The power of virtual presence

I like to think of myself as a reasonably seasoned internet user, with a pretty long history of using technology to empower working from home. After all, thirty-five years ago, I had a dedicated 56kbps line connected to my Bell Labs issued, AT&T UNIX PC for remote work access. Before then, I had a Northern Telecom Displayphone for connectivity to almost nothing useful.

Today’s virtual presence capabilities are truly remarkable, but it is only in the last couple weeks that I have been able to fully appreciate the power of video calling as a relatively meaningful substitute for physical contact.

We had grandchildren born during the COVID-19 lockdowns, in distant locations. We have daily video chats with apps like WhatsApp or FaceTime that have let us see the babies and their slightly older siblings. Only recently were we able to travel to meet the not-so-new members of the family.

Our 15 month-old woke up from her nap to find grandparents reaching for her. We are grandparents who, up until then, she only knew from a small screen, but she was willing to be held by those familiar faces with comforting voices.

I’m sure developmental psychologists will conduct in-depth studies of the impact of virtual connectivity on familial bonding. My singular data point shows that there was a surprising level of recognition, despite 15 months of missing tactile and olfactory sensory contact.

Still, as good a substitute as video may be, it’s nothing like the physical reality of touching, holding and hugging.

I even missed the smells of a 15 month old, but suspect this is an area that is ripe for innovation.

Queen’s gambit

When novices plays chess, they move pieces in the moment, simply capturing the immediate advantage without anticipating the impacts and potential responses of their opponent. In the mini-series Queen’s Gambit, we follow the fictional chess prodigy Beth Harmon (played by Anya Taylor-Joy) as she learns to look ahead, anticipating consequences of her moves in preparing her strategies.

Of course, frequent readers will know that it takes little effort for me to find a telecom metaphor embedded in championship chess. A number of times in the past I have made reference to chess in examining telecom policy issues. Simplistic analysis often fails to look beyond the immediate effect of a policy, like a novice chess player quickly capturing a piece without considering the consequences.

For example, when we auction spectrum to maximize revenues, we fail to consider the impact on consumer prices. Carriers will bid on the spectrum to the point that the business case can no longer support any higher amounts, but there is clearly a consequence that arises from higher costs. This was a recurring theme at The Canadian Telecom Summit last week.

Some critics have looked at the Rogers – Shaw transaction and immediately conclude that any contraction in the number of entities participating in the market results in a lessening of competition. Keep in mind that Shaw has indicated that the company is unwilling to continue to invest at the levels required to upgrade the capabilities and reach of its network. As a result, there are many Shaw wireline customers (such as Manitoba and Saskatchewan and parts of BC and Alberta) that are outside the reach of the Shaw mobile network and there are Rogers mobile customers in Western Canada unable to bundle services with residential wireline. It is widely expected that Shaw’s wireline network will provide Rogers with local infrastructure to accelerate the roll-out of competitive 5G services in all of Western Canada.

As Rogers SVP of Regulatory Affairs told The Canadian Telecom Summit last week, there are no places that Rogers wireline business competes with Shaw wireline. Even on the wireless business, it isn’t clear that combining Rogers and Shaw will result in a lessening of competitive intensity in every geographic market. For example, in BC, the combined Rogers and Shaw would have about 40% market share, similar to that of TELUS (according to NBI Michael Sone Associates). Bell would have roughly half their share. What would one expect in terms of competitive intensity in the BC market as a result? In Alberta, TELUS has roughly half the mobile market. A combined Rogers and Shaw would have about 30% and Bell would have about 20%. Again, couldn’t this result in an increase in competitive intensity?

The communications sector in Canada is a $75B business and there is a $26B transaction being reviewed by the CRTC, with a week of oral hearings starting today. The transaction will also need approvals from the Competition Bureau and the Federal Government (ISED).

Just as I have said that we need to explore policies for the digital economy with the thinking of a chess master, the same depth of analysis needs to be applied in considering spectrum policy and the impact of the Rogers – Shaw transaction.

We got it wrong

“I’ll be frank: we got that initial decision wrong.”

It isn’t often that a government official uses clear language to acknowledge mistakes, but this is precisely how CRTC Chair Ian Scott addressed the elephant in the room when speaking at The 2021 Canadian Telecom Summit earlier this week. I think it is worthwhile including a lengthy excerpt directly from the text of his speech.

