Clear, mutually exclusive, and exhaustive

In statistical terms, we would use the terms “mutually exclusive” and “exhaustive” when trying to categorize a population into different subsets: setting clear boundaries, but covering the entire field.

Think of it in terms of defining answers for a multiple choice questionnaire, ensuring there isn’t any overlap (mutually exclusive), while making sure that every possible answer is covered (exhaustive). How many times have you looked at a poorly worded survey question and just sat there, wondering how you were supposed to choose just one answer? I’m certain that you must have seen questions for which the only possible correct answer for your circumstance was “none of the above”, but that wasn’t a choice.

What happens when legal questions look like that? When there is a question of who is in charge or, perhaps even worse, if no one is in charge?

TELUS has sought leave to appeal the CRTC’s recent Regulatory Policy – Review of Mobile Wireless Services decision, filing an application late Friday with the Federal Court of Appeal. TELUS says the CRTC had boundary issues in its recent Wireless Review, failing to exercise its authority in one case; overreaching its jurisdiction in another.

A couple of weeks ago, in “Channels of appeal”, I described the three ways a CRTC decision can be challenged in the context of a Cabinet appeal filed by DOT Mobile. I found Friday’s TELUS filing with the Court to be interesting, and perhaps somewhat unique to Canada, because regulatory authority for wireless services is divided between two different agencies: ISED and the CRTC. In most countries, there is a single regulator, such as the FCC in the US, or Ofcom in the UK.

Indeed, 15 years ago, in Recommendation 5-10, the Telecom Policy Review Panel said “The authority to regulate Canada’s radio spectrum and to license its use should be transferred from Industry Canada to the CRTC.” Had the government unified the bifurcated authorities over wireless communications, we may not have the problems that TELUS raises in its appeal documents, where the issues appear to arise from the boundaries between CRTC and ISED.

For any given telecommunications issue, there should be clarity: does authority rest in the hands of ISED or the CRTC?

According to TELUS, there are two problematic sections of the CRTC’s new Mobile Regulatory Policy with errors in law or jurisdiction: an issue of access to local infrastructure; and, the issue of mandated seamless roaming.

In the first instance, TELUS says the CRTC is failing to exercise its authority (under Section 43 of the Telecommunications Act) to enable carriers to build wireless infrastructure for 5G networks, when it said [at Paragraph 451] “the Commission notes that it does not have general jurisdiction over tower siting, and that ISED already has well-established rules in this regard, including a municipal consultation process.” According to TELUS, ISED doesn’t actually have the same power, “and declining jurisdiction over access for their deployment, the CRTC has created a lacuna in the federal regulatory scheme”.

The CRTC recognized the difficult jurisdictional question over the issue and the decision contains 10 paragraphs in its decision discussing the Commission’s determination [paragraphs 477-486]. TELUS argues there is a difference between the CRTC’s power to order access, as contrasted with the Minister’s power to approve such access.

The CRTC incorrectly concluded that it did not need to exercise jurisdiction given the power of the Minister of Innovation, Science and Industry (the “Minister”) under the Radiocommunication Act to approve sites for the placement of radio apparatus. The Radiocommunication Act does not provide access to such sites.

While in the first instance (the access issue), TELUS says the CRTC isn’t exercising powers that it has, in the second case, TELUS says the CRTC was acting beyond its authority when it ordered the major carriers to provide seamless roaming.

TELUS and other wireless carriers have spent billions of dollars licensing wireless spectrum from the Minister under the specific conditions of licence set by the Minister. Jurisdiction to amend the Minister’s condition of licence is reserved exclusively to the Minister in the [Radiocommunications Act]. The CRTC cannot simply reach a different policy conclusion and issue a conflicting condition.

In successive spectrum consultations, the Minister has rejected mandated seamless roaming and TELUS says that it has spent $4.5 B acquiring “licences [that] contained specific
conditions that seamless roaming would not be required.” The appeal documents say that the CRTC has reached into an area that is exclusively within the powers of the Minister and has created an “operational conflict”: “if a regional wireless carrier claims entitlement to seamless roaming, a judge or other decision maker cannot give effect to both the Conditions of Licence the Minister granted to TELUS under the Radiocommunication Act and the CRTC Decision.”

