Telecom Trends

It isn't surprising that Industry Canada will require mandated tower sharing as part of its new rules for the AWS spectrum.

A series of articles in recent days in a variety of community papers points to a trend that had to have been considered: people don't want towers in their backyards.

My local community paper spoke of local councillors looking into developing a comprehensive plan to deal with cell phone towers. The Toronto Star writes about residents of a Toronto neighbourhood challenging an agreement between a church and a carrier to build a "non-eyesore" 35-metre-tall communications tower - it will look like a flag pole, only taller.

We all want 5 bars of signal. We want capacity to be there when we want to make a call, send a message, pick up email. We want carriers investing in infrastructure. Just not in our backyard.

Carriers that have existing towers recognize the difficulty in building new sites and may be less willing to share their existing space because of concerns that they may need the capacity for their own requirements.

We want towers within sight of our cell phones; just not within sight of our eyes.

Industry Canada has launched a new consultation in order to work out the amendments to licenses for existing spectrum holders. We will want to see if imposing the tower sharing requirements - a new condition on current licenses - will be able to pass a challenge. How is it not a form of expropriation?

Technorati Tags:
mobile, cellular, towers

There are a couple interesting twists that emerge from a closer review of the AWS spectrum policy announcement. These are beyond the serendipitous observation that the spectrum auction should be wrapping up just in time for The 2008 Canadian Telecom Summit.

One twist reveals a perverse definition for new entrants that will see the least competitive provinces stay that way; the other thing I noticed is the creation of a potential poison pill for new entrant spectrum winners.

As I mentioned earlier, new entrants are defined as:

An entity, including affiliates and associated entities, which holds less than 10 percent of the
national wireless market based on revenue.

So, MTS and Sasktel are defined as new entrants, and that definition will allow them to bid on the new entrant spectrum - even in their incumbent province - despite enjoying 60% and 80% market share at home respectively!

While the intent of the government policy was to be introduce more competition, this part of the policy appears to be ill conceived, because the two provinces with the least evidence of competition will have the least opportunity to have that situation changed.

Oops! Don't consumers in those two provinces deserve the same benefits of new entry?

Now, if you are a successful new entrant winner of spectrum, that spectrum will serve as a poison bill to ward off Bell, TELUS and Rogers as potential future suitors:

While all licence transfers must be approved by the Minister, licences obtained through the set-aside may not be transferred to companies that do not meet the criteria of a new entrant for a period of 5 years from the date of issuance.

How will this kind of poison pill influence shareholders?

Shaw had been looking for favourable auction conditions to help it decide on whether to bid in the auction. Will the risk of poisoning a future acquisition influence its decision?

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Update [November 29, 3:10 pm]
I appeared on BNN [clip available here] this morning with perspectives on the auction rules. Be generous: I had to get up early to get downtown to be in make-up for an 8:15 appearance!

Technorati Tags:
AWS, spectrum auction, MTS, SaskTel, Rogers, Bell, TELUS

Earlier today, Industry Canada warned us about "an important announcement" that was released at 4:00 pm today.

The full rules were announced in front of a banner claiming "Putting Consumers First".

For the major incumbents, the government nearly completely rejected their arguments against a spectrum set-aside, against tower sharing and mandated roaming. 40 MHz of the total 105 MHz will be set-aside for new entrants. The 40 MHz could yield 3 new carriers since it is divided into 14 provincial blocks of 20 MHz each, 14 blocks of 10 MHz each and 59 regional blocks of 10 MHz.

Even the definition of new entrants runs against what the incumbents might have hoped:

An entity, including affiliates and associated entities, which holds less than 10 percent of the national wireless market based on revenue.

That definition allows current incumbents MTS and Sasktel to bid as new entrants, but will keep Bell from bidding on spectrum in Manitoba, despite the fact that Bell owns no spectrum there and MTS enjoys a 60% market share within the province.

No liberalization of foreign ownership rules, so we'll wait to see how potential new entrants raise sufficient capital to bid on the spectrum, let alone build out their networks.

The mandated roaming rules are pretty generous as well - we'll comment further over the coming days.

The complete 19 page book of spectrum rules can be found here.

Technorati Tags:
AWS, spectrum auction

According to CTV, the Manitoba government will be introducing legislation to require ISPs to report any detection of child pornography.

Many of the large ISPs have voluntarily started to block access to child abuse content that is identified as part of Project Cleanfeed Canada. This legislation appears to be the first time that ISPs will be required to act.

All kinds of questions that emerge - including provincial authority over what is normally a federal undertaking, that is, telecommunications content; does this represent a change in the traditional common carrier defense for ISPs; etc.

I'll update with a link to the legislation when it is available.

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Update [November 28, 5:50 pm]
The Manitoba Government press release has a few more details about Bill 7 (The Child and Family Services Amendment Act) - also available in pdf.

