Part 1 application to Canadian Radio-television and Telecommunications Commission

by Vaxination Informatique regarding

Undue preference under the Telecommunications Act by Québécor Média's Vidéotron wireless unit (respondant) towards selected partners

Jean-Francois Mezei Vaxination Informatique [email protected] Montréal, Québec 03-September-2015 Table of Contents Introduction ...... 3 Description of the offering in question ...... 3 Big picture ...... 3 2015-26, MobileTV and 27(2) ...... 4 Network Neutrality and competition ...... 5 Network Neutrality and ITMP Rules ...... 6 Tethered discrimination ...... 6 Discrimination between applications that use same bandwidth ...... 6 Content discrimination ...... 7 Preference onto itself ...... 8 Why LTE only ? ...... 9 Requested relief ...... 10 Conclusion ...... 10 APPENDIX: ...... 11

Vaxination Informatique 2 of 11 03-Sep-2015 Introduction 1. Pursuant to Part 1 of the Commission's Rule of Practice and Procedure, Vaxination Informatique is making this application seeking compliance by Québécor Média's Vidéotron wireless unit (Vidéotron) to the Telecommunication Act (section 27(2) in particular) and the ITMP rules TRP 2009-657 with regards to Vidéotron's launch of "Musique Illimitée", a zero-rated service where data from selected partners is given preferential treatment. Description of the offering in question

2. Vidéotron's press release1: Montréal, le 27 août 2015 – Vidéotron lance Musique illimitée, une initiative qui permet à ses clients d’écouter de la musique en continu sur les plateformes les plus populaires sans consommer les données de leur forfait mobile. 3. Vidéotron which operates a wireless service governed by the Telecommunications Act grants preferential treatment to a select group of music providers who meet Vidéotron's standards, discriminating against other music providers as well as all other content providers.

Big picture 4. Telecommunication services are to the digital economy what railways were to the industrial age: an essential enabling infrastructure. In the digital age, everyone needs access to affordable telecommunications. Through Section 7(c) of the Act and the Policy Direction, Canada has chosen to achieve the goal of affordable telecommunications by ensuring there is sufficient competition.

5. Vidéotron's latest endeavour is part of a trend to shift competition away from core telecommunication services to ancillary services (bundled content such as music, TV, hockey, exclusive content, as well as bundled services such as cableTV, wired internet etc) Achieving the goals in Section 7 and Policy Direction can only happen if competition is refocused on the actual telecommunications services.

6. Strict enforcement of 27(2) is not only important to ensure fair treatment of all communications, but also to ensure incumbents do not use undue preference to a few services that act as poster boys that allow incumbents to claim low prices. This deprives the economy of the real competition needed to drive telecommunication prices down.

7. In the case of Vidéotron, as the zero-rating applies only to the 3 most expensive plans, this creates an incentive for customers to upgrade from the more affordable plans to the most expensive ones, raising ARPU. The marketing facade is even shakier when one considers it only applies to the lowest quality music streaming level (128kbps and below) and many users may end up paying for data while listening to music on default music settings.

1 Press release, August 27th: http://corpo.videotron.com/site/salle-presse/communique/846 Vaxination Informatique Introduction 3 of 11 03-Sep-2015 2015-26, MobileTV and 27(2)

8. The Broadcasting and Telecom Decision CRTC 2015-26 made a very clear statement that 27(2) would be upheld. The Chairman's speech announcing this decision made it clear the Commission understood the stakes related to network neutrality.

9. As 27(2) bans undue or unreasonable preference toward any person, whether Vidéotron grants a preference onto itself or onto others does NOT change the precedent set by 2015-26's interpretation of 27(2) for such issues.

10. The fact that Vidéotron claims that it accepts any music provider (not true, see later) does not detract the fact that there is preference granted to some content providers and not others. Even if all "music" providers were granted the zero-rated privilege, it would still be granting a preference onto a class of content providers and not others even if others use the same amount of bandwidth but transmit non musical data. (Consider a service which transmits health related data at less than 128 kbps or some news organization that produces live text-only closed captioned programming for the deaf.)

11. There are good reasons for strictly enforcing 27(2). Loose enforcement will quickly degenerate into big mess in the Canadian telecommunications industry dominated by vertically integrated carriers who are more interested in leveraging their exclusive content than in competing on the price of the telecommunications service.