Another matter that has attracted a great deal of attention and commentary is our decision that set the final wholesale rates for aggregated high-speed broadband access services. Obviously, and as you know by now, we reversed course on implementing the rates we set in 2019. Rates, I will add, that were never implemented in the marketplace.

I’ll be frank: we got that initial decision wrong.

There were unquestionably errors in the initial decision. We are not infallible, and we could not ignore those errors once they were properly identified. We have always said we will review any decision if a party submits an application. Legislators anticipated that the CRTC may sometimes make mistakes or base its decisions on an incomplete record, and for that reason included the review and vary provision in the Telecommunications Act.

When a party submits an application asking us to review a decision, we address the issues in question seriously, fairly and in an independent manner. Because no one benefits from uncertainty in the market.

The work we at the CRTC do is not always popular or easily understood, especially when it comes to the costing of wholesale services. We recognize that. But I will say that in the process of reaching a decision—be it on rates for high-speed access services or any other matter you care to name—the process we follow is always based on sound administrative-law principles. We build a public record, our expert Commission staff analyze the evidence and Commissioners – all of whom share equal voting rights – make decisions. And we do all of this with the public interest foremost in mind.

Unfortunately, in the aftermath of this high-speed access decision, some remain focused on perceived winners and losers. We, however, have moved on. The industry continues to evolve and move forward, and we’re looking at far bigger and frankly, much more productive things. Our focus is on the multitude of threads—the multitude of proceedings before us, if you prefer—that we are currently weaving together to create a policy framework that fosters more competition in the marketplace in order to reduce prices for consumers.

Those threads include more than our mobile wireless and high-speed access decisions. They also include our ongoing work in developing our high-speed access framework across Canada, including in the North, as well as a variety of issues relating to detailed technical and policy matters.

We’re looking at these matters, and others, with a goal of building a comprehensive regulatory approach that supports sustainable competition and balances the various perspectives of all stakeholders. Regulatory certainty, after all, is important to everyone. It’s important to consumers, who want better services at lower rates; to competitors, who want to explore opportunities to serve new markets; and to incumbents, who want the capacity to invest in, and expand, their services. That’s why we are focused on getting it right.

A few minutes earlier, the Chair had said “Although aspects of both of our mobile wireless and high-speed access service decisions are being appealed to Cabinet and the courts, the Commission is convinced of the validity of our approach. Both are helping to lay the foundation for the continued growth of smaller service providers and new entrants into the market. Both are helping to support sustainable competition that will ultimately lower what Canadians pay for their telecom services. And both are helping to build confidence in the marketplace.”

The appeals can work their way through the system. The reality is that the federal government has consistently affirmed and reaffirmed its support for sustainable, facilities-based competition, providing appropriate incentives for investment to upgrade networks and extend the reach into unserved and underserved communities.

Canada’s future depends on connectivity.

In search of perfection

Government programs to provide better broadband are failing underserved markets. On this point, a number of recent releases agree.

Whether it is improving availability of higher speed, better quality, more reliable services, or improving rates of adoption among certain communities, governments in Canada at all levels are simply not delivering fast enough on their commitments to improve access to broadband services for their constituents.

Subsidy programs designed to stimulate construction in underserved areas have moved too slowly, and in some cases, the overhang of promised funding may have delayed roll-outs to areas that might have otherwise seen construction without government funding. (See: “A less than rapid response stream”.)

Social service agencies aren’t dispensing direct subsidies to allow low income households to sign up for communications services of their own choosing, leaving the development of such services to the goodwill of the private sector, which has stepped up to fill the void left by a failure of government leadership. Contrast this with the Emergency Broadband Benefit in the United States, that provides “a discount of up to $50 per month towards broadband service for eligible households”.

“Waiting to Connect”, a report [pdf, 3.8 MB] from the Council of Canadian Academies, says “Canada’s current broadband funding and consultation processes are often complex, onerous, competitive, and involve many actors, making them difficult for small, capacity-limited organizations to navigate.” This is accurate. However, it is difficult to support a conclusion that says “Broadband infrastructure can only meet long-term connectivity needs if it is scalable and sustainable, and if there is local expertise and capacity to build, operate, and maintain it.” The paper appears to argue against the efficiencies of scale, in favour of local capabilities. About a year ago, I wrote “Toward a universal broadband strategy”, that talked about the problems caused by the lack of stable funding to offset the higher ongoing operating costs associated with rural and remote telecommunications services. There is a relatively easy solution, reminiscent of the funding for high-cost serving areas that was formerly administered by the CRTC before it chose to duplicate other branches of government funding capital projects.

