Mark Goldberg


www.mhgoldberg.com





The Canadian Telecom Summit

Fox Group Dispatch

Looking at who, not just where

For the first time in recent memory, the Federal Budget [pdf, 2.6MB] released yesterday looks at measures to increase adoption of internet services. Typically, the government has allocated money toward stimulus of rural and remote broadband, without considering the more significant challenge of increasing the demand side in urban and rural communities.

Open Media was quick to criticize the lack of additional funding, “It’s a real letdown to see the government discuss innovation without any new funding commitment for Internet infrastructure, despite the CRTC’s historic ruling in December that every Canadian should have affordable, reliable Internet access.” However, the budget maintains the $500M in support for rural internet infrastructure announced last year, the vast majority of which is set for spending beginning in the 2018-19 fiscal year. In addition, the CRTC established its own rural internet support programme, setting up $750M in new funding, so it is difficult to see how the Federal Government could have responsibly gone beyond its current level of commitment.

I have said before, what is needed most from Ottawa doesn’t take money, we needs leadership. Yesterday’s Budget is promising from the perspective of starting to say the right things and starting to send the right signals.

According to the Economist Intelligence Unit, Canada is tied for 8th out of 75 countries in terms of Internet inclusivity. Canada does particularly well on measures of Internet affordability—ranking first overall. Canada is also successful in terms of Internet quality and availability and in terms of having local and relevant Internet content. An area where Canada can improve, however, is by addressing digital divides that result in some Canadians being underserved by the digital economy. The Digital Literacy Exchange and Accessible Technology Development programs proposed in Budget 2017 will enable Canada to make progress in this important area.

An entire section of the Budget is entitled “Making Home Internet Access More Affordable for Low-Income Families”

Since 2008, the pages of this blog have been calling for government leadership to promote low income options for internet service and home computers. Income verification has been among the biggest challenges for service providers that wanted to offer a discounted service to low income households. Up until now, the Federal Government was unwilling to help, leading service providers to work with provincial and municipal agencies to identify qualifying households. The Budget represents the first time the Federal government has acknowledged its role in promoting such solutions.

Access to the Internet opens up a world of opportunities—from social connections with friends and family to new ways to learn and work. Most Canadians are already online, but many low-income families face financial barriers to access, such as the cost of purchasing a computer and the high cost of an Internet connection at home.

Budget 2017 proposes to invest $13.2 million over five years, starting in 2017–18, in a new Affordable Access program, which will help service providers offer lowcost home Internet packages to interested low-income families.

As the cost of computer hardware is also a barrier for some families, a target of 50,000 computers refurbished through the existing Computers for Success Canada program will also be distributed to families, along with the low-cost Internet packages.

In October, I wrote “Building a broadband research agenda,” calling for “serious research into why people don’t subscribe to broadband.” The budget has allocated $5M to begin the process.

To better understand how Canadians use digital technology, Budget 2017 also proposes to allocate $5 million over five years, starting in 2017–18, for Statistics Canada and private sector-led surveys on the impact of digital technology in Canada.

The Budget also promises “to review and modernize the Broadcasting Act and Telecommunications Act.”

In thia and Canadian content creation. Further details on the review will be announced in the coming months. s review, the Government will look to examine issues such as telecommunications and content creation in the digital age, net neutrality and cultural diversity, and how to strengthen the future of Canadian media and Canadian content creation. Further details on the review will be announced in the coming months.

I have written before that Canada is long overdue for a review of digital policy matters. Recall that the Telecom Policy Review panel called for a fresh look every 5 years. That was in 2006.

I try to be a “glass half-full” kind of guy, tainted with a healthy measure of cynicism. Canada’s telecom policy has been drifting aimlessly for more than a decade, with random measures introduced into legislation absent a cohesive digital strategy. In other posts, I have suggested that Ottawa has delivered “Inconsistent messages; predictable turmoil.” But I am optimistic that a new review of legislation will provide the opportunity for a fresh start.

A year ago, I wrote “Overdue for digital leadership.” Are we now getting onto the right track?

As I have suggested before: Set clear objectives; Align activities with the achievement of those objectives; Stop doing things that are contrary to the objectives.