12. Like racoons trying to get into racoon-proof bins, incumbents will get smarter and smarter every time they try an assault on 27(2). And try, they will. Only once it has been made clear to them that 27(2) is impenetrable will they decide to shift their efforts elsewhere. Until such a time, 27(2) must continue to be strictly enforced, no matter how ingenious the incumbents get in trying to break through 27(2).

Vaxination Informatique 2015-26, MobileTV and 27(2) 4 of 11 03-Sep-2015 Network Neutrality and competition 13. Pundits may claim that zero-rating specific applications fulfils Section 7 objectives, namely rendering telecommunications more affordable. Pundits would argue that blocking zero-rating would harm consumers who would be forced to pay the high data prices to listen to music. 14. However, zero rating is just lipstick on a pig: it doesn't change the fact that high data prices is the problem to be solved, and is due to incumbents refusing to compete on the core telecommunication service. Marketing gimmicks such as zero-rating are just facades that cost next to nothing to implement which provide the illusion of lower prices while actual prices are kept high and even rising. 15. The real problem is the failure of market forces to drive the real price of the service down. Marketing gimmicks that affect the price of ancillary services which are often outside the purview of telecommunications (such as music, hockey, television) do not contribute to the market forces that are meant to make the telecommunications market healthy. 16. This move marks the graduation of Vidéotron from new entrant to incumbent, joining its incumbent brothers in refusing to compete on price of the telecom service and instead playing marketing games that are designed to keep the prices high. This is significant in an environment where the Commission has been counting on the new entrants to help drive wireless prices down. 17. In the case of Vidéotron, what on the surface appears as a good deal for consumers is in fact a smart way to raise ARPU. As the advertised deal is only available on the 3 costliest plans, this pushes consumers to upgrade from more affordable plans which are now much less attractive. And Vidotron has evenry motivation to keep affordable plans less attractive to continue to build an incentive to upgrade to more expensive plans. This is only possible in an environment where market forces are not working properly. 18. Zero rating causes another problem: it removes any incentive to lower data costs. By granting preferential pricing to a few applications or partners and spinning this to the public, it removes pressure to lower prices, especially when all other incumbents play similar games that avoid price competition. 19. Only proper competition will force incumbents to lower prices and/or increase caps (or perhaps offer unlimited packages). In the wired world, incumbents who said unlimited packages were impossible magically found a way to offer them again once independent ISPs started to steal too many customers. 20. So while on the surface, zero-rating may appear to be consumer friendly, it is designed to protect high telecom prices and also interfere with market forces in the affected markets, in this case, the music streaming industry. There are good reasons to uphold 27(2) . 21. Zero rating is not the solution, the solution is to fix the high wireless prices.

Vaxination Informatique Network Neutrality and competition 5 of 11 03-Sep-2015 Network Neutrality and ITMP Rules 22. From an ITMP perspective, congestion is agnostic to the content of packets or its , it cares about throughput (bandwidth). It is true that low bandwidth applications have lesser likelihood of causing congestion. However, discussion on whether preferential treatment could be granted to low bandwidth traffic cannot begin unless all low bandwidth traffic is treated equally, irrespective of their content or origin.

23. From Vidéotron's FAQ:2 •Le service Musique illimitée fonctionne-t-il en mode partage de connexion Internet (tethering)? Lorsque vous êtes en mode lecture en continu, il vous est possible d’écouter gratuitement de la musique directement sur l’appareil mobile pour lequel vous êtes abonné à un forfait Premium tout inclus Canada. Par contre, en mode partage de connexion Internet, les données consommées pour écouter de la musique seront décomptées du bloc de données compris dans votre forfait. •Quel est le débit de transmission auquel je peux écouter mes chansons lorsque je suis en mode lecture en continu? Musique illimitée vous permet d’écouter de la musique à 128 kbit/s, ce qui correspond au débit moyen des applications. Les données consommées par la lecture de musique à haut débit ou en haute définition peuvent être décomptées du bloc de données compris dans votre forfait.

Tethered discrimination

24. Whether one has a 128kbps flow of traffic terminate on the handset which plays the music, or whether it flows through the handset to a laptop which plays the same music makes absolutely no difference from an ITMP point of view. They both use the same bandwidth on the Vidéotron network.