Technorati Tags:
Manitoba, child abuse

Industry Canada has issued a media advisory for "an important announcement" to be released by Minister Jim Prentice today, shortly after the markets close at 4:00 pm today.

Will this be the announcement of the rules on the AWS spectrum auction?

The level of public discourse has been accelerating, with an OpEd in today's pages of The Financial Post by Martin Masse, a former policy advisor to Minister Bernier.

Technorati Tags:
AWS, spectrum auction

[Today, I offer a guest article written by Alex Goldberg - a student at Queen's University. Traffic shaping isn't just an issue for commercial ISPs.]

During the last week of the semester, it is not uncommon to see a bulk of students at Stauffer Library pounding away at their term papers or reports. In my case, I am polishing off a poster presentation on my Honours research project. Most students use the library as a venue with minimal or limited distraction; all of the necessary resources for research are available, between electronic and physical texts, as well as a general atmosphere conducive to study.

Like most universities, Queen’s provides free wireless internet access at all of its libraries. This provides access to electronic academic resources available exclusively to Queen’s students, as well as resources in the public domain. However, the network provided by Queen’s is also used extensively for file sharing between students on the network.

The legality and legitimacy of file sharing aside, I don’t believe that downloading the latest Futurama episode should take precedence over one’s access to academic materials, especially on a university campus.

Unfortunately, the capacity of the university network is limited. On several occasions, I have found that my connection deteriorates considerably during peak usage times. In fact, the bulk of this post was written during periods that I’ve been waiting for pages to load. While the ideal solution to the problem would be to expand the university network’s infrastructure and to increase capacity, there are obvious costs associated with it, let alone the time and energy required to implement such a change at a public institution.

Packet prioritization is an issue for more than just the commercial ISPs; capacity constraints affect university campus networks as well. Since there is a limit to the capacity of the university network, most would agree that research and access to basic information should take precedence over downloading for personal entertainment.

While the end goal should be to expand network capacity and make all information easily available, the immediate needs can be addressed by implementing packet prioritization.

Technorati Tags:
Queens University, traffic shaping, net neutrality

Last Friday, the CRTC must have been caught up in the holiday spirit unleashed by all of those post-Thanksgiving sales south of the border. All those ads for "buy one, get one free" just don't seem to be as prevalent here.

As of last week, a regulatory constraint for deals on telecom services has been lifted. The Commission released a Decision that removed the need for ILECs to get approval for what could be considered any reasonable bundle of services.

In essence,

the bundling rules, including the requirement to file and obtain Commission approval for a tariff, no longer apply with respect to bundles in which the retail price at least equals the sum of the rates of all retail tariffed services included in the bundle.

So, a bundle can include one or more components that are still regulated, and as long as the price for the bundle is at least as high as the tariff price, no CRTC approval is required.

What could this mean for consumers? In areas that still have price regulation for local service, watch for deals that throw in a little internet here and there. Maybe a side order of discounted wireless, as long as you keep your basic residential service.

The relaxation of the bundling rules could mean even more for business users. Telcos have had a more difficult time responding in a timely fashion to special requirements set out in RFPs because many such arrangements needed regulatory approval.

The relaxation of the bundling rules could mean that pricing for business services will be getting more competitive.

Technorati Tags:
bundles, ILEC, CRTC

I mentioned that I saw Dave Caputo last week at the Scotia Capital investor event.

When we spoke, Dave reminded me that Sandvine wrote a white paper nearly 3 years ago - long before many of us had even heard the term Net Neutrality, let alone formed an opinion about it.

The white paper provides a different perspective on the term, suggesting that carrier management of traffic ensures true network neutrality by means of fair allocation of limited network resources between potentially competing uses of the network. The paper speaks of the Tragedy of the Commons.

When too many owners are endowed with the privilege to use a given resource, the resource is prone to overuse and eventual depletion or destruction.

Individual subscribers are concerned about maximizing their own personal utility of the broadband service. There is no incentive for the subscriber to moderate their use of the network without some form of feedback via the service plan definition, cost, structure and enforcement.

Of course, Sandvine provides tools to network operators that provide visibility into the traffic, enabling them to control the allocation of 'common' resources between subscribers, applications, and content providers. The objective is to maximize the utility of the network.

In the words of the white paper, subscriber internet freedoms are realized by protecting the network and the experience enjoyed by the overall body of subscribers.

Technorati Tags:
Sandvine, net neutrality

The editor for The Toronto Star's Entertainment page must have taken the day off yesterday to have let parts of Raju Mudhar's whine get through.

Here is the essence of the article. Pity us poor Canadians. We don't have iPhone. No Amazon Kindle. TV streaming from ABC and CBS gets blocked. The article didn't mention that we are also denied access to the really good Super Bowl commercials. That would have been my gripe.

