A new day dawning

As a new government is formed in Canada, there will be an opportunity for a renewed focus on developing a cohesive digital strategy to guide the economic recovery.

Yesterday’s election results are not yet finalized, but we already know that there will be new faces in Cabinet in a number of portfolios impacting communications and connectivity.

A couple weeks ago, I wrote about the need “for a clear strategy, recognizing the balance and inter-relationships between competing objectives for universal access to high quality telecommunications services at affordable prices” (see: “How did we get here? How do we move forward?”).

A recent article on Politico by Vodafone Group CEO Nick Read, “How the EU can speed up its digital transition”, caught my eye. In it, he speaks optimistically of the need for changes in telecom policy and regulations, as some countries recognize that there are opportunities to learn from approaches being applied in other jurisdictions.

European policymakers profess to the importance of the digital transition. As evidenced during the pandemic, modern connectivity and digital services play a critical role in our economic recovery and to help future-proof our society. Yet, Europe is falling behind other pioneering nations in everything from high capacity networks, 5G industrial applications, IoT and cloud to artificial intelligence. A large and growing investment gap has emerged, not least in digital infrastructure and 5G.

The Vodafone CEO mentioned a few examples from a variety of countries, such as recent reforms in Germany that are expected to reduce the time to deploy mobile base stations by up to 4 months.

To attract private investment, Spain introduced interesting policy reforms, such as in the structure of its July auction for 700MHz spectrum, that concluded after just 2 days. Vodafone, Telefónica and Orange all secured frequencies. Read noted that “the government did not use the auction to artificially meddle with the market structure or extract value from the industry.” The spectrum licenses are for 40 years, double the normal length, as long as the carriers meet their licence obligations. “Long-term spectrum licences at reasonable prices will help us move forward with the deployment of 5G services that will revolutionise industry, public services and healthcare.”

Most striking in the Politico article is the call for government and the private sector to develop a new collaborative approach. The digital transition is seen as being an important foundation for a greener economy. “As evidenced during the pandemic, modern connectivity and digital services play a critical role in our economic recovery and to help future-proof our society.”

Whether it is the NDP’s “Ready for Better”, the Conservative’s “Canada’s Recovery Plan”, or the Liberal’s “Forward. For Everyone”, I remain optimistic that the new government will bring a fresh opportunity to leverage the capabilities of Canada’s communications sector, to build Canada’s digitally powered future.

There is much work to be done, but it’s a new day dawning.

Is retail regulation delaying delivery of consumer benefits?

Retail price regulation means government approval is required for changes in rates, whether prices are going up or down. The same approval process is required if the terms or service characteristics, such as speeds and data allowances, are changing. These are known as tariffs. In most of Canada, for most consumer telecommunications services, tariffs, and the associated regulatory approval process, are no longer required. Such isn’t the case in many rural and remote serving areas.

Still, one would think that no regulator would stand in the way of prices going down, right? You would be wrong.

Let’s take a look at the far north, where most rates charged by Northwestel are subject to tariffs regulated by the CRTC, unlike just about everywhere else in Canada. That means that any change in price (or terms) needs the approval of the Commission, even when prices are going down, or service characteristics are improving to the benefit of consumers.

Given the geography, it isn’t surprising that Northwestel’s prices for broadband services are among the highest in the country; average available broadband speeds are among the lowest. The latest Communications Monitoring Report (CMR) shows that only 60% of residents in the Yukon and Northwest Territories have access to 50/10 service. Unlimited service was not yet available at the end of 2019 when data for the 2020 CMR was collected; an unlimited option was added in December 2020.

One might think that proposed improvements in service quality and prices would be fast-tracked by the regulator. Again, you would be wrong.

Over the past year and a half, when most of the country has been so dependent on broadband to work from home and stay connected, we have seen some lengthy regulatory delays blocking implementation of proposed rate reductions, internet speeds improvements, and launches of unlimited service. Some might consider these delays to be excessive.

For example, let’s take a look at Northwestel Tariff Notice 1099 [zip, 288KB], filed 11 months ago on October 21, 2020, with a proposed service date of November 2, 2020. From the cover letter:

On 12 August 2020 , Northwestel was pleased to be awarded $62M in broadband funding to expand broadband in our serving territory. As part of each of these winning bids for broadband funding, we committed to introduce unlimited Internet service packages not only where we received funding, but also within our cable and FTTP-served footprints as soon as possible. Consistent with this commitment, we are pleased to file today new proposed packages including unlimited Internet service packages for residential and business customers.

The CRTC itself had awarded the funding in a series of decisions on August 12, 2020, which included a condition requiring Northwestel to offer an unlimited service option. Still, the Commission didn’t approve the tariff application in the standard 15 day period, delaying interim approval until December 1, 2020. The process has continued to drag on over the past 8 months with costing submissions and responses to various interrogatories lasting until last month. Final approval is still outstanding.

In April, Northwestel filed a related application (TN 1121 [zip, 237KB]) to extend its “Try-it-and-Save” promotion for another year, and to also include the unlimited option to the promotion. On April 27, the CRTC told Northwestel that the promotion would not receive the customary 15 day interim approval, “[h]owever, the Commission intends to dispose of this application, along with any associated subsequent revisions, within 45 business days of receipt of the filing.”

