Mark Goldberg


www.mhgoldberg.com






Competitive communications: 25 years later

June 12, 1992 marked the release of the CRTC’s landmark decision to open up facilities-based competition in telecommunications markets. I remember the day like it was yesterday.

The Canadian Telecom Summit was launched to celebrate the 10th anniversary of that decision; it was a kind of reunion for many of us who had been so involved in transforming the market dynamics of this sector. This year’s event marks 25 years of competitive communications in Canada. And for the past 15 years, we continue to meet each year to discuss the trends and issues that influence development in this critical sector of the digital economy.

What is the state of competition in Canada’s telecommunications industry 25 years later? That is the subject of a report being released today by the Montreal Economic Institute [6.9MB, pdf].

This year’s edition, the fourth annual report, surveys where Canada stands and finds:

  • Canadians continue to enjoy competitive, quality telecommunications services, and are among the biggest consumers of telecommunications services in the world;
  • Penetration and usage rates for tablets, smartphones, and LTE connections are among the highest for industrialized countries;
  • Canadians continue to enjoy some of the most advanced and efficient wireless and broadband Internet services in the world;
  • The prices Canadians pay for wireless services remain generally higher than in Europe and in Australia, but comparable to or lower than in the United States and Japan. However, Canada ranks first in terms of affordability when taking into account income per capita and the state of competition in the market;
  • Considering the additional costs associated with the Canadian market’s low density of users per km2, Canada fares relatively well both in terms of prices and in terms of the quality of services offered.

The report also examines policies that may be inhibiting the kinds of investments necessary to enable the Internet of Things (IoT). As I have recently pointed out, the report says “the CRTC too often merely pays lip service to the principles of the Policy Direction, and has largely gone back to its old interventionist ways.” The report does not entirely blame the CRTC “for the lax enforcement of the principles enshrined in the Policy Direction.” The report authors say that the Harper Government, which had introduced the Policy Direction in 2006, later “embraced a more interventionist telecom policy agenda,” with “its reaction to the CRTC’s 2011 decision on usage-based billing” serving as the most blatant example.

The report says we may need “to recognize that the Policy Direction was a good initial compromise between regulatory discretion and direct government involvement in the policy-making process, but that more is needed to counter the regulator’s documented tendency to undermine its principles.”

Looking forward, the report is concerned that bad policies will become even worse.

In the first three annual editions of this Research Paper, we made the case that the best policies to bring about an optimal level of competition in the telecommunications sector were policies that let markets decide how many players, and which ones, should offer services.

The authors reiterate their concerns given “the rising importance of the Internet of Things,” which is facilitated by investment in the next generation of wireless networks, 5G, requiring billions of dollars of further investment. The report’s conclusion warns that “policies embraced by Industry Canada and the CRTC over the past decade aimed at propping up undercapitalized wireless players and broadband resellers” could discourage investment in IoT architectures and thereby harm the economy.

A key component of the federal government’s priorities is the so-called “Innovation Agenda.” If it wants to “walk the walk” when it comes to innovation, it should stop fighting yesterday’s regulatory battles. Instead, Ottawa should adapt its policies to the new IoT reality, so as not to hamper the tremendous positive impact it will have on Canada’s economy.

The report is certain to contribute to themes being explored at The Canadian Telecom Summit, taking place June 5-7 in Toronto.

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