Go ahead, rant, wring your hands, whine, beat your chest. But try to get the story straight.

Try to follow this quote - which is actually talking about Amazon Kindle, a device that lets Amazon download a book to you electronically - and Amazon eats the cellular data charges.

Amazon is using Sprint's EVDO network, which is similar to the Bell and Telus networks. But compared to the U.S., Canadian cellphone data access rate costs are quite high (travellers are telling horror stories about accidentally racking up bills in the hundreds of dollars for using their iPhones in Europe) and these new content/carrier relationships will require new thinking from Canadian cell companies.

Where do I start?

Gee - I guess the Entertainment page didn't get the press release about Bell's $7 per month all you can eat data plan. Sure, it is device specific - but so is the Kindle. Can Canadian carriers tailor data plans? Yes.

Now, let's move onto the non sequitur about the iPhone. What do travellers racking up bills in the hundreds of dollars in Europe have to do with Canadian cellphone data rates? Yes, those same users would likely have racked up high rates in Canada as well - but, at the end of the day, those are roaming charges from AT&T.

I have to remember. It's just Sunday reading. And it's supposed to be entertainment.

Technorati Tags:
Toronto Star, iPhone, Amazon Kindle

Much has been written about the impact of the rise of the dollar on Canada's manufacturing heartland in Ontario. However, jobs that may be the most globally mobile - software development and high tech - are equally at risk because their labour costs have also risen. Canadian companies that have traditionally sold their goods priced in US dollars are doubly impacted - lower revenues getting recognized and higher costs.

And the response of the Ontario government? In its zeal to win votes in the last election, Ontario added an across the board 0.5% increase in labour costs to all employers.

How? By giving workers an extra statutory holiday in February. An extra paid day off. Yippie, if you are an employee. Not quite as gleeful if you are the employer.

In proclaiming the day, the premier said:

There is nothing more valuable to families than time together. And yet it seems tougher than ever to find, with so many of us living such busy lives. ...

I can think of no better way for our government to get to work than by rewarding Ontarians for all their hard work, and for their belief that when we work together, build together and dream together, there is nothing we cannot accomplish.

The premier boasts to some that Ontario's economy added 165,000 jobs in the past year. Derek DeCloet's recent column in the Globe complains that more than half of these were in the public sector.

The smart way to spend money is to ensure the entire budget gets aligned with an innovation strategy. The Ontario Corporate Chief Technology Officer is hosting a Town Hall on Monday. Among other topics will be an examination of Government 2.0: How new technologies can transform and enhance Government. I hope to have a report on the session early next week.

If governments don't spend strategically, we might find that employers use the new holiday in February to find ways to relocate jobs (without the families) to more cost competitive jurisdictions.

Technorati Tags:
competitiveness

The Canadian High Commission in London has again built a website to help coordinate the Canadian presence at the 2008 Mobile World Congress in Barcelona in February. The 2007 event attracted more than 50,000 people.

The folks at International Trade have released a new brochure to attract investment in Canada from wireless and multimedia companies: Canada as an investment destination for wireless and multimedia.

The report includes a few charts that demonstrate the competitiveness of Canadian labour rates for high tech workers. One of the charts compares management engineer salaries in Canada ($95K) versus Hong Kong ($97K), Denmark ($112K) and the US ($99). Of course, these were 2005 figures. Another chart compares the cost of software and multimedia talent in Waterloo, Ottawa, Montréal, Vancouver, San Diego, Dallas and New York.

What has the rise in the dollar done to Canadian competitiveness in these new economy jobs?

There are other factors as well. As Terence Corcoran recently wrote in his Invasion of the Policy Snatchers,

Maybe the objective [of the Competition Review Panel] is simply to stimulate debate to ultimately get to a "policy framework" that would tear down barriers that currently prevent Canadian entrepreneurs from competing successfully on the world market. If that's the case, such things as high taxes, internal trade barriers, pro-union labour laws, statist health care, problems with education and training, infrastructure inadequacies and regulatory burden would be things to look at.

I'll have some more thoughts tomorrow about the government using strategic spending as a means to drive an innovation agenda.

Technorati Tags:
competitiveness

I attended the Scotia Capital Telecom and Tech Conference yesterday and heard some interesting interviews with a variety of industry leaders - 4 of whom were speakers at The Canadian Telecom Summit last June.

Pierre Blouin, CEO of MTS Allstream, had a notable observation about bundles. In his view, telephony, TV and internet increasingly are seen by consumers as a single product. Mobile wireless is a separate, more personal product. The other 3 are more than a bundle; they are a complete household communications suite.

