Mark Goldberg


www.mhgoldberg.com





#CTS20

Spectrum policy in the race for 5G

Canadian spectrum policy will be taking a high profile this year as the government and industry prepare for the increased bandwidth requirements for 5G deployments.

In December, I wrote “Spectrum policy and auctions”, providing links to the videos and presentations from November’s Spectrum Policy workshop held in Ottawa by the International Telecommunications Society.

This past Thursday, Telecom Review magazine released a special report “Spectrum and regulatory policy in the Race for 5G”, examining what various countries around the world are doing to deliver 5G services. The report concludes with “an urgent plea to the politicians and regulators, if you do not allocate sufficient spectrum to the various operators, then you have delivered 4G and underserved your nation in this global 5G race.”

In the article, Italy is identified as an example of what not to do in releasing 5G spectrum:

Italy in our opinion offers a perfect example of what a regulator ought not to do. Italy’s communication regulator, AGCOM, has set its near-term 5G future up for failure in two ways. First, by offering incumbent fixed licensees a six-year extension of their 200 MHz licenses (in the 3400-3600 MHz band) originally set to expire in 2023, Italy limited itself to only being able to auction 200 MHz of spectrum in its 2018 auction, split among four players. Compounding this shortage was a globally recognized poor auction design which split the 200 MHz into two blocks of 80 MHz and two blocks of 20 MHz (with a 100 MHz cap). In doing so, Italy forced its bidders to fight desperately for an 80 MHz block, leading to exorbitant auction prices and a distribution of spectrum that only supports true 5G deployment on two networks.

Unfortunately, the article continues, saying “In North America, Canada appears set to follow Italy’s example”.

By way of contrast, the article highlights the way some regulators are moving away from auctions, favouring a direct assignment of spectrum.

In April 2019 Japan assigned 100 MHz each to four operators (including a new entrant) based on coverage and investment commitments. Similarly, in the UAE two operators were allocated 200 MHz each with potential plans of making an additional 100MHz available.

ARCEP, the French regulator, has proposed to allocate up to four 50 MHz blocks in exchange for a series of “optional commitments”, and the remainder of the 310 MHz band would be allocated in a traditional auction.

If a hybrid approach like France was tried here, what kinds of potential commitments might be sought by the government in exchange for spectrum?

In September, I wrote “The cost of spectrum policy” and I warned “There is a cost associated with spectrum policy, not all of which is financial. As Canada moves forward with development of auction policy for the next wave of spectrum, it is critical to consider the potential for unintended consequences to have significant impact on consumers.”

The mandate letter for Minister Bains already contains a clause on spectrum set-asides that appears to pre-determine a portion of what normally follows a public consultation: “Award spectrum access based on commitments towards consumer choice, affordability and broad access. You will also reserve space for new entrants.”

If Italy offers a perfect example of what a regulator ought not to do, then Canada should be concerned when an international report warns that “Canada appears set to follow Italy’s example.”

It bears repeating: There is a cost associated with spectrum policy, not all of which is financial.

Top 5 from 2019

Which of my blog posts attracted the most attention in 2019?

Looking at the analytics, these 5 articles had the most individual page views:

  1. Retooling Rewheel’s reports” [July 15th, 2019]
  2. A cautionary tale of political interference” [October 7, 2019]
  3. Where do you think the money comes from?” [August 22nd, 2019]
  4. The economics of Canadian telecom” [December 11th, 2018]
  5. Supporting junk science” [March 11th, 2019]

In fact, “Retooling Rewheel’s reports,” the post about the NERA Economic Consulting’s report saying policy makers and regulators should ignore the ‘fatally flawed’ Digital Fuel Monitor (by Finland’s Rewheel Research), was one of my most viewed pieces of all time.

I should give an honourable mention to “Maintaining incentives to invest” [March 4th, 2019] and “Better data leads to better policy making” [January 28th, 2019].

Some of my posts from the past were apparently being used as reference materials, such as “The Inside Wire: CRTC rules on telecom carrier access to buildings” [July 1, 2003] and “Unplug the digital classroom” [October 7, 2012]. I am happy to see that my archives are providing some value, in some cases more than 15 years later. Take some time to poke around through the archives found in “My back pages”.

Thank you for following me here on this blog (and on Twitter) and engaging over the past year.

Let me extend to you the very best wishes for health, happiness and peace over the holidays and in the year ahead.

There’ll be new dreams, maybe better dreams…

It’s mid-December and, as has become an annual tradition, it’s that time again for me to write a year-end wrap-up post.

Like last year, over the past 12 months I have published just over 70 blog posts, down from a few years ago in part because I am spending more time on Twitter, and also because of the need to deal with a few important personal issues, especially the two most enjoyable distractions (who have been interfering with my focus for 5 years and 3 years respectively).

