CRTC Vaxination Access to FTTH Part 1

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 music 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

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