Month: August 2020

“Canada’s future depends on connectivity.” Those were the opening words in the statement issued by Innovation, Science and Industry Minister Navdeep Bains in discussing Cabinet’s decision not to formally intervene in last summer’s wholesale internet Order by the CRTC. While declining to take action, Cabinet sent a clear message that it expects significant changes to those rates in the pending outcome of the Commission’s own review of the Order.

The CRTC’s Order was issued August 15, 2019. Under Section 12(1) the Telecom Act, subsequent to a ‘petition’, “within one year after a decision by the Commission”, Cabinet (the Governor in Council) could “vary or rescind the decision or refer it back to the Commission”.

Exactly one year later, Cabinet decided not to take any of those actions, at this time.

The statement from Minister Bains explicitly acknowledges that the original CRTC Order got the rates wrong and says that the Commission did not strike the appropriate balance between the competing objectives of the Telecom Act, failing to apply sufficient weight to Section 7(b): “to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada”. Cabinet recognized that wholesale rates got set so low that carriers were unable to continue expanding their networks into unserved and under-served regions.

On the basis of its review, the Governor in Council considers that the rates do not, in all instances, appropriately balance the policy objectives of the wholesale services framework and is concerned that these rates may undermine investment in high-quality networks, particularly in rural and remote areas. Retroactive payments to affected wholesale clients are appropriate in principle and can foster cooperation in regulatory proceedings. However, these payments, which reflect the rates, must be balanced so as not to stifle network investments. Incentives for ongoing investment, particularly to foster enhanced connectivity for those who are unserved or underserved, are a critical objective of the overall policies governing telecommunications, including these wholesale rates. Given that the CRTC is already reviewing its decision, it is unnecessary to refer the decision back to the CRTC for reconsideration at this time.

With such strong views about the CRTC’s Order, some may ask why Cabinet didn’t exercise its power to formally “refer it back to the Commission.”

The better question is “Why would it bother referring it back to the CRTC?” All that would do is cause a delay.

The CRTC already has its own review of the Decision underway. That process began last November and submissions have already been received. Had Cabinet chosen to exercise its option to “refer it back to the Commission”, the resultant process might have to start over.

By setting forth a statement outlining its expectations for the Commission’s own review process, Cabinet is expediting the process that will ultimately release wholesale rates that balance the competing objectives. Although it declined to act, Cabinet is sending a signal to the Commission for what could trigger a subsequent review of the CRTC’s reconsideration proceeding.

[The CRTC’s Order was also the subject of a judicial process that was heard by the Federal Court of Appeal this past June. The Court imposed a stay of the Order, saying “the implementation of the CRTC Order that could result in a permanent market distortion which would be difficult to remedy posteriori.”]

A little over a week ago, I wrote that there are “other regulatory or policy levers that don’t require direct subsidies to improve the business cases for rural expansion”. In today’s release, we see Cabinet pulling a powerful policy lever that will significantly improve the business case for network investment including rural expansion.

Sometimes, the best decision is choosing not to make a decision at all.

A few months ago, in “A key to recovery? Communications leadership”, I wrote “Set clear objectives; Align activities with the achievement of those objectives; Stop doing things that are contrary to the objectives.”

Canada’s future depends on connectivity.

That is a strong statement, around which we can build objectives.

Last month, in “The COVID wild card”, I wrote about the supplementary comments filed in the CRTC’s mobile services review. “The importance of maintaining incentives for investment figures prominently in the final comments submitted last week.” On the subject of mandated resale of mobile services, I noted that Bell wrote “It would be particularly destructive now, during a period of unprecedented economic turmoil brought on by the COVID-19 pandemic and at a time when large investments of private capital are required to support rapidly expanding usage, the roll-out of 5G, and the continued extension of access to underserved rural and remote communities.”

With the ability to declare victory on falling prices for mobile services, the government is rightly turning its focus on maintaining incentives for investment in advanced facilities and expansion in unserved and under-served markets. What implications can we extract from today’s Cabinet release that may guide the outcome of the CRTC’s review of mobile services?