Community networks are hard

A few weeks ago, the Financial Post ran a story by Emily Jackson about the drive by some advocates for communities to build their own networks (“Left in the digital dark ages, small town Canada chases its own gigabit dream“).

Community networks are also attracting the attention of major cities. San Francisco has appointed a panel studying the development of a billion dollar community broadband network.

It seems that many have forgotten the days of telephone and telegraphs operated as part of government postal departments. With very few exceptions, those were not happy times.

In the Financial Post story, Emily Jackson quotes me saying:

“Governments have a really lousy track record of operating things for consumers,” said telecom consultant Mark Goldberg.

Governments are good at building things, he said, but there isn’t any “political glory” associated with maintenance when, for example, aerial fibre cables get cut in ice storms. Plus, there’s a risk of setting up monopolies since private-sector companies can’t compete against their own tax dollars.

There are times when community networks can make sense, but too often, naive business plans overestimate the demand for ultra high speed service, while underestimating the costs of ongoing maintenance and system upgrades.

The Taxpayer Protection Alliance Foudation has produced a website that details “Broadband Boondoggles: A Map of Failed Taxpayer-Funded Networks.” (Also, see its “Dirty Dozen” report [pdf, 2.9 MB]) Among the examples of failed networks stands UTOPIA, the Utah Telecommunications Open Infrastructure Agency, with half a billion dollars in taxpayer funding.

Utah Telecommunication Open Infrastructure Agency (Utah) – A consortium of 16 cities in northern Utah spent more than $500 million in public funds to build the regional fiber network known as UTOPIA. Thanks to high overhead costs and weak customer numbers, UTOPIA loses $13 million annually, is suffocating under more than $442 million in debt and is considered to be one of the biggest broadband failures in U.S. history. In 2015, the network only had around 11,000 subscribers and is adding fewer than 500 new customers per year. Taxpayers are on the hook to continue paying off bonds used to fund the network until at least 2040.

As I told the Financial Post, if a community bands together seeking more advanced communications infrastructure, then absolutely, the municipal leadership should be advocating for it. The challenge is designing the right network architecture and business structure to deliver it, and in doing so, ensuring no citizens are left behind.

Community networks are hard to get right, and very costly when done wrong.

Building an affordable digital world

To mark World Consumer Rights Day 2017, Canada’s Public Interest Advocacy Centre (PIAC) asks “How do we build a digital world that is affordable for everyone?

Are governments and policy makers in Canada and the rest of the world ensuring everyone can get online? PIAC believes much more can and must be done, especially to ensure low-income families – those who could benefit most from being online – can affordably access broadband.

PIAC notes that low income households are far less likely to subscribe to home internet service, as regular readers of this page know. PIAC says that cost was the number 2 reason cited by respondents for not subscribing. Lack of interest was the primary reason given, but other surveys have found this to be a euphemism affordability for families that are having trouble putting food on the table or paying for shelter.

As I wrote last month, during the hearing that led to the Basic Service Objective determination, CRTC Chair JP Blais interrupted the proceeding and said “Every day that goes by without a more robust Canadian broadband strategy means a Canadian who is socially and economically vulnerable continues to be profoundly disadvantaged.” Still, as PIAC notes in its press release, “the CRTC decided not to address affordability for low-income households at all, and instead asked the Canadian federal government to add this issue to its forthcoming Innovation Agenda.”

Since 2008, my opening remarks each year at The Canadian Telecom Summit have called for government and industry to work together to help increase adoption of broadband services in low-income households. TELUS and Rogers have stepped up to offer significant discounts on broadband service as well as low-cost computers, technical support and literacy training. But the government missed an opportunity to make such a program even more widely available as part of its approval of the Bell / MTS acquisition.

PIAC writes, “Affordable broadband will not only be a challenge in Canada but for all low-income consumers wishing to go online around the world. It is a challenge all governments and policy makers must recognize and urgently address.”

