Two of the leading issues before the CRTC – over-the-top video and usage based billing – have come together as Shaw has announced plans to launch a new online movie service designed to compete with Netflix. Subscribers to the service, which will cost $12 per month, will be able to watch on their TV and computer. Most notably, Shaw says that the service will not count against subscriber data caps. Given the problems users of over-the-top video services have encountered with the caps, the Shaw approach places the spotlight on the CRTC net neutrality guidelines and undue preference rules. [Update: Shaw now says that watching movies via the Internet will count against user caps]
Last week I examined the failure to effectively enforce the guidelines, however, this case raises the question of whether Shaw is violating the rules by offering an over-the-top video service that does not count against a user cap while traffic from competitors such as Netflix does. The obvious complaint will be that Shaw is giving itself an undue preference in violation of Section 27(2) of the Telecommunications Act:
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.
Interestingly, the Internet traffic management practices (ITMPs) are generally focused on technical ITMPs such as throttling, however, this would involve an economic ITMP (data caps or linking rates to end user consumption). While the CRTC has said that economic ITMPs “would generally not be considered unjustly discriminatory”, treating equivalent services differently for the purposes of an economic ITMP should surely qualify as unjust discrimination.
Indeed, a comparable service from Rogers – Rogers On Demand Online – makes it clear that data usage from that service counts against user caps. Similarly, the conditions placed on the Comcast – NBCU merger earlier this year in the United States were specifically designed protect online video services from this form of discrimination (sadly the issue barely caused a ripple in the Shaw-Canwest and Bell-CTV merger hearings). At a minimum, assuming the service is as described in the article, it would seem that a CRTC complaint is a certainty and the pressure will be on the Commission to demonstrate that the law against undue preference in Canada has some teeth.