Speaking over the distraction of an annoying (false) fire alarm, Jim Balsillie, co-CEO of RIM, gushed about the upside potential represented by UMA (unlicensed mobile access) and FMC (fixed mobile convergence). He sees these capabilities as a threat to traditional wireline telephony but an opportunity for wireless carriers. WiFi simply won't have the hand-off capabilities or the back-haul, so the wide area networks of the cellular carriers will be the glue to hold it all together.

The added benefit, which was also mentioned by Nadir Mohamed of Rogers, is the ability to off-load some of the data traffic from the carrier networks, easing pressure on capital resources.

The fourth Telecom Summit alumnus was Dave Caputo of Sandvine who presented some fascinating data about the internet traffic impact of Halo 3 it was released in September. Gaming traffic on ISP networks shot up five-fold, but there were virtually no new households added. So, while Microsoft enjoyed a spectacular opening day revenues, ISPs carried the significant increase in traffic without a measurable, let alone commensurate, contribution to their top line.

Pierre and Nadir are already confirmed to return as keynote speakers at The 2008 Canadian Telecom Summit.

Technorati Tags:
MTS Allstream, RIM, Rogers, Sandvine, Halo 3, Canadian Telecom Summit

I received an interesting email today from New York based SX Mobile Media.

They recently shot and launched a new music video for Samsung Mobile called Europe United. Interesting concept. They went to 10 European cities; London, Paris, Berlin, Rome, Prague, Ibiza, Barcelona, Moscow, Edinburgh and Galway and asked regular people to dance in the street.

Those who made it into the final cut of this video won a free Samsung phone.

And now the video is being spread via YouTube with only the lightest mention of Samsung.

Technorati Tags:
Samsung, SX, Europe United

While Canada is awaiting the release of the rules on the AWS auction, attention south of the border is focussed on the next swath of radio spectrum - the 700 MHz band.

Last week, as the World Radiocommunication Conference wrapped up in Geneva, a consensus was reached on using 700 MHz for wireless broadband services including cellphones, mobile TV and WiMax, although at each country’s time of choosing, as reported in the NY Times.

While the European Broadcasters Union was concerned about potential intereference with its digital TV signals, many of the large countries in Asia — including China, India, South Korea and Japan — signed on to the American plan.

The NY Times article speculates that such a global consensus will help increasing the number of potential bidders (possibly including Google, Apple and Yahoo) and driving the value - and the resultant bids - higher when the 700 MHz band goes to auction.

There is more spectrum available for mobile applications beyond the frequencies under consideration in the current AWS auction consultation in Canada. WRC07 has ensured that the 700 MHz band will be globally converted, creating an attractive alternative for future requirements.

Technorati Tags:
700 MHz, WRC 2007, NY Times

I had breakfast with a colleague last week and we were speaking about the growing chorus calling for various levels of governments to set out their innovation vision. I have some thoughts that have emerged from that meeting that I plan to share over the next few days.

I noticed that the Hill Times had a special Innovation supplement on November 5 with various interest groups submitting textual versions of the Ottawa handshake - you know the move - hold your right hand in front of you, palm facing to the left, straighten elbow, cup your hand and rotate it upward. Michael Geist's column in that section has a subtitle that says we need more than tax breaks to maximize the value of research. I agree.

Let's go back a few years. When the National Broadband Task Force was launched, its objective was to explore the best approaches to make high-speed broadband Internet services available to businesses and residents in all Canadian communities by 2004.

Unfortunately, as we approach the end of the year 2007, we still aren't there.

In any case, I'd submit that broadband availability was insufficient as an ultimate goal; it is just a piece of the solution space. One step along the way.

If we are looking for Canada to lead in electronic literacy, what programs are we willing to establish to get there? This ties to a couple of my comments last week about the need to create the right environment to enable all citizens to be drinking from the digital fountain of knowledge.

Are any of the provinces willing to move forward on their own to set their own digital objectives? Across the broad spectrum of agencies, health care appears to have the lowest hanging fruit.

Ontario's premier Dalton McGuinty has established a new $165M venture fund to "help create the jobs of the future by boosting cutting-edge companies here in the province". It is an important contribution. But it strikes me as similar to making a charitable donation in lieu of rolling up your sleeves to volunteer sweat. We need governments to commit more than just money.

For an innovation strategy to take hold, can we energize further progress by changing the way government and public institutions deliver services?

For example, why are medical diagnostic labs still producing radiological films that require physical media rather than digital images? Doctors still keeping illegible paper records. Under a digital strategy, provinces would set a firm date by which all labs must upgrade in order to continue to be licensed or receive funding. Doctors - prepare to digitize your records.

What is the bold vision? Where is the leadership across all sectors and all levels of government to drive spending consistent with that innovation agenda. Where will innovation rank on political agendas?

Technorati Tags:
broadband, innovation

For the past few months, I haven't been blogging on weekends, but John Roese points to the One Laptop Per Child program beginning large scale production and there is a special opportunity available this week only.

