Mark Goldberg


www.mhgoldberg.com





The Canadian Telecom Summit

Fox Group Dispatch

#CASL: Clarifications are in order

The House of Commons Standing Committee on Industry, Science and Technology (INDU) has released its report [pdf, 4.3MB] following the statutory review of Canada’s Anti-Spam Legislation (CASL) and the Committee has made a number of recommendations to “ensure the Act continues ‘to promote the efficiency and adaptability of the Canadian economy.'”

Ever since its enactment, CASL’s main challenge remains to balance, on the one hand, restricting the transmission of unsolicited commercial electronic messages in order to limit the costs associated with such messages and protecting Canadians against spam, and, on the other, allowing individuals and organizations to promote their lawful activities. Meeting this challenge requires clear legislative action that does not lead to unintended consequences.

The report has a total of 13 recommendations, ranging from the trivial to far more substantive. Recommendations 1 and 13 deal with the name of the Act itself, recommending that the Act be called the “Electronic Commerce Protection Act” (ECPA) as contrasted with the name that rolls off no one’s tongue: “An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act“. Catchy, right?

The bulk of the recommendations incorporate the phrase “unintended cost of compliance”, evidence that the message has been received: CASL has led to unintended costs for Canadian businesses which ultimately are borne by consumers.

Three of the recommendations target the CRTC: increasing education efforts; sharing information with law enforcement agencies; and, increase transparency in its investigations and determinations of penalties.

The INDU Committee is recommending changes, made clear from the title of its report, “Canada’s Anti-SPAM Legislation: Clarifications Are In Order.” The report concludes with a clear message to the Government:

While improving guidance and education should be a priority moving forward, it can only achieve so much. The Act and its regulations require clarifications to reduce the cost of compliance and better focus enforcement. Provisions defining CEM, consent, and “business-to-business” messages, among others, warrant the attention of the Government of Canada. The Government will be in a better position to assess the impact of the coming into force of the private right of action once these clarifications are implemented.

As longtime readers of this blog are aware [just use search word “CASL” to see], I agree. Clarifications are in order.

Meeting regulatory service standards

In a decision released earlier today, the CRTC finally corrected a small but significant error it made in Telecom Decision CRTC 2017-56, “Wholesale mobile wireless roaming service tariffs – Final terms and conditions”.

There was a single bullet point in the Appendix to that decision that caused concerns for Bell:

15.(a): Delete the second sentence. The third (i.e. final) sentence is sufficient to address this matter.

Here is the paragraph in the originally proposed Bell Tariff to which this instruction refers:

The Operator acknowledges that the Company has an equipment identity register (“EIR”) program. If any Device belonging to a Roaming Customer is identified as being stolen or unauthorized equipment that is registered in the Company’s EIR or in another EIR registry program in which the Company participates, then the Company shall be entitled to prevent usage of such equipment on the Company Available PMN. In the event the Company notifies the Operator of any Devices that have been used for Roaming which the Company believes have been stolen or are unauthorized, then the Operator shall use commercially reasonable efforts to investigate the registration of the Device and, where appropriate, suspend such Devices. [emphasis added]

The intent of the sentence was to permit Bell to block the use of a device that is on the Equipment Identity Registry (EIR) – the blacklist of stolen phones.

On April 10, Bell filed an application to review and vary that portion of the Decision, saying “we believe that the Commission’s directive is in error.” As Bell stated in its application, “any blocking of devices based on the EIR is automated and this sentence simply informs wholesale roaming customers of this fact.”

In reply, Rogers, TELUS, Freedom Mobile and Quebecor (Videotron) all endorsed the Bell application. There was no opposition to the filing. On May 25, Bell filed its reply, observing that all 4 of the interventions were in support, and “no party objected to our Application or our requested relief.”

A little more than 6 months later, the CRTC has finally cleared this file, saying: “the Commission finds that it erred in fact with regard to its determination on item 100.15.(a), and approves Bell Canada’s application to review and vary this portion of Telecom Decision 2017-56. The Commission therefore rescinds its directive for Bell Mobility to delete the proposed second sentence of item 100.15.(a).”

More than 6 months to approve an uncontested application that likely could have been handled as an erratum if there were better channels of communications.

“In order to help monitor its efficiency in disposing of applications, and in response to requests from stakeholders for more reliable response times by the Commission,” the CRTC established service standards “for the processing time to issue determinations on various types of telecommunications applications.” The current version of the standards were set in 2011.

Indeed, in Section 1 of the 2006 Policy Direction to the CRTC says:

  1. the Commission, to enable it to act in a more efficient, informed and timely manner, should adopt the following practices, namely,
    1. to use only tariff approval mechanisms that are as minimally intrusive and as minimally onerous as possible,
    2. with a view to increasing incentives for innovation and investment in and construction of competing telecommunications network facilities, to complete a review of its regulatory framework regarding mandated access to wholesale services, to determine the extent to which mandated access to wholesale services that are not essential services should be phased out and to determine the appropriate pricing of mandated services, which review should take into account the principles of technological and competitive neutrality, the potential for incumbents to exercise market power in the wholesale and retail markets for the service in the absence of mandated access to wholesale services, and the impediments faced by new and existing carriers seeking to develop competing network facilities,
    3. to publish and maintain performance standards for its various processes, and [emphasis added]
    4. to continue to explore and implement new approaches for streamlining its processes.

