Is it time to remove telecom ownership restrictions?

In a Globe and Mail article last week, Rita Trichur set out compelling arguments to remove Canada’s remaining foreign ownership restrictions that apply only to carriers that have greater than 10% of total Canadian telecommunications revenues. From a practical perspective, that definition is a euphemism for Bell, Rogers, and TELUS.

In her article (“Telus CEO says it’s time for Ottawa to relax foreign-ownership rules for large telecoms. He’s right”), Rita writes that efforts by the Canadian government to “micromanage market competition have failed.”

The article continues: “If lower prices, connectivity and innovation are the Trudeau government’s overarching goals, then the time is right for our federal legislators to finally heed Mr. Entwistle’s advice and let market forces prevail.”

As the article notes, the 2006 report of the Telecommunications Policy Review Panel [pdf, 1.6 MB] and the 2008 Competition Policy Review Panel report [Compete to Win] each recommended liberalization of restrictions on foreign investment in order to boost competition.

From the Competition panel report:

Telecommunications and Broadcasting

  • For several years, Canada has been reorienting its telecommunication policies to place greater reliance on market forces in recognition that competitive access to information and communications technology facilitates business productivity throughout the economy.
  • Canada’s telecommunications policy was subject to an extensive review in 2005–2006 by the Telecommunications Policy Review Panel, which concluded that reducing restrictions on foreign ownership would increase competitive intensity, improve industry productivity, and be more consistent with Canada’s open trade and investment policies.
  • Accordingly, the Panel recommends the adoption of a two-phased liberalization of foreign ownership rules pertaining to the telecommunications and broadcasting sectors. In the first phase, foreign telecommunications companies would be permitted to establish a new Canadian business or acquire an existing Canadian telecommunications company with a market share of up to 10 percent. In the second phase, liberalization of foreign ownership would be undertaken for both telecommunications and broadcasting in a way that would be competitively neutral.

As the Globe article notes, “Not only is Ottawa taking too long to move forward with the second phase of foreign-investment liberalization, but the remaining restrictions unnecessarily drive up the cost of capital for large telecoms.”

The article quotes TELUS chief Darren Entwistle saying:

When you have artificial regulation, it fetters your fluid access to international capital markets. I don’t want to do that; I want to get the cheapest money available.

When we’re blowing our brains on fibre and 5G, I want to make sure that we get money at the lowest cost possible along the way.

I have written before about the high levels of investment required to build networks in Canada. Over the summer, a government background paper acknowledged that “in Canada the share of telecommunications revenues invested in capital expenditures over time was 30-50% above the OECD average.” Canadian telecom carriers invest well in excess of $10B in capital each year.

The opinion piece in the Globe and Mail concludes saying: “Instead of more meddling in the telecom market, Ottawa should create a plan to relax the remaining foreign-investment restrictions over the next three years.”

Is it time? Will a minority Liberal government take a “free-market” page from the Conservative party’s playbook to open up Canada’s telecom market?

Recall that a couple of weeks ago, I released “A Reading List For Free Market Telecom Policy”. Are you sensing a trend?

Shana Tova – 5783 – שנה טובה

Rosh Hashana, the two-day holiday marking the Jewish New Year, begins Sunday evening, September 25, marking the start of the year 5783.

As I have explained in previous years, celebrating Rosh Hashana is very different from the celebrations marking the arrival of January 1; it is a time of reflection and introspection, reviewing the past year, and looking ahead to the next.

I reflect on the past year feeling a mixed sense of professional satisfaction, having highlighted abuse of a government program that directed anti-racism funds to a purveyor of hate. There are many lessons to be learned by all of the parties involved: government leaders, bureaucrats and public-interest groups that are supposed to be our first lines of defense. It was particularly gratifying to see the support for my work openly displayed by a diverse coalition of colleagues from across the competitive spectrum. In the coming year, we will be certain to explore ways to improve processes and renew education and sensitivities on these important issues.

As it happens, through the weekend, I came across one of those motivational graphics that adorn various social media pages that seemed to resonate with me: “Our lives begin to end the day we become silent about things that matter.” I hope the coming year continues to provide opportunities to speak out on things that matter. I encourage you to find your voices to join me.

As we continue to emerge from the pandemic, I am approaching the coming year with renewed optimism. I have been able to travel to visit family who are overseas, and those on the other side of the continent, as well as host visitors – selectively. The past year enabled my wife and I to spend time with our grandkids, including getting to meet our granddaughter after 15 months of knowing her only by daily video chats. I wrote about the power of virtual presence, but let me reiterate, as good a substitute as video may be, it’s nothing like the physical reality of touching, holding and hugging.

As many of you read this, I will be watching a third year of live-streamed synagogue services, not yet ready on a personal level to crowd into a sanctuary for 4 hours. Still, there is a greater feeling of optimism as we continue along a path toward normalcy. I am looking forward to a year filled with more opportunities to hold and hug all of my little ones.

May the coming year be marked by good health, by personal and professional growth, and may it be a year of peace for all of us.

לשנה טובה תכתבו ותחתמו
May you be inscribed and sealed for a good year.

Training the Next Generation of Tower Technicians

A new report aims to encourage and assist the development of comprehensive training programs for the next generation of telecommunications tower technicians. According to the release, “As the demand for wireless services in Canada continues to accelerate, so grows the demand for skilled technicians trained to build and maintain the country’s telecommunications towers and other critical wireless infrastructure.”