For just $399, you can buy two of these adorable green machines. One gets sent to empower a child in a developing country. The other one gets sent to you. If that wasn't enough, you also get a tax receipt for the $200 gift machine.

Further, T-mobile is providing purchasers with a year of free hot-spot access on their US WiFi network of 8500 access points. Any Canadian service providers want to step up?

For any corporations or organizations that are looking for a special way to participate as we approach the end of the year, the program has "Group Giving" consultants to work with you.

Give one, get one expires on November 26. The sooner you order, the better your chances of getting a cute little green computer in time to put it under the tree.

Technorati Tags:
OLPC

It is one thing to bring broadband internet to the masses, but how do we make them drink from the fountain of knowledge?

One of the challenges, of course, is that the industry has not yet sold turn-key applications that capture the imaginations of the unconnected. Surprising as it seems, email, Facebook, file swapping and web surfing have not yet attracted 100% of the population.

Are there some applications that might lend themselves to a toll-free model in order to reach the rest of the market?

For example, would home health care warrant installing a broadband connection as part of a monitoring service? The broadband access would be enabling underlying service, but the costs would be incurred by the health care agency, not the infirmed. Like toll-free calling, the application provider would pay the charges.

Your aging grandmother may have no idea that she would have a broadband connection coming into her apartment - perhaps complete with a wireless router. All she would know is that she can stay at home for routine monitoring check-ups.

Besides health care and elder-care, what other applications might "reverse-the-charges" for broadband access? Security services? Gaming? Entertainment? Energy management?

Among other considerations such as driving more universal connectivity, a reverse-the-charges model might put a very different spin on net neutrality - these applications will be asking the ISPs to bill them for a specific kind of access.

Technorati Tags:
broadband, net neutrality

The CRTC is in the midst of hearings on the processes and mandate of the Commissioner for Complaints for Telecommunications Services (CCTS).

The opening comments from the CRTC Chair indicated

This past spring, the government called on the telecommunications industry to establish an independent consumer agency that would, among other things, resolve complaints from consumers and small business customers arising as a consequence of forbearance from regulation of local services. A number of service providers joined forces to launch the CCTS in July 2007.

Further to the government's directive, the new consumer agency's structure and mandate is to be approved by the Commission. While the Commission will consider all the issues raised in Telecom Public Notice CRTC 2007-16, this hearing will specifically focus on the following matters:

• whether membership in the consumer agency should be mandatory for all telecommunications service providers;
• whether the consumer agency's proposed governance structure ensures its independence from the telecommunications industry; and
• whether the consumer agency's proposed mandate is appropriate.

Among the most interesting exchanges took place in the morning when the CRTC asked about the proposed process for filing a complaint. The CCTS complaints process requires that complaints be made in writing: submitting a form by mail, fax or on-line. What happened to phone?

The CRTC questions indicate that it thinks it would be reasonable for a telecom agency to take phone calls. Representatives of the CCTS board suggested that they need a record of the complaint - that is why they wanted the complaint in writing.

Would it be too much to suggest the ability to record the calls or have representatives take on-line notes?

Doesn't the telephone industry sell such solutions all the time? If you can order service by phone and pay for service by phone, maybe we should let people express their frustrations by phone as well.

Technorati Tags:
CCTS

The Associated Press is reporting that Britain is seeking the assistance of ISPs and technology companies to help stop the online distribution of terrorist propaganda.

According to The Guardian:

The prime minister also set out measures to counter the influence of radical fundamentalists in Britain's schools, universities, mosques, youth clubs and prisons, as well as on the internet.

The Independent is reporting that Home Secretary Jacqui Smith will hold talks with internet service providers and global technology companies on blocking online incitement of terror.

The Prime Minister's official statement phrased the meetings as targeting a theme that has been raised on this blog many times before:

The Home Secretary is inviting the largest global technology and internet companies to work together to ensure that our best technical expertise is galvanised to counter online incitement to hatred.

We will want to watch how this initiative evolves.

Technorati Tags:
illegal content, net neutrality, hate

Yesterday's National Post included an article about MTS and Sasktel that could have been entitled "A Tale of Two Crowns". The article was written by David Seymour of the Frontier Centre for Public Policy in Winnipeg and it is a digest of a recent report from the Centre.

The report examines the benefits of MTS having been spun off by the Manitoba government from its former crown status, while the Government of Saskatchewan has held onto its ownership in its provincial carrier.

Over the past decade, telecommunications privatization has played out in a continent-sized laboratory. In the middle of North America, two almost identical companies in the almost identical markets of Manitoba and Saskatchewan went divergent ways. While Saskatchewan politicians chose to hang on to Crown corporation SaskTel -- the new provincial Premier vows to maintain the status quo -- Manitoba politicians cashed out and let go of Manitoba Telephone Services through a 1996 public share offering.