The archives for this blog (accessed in the “My back pages” tab) now include more than 2800 articles, chronicling trends and issues as far back as 1997. As I look at the analytics, it is interesting to see the search terms being used. It is especially gratifying to see that a number of older posts continue to attract readers.

I continue to be optimistic about Canada’s telecommunications industry. After more than 39 years working to build advanced competitive communications networks in North America, I still find new challenges that make it a pleasure to get to work each day. Most satisfying is seeing the role played by low cost advanced communications in improving virtually everything we do.

It has never been easier or cheaper to communicate. I can talk with my kids and video-chat with my grandchildren halfway around the world every day as though they live around the corner.

Nov 6, 1970 Ad in Toronto TelegramWhen I was their age, my father would line us up in the kitchen on Sunday afternoons to stand quietly near the kitchen phone, as he prepared to call his dad in New Brunswick during the 60% discount period. Deep discount rates were also available after 11 pm each weeknight, but that just wouldn’t work for calling grandparents in the Atlantic time zone. So my dad would rush each of us through a quick “say hi” moment on the phone since long distance phone rates – even discounted long distance rates – were outrageously expensive. Our family was lucky to be able to afford weekly long distance calls. Regular trans-Canada rates were 50 cents per minute; evenings were about 3 minutes for a dollar, but late at night and on weekends, we could speak for 20 cents per minute – a crazy amount of money in those days. In those days, a McDonalds burger cost the same 20 cents; a Big Mac was 55 cents. No wonder Mother’s Day and Christmas Day were the busiest long distance calling days of the year; for many, calling home needed a special occasion to justify the cost of long distance.

Some groups talk about affordability of communications services but in most cases, they aren’t really talking about being able to find a plan that most of us can afford. There is a big difference between wanting to pay less for a device or service and being able to afford any plan or device.

I won’t get drawn into a discussion about why prices for some plans are lower in some other countries; Canadians pay more than people in other countries for a lot of goods and services, including our weekly grocery shopping bills. We still have government sanctioned ‘marketing boards’ and quota systems that inflate prices for genuine staples such as dairy products and poultry. So please forgive me for sometimes getting cynical about politicians proclaiming that they are seeking to lower costs for the middle class.

On the other hand, there are indeed some Canadians who are genuinely unable to find an affordable device or service plan that they may need to participate in today’s economy, to help find a job, maintain their health, be in touch with their families and friends. In late October, we learned that nearly 1 in 5 Canadians in the lowest income quartile doesn’t have broadband connection at home. In many cases, it isn’t just an issue of affordability; the experience learned from targeted programs that deliver low-cost connected computers have helped us to understand that there are a number of factors – not just lower prices – that inhibit adoption of communications technologies among certain demographics.

I have written a number of posts through the years calling for us to do more to develop a better understanding of those Canadians who have not yet adopted information and communications technologies. For example:

  • Building a broadband research agenda • October, 2016: “As Canada invests in its Innovation Agenda, there is a gap in understanding why nearly 1 in 6 Canadian households has no broadband connection. There is an opportunity for better understanding to emerge from a Canadian broadband research plan.”
  • Do we know what we don’t know? • November, 2017: “Is Canada doing enough research to explore the nature of its digital divide? How can we find solutions for a problem that we may not fully understand?”
  • Understanding the digital divide • March, 2018: “Bridging the digital divide isn’t just about rural infrastructure. Should Canada expand research to improve our understanding of other contributing factors that limit digital adoption?”
  • We need more data • October, 2019: “How is Canada supposed to be engaged in evidence-based policy making when there is so little information being gathered about who is online, how Canadians are using the internet and perhaps most importantly, who isn’t online yet and why not?”

As I wrote this past June, “Unfortunately, most government programs continue to focus on increasing “supply”, extending access to broadband. We need to ensure there are strategies to drive “demand”: increasing adoption rates among groups that could subscribe, but have not. That is a problem across all geographies, and is perhaps more pronounced in urban markets.”

If it is a matter of affordability, we can develop programs that target those people or households. Unfortunately, we do not currently know what all the factors inhibiting adoption really are. We need to fund much more research in this area.

In my year-end wrap-up in December 2010 entitled “Digital divide”, I wrote “I’d like to update Hoover’s 1928 promise of prosperity: We need a connected computer for every home.” We now know that it isn’t just price that is keeping people from getting online.

As we close the books on 2019 and set objectives for the coming year, let’s dream of more evidence-based policy making. Let’s dream of developing a greater understanding of those individuals and households on the wrong side of the digital divide. And let’s dream of creating solutions to bridge that gap.

I hope you and your families have a happy, healthy, safe and peaceful holiday season.

I look forward to engaging with you in the New Year.

Minister’s new mandate

Prime Minister Trudeau published the mandate letters for each of the members of the new Cabinet.

