Does Rogers Spotify deal side-step zero rating ban?

Streaming service will count against Fido users’ data caps, but the price discount raises questions.

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Rogers Spotify Deal:

When is something that isn’t zero rated really something that is zero rated? That’s the question Rogers’ new deal with Spotify brings up.

Zero rating is an emerging issue in the fight over net neutrality. It’s where an internet provider discounts a certain use of the internet – say a specific messaging app or video streaming service – from customers’ monthly data caps. Other apps that aren’t so chosen continue to be counted against those limits.

There’s usually some sort of financial transaction going on behind the scenes between the carrier and the app provider to facilitate the freebie data, or the carrier is looking to favour its own content by making it cheaper to consume.

It’s a relatively new phenomenon, but it’s growing rapidly, especially in wireless. Numerous carriers around the world have introduced zero-rating offers on various apps in recent years, from Spotify and Facebook to BBM and WhatsApp.

It’s also found in some countries on the wired broadband side. Comcast tried to discount Xbox traffic a few years ago in the United States, while zero rating of Netflix and other streaming services in Australia is commonplace.

Internet providers say zero rating is great for customers because it cuts them a break on data. They get to use their favourite apps without worrying about exceeding monthly caps.

On the other hand net neutrality advocates say zero rating is just the latest effort by carriers to apply a cable TV-like model to the internet. By picking certain apps as winners, they will make it more difficult for new competitors to arise.

A few countries including Chile, the Netherlands and Slovenia have passed outright bans on zero rating as a result. Regulators in Canada and the United States have mostly banned the practice (or have signalled they’re not in favour of it).

The Canadian Radio-television and Telecommunications Commission in January ruled that Bell and Videotron could not privilege wireless video services of their own choosing in this manner and ordered them to stop. Videotron has obeyed but Bell is looking to appeal the order in court.

It’s in the wake of that decision that Rogers on Monday announced its deal with Spotify. Subscribers to Rogers’ Fido wireless brand will get a free two-year subscription to the music streaming service, valued at $9.99 a month. As per the press release:

This exclusive agreement will give Fido customers a free 24-month subscription to Spotify Premium, so you can stream to your heart’s content. Plug in and escape, anytime, anywhere, and listen to anything you’re into.

A Rogers spokesperson confirms that the offer does not include zero rating, meaning that Spotify will indeed count against customers’ usage caps. On that front, the deal appears to be compliant with the CRTC’s rules.

However, does the offer skirt the heart of the order while technically complying with it?

Rogers isn’t allowed to discount the data used by Spotify, so it’s doing the next best thing – it’s discounting the cost of the service itself.

Net neutrality advocates might argue this has the same effect as zero rating data because it makes it tougher for other music services to succeed. If other wireless carriers were to offer similar deals with Spotify, then the likes of Rdio, Deezer and others would be disadvantaged in the eyes of consumers.

Such a scheme would allow a deep-pocketed service or app provider to buy its way to the top of the food chain, which is anathema to net neutrality supporters, who argue that everyone should have a fair shake.

On the other hand, merchants have been throwing in freebies with their various good and services for ages. Whether it was a free eight-track radio for a new car or an extended warranty on a TV set, add-ons have long been an accepted part of commerce.

The difference in this situation might come down to the cost of what’s being given away. In the case of zero-rated data, the actual cost to the carrier of the discounted bits is negligible, which makes discrimination with zero rating more obvious and potentially egregious.

In the case of a service such as Spotify, which carries with it a real, set price, the cost is not insignificant. Rogers and Spotify didn’t disclose the terms of their agreement so it’s difficult to assess whether money is changing hands. Rogers could be subsidizing the cost of the subscription, Spotify may be discounting it in exchange for marketing, or some combination in between.

As far as the CRTC is concerned, chairman Jean Pierre Blais said during the zero rating announcement that the regulator has to “keep the lanes of our bridges unobstructed so that everyone can cross.”

The Rogers Spotify deal doesn’t obstruct that bridge on a technical level, but whether that’s just a technicality is a question worth asking.

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