There are some additional facts that might have been relevant for a more complete analysis.

Considering the present focus on mobile services competition, it would be helpful to assess the 5.5% cellular adoption differential in Saskatchewan (67.9%) versus Manitoba (62.4%). In Saskatchewan, 80% of cell phone users subscribe to Sasktel service; only 60% of Manitoban's subscribe to MTS Mobility. Some might wonder if increased mobile penetration is a side benefit of Sasktel's overwhelming local presence and whether provincial policies have contributed to higher adoption.

I also have a contrarian view relative to the study's argument on taxation benefits:

In 2006, MTS racked up an income tax liability of $126.7-million to the governments of Canada and Manitoba, funds that can be used to pay for services or lower taxes in the broader economy. Meanwhile, SaskTel, as a Crown corporation, is exempt from income tax. This tax exemption is one of several hidden subsidies within the Crown corporation model. This subsidy represents a hidden financial loss for governments and taxpayers that is paid for with higher taxes or fewer services elsewhere.

Let's not forget that MTS has avoided significant levels of tax payments by virtue of its acquisition of Allstream's losses carried forward. Further, as a Saskatchewan crown, wouldn't all of the profits go to the provincial government, whether paid as a dividend or reinvested? It might be argued that the people of Saskatchewan get to benefit from 100% of Sasktel's profits.

MTS today earns twice the revenue, has three times the assets and employs 20% more people.

The Allstream acquisition masks the impact of investment and employment levels within the province of Manitoba. Almost all of Sasktel's capital spending and employment is in the province; MTS has a national scale - good for growth opportunities, but more difficult to assess from the perspective of benefits to the people of Manitoba.

What I find most interesting is the similarity in services benefits for subscribers. Over a ten year period, the study found that consumers are pretty much equal - benefiting from the same level of service innovation and similar pricing.

Consider that a crown corporation can afford to look at longer term strategies with different pressures from the quarter-to-quarter demands of the public equities markets. I would be interested in hearing views on whether crown ownership may drive some behaviours more reminiscent of firms controlled by private equity.

Deal or no deal? As Howie Mandel asks at the end of each show, did the people of Manitoba make a good deal when "the banker" paid them out 11 years ago?

Private sector versus public sector; PC versus Mac; you say tomato... Is this one of those religious debates that has no answer?

The complete study is worth reading as a stimulus for these discussion. A one page graphical summary is also available.

Technorati Tags:
National Post, MTS, Sasktel, FCPP, Frontier Centre

Some wondering out loud today.

I wonder if the current system of supplier-side subsidies is working effectively to increase broadband adoption in Canada.

There is a higher cost per subscriber to provide services in less densely populated areas, but why does that necessarily translate into a requirement for an across the board subsidy from the government? It is as though the government initiatives for extending broadband begins with a premise that equates "rural" with "poor".

After all, many residents in unserved areas have made a conscious lifestyle choice to reside outside of an urban landscape. Fresh air, more land, fewer neighbours.

Rural residents read the store ads in the national papers and are envious of prices available to city dwellers. They are used to paying more for many staples, since there is often less competition; bread, lettuce, meat, appliances, among other essential items, often are cheaper in the city.

Still, many draw healthy salaries, and generally, rural residents tend to enjoy lower housing prices.

It is understandable that they would like to get a government subsidy for their broadband service. I would too.

But is it reasonable for government initiatives to focus on universal subsidies on the supply side? Such approaches risk anointing winners and creating losers, potentially precluding opportunities for competitive supply. And we are seeing hundreds of millions of dollars being spent without significant impact on broadband adoption.

Are the funds being spent effectively? Is there another way?

I wonder about a direct end-user incentive such as a broadband tax credit. Using the existing tax system, policy makers could apply the credit as broadly or focussed as they choose.

Perhaps the program could target lower income earners, regardless of where they live, offering $20 per month to connect to entry level broadband. Perhaps an additional amount would be available in rural areas. Maybe there could be a one-time credit to cover equipment installation - or even buying new computers.

Such an approach could create the right environment to encourage multiple service providers to enter more markets. This approach increases the pool of potential subscribers, rather than limiting the number of suppliers to a monopoly.

Such an incentive plan might fit other services like mobile phones or even a program to match Italy's approach to stimulate the conversion to digital TV. But those are subjects to be explored sometime in the future.

How will broadband figure in platforms for the next election?

Technorati Tags:
rural, broadband

My friends at Privacy Laws & Business are reporting on proposed legislation in the Netherlands to protect against publication of unauthorized personal information on the web. Last month, the data protection authority (CBP) published recommendations to give people the right to demand that information about them is removed from websites.

The publication of personal details on the internet can follow people for years. Personal details should therefore be used with caution, particularly on the internet.

