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CRTC Rules Zero-Rating not Allowed by Internet Providers

Last week, the Canadian Radio-television and Telecommunications Commission (CRTC) released its decision on differential pricing by Internet service providers (ISPs). The practice of differential pricing, commonly known as zero-rating, is where an ISP does not count the data used by certain Internet applications against a user’s data usage. Consumer advocates argue zero-rating violates net-neutrality by preferring certain applications and making competing applications more expensive for users. Zero-rating therefore allows ISPs to unfairly prefer certain applications, which stifles competition and alternatives to those preferred applications. ISPs argue that zero-rating encourages innovation, and lowers costs for consumers.

The CRTC found that Quebec based Videotron’s zero-rating of various music apps violated sub-section 27(2) of the Telecommunications Act.  That sub-section provides that “No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.”

In its finding, the Commission applied the framework for determining if an ISP’s practice violates the Act, in particular:

  • the degree to which the treatment of data is agnostic (i.e. data is treated equally regardless of its source or nature);
  • whether the offering is exclusive to certain customers or certain content providers;
  • the impact on Internet openness and innovation; and
  • whether there is financial compensation involved.

While not precluding every practice of zero-rating, the CRTC’s framework provides strong protections for net-neutrality in Canada. Read the full CRTC decision here

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