The appeal documents make for an interesting read, with citations dating back to the Constitution Act of 1867 and the Railway Act of 1899.

Failing to exercise powers that it has, while exerting authority over another area where it lacks jurisdiction.

This will be an interesting proceeding to follow, perhaps helping to create improved clarity in jurisdictional issues impacting the regulation of wireless services in Canada.

At least for these two telecommunications issues, hopefully the court will clarify the answer to the question, “does authority rest in the hands of ISED or the CRTC?”

Would we be in the same position if successive governments had adopted more of the recommendations of the 2006 report from the Telecom Policy Review Panel?

Clear, mutually exclusive, and exhaustive. For any given telecommunications issue, shouldn’t we be able to tell who is in charge?

A less than rapid response stream

For the past couple of weeks, it seems that ISED press releases have been flowing on a daily basis, sometimes multiple announcements per day, announcing funding to support broadband investments in rural Canada.

In some cases, work will be completed this year. In other cases, (like this), the announcements indicate that construction will be completed by September 2022, nearly a year and a half from now.

Why such a long construction interval?

There can be a number of factors at play: availability of workers, the need for detailed needs inventories, mapping, engineering, ordering equipment, permits. All of these have to precede the start of actual construction, and in some areas, some activities simply aren’t possible at certain times of year.

In many parts of Canada – especially rural Canada – major construction is tied to the seasons. A few years ago, at The 2018 Canadian Telecom Summit, Bell Canada’s CTO spoke about the challenges of meeting the limited summer shipping window to prepare for arctic construction on Ellesmere Island. For other communities, fans of Ice Road Truckers know that some locations depend on shipping in the winter when lakes are frozen over.

The Rapid Response Stream for Canada’s Universal Broadband Fund was announced November 9, with applications due January 15. This stream set aside up to $150M for projects that could be completed before November 15 of this year. That is just 6 months from now. For many companies, that is already an awfully tight timetable to complete a project of any meaningful size.

Applicants had just 2 months to apply and nearly four months later, most of those applications have not yet been approved. Many won’t be approved. Surely, there are many that could have been rejected already and those applicants should have already been told.

I haven’t seen a scorecard on the program, but it might be a good idea for the government to produce one. It has been reported that 576 applications were received. Whoever is managing the program can hopefully let us know the key indicators being tracked:

  • how many of these projects have been approved,
  • how much of the budget have these projects consumed,
  • how many households are covered by the approved projects,
  • how many applications have been formally rejected,
  • how many projects have been completed,
  • how many households now have access,
  • how many households have subscribed.

What else would you track on your dashboard?

Time is running out. For the Rapid Response Stream to be “rapid”, remaining projects under the program will need to be finalized in the next few weeks, or it will be impossible to meet the November 15 completion deadline.

Watch for more projects to be announced, hopefully somewhat rapidly.

Census day: count yourself in

May 11 is Census Day in Canada. As Statistics Canada describes it:

Every five years, Canadians are invited to participate in the census to help paint a portrait of Canada’s diverse population and the places where we live.

The Census of Population provides high-quality information on key socioeconomic trends and analysis that helps Canadians make important decisions that affect our families, our neighbourhoods and our businesses.

The Census captures an important snapshot of Canada’s population, said to be painting “a detailed and comprehensive statistical portrait of Canada”. It yields high quality information to inform policy makers and planning for government programs and social services, infrastructure and investment from both government and private sectors, leading to better outcomes for all of us.

For most of us, it takes just a few minutes to fill out the short form. A quarter of us will receive a long form [or this version] that gathers more detailed information, such as family and demographic concepts, activities of daily living, immigration, ethnocultural diversity and languages, education, labour, commuting, and Veterans, income and expenditures, and housing.