The recommendations would require that private individuals must give permission for information about them to be put on the internet. Websites which refuse to remove unwanted information face civil court proceedings.

How will the proposed rules apply to foreign websites? Will citizens be able to enforce their privacy rights if targeted from abroad?

The European Privacy Officers Network is holding a roundtable discussion in The Hague tomorrow evening and Wednesday.

Technorati Tags:
privacy

Last Sunday's NY Times carried an article about cell phone jamming equipment making its way into the US. It would be surprising if the equipment hasn't leaked into Canada as well.

[Jamming devices are not permitted for sale or use in Canada. Their use, possession, sale, manufacture, distribution or importing would contravene sections 4 and 9 of the Radiocommunication Act.]

James Katz, director of the Center for Mobile Communication Studies at Rutgers University, provided an insightful quote

If anything characterizes the 21st century, it’s our inability to restrain ourselves for the benefit of other people. The cellphone talker thinks his rights go above that of people around him, and the jammer thinks his are the more important rights.

When this subject was examined by Canadian regulators five years ago, I recall hearing a radio interview with a thespian from the Stratford Festival whose support was being sought for silencing cell phones in the audience. The actor demurred, suggesting that the rare ringing during a performance was less of a distraction than people coughing, yet no one was calling for the audience to be subjected to a medical check-up before being admitted.

I tend to believe that jamming cell phones is not just illegal - it can endanger lives. What about simple common courtesy on both sides?

Your views?

Technorati Tags:
jamming, NY Times

Just returning to the office after a few days in Atlantic Canada visiting with the team at Barrett Xplore.

I have spoken of Barrett many times in the past and I am on their advisory board.

Barrett Xplore continues to expand its fixed wireless footprint into underserved parts of Canada - its satellite internet service is already available everywhere. Fixed wireless solutions provide an even better broadband experience at a lower price point and with an easier installation.

Our vision is simple — more for rural Canada: more choice, competition, and availability of broadband access, applications, and accessories.

What is remarkable is that Barrett Xplore's business plan isn't predicated on government assistance or draws from the CRTC's deferral account.

Policy makers need to ensure that government rural broadband strategies don't serve to distort market forces and inadvertently damage the successful business that is allowing companies like Barrett Xplore to expand without handouts. Over the coming days, I will try to add some thoughts on possible alternate different approaches for policy makers to promote increased broadband adoption.

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Barrett Xplore

My daughter couldn't hold off any longer waiting for an iPhone. She is now a proud owner of an iPod Touch - and she loves the device.

Thanks to built in WiFi, she can use the device as an internet access terminal and do her emails as well as load up music and videos from within the university buildings or through other internet hot spots.

When you reflect on the alternate forms of connectivity that are built into these devices, and consider the way that people like Alec Saunders have avoided excessive roaming charges, you can see that the carriers have limits to their negotiating position with companies such as Apple or Google who are seeking a slice - a big slice - of the wireless pie.

It seems to me that all that is missing from the iPod Touch is a microphone and my daughter's iPod Touch could become a WiFi enabled telephone. No carrier required. Would Apple consider such a strategy to bypass the carriers?

You know, 'tis the season for people to be shopping for new electronics. Even without the iPhone in Canada, there are lots of new phones appearing in ads and on the shelves of dealers for the upcoming peak shopping season. The LG Shine is now available from Rogers, Bell and TELUS - it looks like it is the RAZR for 2007. I stopped by a couple stores this past weekend and I noticed that the packaging for the new HTC Touch at TELUS stores was inspired by Apple. The bundle includes a hefty micro-SD memory card to help make this a hit with recipients of that gift box.

The industry is dreaming of a shiny Christmas.

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Apple, iPod, WiFi

A number of stories have emerged in the past few days about Apple's discussions with Australia's Telstra for the future launch of iPhone down-under.

One of the stories suggests that 20% of the iPhones sold so far in the US have been unlocked and moved to other carriers or exported to other markets. What does this mean for AT&T's reported revenue sharing with Apple? The mobile migration problem is certainly going to be a consideration for negotiations with carriers in other markets.

Another one of the reports suggests that Telstra would want Apple to introduce 3G capabilities to leverage the carrier's 'Next G' network launch in 2008. iPhone currently operates at EDGE speeds in the US.

Telstra's network also operates at a different frequency, so Apple would need to make some changes to the radio in order to launch in Australia. However, HSPA chipsets may have an impact the cost and power characteristics.

Consumers in many markets are getting used to the faster mobile internet experience enabled by 3G HSPA networks and Apple's competitors are introducing an array of devices to deliver such capabilities.

When will Apple deliver an iPhone Turbo?

