In ESA v SOCAN the Supreme Court found that downloading a video game does not constitute a communication to the public under s.3(1)(f) of the Canadian Copyright Act. In this case ESA represented a coalition of video game publishers and distributors who enabled customers to download copies of video games as an alternative to buying physical copies of the games in shops. It was key in this case that ESA had already paid royalties in respect of the video games, therefore the Supreme Court held that download of the game should not attract additional fees as this would violate the principle of technological neutrality. Therefore downloading the game was not a communication to the public.
Of course the last sentence of the above paragraph does not necessarily flow from the principle of technological neutrality that the Supreme Court was seeking to implement, and to say that a download does not constitute communication to the public has much broader implications. It is not clear from the statement of claim whether the mobile phone providers have already paid royalties in respect of the ringtones in a different format and therefore are seeking to apply the principle of technological neutrality affirmed by the Supreme Court, or whether they simply want to rely on the Supreme Court's finding that downloads do not constitute communications to the public to exempt them from paying royalties at all.
Either way, the Canadian mobile phone providers are asking for their money back as well as a declaration that that the transmission of a ringtone is not a communication to the public by telecommunication.
As an aside, in Europe the term communication to the public (used at Article 3 of the InfoSoc Directive) has also been much discussed. Most recently, the CJEU has held in UsedSoft v Oracle that in the EU download of a computer program is a distribution rather than a communication to the public for the purposes of Article 3 (see here for a report of the judgment). The CJEU limited its decision to software licensing, so the principle doesn't automatically extend to other content distributed over the internet, however it gives a good indication of how the CJEU might address the question of downloads in general.
The main similarity between the decisions of the Canadian Supreme Court and the CJEU is the feeling that users should not be penalised because they choose to download content rather than buying it on the high street. With that in mind, if the Canadian mobile phone providers are looking to benefit from not paying royalties at all they may find that they have an uphill battle on their hands.