The Commission has not asked Northwestel for any further information. A couple weeks ago, the CRTC approved a modified version of the promotion, only granting 6 months, while denying the request to add unlimited Internet packages to the promotion. Why? “[T]he Commission considers that including Northwestel’s unlimited Internet services at this time would potentially add complexity to the administration of the promotion and confusion to customers, given that this service has been approved on an interim basis only.”

Hold on. The only reason the unlimited service just has interim approval is because the CRTC itself hasn’t gotten around to providing final approval.

One might have thought that the CRTC would have seized the opportunity to finalize the 2020 tariff approval in time to allow people in the North to try out unlimited broadband as the school year is getting underway. But once again, you would be wrong.

There are more examples. Tariff Notice 1122 [zip, 252KB] filed April 21, 2021 seeks to reduce the price of unlimited packages by $10 for residential customers. Tariff Notice 1137 [zip, 793KB] was filed August 19 seeking to increase speeds and usage for certain cable and fibre-to-the-premises residential and business packages; two weeks ago, the CRTC told Northwestel that it will not get 15 day interim approval and “the Commission intends to make its decision regarding the application and any subsequent revisions within 45 business days of receipt of the filing.”

In a media release two weeks ago, Curtis Shaw, Northwestel President, said “We know Northern customers want to see continuous improvements in the value of their Internet service, and that’s why Northwestel has laid out its plans to improve speeds and lower rates on our most popular Internet plans”.

Nearly half a year after Northwestel asked to lower rates, the CRTC hasn’t moved on the file. What can possibly be holding up interim approval for lower broadband rates, especially at this time?

When there is so much chatter about access to affordable service, and when there is universal agreement on the need to improve access to affordable high speed services in the north, wouldn’t we want to see interim approvals and speedier processes when consumers benefit from proposed tariff filings?

Unfortunately, that isn’t happening.

Those of us who have been around for a few years understand that the machinations of government regulatory bodies have trouble keeping up with the needs of the consumer marketplace. It is an important lesson for those calling for retail rate regulation for communications services in other areas of the country.

A smarter approach to community networks

Too many community networks are failing their constituents.

I’m sure there are some exceptions, but the record shows that too many of them are a drain on scarce community financial resources and have created disincentives for private sector broadband investment. In the end, such projects can delay delivery of broadband services, precisely the opposite of what should have been sought.

Recently, i-Valley, an organization claiming to be behind “Canada’s largest rural network”, issued a press release “calling on all Federal Parties to take a new approach to broadband creation”. In “Fresh Approach Needed for ‘Broadband Nation’”.

Let’s take a look at i-Valley’s signature project, a broadband network for the Municipality of Pictou County in Nova Scotia. “In 2016, Council initiated a planning process to remedy the situation by taking the future into its own hands, without waiting for outside agencies for relief.”

The municipality has allocated $11M toward construction of the first ring. Another $4.46M in federal funding has been allocated as part of the rapid response stream of the Universal Broadband Fund, connecting 3600 households.

Five years later, the future still hasn’t arrived for residents of the Municipality of Pictou County. Five years. A fresh approach is certainly needed.

Last summer, I wrote about Beaumont, Alberta (“When a smart city plan isn’t so smart”). It still hasn’t decided on whether to proceed.

The poster child for community networks in Canada, O-Net, has been pushed into receivership by the town of Olds, Alberta, for failure to repay a $14M loan.

I have written before that Community networks are hard. A year ago, Rob McCann of Clearcable Networks (and President of the Hamilton Technology Centre) asked “Have Open Access Networks Seen Their Day?” in an article in the Intelligent Community Forum.

While the Conservative Party platform says it will “Promote investment in communications facilities by local and regional communities”, it should carefully consider the history of failed local government attempts to deliver on the promise of community networks.

There are business models that can accelerate investment in broadband facilities in underserved communities.

And, there are models that squander time and tax dollars. The smarter “Smart Communities” know the difference.

How did we get here? How do we move forward?

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.

Shana Tova – 5782 – שנה טובה

The Jewish New Year, Rosh Hashana, begins Monday evening, September 6, marking the year 5782.

This period in the calendar is a time of reflection and introspection. We review the past year, and look ahead to the next. Last year, I wrote “I hope the coming year allows a return to increased personal interactions, without masks hiding our facial expressions.”

Like many of us, I had high hopes. I have missed being able to see those members of my family who live overseas, including one who only knows us via video-chat software, and we have only seen our west coast family too briefly in June.

A year and a half after COVID-19 restrictions began, how many of us thought we would be seeing infection rates rise again? Who thought it would take a year and a half before vaccines became mandatory to enter many workplaces and schools and places of worship? That vaccine hesitancy would continue to be based on misinformation being shared and amplified on social media?

As we move toward a second year of live-streamed synagogue services, I continue to hope that you are inscribed for a year marked by good health, by personal and professional growth, and a year of peace for all of us.

לשנה טובה תכתבו ותחתמו

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