25. Discrimination between tethered and non tethered traffic is not justified.

Discrimination between applications that use same bandwidth

26. When 2 streams consume exactly the same bandwidth, it is discriminatory to apply an ITMP to one and not the other. From a network management point of view, there is no justification for such discrimination.

27. Had Vidéotron implemented a policy to zero-rate any/all streams below 128kbs, from heart monitors to streaming music, from radio to low resolution images (ex: home security camera with image refreshed once per minute), or any new emerging low bandwidth application, then there could be a debate whether a preference for all low bandwidth traffic was reasonable or undue as there would be no discrimination between applications that have equal impact on network capacity/congestion.

2 Vidéotron's FAQ web page: http://soutien.videotron.com/fr-ca/residentiel/mobile/services-optionnels/divertissement/musique-illimitee Vaxination Informatique Network Neutrality and ITMP Rules 6 of 11 03-Sep-2015 Content discrimination

28. On launch day, Vidéotron went through great lengths to give the impression they would accept any music service and quickly add them in order to alleviate any accusation of preferential treatment being given to a chosen few. The reality is somewhat different.

29. From a CART article, August 28 20153: But "any other player" doesn't include radio stations who offer live streaming, explained Myrianne Collin (pictured above), Vidéotron's senior vice president, strategy and marketing. "It's a business decision" to offer this just to streaming music services and not to radio stations or other spoken-word services, she said. (emphasis added)

30. In the context of this proceeding, "business decision" means that as a network operator, there is no regulatory justification for this discrimination. It should be noted that offering radio stations in Québec means a high likelihood of offering stations owned by competitors Bell Média , Radio Canada (CBC) and Cogéco.

31. From the Vidéotron FAQ document: Je suis un fournisseur de lecture de musique en continu. Comment puis-je prendre part au service Musique illimitée? Si vous êtes un fournisseur de lecture de musique en continu et que vous aimeriez être partie prenante du service Musique illimitée, écrivez-nous par message privé via notre page Facebook! Nous vous expliquerons comment amorcer le processus d’intégration à Musique illimitée. Vous devez toutefois répondre à certains critères : Tout service de lecture de musique en continu doit être légal et commercial, et fournir du contenu sous licence à partir de diverses sources. Les sources peuvent inclure une partie ou l'ensemble des plateformes suivantes : les plateformes faisant la gestion des droits numériques du contenu de maisons de disques, les plateformes globales et d’autres plateformes commerciales de contenu musical en continu.Les services exclus comprennent, mais sans s’y limiter : •Les services de lecture de musique en continu provenant de sources privées ou dépourvus de licence; •Tout contenu vidéo et radio.

32. This (and other public statements) show that Vidéotron requires the negotiation of an agreement (whose clauses are not public), and selectively imposes specific restrictions on business relationships , legality of service, DRM etc. These restrictions not only makes it nearly impossible for a non global new entrant to gain market share but by selecting which music service qualifies for their preferential treatment, Vidéotron becomes a "gatekeeper" instead of merely providing the transmission.

3 CART article: https://cartt.ca/article/vid%C3%A9otron-launches-unlimited-music-expect-net-neutrality-advocates-object

Vaxination Informatique Content discrimination 7 of 11 03-Sep-2015 Content discrimination (cont)

33. Vidéotron controls which content provider qualifies for its preferential treatment. As this selection is based on a number of business criteria ranging from relationship with major record labels, whether rights have been obtained and how bytes are formatted (DRM encoded) , it implies control over content. And Vidéotron uses this control to discriminate between content providers in order to justify keeping certain providers out.

34. By limiting the potential partners to only those who fit Vidéotron's "global platform" standards, it makes it much harder for smaller businesses to be accepted for Vidéotron's preferential treatment, especially if they represent local independent Canadian artists who have no relationship with large record labels nor use global platforms or support DRM

35. The fact that Vidéotron states " Les services exclus comprennent, mais sans s’y limiter" gives Vidéotron discretion to refuse any service it wants. And when hybrid services such as Apple Music comes knocking at Vidéotron's Facebook door4, how will Vidéotron react to a service which has both radio and on-demand playlists ? Will it bend the rules for Apple and still block other radio stations ?

