Netflix Hires Former Telecom Regulators as Canadian Lobbyists

Netflix Inc., the U.S. movie-rental service that began operating in Canada last year, hired two former regulators to help smooth its first international expansion as an Internet billing debate grows.

Leonard St-Aubin and Jan Skora, both former director- generals with Canada’s federal department that oversees the telecommunications industry, will advise Netflix, the registry of the Office of the Commissioner of Lobbying of Canada shows.

Netflix began offering Canadians unlimited movie downloads for C$7.99 ($8.05) a month in September, adding to a debate on how heavy Internet users should be charged for downloads. Canada’s main telecommunications regulator and the federal government disagree over whether large cable and phone companies can charge smaller Internet service providers on the basis of usage-based Internet billing.

Steve Swasey, a Netflix spokesman, confirmed the appointments and declined to comment on the specific work St-Aubin and Skora will be doing for the Los Gatos, California- based company.

“It’s an evolving market and Netflix is new in Canada,” said Swasey. He said the company’s staff and infrastructure are based in the U.S. “We want to have the right people on the ground in the discussions.”

Industry Minister Tony Clement has rebuffed efforts by BCE Inc. and Rogers Communications Inc. to impose per-use billing on smaller service providers such as Primus and TekSavvy Solutions Inc., which purchase bandwidth then resold to consumers. Sales of Internet services account for C$6.6 billion of the country’s C$41 billion telecommunications industry, according to data from the Canadian Radio-television and Telecommunications Commission.

Canadian Growth

Clement said this month he would overrule a January decision by the regulator that would have forced usage-based billing on the smaller Internet service providers. Montreal- based BCE and other telecom companies already have usage-based billing for their Internet customers, and sought to impose the same pricing system on service providers on their networks.

While Netflix’s growth in Canada outpaces that in the U.S., the imposition of per-use billing would threaten to slow the expansion and is something “we’re definitely worried about,” Chairman and Chief Executive Officer Reed Hastings told analysts last month. He said Canadians who have Internet service with download limits may not understand how their plans work and their reaction after receiving a couple of bills “is potentially a significant negative for Netflix.”

Subrata Bhattacharjee, a Toronto-based competition lawyer with Heenan Blaikie LLP, and Lynne Hamilton of GCI Group Inc. have also been hired to lobby for Netflix, Swasey said. Telephone messages left for Hamilton and Karyn McLean, a Heenan Blaikie spokeswoman, weren’t immediately returned.

Jan Skora’s clients include TekSavvy, for which he is lobbying on usage-based billing, the registry shows. Skora didn’t immediately return a call seeking comment. Leonard St- Aubin deferred comments to Netflix when reached by phone.

To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net Theophilos Argitis in Ottawa at targitis@bloomberg.net;

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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