Over the past two days, Rosh Hashana services have given me an opportunity to reflect on a variety of issues and, as might be expected, my mind turned to telecommunications.
Conservative leader Erin O’Toole released a policy statement on telecom on Tuesday, the first day of Rosh Hashana, saying
Canada’s Conservatives will let companies from Europe or the United States come to Canada and compete for your business. That will mean more choice and lower prices. Only Canada’s Conservatives have a plan to make cell phone and internet service more affordable for you.
Due to the holiday, I regret that it has taken a couple days to respond.
As I wrote a couple weeks ago when the platform was first released, this promise is “interesting (and perhaps a little awkward) since foreign ownership in telecom was relaxed back in 2012 under (Conservative) Prime Minister Stephen Harper”.
The Conservative backgrounder [pdf, 245KB] appears to be relying on Section 16(3) of the Telecom Act for its statement, “Currently, foreign ownership of a Canadian telecommunications company is limited to up to 20 per cent of a company’s voting shares and no more than 33.3 per cent of the voting shares of a holding company, and an effective total limit of 46.7 per cent as long as the foreign entity does not have control.”
Apparently, they read that section of the Act without reading S.16(2)(c) and S.16(6) which effectively combine to allow any company other than Rogers, Bell or TELUS to be foreign owned. So it simply isn’t true that “Canada currently bans foreign companies from competing here”, as Conservative leader Erin O’Toole said during the press conference.
The Conservative backgrounder starts off saying “A Conservative government will begin the process of allowing international telecommunications companies to provide services to Canadian customers, provided that the same treatment is reciprocated for Canadian companies in that company’s country.” A reciprocity test does not currently appear in the Telecom Act, so such a restriction would actually serve to limit the number of foreign competitors, not increase the pool.
Companies from Europe and the United States (and, for that matter, from the rest of the world) have been allowed into Canada for nearly a decade.
With new-entrant set-aside rules, these foreign competitors even had the opportunity to pick up spectrum at a substantial discount.
I have to ask, “Where are they?”
If consumer prices are really that much higher than costs, wouldn’t that have created even more of an incentive for others to enter the market?
It is good to see the Conservative platform examining the cost of spectrum, which has been identified as a significant contributor to higher carrier costs. Canadian spectrum costs have been called a hidden tax, contributing an extra 12% to our wireless bills. It appears to be a recognition that spectrum policy needs to be reviewed. It remains unclear how a promise like “A Conservative government will make investments in rural broadband and lowering prices a necessary criteria of winning spectrum auctions” would be significantly different from the current government’s tension balancing price, coverage and quality.
In the welcome letter to CRTC Chair Ian Scott four years ago, the Ministers wrote “All Canadians and Canadian businesses deserve high quality telecommunications services at affordable prices.”
They do. As I have noted many times, there is a difference between “affordable prices” and “rock-bottom prices”. And there are costs associated with expanded coverage and advanced technologies. Mr. O’Toole said at Tuesday’s media event “Canada’s Conservative will always put the interests of Canadian consumers first.”
It is important to recognize that the interests of consumers are multi-dimensional and extend beyond just price.
So, how did we get here?
A number of years ago, in “Digging ditches and digital policy”, I cited a paper from the Institute for Research in Public Policy that said “Like other countries, Canada is once again engaging actively and more openly in industrial policy. In fact, it has a profusion of industrial policies, what it lacks is a strategy.”
No clear strategy. No clear objectives. No scorecard for measuring progress.
What are we trying to accomplish? How do we measure success? As I have said many times [here and here], I would like to see us start with clear objectives: “Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives.”
How do we celebrate success in digital policy, if we aren’t clear about what we are trying to do?
How do we move forward?
After the heat of the election battle has cooled down, we’ll want to watch for a clear strategy, recognizing the balance and inter-relationships between competing objectives for universal access to high quality telecommunications services at affordable prices.
It’s one thing to look at how we got to where we are; it’s something quite different to agree on where we want to go from here.
Only then can we figure out the best way to get there.