Of particular interest to the telecommunications community is the mandate letter for Navdeep Bains, Canada’s Minister of Innovation, Science and Industry.

The letter includes a telecom specific section:

  • Use all available instruments, including the advancement of the 2019 Telecom Policy Directive, to reduce the average cost of cellular phone bills in Canada by 25 per cent. You will work with telecom companies and expand mobile virtual network operators (MVNO) in the market. If within two years this price target is not achieved, you can expand MVNO qualifying rules and the Canadian Radio-television and Telecommunications Commission mandate on affordable pricing.
  • Award spectrum access based on commitments towards consumer choice, affordability and broad access. You will also reserve space for new entrants.

Some concerns came to mind on my first read of the letter, as I wrote on my Twitter stream. While the preamble in the letter says “We are committed to evidence-based decision-making…”, one might have difficulty squaring this promise with what appears to be a pre-determination of issues being explored by the CRTC in Public Notice 2019-57: Review of Mobile Services.

Some additional points set out in Minister Bains’ mandate require coordination with other members of Cabinet:

  • With the support of the Minister of Middle Class Prosperity and Associate Minister of Finance and the Minister of Seniors, create a new Canadian Consumer Advocate to ensure a single point of contact for people who need help with federally regulated banking, telecom or transportation-related complaints. Ensure that complaints are reviewed and, if founded, that appropriate remedies and penalties can be imposed.
  • Work with the Minister of Infrastructure and Communities, the Minister for Women and Gender Equality and Rural Economic Development and the Minister of Canadian Heritage to deliver high-speed internet to 100 per cent of Canadian homes and businesses by 2030.
  • Co-lead work with the Minister of Canadian Heritage to modernize the Broadcasting Act and the Telecommunications Act, examining how best to support Canadian content in English and French and ensure quality affordable internet, mobile and media access.
  • Work with the Minister of Canadian Heritage to introduce legislation by the end of 2020 that will take appropriate measures to ensure that all content providers, including internet giants, offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content in both Official Languages, promote this content and make it easily accessible on their platforms. The legislation should also consider additional cultural and linguistic communities.
  • Work with the Minister of Justice and Attorney General of Canada and the Minister of Canadian Heritage to advance Canada’s Digital Charter and enhanced powers for the Privacy Commissioner, in order to establish a new set of online rights, including: data portability; the ability to withdraw, remove and erase basic personal data from a platform; the knowledge of how personal data is being used, including with a national advertising registry and the ability to withdraw consent for the sharing or sale of data; the ability to review and challenge the amount of personal data that a company or government has collected; proactive data security requirements; the ability to be informed when personal data is breached with appropriate compensation; and the ability to be free from online discrimination including bias and harassment.
  • With the support of the Minister of Canadian Heritage, create new regulations for large digital companies to better protect people’s personal data and encourage greater competition in the digital marketplace. A newly created Data Commissioner will oversee those regulations.

Like last time, the mandate letter talks about broadband coverage, without addressing factors impacting adoption.

Over the coming months, we’ll be certain to be coming back to these issues.

Spectrum policy and auctions

I was vacationing on November 21 when the International Telecommunications Society (ITS) held a workshop in Ottawa entitled “Spectrum Policy and Auctions: Best Practice from Around the World” but much of the day was captured on video. I thought it would be useful to provide a link to the archive.

The workshop attracted more than 70 participants from around the world to discuss auction best practices, opportunities and challenges, in the 5G era, including representatives from government, industry and academia.

Here are direct links to the presentations. I encourage you to visit the ITS site for a summary. Note that the video files are set up with a split screen to allow you to see the speaker and slides.

  • Professor Martin Cave, London School of Economics: Video | Slides
  • Oliver Chapman, GSMA Policy Director: Video | Slides
  • Evan Kwerel, Senior Economic Advisor at the Federal Communications Commission: Video | Slides
  • Dan Maldoom, partner at DotEcon: Video | Slides
  • Professor Pat Sujarittanonta, Chulalongkorn University: Video | Slides
  • Jan-Hendrik Jochum, Senior Expert, Public and Regulatory Affairs, Deutsche Telekom: Video | Slides
  • Nick Bone, Principal Engineer: Auctions, Security and Cryptography, Vodafone: Video | Slides
  • Professor Erik Bohlin, Chalmers University of Technology: Video | Slides
  • Panel of all speakers, moderated by Janet Yale, Chair of the Canadian Broadcasting and Telecommunications Legislative Review Panel: Video

Back in September, I wrote “The cost of spectrum policy”, introducing the GSMA report discussed by Oliver Chapman in his talk. That report found “High spectrum prices can cause negative consumer outcomes, including lower coverage levels and slower data speeds.”

The videos and slides from all of the speakers provides valuable material to productively fill time as your office empties over the winter break.