When I did my graduate work in statistics, I chose a school in Ottawa because of Statistics Canada; many of the faculty at the time had close ties to the government agency and were world-leading statisticians. From them, I learned a lot about striving for excellence in data collection and reporting. Frequent readers know that I often decry some of the embarrassingly poor quality of analysis masquerading as reports on the digital economy.

I am much more inclined to rely on Statistics Canada for information gathering. Three months ago, I wrote “Better data leads to better decisions”, talking about Statistics Canada new telecommunications data portal. It is continuing to be enhanced with even more data and high quality information.

A few weeks ago, I described a webinar taking place later this week (on Tuesday), asking “Are pandemics caused by lack of good information?” The abstract for the session says “A pandemic is essentially an information problem, and if we solve the information problem, we can defeat the virus.” There is still time to register for Tuesday’s session.

The census sets the foundation upon which so much of our demographic information is built. Statistics Canada has even come up with a page of different Spotify and YouTube soundtracks to help get in the mood. [It clearly isn’t the same staid agency from my grad school days!]

Better data definitely leads to better decisions. Be sure to count yourself in.

Channels of appeal

Data on Tap, otherwise known as DOTmobile, says that it has appealed the CRTC’s recent Regulatory Policy – Review of Mobile Wireless Services to Cabinet.

Recall that the Telecom Act prescribes three channels of appeal for a CRTC decision: to Cabinet (the Governor in Council); to the Federal Court of Appeal; or, back to the CRTC itself.

A “petition” to Cabinet must be filed within 90 days of a CRTC Decision. The Commission’s policy was issued on April 15th, less than 3 weeks ago; Cabinet has a year from the date of the decision to respond.

The press release says:

“The CRTC decision misinterprets Canada’s wireless policy. Industry analysts, telecom experts, competitive regional providers and even the dominant carriers all recognise that this decision will not have any meaningful, immediate or nation-wide effect on the wireless market,” said Algis Akstinas, CEO of Data on Tap Inc. “It is not addressing the pain points that kicked off the Review of Mobile Wireless Services and were validated by the Commission and Competition Bureau Canada during the proceeding.”

Given that the CRTC’s model largely adopted the competitive framework proposed by the Competition Bureau, it is hard to understand the validity of this statement.

In its Application, DOTmobile asks Cabinet to:

  1. Make wholesale access to dominant networks available to Full MVNOs by removing the requirements targeting regional MNOs:
    • Remove all spectrum licensing requirements.
    • Remove the seven-year limitation on mandated wholesale access.
    • Remove the requirement to own and operate an existing radio-access network.
  2. Set a maximum wholesale rate to allow Full MVNOs to offer plans that meet the affordable and occasional-use plan requirements identified by the CRTC:
    • $0.0070 per voice minute (based on 500 average minutes of usage)
    • $0.0010 per SMS message (based on 500 average minutes of usage)
    • $0.0060 per MB of data (based on 3GB of average data usage)
    • Wholesale cost for the $35/month 3GB plan would be $22.00, leaving a moderate 37% average retail margin to cover operating costs and investments.
  3. Direct the CRTC to review maximum mandated wholesale rates every two years to determine if they allow for competitive retail pricing, based on a margin equal to the average reported wireless EBITDA margin of the dominant networks in the CRTC’s Communications Monitoring Report.

It is a hefty request with a degree of specificity that is extremely unusual to expect from Cabinet.

DOTmobile’s Application itself recognizes the close relationship between the CRTC’s Decision and the Competition Bureau’s proposed model. Recall that the Competition Bureau is an agency that reports to the Minister. As the CRTC observed, “The Commissioner [of Competition] suggested that, relative to facilities-based competitors, service-based MVNOs are inferior because, without any networks of their own, they must rely on network operators and the regulator to set the bounds in which they operate” and “proposed that the Commission [CRTC] adopt a narrowly focused, facilities-based MVNO access policy.”

It is worthwhile looking at a part of the introduction to the CRTC’s Policy Decision:

the Commission considers it necessary to apply certain targeted regulatory measures to ensure that the needs of Canadians are met, having regard to the policy objectives of the Telecommunications Act and both the 2006 and 2019 Policy Directions.

