A Cord-Cutting Battle in Canada is Brewing Between a Telecom David and Goliath

In Canada, it's completely legal for a small cable or IPTV company, which sends content over the internet to set-top boxes, to "retransmit" some TV channels sent over the air, including local stations and US offerings like Fox and NBC.

That's true even if they don't own the broadcast rights to these shows. They still won't be violating copyright, and don't need to consult the rights holder before doing it, which is great for pretty much everybody involved. Canadians get a broader choice of programming no matter which cable company they choose, and local stations get more exposure.

Ontario-based VMedia is doing this, but with a twist: not only does VMedia retransmit TV to people who buy one of their set top boxes, but it also retransmits to anybody who has an internet connection and an app on a Roku box, a device similar to Chromecast.

Bell Canada, one of the country's three largest telecom companies, doesn't like this. It plans to seek a legal injunction against VMedia, and, the CBC reported, maintains that the company is infringing their copyright by retransmitting TV signals over the open internet instead of just through their proprietary set-top box, and without first negotiating with Bell.

The reason for Bell's legal challenge, according to a court filing, is that VMedia's service "is causing, and will cause the subscribers of Bell TV, and other Bell Media partners, to 'cut the cord' and terminate their television subscriptions.'

Read More: The Motherboard Guide to Cord-Cutting

"It's a weird argument because CTV is available over the air and you could watch it with an antenna," said Alysia Lau, a lawyer at the Public Interest Advocacy Centre in Ottawa. "In this case you're just watching the exact same feed over the internet, commercials and all."

"All regulators are trying to figure out if it's really the same thing and you're just watching it on another medium, or if the internet is a new realm with different rules," Lau continued.

Neither Bell nor VMedia responded to Motherboard's request for comment, and we'll update this article if and when we hear back.

Canada's laws here are extremely complicated and somewhat murky. A legal case would chart unexplored waters when it comes to cord-cutting, Lau said.

VMedia is a broadcaster licensed with the CRTC, and thus a legitimate cable or IPTV "retransmitter." But it also retransmits over the internet, making it a "new media transmitter" under the Copyright Act. New media transmitters don't qualify for the copyright exemptions that cable or IPTV retransmitters do—VMedia is technically both, but to get the exemption it needs to argue that it's really just a normal retransmitter.

Bell is arguing that by acting as a new media retransmitter when broadcasting over the open internet, VMedia should not receive the copyright exemptions that it would qualify for as a normal retransmitter.

VMedia pays royalty fees to any company that they retransmit, and charges its customers $17.85 per month for the service, which is meant to compete with the $25 "skinny" plans telecoms in Canada are legally mandated to offer.

Bell's own skinny plan, in contrast, until last month—and only after immense public pressure—cost customers anywhere from $60 to $100 per month since the company required folks to also sign up for its internet service in order to access the plan.

A ruling in favour of VMedia would be "great for consumers and it increases competition and access," Lau said.

"These channels are available for free anyway, and now the ways that Canadians can access them is growing."

Get six of our favorite Motherboard stories every day by signing up for our newsletter.