way that is transparent to customers. Indeed, the Commission wrote that economic ITMPs are the most transparent ITMPs and were assumed to “match consumer usage with willingness to pay, thus putting users in control and allowing market forces to work.” It’s difficult to imagine how any service of this kind could be less transparent.

20. Far from addressing these issues, Bell and Rogers have both fallen back on the tired arguments stemming from Canadian content and duty to country. For its part, Rogers states that because its RAP-TV service is in a nascent state of development, the fees associated with it are not cost-based. They reflect instead “the low consumer demand that currently exists for the service” (A10, p.11), which is apparently taken to mean that its service should get the indulgent treatment policymakers often accord to infant industries.

21. Rogers goes on to say that it needs to price its mobile TV offering at a low enough point to attract more traffic, so that it will eventually recoup its investment of “billions of dollars” in network infrastructure. It then adds a patriotic flourish to rebut any claim that it is engaging in an undue preference. It says, in so many words, that it is doing good works by encouraging Canadians to consume Canadian content on their wireless devices, because by so doing, it is benefitting the broadcasting system and furthering the objectives of the Broadcasting Act – a sentiment that echoes the position taken in Bell’s original submission.

22. I want to underline the highly problematic nature of the use made by Bell and Rogers of this “broadcasting defence” – especially in the reductio ad absurdum offered by Rogers as part of its reply to Question 10. In this particular passage, Rogers cites the Commission’s thinking in Broadcasting Decision CRTC 2011-371 to bolster its claim that – as long as there is some benefit to the broadcasting system – even preferential treatment that results in material harm is to be tolerated (p.12):

“Clearly, [Rogers’] strategy benefits the Canadian broadcasting system and furthers the policy objectives set out in the Act. As such, our offering would not constitute an undue preference or disadvantage under the Act. The Commission has indicated that even if there is a preference or disadvantage that results in material harm, it would not be a preference or disadvantage that is “undue” in circumstances where it would benefit the Canadian broadcasting system:

“‘In this respect, the Commission notes that generally speaking even if a packaging decision is likely to result in material adverse impact on a programming service, it would not necessarily result in an undue preference finding if the change is consistent with the achievement of broadcasting policy objectives set out in the Act.’”

23. Major licensees have for too many years been able to take refuge behind the claim that what might appear to be harmful behavior in any normal interpretation of the concept should be deemed acceptable, indeed patriotic, as long as that behavior can be construed as contributing somehow to Canada’s cultural policy goals.

24. I hope the Commission will see – nearly 20 years after its first milestone study of convergence – that this “broadcasting defence” no longer serves the public interest and only encourages anti-competitive and anti-consumer behavior. This is not the place to examine the ways in which these outmoded appeals to the health of the broadcasting system distort the marketplace. But I would maintain that the highly artificial arrangements made by the companies to favor their mobile services cannot possibly be construed as “allowing market forces to work,” as the Commission puts it in the ITMP policy.

25. I will close with one further comment on the claim by Rogers and Bell that there is simply no evidence that their services could be causing harm to competing content providers. In its reply to Question 10, Rogers goes so far as to say that the absence from this proceeding of competing content providers is proof that its services raise no threat to competition (p.14):

“Rogers believes that it is significant that no Canadian or foreign content provider, including the CBC and the NFB, has filed a complaint with the Commission regarding mobile television services or even intervened in this process in support of the allegations made by PIAC or Mr. Klass. Clearly, the reason for their absence from this public proceeding is that they do not view a mobile television service like RAP-TV as a threat to their business models and have concluded that these mobile services are not having any adverse impact on them.

“There is certainly no evidence that competing content providers have been materially harmed by the data usage charges for the RAP-TV mobile service. As such, any claim made by Mr. Klass or PIAC that these content providers are being subjected to an undue disadvantage or an unjust discrimination is not supported by any evidence and should be dismissed.”

26. I would, first of all, urge the Commission not to be distracted by such claims at the expense of addressing the central challenge as raised by Klass, namely to insist on an accounting from the companies about their responsibilities under the ITMP framework – a subject, as I have said, that is conspicuous by its absence from their replies.

27. Second, I trust the Commission will not be swayed by the disingenuous assertion that since no harm to competitors has been documented and placed on the public record, no potential for harm exists, and no action by the Commission is warranted. The Commission does not need to wait for Netflix or any other content provider to come forward with evidence it claims demonstrates a loss of business in traffic, revenues or otherwise – since the discriminatory pricing put in place for Mobile TV (and its counterparts) is anti-competitive in and of itself.

28. Finally, because of the unusual way this Part 1 Application process has unfolded, the claims and counter-claims made by the parties may lend themselves to a more thorough examination than was anticipated after Mr Klass made his November submission. I would therefore urge the Commission to consider looking at the issues raised thus far in the wider context of a telecom regulatory policy review – an opportunity, I believe, to assess and refine the mechanisms it introduced as part of the 2009 ITMP framework.

D.E.