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Apple, ATT, Telstra, iPhone, HSPA

A couple weeks ago, I was speaking with Howard Thaw of Iotum. Howard works with Alec Saunders and both have sung praises about a Montreal-based mobile services company that has been saving them money on their considerable cell phone bills. On Friday, Alec wrote about how he has found ways to save considerable amounts of money when travelling to VON last week, spending only $4.16.

Mobivox seems to be attracting some attention lately, with new funding and a new COO. A couple weeks ago, Mobivox closed $11M in funding from IDG Ventures, Brightspark and Skypoint. Last week, Mobivox announced a new COO, Nitzan Shaer, formerly of IDG Ventures and former head of Skype's mobile products group.

I have been trying out Mobivox for the past couple weeks and I think it is an interesting application.

How does Mobivox work? When you sign-up, you build an address book. The system can help by importing your Outlook, Gmail or Skype contacts. Then, you place a local call to the Mobivox access number nearest you - there are access numbers in major cities in 36 countries already. You speak to an automated attendant and just say the name of the person you want to reach.

If that person is a Mobivox or Skype user, the call is free. Well, for the cost of an outbound local call. Of course, there are lots of mobile calling plans out there that would allow customers to make their Mobivox access number one of their unlimited free destinations, such as Rogers My 5 or TELUS' My Faves .

If the person you are trying to reach isn't a Mobivox user, the call goes through at rates we have come to expect from VoIP. If you live in a place where there isn't an access line, there is a call-back option - just send a text message and the system calls you.

Now, I have never been crazy about investing in arbitrage - at some point, the cellular companies will decide that they don't really need 97% margins on their long distance calling rates and make North America part of their local calling. Say good bye to long distance arbitrage.

On the surface, Mobivox is just a sophisticated prepaid card / call-back company for mobile phones. Only worse for investors - a lot of the calling is for free. I seem to remember from the demand curves in my first year Economics course that it is easy to attract customers when the price is zero.

So how does Mobivox move onto the radar screens for venture capital? How does the business plan to make money?

Look at the marketing approach. Part social networking. Part viral. Look at the intelligent interface with voice recognition that drives enhanced features. Instant conference calling. Instant group calling. Transfer calls in progress from your mobile phone to a fixed line. Convenience features that will still be valuable to end users even when the savings aren't as important.

All of these capabilities could be offered by the carriers, if they wanted to. That is a big "if", because it puts LD revenues at risk, with an uncertainty that the elasticity will drive sufficient increases in total airtime to make up for the potential revenue shortfall.

That day will come. In the meantime, Mobivox is building out a global following. There are lots of places on the planet to arbitrage mobile long distance, even if carriers in any one country try to cut down the opportunity.

That is precisely what Hutchison appears to be doing with a recent announcement from 3UK, its upstart operating unit in the UK. In a deal done directly with Skype, 3UK is offering free calling and free messaging between Skype branded customers. An interesting acquisition strategy - but how do they make money?

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Mobivox, 3UK

There is an article in EETimes by Fay Arjomandi of Vancouver-based Mobidia that may shake up the fans of the 10 year old stupid network principle. The stupid network essay calls for intelligence to reside at the edge of the network, rendering IP networks to plumbing pipes - with carriers ignorant of the application and services being transported.

The Arjomandi article suggests that what is really needed is a sharing of network intelligence and joint management of network efficiency practices. The article suggests that devices should be active, intelligent network elements within the network.

Such an approach would enable end-user devices to share the responsibilities of network management for uplinks while core network nodes manage the downlinks.

This will require devices to be service-, network- and policy-aware. Such awareness will provide a much more comprehensive, efficient and wireless-friendly way to negotiate QoS with the network; enforce network policies; and queue, prioritize and manage traffic right at the source, based on its type, before sending data over precious network resources. This will eliminate the need for extra transactions over the wireless link for QoS parameter exchange. The device becomes a self-managing element within the network that manages uplink traffic.

Interesting approach. Still, I suspect there are many IP network purists who would oppose any network-based means to manage demands on network capacity.

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Mobidia, stupid network

Israel's Communications Ministry has issued a notice that it intends to prohibit phone companies from linking minutes to handset sales, in an attempt to further open up the market in advance of the introduction of mobile number portability in December.

Israel already has among the world's highest level of mobile phone penetration, estimated at 116% in 2006, so it is fascinating that Israel's government felt that further intervention in market pricing was warranted.

According to the story in the Jerusalem Post, the intent is to enable more retailers and suppliers to enter the market for handsets:

In order to move new players into the market we have to make it fair. Therefore, cell phone service providers will no longer be allowed to subsidize the price of expensive handsets by offering free minutes.

An analyst suggests that the move will help independent retailers and handset manufacturers, but it is less clear how consumers benefit.

Should carriers be limited in the types of offers that they can offer consumers? What is the role of pricing regulation in the wireless market?

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Israel, mobile