In another paper, from the Public Policy Forum, “Future Proof: Connecting Post-Pandemic Canada” [pdf, 1.8 MB] argues that Canada needs to be a global leader in 5G as I discussed a couple weeks ago. The paper argues for “future-proof digital connectivity
infrastructure—connectivity that is scalable so it is capable of supporting data rates that far exceed needs that can be foreseen today” but also notes “It is prudent to enter a caveat that truly universal future-proof connectivity cannot be assured within specified time.” Recognizing that universal access to fibre is impractical, the paper argues for Canada to develop a strategy to be a global leader in 5G.

Two papers, both talking about connectivity, but ignoring the issue of adoption. The papers focus on the supply side, without looking at measures to increase demand among those who are not yet connected.

In part, I believe the problem is a result of a failure to apply some basic systems engineering principles, defining requirements rather than specifying solutions. In the past, I have described this as having people start with a premise that they need nails, which is a specific kind of solution, rather than defining the real requirement, that they need to put two pieces of wood together.

It is easier to define problems in terms of solutions with which we are familiar, or in terms of concrete, physical solutions. As a result, we have had people hijack the need to increase broadband adoption among low income households and advocate for municipalities to build their own fibre network. The most extreme case is the Connect TO project, overlaying municipal fibre in one of the world’s most connected cities. Look at Beaumont, Alberta, a suburb of Edmonton, that in the summer of 2020 promised to have construction underway before the end of the year. A year and a half later, all that Beaumont has done is inhibit investment by private sector service providers. At least Beaumont isn’t as far along in squandering taxpayer dollars as Olds, Alberta which is rescuing its community network from bankruptcy.

As I have written before, we need a smarter approach to community networks.

The proponents and advocates for such local community network programs aren’t ill-willed, but unfortunately, I think many of these programs suffer from a failure to examine the potential for unintended consequences emerging from their solutions.

For example, if a municipality builds its own private network to link all schools, hospitals, and other municipal public institutions, it can have the effect of significantly damaging the business case for investment in communications infrastructure in the rest of the community. When a government infrastructure subsidy program is announced, it can freeze the incentives to invest until funding is distributed. Further, it is important to recognize that a government subsidized network, or a municipally owned network, impairs the business case for a competitive network build. It enshrines a monopoly in that area and the history of government telecom monopolies is not a good one.

There is some activity on the supply-side. Rogers (Connected for Success) and TELUS (Internet for Good) have each upgraded the initial targeted programs for affordable broadband, empowering disadvantaged households to choose the services that best meet their needs. It is expected that there will soon be upgrades to the national Connecting Families program, a private sector led initiative, coordinated under a federal government umbrella.

As we approach the end of the year, we need to look back at what we have learned from more than 20 months of pandemic-induced changes to our way of working and studying, driving increased needs for improved broadband connectivity at home.

Which programs are working? Can we, or should we, do more of them? How can we accelerate service improvements?

I have long argued “Isn’t some broadband better than nothing?” Isn’t it better to get some broadband service to unserved areas rather than wait for future-proof connectivity? When some Canadians are wanting for any kind of affordable broadband, it takes a certain kind of arrogance to proclaim that 25Mbps (or 50 Mbps) just isn’t good enough.

Le mieux est le mortel ennemi du bien.

We can’t wait for a perfect, “future-proof” solution for universal broadband for all Canadians. But surely we can strive to do a lot more, a lot better, and a lot sooner.

The price of quality

Many of you know that in the olden days, I would frequently travel to Israel to visit family and catch up on some of the latest innovations in the world of technology.

Thanks to COVID, it has been 21 months since my last visit, but the borders have cracked open and I am in Israel again at long last.

Spring and Fall are my favourite times of year to be here. I’m not crazy about the heat of Summer, but that’s on me.

In the month leading up to Hannukah, bakeries in Israel try to out do each other with special edition donuts, known as sufganiyot, with prices for some of the fanciest approaching $10 each. Each!

Why would people line up for $10 donuts, when supermarkets sell sufganiyot for $1? I’m sure there is a metaphor for telecom hidden in there… somewhere.

I’ll do some primary research over the next few weeks, trying to figure out what justifies the price of quality. I think I will start with the cassis cheesecake, please.

I know. It is a sacrifice, but inquiring minds want to know.

You’re welcome.

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