The CRTC issues a scorecard each year for its performance during the previous year but the report does not show aging for applications that are still open. So, in the most recent report [for year ended March 31, 2017], the CRTC only closed 7 of 30 Part 1 applications within its objective of 4 months from the close of the record – just 23%.

The current version of the scorecard provides no information about the aging of outstanding applications that have not yet been closed. Such information may be helpful as a tool “to help monitor its efficiency in disposing of applications,” and to help provide stakeholders with more reliable response times.

As Bell said in its application, today’s decision was all about correcting a minor factual error or misinterpretation of the sentence that the Commission erroneously ordered deleted.

Perhaps there needs to be an examination of the processes that led to such a lengthy delay dealing with an uncontested Part 1 application.

Launching The 2018 Canadian Telecom Summit

Registrations are now open for The 2018 Canadian Telecom Summit, taking place June 4-6 in Toronto.

The new website is now running and we have started the process of building the schedule for next year’s event.

Register now and get a receipt online, if you are trying to manage your year-end budget.

Visit the conference website often to see the program as it continues to develop.

Now in its 17th year, The Canadian Telecom Summit is Canada’s leading ICT event, attracting the most influential people who shape the future direction of communications and information technology in Canada.

For 3 full days, The Canadian Telecom Summit delivers thought provoking presentations from the prime shapers of the industry. This is your chance to hear from and talk with them in both a structured atmosphere of frank discussion and high-octane idea exchange and schmooze in a more relaxed social setting of genial conversation.

The theme this year is Innovation and Disruption in ICT: reinventing and securing our business and personal lives. In-depth panels will examine:

  • Cyber Security: Securing your data, protecting your privacy;
  • The 5G journey: IoT, connected cars, mobile video and more;
  • Customer Experience Management;
  • Cultivating an Innovation Economy;
  • Network Innovation & Service Delivery: Transforming networks & applications for nexgen services;
  • Artificial Intelligence: Should we embrace or fear what’s coming;
  • and of course, the not-to-be-missed Regulatory Blockbuster.

If your interests are in the Telecommunications, IT or Broadcasting sectors, you need to attend The 2018 Canadian Telecom Summit. Mark the dates on your calendar: June 4-6, 2018.

Take advantage of our early bird registration rates by reserving your place now.

Another look at ARPU

There are a number of Canadian telecommunications industry observers who seem to have trouble with basic mathematics. One of the areas they frequently confuse is mixing up “ARPU” (average revenue per user) with “prices”.

A number of financial analysts produce regular reports that have typically shown that Canadian wireless carriers enjoy some of the world’s highest ARPU, to which the knee jerk reaction is that this is evidence of Canadian prices being among the highest in the world.

There are a number of problems with this. If subscribing to wireless services was a binary purchase decision (either I subscribe, or I don’t), then ARPU might be a reasonable proxy for price.

But we don’t just subscribe to mobile. We choose a data plan, we choose certain feature options (long distance, US calling, unlimited text and messaging, roaming packages) and we choose whether we want a device subsidy bundled in. It is that mix of features that we add that leads to our monthly bill rising, resulting in aggregate to the carriers’ ARPU. Canadians and Americans are among the world’s biggest users of mobile data, so the data ARPUs will naturally be higher.

Price may contribute toward ARPU, but if the price rises too high for an option, demand drops and the overall ARPU can fall. I spend more at a certain store each month, than I do at another, precisely because their prices are lower. The ARPU for the first store is higher, but ARPU in that case is be a very bad proxy for comparing relative prices at the stores.

That explains why ARPU should not be used as a proxy for comparing prices.

But there are also differences in the way carriers recognize revenues. In a recent investor note related to the Shaw-Freedom “$0 iPhone”, Jeff Fan at Scotiabank observed:

Shaw’s Freedom ARPU and subsidy accounting difference. Under Shaw’s accounting methodology, subsidies are not expensed initially (booked as receivables that are amortized against future revenue). This means EBITDA is higher and reported ARPU will be lower.

The major carriers have been reporting that there will be a transition to International Financial Reporting Standards (IFRS 15), resulting in a substantial change in reported service revenues. For example, from Rogers’ latest annual report, we read:

We anticipate this will most significantly affect our Wireless arrangements that bundle equipment and service together into monthly service fees, which will result in an increase to equipment revenue recognized at contract inception and a decrease to service revenue recognized over the course of the contracts.

The standard is effective for annual periods beginning on or after January 1, 2018.

Similar notes appear in the annual reports for Bell and TELUS. In the near future, we are about to see significant drops in the ARPU being reported by the major carriers, solely because of this accounting change.

To what extent have accounting differences contributed to the general misunderstanding of Canadian ARPU rankings in global comparisons?

The end of the internet as we know it?

I took a look through the archives of my blog to see what I have written on Net Neutrality.

It strikes me that this issue has been open a long, long time.

The current furor in the US is over regulations that have only been in force for the past 2 years. Much of the hyperbole says that dismantling the US rules will mean the end of the internet as we know it, which is somewhat disingenuous, considering that most of the internet as we know it was developed in the absence of these regulations.

As I Storified from a Twitter rant earlier today, here are links to some highlights from my archives, reaching back more than 11 years.

The end of the internet as we know it? Hardly.

I wonder: in two years, will Canadians look at the state of the internet in the US and be happy with the CRTC’s internet regulatory framework, or seek the return of market-led development?