I have written before about the Structure, Tower and Antenna Council (STAC), which represents and provides a collaborative forum for Canadian wireless communications carriers, tower owners/operators, tower and rooftop equipment engineering service suppliers, and wireless communication facilities construction and maintenance contractors.

STAC released “Training the Next Generation of Tower Technicians” to aid in the development of a standardized training curriculum for new telecommunications tower technicians. The hope is that this will aid post-secondary educational institutions and specialized training schools to train the next generation of this in-demand workforce, supporting the growing need for wireless
connectivity.

Following lengthy deliberations, including research and interviews with people involved in launching similar training in the US, STAC identified six primary areas of study for those training to become tower technicians, as well as corresponding subtopics per each subject:

  • An Introduction to Telecommunications;
  • Climbing and Safety;
  • Measurements;
  • Construction;
  • Rigging; and
  • Electrical and Radiofrequencies (RF) Safety.

The structure, tower and antenna industry faces unprecedented recruitment challenges regarding the supply of workers, critical to meeting a continually growing demand for wireless services. In the absence of standardized industry training, employers are hiring and training new technicians themselves. As a result, there can be disparities, not only the types of training, but the scope and quality of training provided to new employees entering the industry.

As with any specialized workforce, the lack of adequate, standardized training can potentially result in hazardous working conditions. Harmonizing training and skills requirements for those joining the industry can help ensure critical communications infrastructure will be constructed with paramount concern for worker safety and network quality. Following completion of the classroom and lab-based learning modules, STAC’s Industry Workforce Committee believes additional structured learning through the completion of workplace learning placements, such as coop programs, would be beneficial to students, allowing for experience-based learning on-site, and providing students with an opportunity to develop hands-on knowledge of the job.

STAC indicated that it is eager to assist educational institutions and training providers seeking to offer this curriculum to develop the next generation of tower technicians.

Which schools will step up?

Investment driving innovation

Over the past few days, I noticed a common theme – investment driving innovation – in two press releases (Bell and Comcast) and two executive profiles in the Globe and Mail (on TELUS CEO Darren Entwistle and Bell CEO Mirko Bibic).

Let’s take a quick look at the connections.

Earlier today, Bell announced Gigabit 8.0 internet service, offering symmetrical download and upload speeds of 8 gigabits per second (8 Gbps) over its fibre network. That is a blistering high speed service, said to be the fastest residential internet speeds available in North America. At the same time, Comcast announced that it had successfully tested technologies that enable it to offer symmetric multi-gigabit per second services over its cable plant – technologies that can be expected in residential networks over the next year. We can expect these capabilities to be deployed in Canada as well.

In the profile on TELUS CEO Darren Entwistle we read:

When Telus first started planning its copper-to-fibre migration, its leadership wasn’t in agreement about how fast to move. “We were not a house united, we were a house divided,” Mr. Entwistle said. “There was a lot of back and forth – not so much on doing it, but what’s the right pace? Should we take an incrementalist approach versus going all in? Thankfully, we went all in.”

Similarly, the ROB Magazine profile on Bell CEO Mirko Bibic has:

Since I became CEO, and since the pandemic, we have invested more. Built more, better wireless networks, better fibre networks, to more communities—urban, suburban and rural. At the beginning of 2020, we had no 5G networks. Now we’re going to have 80% of the country covered with Bell 5G networks. By the end of this year, we will have made our fibre internet services available to two million additional locations. And we’ve invested in more resiliency and security.

I saw a common theme in facilities-based competition driving investment. Not just for the sake of investment, but because of the strategic value of networks as the platform upon which the overall economy can grow. As Mirko Bibic said when asked what the telecom landscape looks like in five years:

In terms of the connectedness of the country, what I really hope is, well before five years from now, we will have shifted the public policy focus from not only talking about price, quality and coverage, to serious discussions about how to use these networks. How do we encourage more investment in networks, more technology adoption by large and particularly by small businesses? More R&D investment by domestic and global players. Because if you want to invent something, in the metaverse or whatever it is, come here. Because we can give you the best network experience in order to make your inventions work. That’s what I hope we’ve accomplished, well before five years from now.

Investment drives innovation. Facilities-based competition drives investment.

A reading list for free market telecom policy

Congratulations to Pierre Poilievre, the new leader of the Conservative Party of Canada, and leader of His Majesty’s Loyal Opposition.

Over the past few years, I have been somewhat critical of some telecom policy position papers to emerge from the Conservative party. Truth be told, I have been critical of a lot of telecom policy… full stop.

Let’s face it, Canadian telecommunications policy hasn’t won a lot of fans among consumers, or among service providers for that matter. Yet here we are, continuing to pursue the same approach, with spectrum set-asides and using number of competitors as a lazy substitute to measure competitive intensity.

But, with a new leader of the opposition, a “champion of free markets”, it just might be an opportunity for a fresh look at developing a “free market telecom policy”, as a key enabler of Canada’s digital economy.

So, in the spirit of the start of a new school year, let’s review our initial reading list, kicking off our graduate-level course in Free Market Canadian Telecom Policy.

There you go.

That should be a good start for some background reading on a more free market approach to Canadian telecom policy. I’m happy to hear if there are others to be added.

Be ready for a pop-quiz in the next few weeks. I’m looking forward to seeing proposed topics for your term papers. And don’t forget – class participation represents a significant piece of your final grade.

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