As I have written before, I support creative initiatives, such as Facebook’s “Free Basics,” as a way to encourage increased digital participation. In another post, I wrote that “Zero [rating] is better than nothing.” PIAC may differ on some elements of how to implement solutions to increase broadband adoption among low income households, but I unreservedly endorse PIAC’s concluding remark:

Universal digital participation is key to innovation and to building a digital world consumers can trust. For World Consumer Rights Day 2017, we believe Canada needs to ensure there is affordable broadband internet for all.

Faulty facts lead to faulty conclusions

I don’t get it.

It has never been easier to do fact checking, but I guess a lot of people just don’t bother verifying statements, especially if the point supports their previous bias.

This morning, I saw a piece entitled “Canadian, UK telecom markets share same problem” where the author wrote “On the surface of it, the British and Canadian broadband markets are nothing alike.” In the interests of accuracy, he should have stopped there.

But he went didn’t, and he wound up concluding:

The result, just as it has been in the United Kingdom, is that little has changed. Prices for both wired internet and wireless services in Canada are just as high as they were a decade ago and nobody wants to bring up the only real solution: full structural separation.

Hold on. Maybe if you say it fast enough, it sounds reasonable but stop and think about it for a minute. “Prices for both wired internet and wireless services in Canada are just as high as they were a decade ago.” Uh, no they aren’t.

For example, let’s take a look at Rogers internet service. A 100/10 Mbps service from Rogers (Rogers Ignite 100u), with unlimited data, costs $65 per month, as you can find on “comparemyrates.ca“. Just a little more than 3 years ago, one would pay $68 for Rogers Extreme Internet, a 35/3Mbps service with 120GB of usage included. So, in just 3 years, we pay less for a service that is 3 times as fast and now includes unlimited data. In 2007, there was talk about Rogers launching “Hi-speed Elite” service, an 18Mbps service with 90GB of usage for $100 per month.

So, while the author claims that prices are just as high today as they were a decade ago, we can easily see that prices have fallen, and speeds have dramatically increased.

That same article claims that “Canada doesn’t fare much better at 7.9%” of broadband connections on fibre, comparing it to the UK at 2%. In fact, the source document for the 2% figure shows the British figure at 1.7% (taken to the same number of significant digits). The OECD spreadsheet [xls] used for the Canadian figure does not list the UK, saying “No fibre data is available.” Still, it is hard to see how any reasonable person would say that 7.9 isn’t much better than 1.7. Indeed, it is 350% better!

It isn’t that hard to get the facts right. Once again, we see a case of faulty facts leading to faulty conclusions.

How government can drive innovation

Governments aren’t generally known for innovation, but government policy greatly influences – both positively and negatively – the level of innovation in an economy.

An opinion piece by Jack Mintz in the Financial Post looks for the Federal Budget, due to be introduced in 2 weeks, to bring changes to create a more friendly investment climate.

Last year’s federal budget was strewn with anti-innovation policies, bringing back the failed tax credit for labour-sponsored venture corporations and bringing in higher taxes on business and entrepreneurs. If this year’s budget brings in higher capital gains taxes and more regulatory burdens and subsidies targeted at the wrong firms, all that talk of innovation will be empty. We won’t likely see it improve.

If we want more innovation, we’ll need to make Canada friendlier to investment, particularly in the face of the rising competitiveness of the U.S. under the Trump administration.

Instead, a more business-friendly environment for investment should be our aim in face of a new U.S. competitive environment now confronting Canada.

Setting the right climate influences not only whether innovation takes place, it influences where. Our policies need to encourage investment and growth inside Canada. As Mintz concludes, “If Morneau really wants more [innovation] in Canada, he should avoid trying to pick favourite sectors to treat with subsidies and spending and instead create a better environment for businesses to invest in new ideas.”

Innovation and innovation policy will figure prominently on the agenda for The 2017 Canadian Telecom Summit, taking place June 5-7 in Toronto.

Among other issues, panels and keynote speakers will examine what are the characteristics of a policy framework that fosters the development of a more innovative economy.

The conference agenda is taking shape. The brochure is continually being updated, or refer to the conference website for the most up-to-date list of speakers.

The Canadian Telecom Summit brings together the thought leaders and key influencers of the Canadian and global ICT industry.

Have you registered yet?