The Canadian Radio-television and Telecommunications Commission (CRTC) ruled on Thursday that Quebecor Inc's (>> Quebecor, Inc.) Videotron can no longer offer unlimited music streaming from Spotify, Google Music (>> Alphabet Inc) and others to wireless customers without it counting against their data allowances, a practice known as zero-rating.
Videotron, which has until July 19 to comply, said the decision would prevent it is a new entrant from setting itself apart from established mobile operators.
The CRTC did not issue a blanket ban, however, instead saying it would rule on a case-by-case basis on whether such arrangements provide "undue or unreasonable" preference.
"On a technicality it leaves some wiggle room for some really creative attempts at zero-rating that can be challenged after the fact," said Laura Tribe, the executive director of consumer advocacy group OpenMedia.
"This is a really strong step for Canada in terms of being a global leader in net neutrality," she added.
The ruling, which covers both fixed-line and wireless internet, comes amid an ongoing global debate on whether suppliers of connectivity must treat all data equally, a concept known as net neutrality.
EU telecom regulators last year limited the extent to which some applications may be exempted from data limits.
Meanwhile, U.S. President Donald Trump's appointee to head the Federal Communications Commission plans to roll back Obama-era net neutrality rules and wants internet service providers instead to voluntarily agree to maintain an open internet.
"When combined with the federal government's clear support for net neutrality, the Canadian framework is now one of the strongest in the world," University of Ottawa law professor Michael Geist wrote on his personal website.
The CRTC had previously ruled mobile television products offered by BCE Inc's (>> BCE Inc.) Bell Mobility and Videotron ran afoul of the law, while other large operators such as Rogers Communications Inc (>> Rogers Communications Inc.), Telus Corp (>> TELUS Corporation) and Shaw Communications Inc (>> Shaw Communications Inc) have avoided the practice of content-specific pricing.
"We're glad that internet providers won't be allowed to act as gatekeepers and give privileged access to a select few," said David Watt, head of regulatory affairs at Rogers, which dissented from its peers by arguing against the practice at a hearing late last year.
BCE said it saw the decision as consistent with how it already operates.
(Reporting by Alastair Sharp; Editing by Diane Craft and Sandra Maler)
By Alastair Sharp