Next Net Neutrality Battle: 'Zero Rating'

Net neutrality emerged as a top Internet policy issue over 10 years ago as some Internet service providers openly discussed creating a two-tier system with a fast lane for websites and applications willing to pay additional fees and a slow lane for everyone else. The companies maintained that consumers would benefit from the two-tier approach by gaining faster access to premium content.

Internet users and emerging technology companies banded together to oppose the approach, arguing that all traffic should be treated in an equal manner regardless of content, source or destination. They noted that the two-tier approach could lead to unfair competition and an inability for startup companies to challenge established players.

Internet users won the policy battle, and years later net neutrality rules can be found worldwide. Indeed, the importance of an "open Internet" was recently affirmed by Navdeep Bains, Canada's minister of Innovation, Science and Economic Development, who told an international conference that the economy depends upon it.

The Canadian Radio-television and Telecommunications Commission (CRTC) established its policy response in 2009 with the Internet traffic management practices. The rules restrict content blocking or slowdowns and require ISPs to disclose how they manage their networks.

The net neutrality debate has shifted in recent years to the issue of "zero rating" or "differential pricing," references to network providers exempting certain content from data charges. While the traffic management practice has flipped from charging extra for content to offering access to content without data charges, the fundamental concerns are largely the same.

Large providers want to use zero rating or differential pricing schemes to shift away from treating all content in an equal manner. If they are permitted to do so, the two-tier Internet will return with content and applications often succeeding based on the ability to strike lucrative deals with network providers.

Regulators around the world have worked to stop zero rating plans for precisely these reasons. For example, earlier this year India's officials blocked Facebook from continuing with a "free service" that only permitted access to a small number of sites (including Facebook itself). In Canada, the federal court recently upheld a CRTC decision which found that a Bell mobile television service violated the law by exempting some data charges for licensed content but left the data costs for other video services unchanged.

With providers thinking about implementing other zero rating services (including a Videotron music service that is the subject of a current complaint), the CRTC has launched a full consultation on the issue. The first round of comments were filed this week and point to a heated battle between telecom giants and consumer groups.

Who stands where?

Some of Canada's largest network providers, including Bell, Telus and Shaw, have expressed their support for differential pricing models, claiming that consumers benefit from the practice. Moreover, they believe that the models are consistent with existing law that prohibits undue preferences. The position is not unanimous, however, as Rogers supports the principle that all applications and content should generally be subject to standard data charges.

The large providers are joined by companies or groups that have future zero rating plans in mind. These include Facebook and the Canadian Media Producers Association, which envisions the possibility of promoting Canadian content through mandated zero rating schemes.

Standing opposed to zero rating are consumer and public interest groups, who oppose granting ISPs the power to differentiate between content, particularly where they may have a vested interest in favouring some content over others. The Competition Bureau also voiced concern with potential for differential pricing to have a negative effect on competition.

Interestingly, many industry players hold a similar view. For example, Pelmorex Media, the owner of the Weather Network, states that "we are not aware of any alleged benefit from differential pricing which would justify compromising the current level of net neutrality in Canada and thereby interfering with innovation and open access to content on the Internet."

A group of Canada's largest radio station owners (including Rogers Media, Newcap and Corus Entertainment) also warn about the dangers of differential pricing, noting that it "could provide unlicensed or non-Canadian audio services with an undue advantage and/or cause an undue disadvantage to licensed commercial radio stations."

In fact, smaller ISPs and telecom companies are also concerned with differential pricing. Tbaytel, a telecom company based in Thunder Bay, argues that "the practice of exempting certain service applications such as music or video streaming from a subscriber's data plan cap should not be allowed."

A CRTC hearing on zero rating and differential pricing is planned for the fall, but it is already clear that a retreat from Canada's well-established net neutrality principles will face vocal opposition from government, consumer groups and a growing number of industry players.