As two of Canada's biggest Internet service providers, Bell Canada and Rogers Communications are fierce rivals that frequently battle for the same customers. That marketplace fight rarely spills into the courtroom, yet my weekly technology law column (Toronto Star version, Ottawa Citizen version, homepage version) notes that last month a Rogers advertising campaign prompted Bell to file a $50 million dollar lawsuit. The result was an end to the campaign and evidence both companies over-promise the speed of their Internet services.
The case began when Rogers launched a direct mail and Internet ad campaign called "Check Your Speed." The campaign warned users the Internet services "you are paying for may not be what you're getting" and encouraged them to test their connection with an independent third party. The campaign unsurprisingly offered Rogers services as an alternative, promising a "reliable speed every time you connect." Just days after the launch, Bell filed suit, arguing in court documents violations of the Trade-Mark Act, Competition Act, along with various torts. The company sought $50 million in general damages, $1 million in punitive damages, and an injunction blocking Rogers from continuing with its campaign.
Two days later, Rogers dropped the third party testing feature. Rather than using a fully independent third party service, Rogers had used a server located in Seattle, Washington to run its tests. The court found that the distance between users in Ontario and the speed test server in Washington might help account for slower speeds. Even more telling was the evidence that placed the spotlight on a Canadian industry practice of advertising the maximum or "up to" speeds for customers, rather than minimum or actual speeds that customers typically obtain. The Rogers campaign was effectively premised on this discrepancy since it encouraged users to check their speeds where they would undoubtedly learn their typical speeds were lower than those promised by their ISP.
The same holds true for Rogers, however. Under cross-examination, a Rogers witness was asked about the Rogers service: "if he [the customer] runs the test, and it tells him that his Internet connection speed is less than 10 megabits per second, is he still getting the Internet speed that he's paying for? "
The response? "The Internet speed he's paying for is "up to," as is industry practice. So I believe the answer is yes. We sell an "up to" service, as is industry practice."
It is this "industry practice" that deserves far closer scrutiny from Canada's telecommunications and competition regulators. While the Canadian Radio-television and Telecommunications Commission has done little to address the issue, its counterparts in the United Kingdom and Australia have taken action.
Late last month, Ofcom, the British telecommunications regulator, released the results of a study that found more than 50 per cent of broadband users in that country are receiving less than half the speed promised by their providers. The Australian Competition and Consumer Commission addressed this issue several years ago, with guidelines for ISPs designed to counter misleading "up to" speed claims.
The Canadian practices are particularly deceiving since ISPs have also been slow to disclose their traffic management practices, which may often result in deliberate slowdowns for certain applications. Rogers recently admitted it charges tiered pricing for faster upload speeds but that all tiers are throttled to the same speed when using peer-to-peer applications.
As Canada's ISPs battle in court over which company is more deceptive, it is time for Canadian regulators to step in by conducting their own tests on promised speeds and establish clear requirements that bring truth back to ISP advertising.