In considering its regulatory approach, the Commission must take care not to disrupt the competition that is already occurring, but instead foster an environment where this competition can grow and be sustainable over the long term.

I suspect the Minister will follow a similar approach, taking care not to disrupt the competition that is already occurring.

We’ll be following this file.

Spectrum trafficking

Speculating in spectrum can be extremely profitable as I was reminded last week. My Twitter timeline highlighted a couple articles about Canadian spectrum sales over the past few years.

One of the articles highlighted Videotron selling Shaw unused spectrum in Ontario, Alberta and BC in the 700 MHz band and 2500 MHz band for C$430M. Videotron acquired its 700 MHz spectrum in 2014 for C$233M and the 2500 MHz spectrum in 2015 for C$187M. So, on first glance, one might think the $430M sale in 2017 just covered the $420M total cost. But, the total cost included all of the spectrum Videotron kept for its own use in Quebec, so flipping the out-of-region spectrum resulted in getting Quebec for free.

The other tweet linked to a story about Videotron selling to Rogers some unused spectrum it was sitting on in Toronto. In that particular case, Videotron had acquired 10 MHz of AWS spectrum in the 2GHz band in Toronto in 2008 for C$96M, and sold it for C$184M nine years later, just a year before the original license expired.

These stories are insightful for some of the bidder qualifications that have been put in place for Canada’s upcoming 3500 MHz spectrum auction. To qualify to bid for spectrum in a particular area in the June 2021 auction, bidders must already be providing some kind of telecom services in the area. For greater precision, the auction will be conducted in Tier 4 geographic areas; there are 172 ‘localized’ geographic blocks in Canada using Tier 4 subdivisions. To qualify to bid for spectrum in any particular Tier 4 block, the bidder must already be providing a telecommunications service (such as internet, telephone, mobile, etc.) in the associated Tier 2 zone; there are 14 Tier 2 geographic blocks in Canada, generally one for each province except for Ontario and Quebec which have subdivisions.

Clearly, the consultation demonstrates there was a concern about spectrum squatting and trafficking. In the discussion about eligibility in the Licensing Framework, the Department wrote, “To promote optimal spectrum utilization and deployment, set-aside-eligible bidders must be actively providing commercial telecommunications services.” There are also specific deployment requirements set out as a condition of license, aiming to ensure spectrum is actually deployed, not hoarded.

Last week, I wrote about a recent Opensignal report that observed how Canada is falling behind its peers since the “full capabilities of 5G are best realized through the wider channel sizes in the new 5G bands”. The Policy and Licensing Framework acknowledges that “The development and deployment of 5th generation (5G) technologies will support Canada in becoming a global centre for innovation, and will position Canada at the forefront of digital development through the creation and strengthening of world-class wireless infrastructure. Beyond initial improvements to the speed and capacity of mobile broadband networks and services, 5G technologies are expected to transform services across all sectors of the economy including manufacturing, healthcare and transport.”

The 3500MHz spectrum is also important for rural broadband deployment since the mid-band frequencies provide a blend of coverage and capacity.

The upcoming auction was already delayed until June due to COVID, from its original December 2020 date. In the wake of the CRTC’s Wireless Review determination, some had called for the auction to be delayed in order to allow additional companies to decide to register to bid. Last week, Minister Champagne made it clear that the auction is moving ahead in June.

As you know, the deadline to submit an application to participate in the 3500 MHz auction was April 6, 2021. The auction’s timelines were made public in June 2020, and many applicants have now invested significant effort to apply despite the potential uncertainty surrounding the CRTC’s MVNO decision. The auction has also already been delayed by six months to allow providers to respond to COVID 19. Accordingly, we will not be reopening the auction application process at this time.

The June auction is hardly the last opportunity to acquire mid-band spectrum. It is critical for the auction to proceed without further delays, and for Canada to continue to make additional spectrum available – for deployment, not for speculation – in order to continue to support innovative new services and a seemingly insatiable thirst for wireless connectivity.

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