Preference onto itself

36. The Aug 27th press release confirms there is also an undue preference toward itself: Cette annonce vise également le lancement dès aujourd’hui par Stingray de chaînes musicales exclusives aux clients Vidéotron mobile dans l’application gratuite Stingray Musique.

37. Since Stingray will make content exclusively available to Vidéotron customers, the zero rating of this data streamed to customers on the applicable "Premium" plans will confer undue preference onto Vidéotron.

4 It is quite doubtful that serious services would use Facebook to contact Vidéotron, yet this is what Vidéotron suggests. Vaxination Informatique Content discrimination 8 of 11 03-Sep-2015 Why LTE only ?

38. Vidéotron's press release as well as FAQ state that this scheme applies only to LTE capable handset, running only IOS or Android, with LTE capable SIMs.

39. Since and likely many others are available for Blackberry5, there is little logic restricting the marketed plan to only IOS and Android as the music streams would be the same and take up the same bandwidth. Just because not all apps would be available on Blackberry does not require Vidéotron to block those that are available from this programme.

40. Furthermore, the requirement to have LTE capable handset with LTE SIM card is very suspect. As streams are limited to 128kbps, something which is perfectly within 3G HSPA capabilities, it is not clear why Vidéotron would impose such a strange limitation. It is also not clear what happens when a customer with LTE handset with LTE SIM moves through an area with only 3G coverage. Would he then be charge for usage for the music without being told because phone automatically change form LTE to 3G and back ?

41. And considering that most music services stream at higher quality than 128kbs by default, how many customers will subscribe to the service thinking their music will be free, only to get a warning during the month that they have exceeded their monthly total ? Vidéotron's advertising fails to warn users to select the lowest possible quality.

42. These weird limitations appears to he haphazerd, and may point to strange limitations imposed in agreements between Vidéotron and its music partners. (Or between Vidéotron and Rogers who share their networks in Québec).

43. There does appear to be undue discrimination against Blackberry (and Windows phone) users who should be able to benefit from this offer if/when an app for a partnered service is available on their platform.

5 Spotify on Blackberry World: https://appworld.blackberry.com/webstore/content/118611/?countrycode=CA&lang=en

Vaxination Informatique Why LTE only 9 of 11 03-Sep-2015 Requested relief

44. Based on violating 27(2) of the Telecommunications Act, Vidéotron should be ordered to cease offering the zero-rated preference onto the music partners with whom it has agreements. It can increase caps for customers on applicable plans to still allow them to continue to stream a reasonable number of hours of music each month or use the increased monthly usage limit in any way they prefer.

45. In a separate step, the Commission should consider issuing a Public Notice to study whether different pricing or zero rating of any/all data streams that are below a certain speed would be a preference considered reasonable or undue. This approach would not discriminate betweern application or content providers and require no agreements, but it would discriminate against high bandwidth application on the basis that they consume greater network resources.

46. Such an approach, if judged to be acceptable, would allow carriers to zero-rate all low bandwidth traffic without identifying the content provider, nature of contents or application.

Conclusion

47. Vidéotron has instituted a marketing programme which provides a preference (unmetered data) onto certain selected partners on its wireless service. Not all parameters which determine whether a content provider can be eligible for the preference are public and of what is public, we know that Vidéotron has excluded a large portion of the music industry for purely business reasons. There is a preference given under 27(2).

48. Traffic from providers who are not approved by Vidéotron, whether music or other, which consume equal or less bandwidth are deprived of this privilege, so under an ITMP lens, there is discrimination.

49. Therefore, there is very little doubt that the preference exists, that it is undue and like the Bell Vanada MobileTV file, the Commission should rule that Vidéotron is violating 27(2) of the act and must cease this approach. Vidéotron has many other fair ways to make its service affordable such as increasing data caps or reducing prices to make it affordable to listen to any music stream, or use data for any application of the end user's choice.

Vaxination Informatique Requested relief 10 of 11 03-Sep-2015 CONCLUSION

Regards, Jean-François Mezei Vaxination Informatique CP 1016 Succ Pointe Claire Pointe Claire, Québec H9S 4H9 514-394-0348 [email protected]

APPENDIX:

List of parties served:

RESPONDANT: Vidéotron ([email protected])

Courtesy copies to: [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

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Vaxination Informatique Requested relief 11 of 11 03-Sep-2015