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Does Shaw know or care about Internet rules?

The company was back in the news late last week, but likely not for the reasons it hoped.

CB_Shaw

Photo: Jeff McIntosh/CP

What’s going on with Shaw Communications? Of all the telecommunications companies in Canada, none seem to be more schizophrenic than western Canada’s largest cable provider, if recent actions are any indication.

The company was back in the news late last week, but likely not for the reasons it hoped. While its announcement of a rival service to Netflix—called Movie Club—was the intended headline grabber, Shaw instead took flak for what looked like a blatant net neutrality violation.

Movie Club, according to the Calgary Herald, will essentially replicate Netflix’s all-you-can-eat movie service for a monthly fee. But, as company president Peter Bissonnette said, watching stuff on Movie Club won’t count against Shaw customers’ monthly usage caps:

As well, subscribers to Movie Club—who initially can watch on their TV or computer, with phones and tablets planned to come on line later—can view content without it counting against their data plan. “There should be some advantage to you being a customer,” Bissonnette said.

To anyone familiar with net neutrality, that would of course be a violation in the first degree. Net neutrality rules in Canada require telecom and cable companies to treat all services that run over the internet equally. By not counting the hefty gigabytes that online movies chew up, Shaw’s Movie Club would inevitably be cheaper and more desirable to use than Netflix.

Not surprisingly, Shaw took heat for the move. Michael Geist said a complaint under the Telecommunications Act to the CRTC would be inevitable while Open Media said it was a clear attempt to try and turn the internet into a two-tier service. I was pretty shocked at Shaw’s blatant anti-neutrality move myself and said on Twitter that it was either incredibly bold or amazingly dumb. More on that in a minute.

A day later, on Friday, Shaw shifted into damage control mode. Through Twitter and other statements, the company clarified that the Movie Club service going through cable subscribers’ set-top TV boxes would not count against monthly data caps, but if customers used it over the Internet—on their computers or tablets, for example—it would. Net neutrality concerns were therefore not necessary, since Shaw’s service will play by the rules. As the company said on Facebook:

Shaw Movie Club is intended to be watched through your set-top box. You can order your movies online through vod.shaw.ca and send it to your set-top box for viewing—watching movies on your set-top box won’t affect your included Internet data. However, you can also stream your Movie Club movies online to your computer—this WILL contribute to your Internet data.

Movie Club thus sounds like two different services. The internet portion, which will count toward users’ monthly data limits, sounds very much like an “over-the-top” service such as Netflix. The TV version, however, sounds more like a repackaging of the cable provider’s existing video-on-demand service. Rather than VOD users paying per selection, they’ll simply get unlimited access for a monthly fee instead.

Open Media still has problems with this set-up, but I’m not as concerned. Bandwidth isn’t much of a problem when it comes to traditional cable, so if Shaw wants to be able to introduce a Netflix competitor that way, it shouldn’t just be allowed to—it should be encouraged to do so. It is when such a service is offered in a discriminatory manner over the internet that the problem occurs, which doesn’t appear to be the case with Movie Club.

However, it’s starting to become clear that Shaw’s left hand might not know—or agree with—what the right hand is doing. Bissonnette, one of the company’s top executives, was pretty explicit in saying that Shaw customers should have some advantages in using Movie Club over non-customers, a position the Herald reporter stuck to in her follow-up story. Yet a day later, someone else at the company—it’s not clear who—either overruled or corrected him.

The company was similarly lost in the woods on the usage-based internet billing issue. Back in May, when Shaw introduced new internet plans that feature large usage caps in response to user complaints about UBB, company executives also gave people the impression that they’d have to subscribe to cable TV to get those plans. According to multiple reports from people who attended meetings with the executives, the company wasn’t planning on offering standalone super high-speed, high-usage internet plans, thereby raising the spectre of tied-selling, a practice that is illegal in Canada.

The company has since made standalone internet plans available, albeit at a $15 markup, but that particular bullet from the Competition Bureau has been dodged, for now at least.

That brings us back to the question of whether the company is incredibly bold or amazingly dumb. In both the Movie Club and UBB cases, executives have shown themselves to be oblivious to how their products may violate existing CRTC or Competition Bureau rules. In both cases, executives touted services without apparently knowing whether or not they were legal. That either means they simply don’t know about the rules, or they don’t care about them. Quite frankly, I’m not sure which is worse.