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 As if cued by yesterday morning’s supplementary blog post about the CRTC’s review of how much maple syrup is running through the veins of Public Mobile, the Commission issued a release about its review of Mobilicity (the service provider formerly known as DAVE).
The CRTC indicated that Mobilicity also has a relatively complicated ownership structure meriting further review under Type 2 procedures (see yesterday’s post for more info about these categories) and there was a lot of supplementary information already put on the public record as an attachment to the Commission’s letter [pdf, 250KB].
For example, slightly more than 75% of the equity is coming from outside Canada, although that investor is getting less than a quarter of the votes. About half the debt is coming from vendor financing of the equipment.
While the CRTC is saying that Mobilicity “appears to comply with the legal control requirements of the Act,” it still needs to review the “control in fact” to see if there are other ways that company might be controlled by non-Canadians [recall the double negative language in the Telecom Act].
the Commission will apply the existing jurisprudence relating to determinations of control in fact, while taking into consideration that when the Government varied Telecom Decision CRTC 2009-678, it stated that the “decision to vary is specific to the facts of this case”.
How will CRTC reviews of ownership interfere with launch plans for the new entrants?
 Mobile Syrup is saying that Public Mobile plans a “soft launch” next Monday. Will CRTC approvals get in the way?
Last November, the CRTC opened a file to begin the examination of the ownership and control of Public Mobile.
As we have come to know, the CRTC needs to affirm that carriers operating in Canada are in conformance with Telecom Act requirements. Under Canada’s current regime, Industry Canada’s approvals for the purpose of awarding radio licenses is not considered to be sufficient.
In Telecom Regulatory Policy 2009-428, the Commission established a four-type review framework to apply to ownership and control reviews.
In December, the CRTC informed Public Mobile that it had determined that its application was Type 2:
the ownership structure of Public Mobile is of a complex nature and could hold precedential value for the industry and the general public. The Commission does not consider, however, that the evidentiary record would be improved by third-party submissions.
In other words, the ownership approval is not an open-and-shut case, but we don’t need outside assistance on this one. The file has been quiet since then. The Commission has said that it will issue a formal decision and open its files for public examination upon conclusion of its review of Public Mobile’s ownership.
Public Mobile has started its teaser ads and it has been preparing some retail stores. Is the wait for CRTC approval on the critical path and will this possibly delay a service launch?
Last fall, we released a report called “Lagging or Leading” to take a fresh look at the state of broadband infrastructure in Canada [pdf, 1.0 MB]. It is a sizable piece, that assesses a number of comparative international studies and identifies many of the problems associated with comparing apples and oranges.
In Saturday’s Globe and Mail, there was an essay that seems to validate many of the messages of our report last fall. The piece was authored by noted economist, Leonard Waverman, dean of the Haskayne School of Business at the University of Calgary. Professor Waverman does research on the growth and productivity impacts of the rollout of telecommunications and computers. He is also lead author of The Connectivity Scorecard, [we wrote about it here] which ranks countries according to a new definition of how telecom infrastructure, ‘smart’ usage and complementary skills and capital drive economic growth and productivity. The co-author of the essay was Scorecard collaborator Kalyan Dasgupta, of the London office of global expert consultancy LECG.
The essay is important reading. It observes that
Economists with extensive practical experience of telecommunications regulation have already rebutted the Berkman Center report that harshly assessed Canadian broadband performance
Still, the essay takes time to highlight difficulties with attempts to transplant measures from other countries.
The “lines per 100 persons” measure is misleading and less conceptually solid than measures based on household and business adoption rates. Indeed, both business and household adoption rates should be measured separately and in different ways.
As the essay observes, “broadband cognoscenti often look upon European regulation with admiring eyes.” Perhaps that is why they are willing to allow ideology to cloud their analysis of data.
International comparisons almost always suffer from limited data and limited comparability, particularly comparisons of prices and speeds. This is why great humility and caution are required in drawing policy conclusions from such comparative data. Regulation curtails economic freedom, which is why a very high standard of evidence is required to justify regulation.
On Tuesday June 8, Dr. Waverman will be participating on a panel at The 2010 Canadian Telecom Summit looking at International Perspectives on ICT Strategies. These issues are especially important given the plans by government to develop a national digital strategy.
Have you registered yet?
A week ago, a tweet was directed to me asking about download caps.
It was possibly a rhetorical question, but it may also demonstrate a lack of understanding of capacity constraints and cost drivers on wireline and mobile broadband networks.
An unlimited buffet advertised (but not necessarily offered) in other markets won’t last forever. AT&T’s CEO has already said that the company will need to “progress more toward variable pricing. Heavier consumers will pay more than lower consumers.”
In the old days of email, file transfers and news groups as the main applications on the internet, delays due to queuing of transmissions was less of a concern. Who would notice a second or two delay? Streaming content, gaming and voice are far less tolerant of these.
I wonder if we can frame the network engineering problem as having two components when we define broadband capacity: the throughput speed and the volume of traffic to be carried. Think of it in terms of a car. You can put a powerful engine into a car to make it go fast, but the size of the gas tank and how much fuel is on board determines how far you can go.
Are unlimited offers sustainable?
The new Federal Budget raises more questions than answers in respect of liberalization of foreign ownership:
The Government of Canada is committed to ensuring that Canadians can benefit from increased competition and investment in the telecommunications sector, which will lead to greater innovation and lower prices for consumers. Increasing foreign investment is an important way of strengthening market competition and attracting new capital and innovative ideas from abroad.
Consistent with the recommendations of the Competition Policy Review Panel, the Government is acting in Budget 2010 to remove the existing restrictions on foreign ownership of Canadian satellites. This will allow firms to access foreign capital and know-how and to invest in new and advanced technologies. The removal of restrictions will also allow Canadian firms to develop strategic global relationships that will enable them to participate fully in foreign markets.
Yesterday’s throne speech said “key sectors, including the satellite and telecommunications industries”. That was sectors, plural. Not just the satellite telecommunications sector. Well, what about removing restrictions on foreign ownership of Canadian carriers? Small ones, new ones, big ones. Only foreign ownership of satellites?
Enabling strategic global relationships? We were able to do that before, but ask just AT&T how well that worked out.
We’ll need to get some clarity on what is driving the focus on satellites.
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