Public frustration over the state of the Canadian wireless industry has generally focused on consumer-oriented concerns including pricey data plans, misleading system access fees, and text message charge policies. Given the consumer focus, the effect on Canadian business is rarely discussed. My weekly technology law column (Toronto Star version, homepage version) argues that that is set to change as one of Canada’s leading media companies has stepped forward with explosive allegations about how the wireless industry is engaged in practices that stifle innovation by privileging access or controlling content on their networks.
The claims can be found in a recent submission to the Canadian Radio-television and Telecommunications Commission by Pelmorex Media, the owner of the Weather Network in Canada. While Pelmorex is not a household name, the Weather Network's websites rank at the top of Canadian media websites for online visitors.
Pelmorex wrote to the CRTC as part of the Commission's ongoing network management proceeding and was one of the few to focus on the management of wireless networks. Although the submission does not name names, it claims that Canadian wireless carriers routinely impose restrictions on the ability of content providers to deliver advertising as well as restrict or charge more if a customer accesses that advertising. These restrictions undermine the profitability of mobile websites. Moreover, Canadian carriers have established "walled gardens" that feature preferred content. When consumers seek access to alternative content, they typically face higher charges.
The submission points to the following specific incidents that Pelmorex says it has experienced first hand:
- wireless reseller blocking ads from mobile sites
- wireless carriers stripping out tracking codes embedded in web pages, thereby limiting ability to deliver ads
- wireless carriers establishing "walled gardens" that provide preferential access that reduces data charges for sites within the walled garden
- wireless carriers forcing users to use the wireless carrier homepage when accessing the Internet on feature phones
- wireless carriers demanding prior approval of applications for use on smart phones
- wireless carriers imposing additional fees for text messages that include advertisements
- wireless carriers limiting to whom ads in text messages may be sold
The net effect of these practices dampens the potential for online innovation and has a negative impact on mobile electronic commerce in Canada. This comes at a particularly bad time, since the mobile Internet has just begun to gain broad consumer acceptance with some Canadian media companies advising the CRTC that traffic to their mobile sites is now nearly equal to visits to their fixed Internet sites.
The global community is starting to take note of Canada's declining standing with regard to wireless networks and information technology. Last week, the International Telecommunications Union released its latest ICT Development Index that saw Canada drop from 9th worldwide to 19th – the sharpest drop among countries ranked in the top 50 worldwide. While there are several reasons for the decline, the virtual absence of competitive mobile broadband services in Canada was a key factor.
Canadian government officials have to date expressed little interest in wireless net neutrality, in contrast to the U.S., where the issue has been the subject of regulatory hearings, petitions to the Federal Communications Commission, and worked its way into spectrum policy arena. The CRTC is conducting hearings on net neutrality this summer, though it is not certain whether the Commission will adopt an expansive view of the issue to include both wired and wireless concerns. If the Pelmorex allegations are accurate, putting wireless concerns on the agenda is likely to lead to some stormy conditions in the months ahead.