After all, Canada’s future depends on connectivity.

The following OpEd appeared on National Newswatch earlier today:

The past 6 months have witnessed an unprecedented shift in the consumption of digital connectivity by Canadians whose lives and livelihoods have been disrupted by the COVID-19 pandemic.

Communications services providers have rapidly reconfigured their networks to accommodate the shifts in daytime traffic patterns from business centres to residential neighbourhoods; telecom carriers have extended the reach of broadband networks to previously unserved and under-served areas.

The fastest way to roll-out high-speed broadband networks is using wireless technology, for mobile and fixed services. Today’s wireless technologies are already able to connect households and businesses at speeds far in excess of the 2030 target objectives set by the Canadian Radio-television and Telecommunications Commission (CRTC). Those objectives call for all Canadians to have the opportunity to subscribe to a service with 50 Mbps download speeds, coupled with 10 Mbps upload speeds and unlimited data transfer.

Even prior to the rollout of fifth generation mobile technology (5G), Canada’s mobile networks have topped the world in independent speed tests, consistently exceeding 100 Mbps down and more than 50 Mbps up. Technology for rural fixed wireless networks, are being deployed this summer to upgrade service to hundreds of thousands of homes and businesses.

But these wireless technologies need spectrum, the radio frequencies that connect our devices to the networks. Increased levels of data and faster speeds mean that service providers require even more spectrum to be assigned in order to be able to offer fixed and mobile broadband services.

The industry often speaks of radio frequencies as low, mid, and high-band spectrum. Lower frequencies, those under 1000 MHz (1 GHz), are ideal for carrying signals over long distances. High-band radio waves, those with frequencies over 6 GHz, travel a shorter distance but usually have greater data capacity. Mid-band spectrum, ranging from 1000 MHz to 6 GHz, is important because it can deliver higher capacity over longer distance.

Last June, at The 2019 Canadian Telecom Summit, Innovation Science and Industry Minister Navdeep Bains announced plans to increase the spectrum available for 5G services. Those measures included determinations on the 3500 MHz band, plans to release a decision in 2021 on millimetre wave (high-band) spectrum for 5G mobile service, and to release the 3800 MHz band in 2022.

Two hundred MHz in the 3500 MHz band was scheduled to be auctioned later this year; due to the pandemic, that auction has now been delayed 6 months to June 2021.

Canadians are continuing to connect with a seemingly insatiable appetite. Every quarter, there are more new mobile subscriptions; existing users continue to increase data consumption, stimulated by world leading data speeds and, in part thanks to new pricing plans that offer unlimited use, removing the fear of added charges.

Most Canadians have a choice of 4 mobile carriers; this means there is often more competition for limited radio spectrum than in countries, like the US, with just 3 carriers.

As carriers continue to expand the reach their network into previously unserved and under-served areas, these companies are increasing capacity and deploying the latest fifth generation mobile networks, to help drive the next generation of innovation in virtually every sector of the economy.

How can we feed our appetite for connectivity? The industry is investing billions of dollars in technology, but the industry needs radio waves to connect us to the towers.

It is critical for Canada’s government to do its part. We need the government to press forward aggressively with the release of more spectrum.

A new report from the Canadian Internet Registration Authority’s (CIRA) shows that rural broadband speeds have increased 50% since the start of the pandemic.

In its May report, CIRA said “In April, median rural download speeds were measured at 3.78 Mbps”; the latest report, issued earlier today says “In July, median rural download speeds were measured at 5.62 Mbps”.

That is an increase of 50%.

Why then is CIRA characterizing this dramatic improvement as “Since the pandemic began, median download speeds have plateaued around 5.5 Mbps for rural internet users”?

Earlier today, TD Securities issued a report that said “it is time for the government to declare victory in the 12-year quest (since the first set aside of spectrum in the 2008 auction) to help consumers via sustainable competition from a facilities-based fourth carrier in almost every region.”

TD found that the average revenue per user (ARPU) for Canadian mobile service providers are “comfortably below” US, “which feeds into our strong view that the CRTC and ISED should not and will not implement new measures to mandate either lower prices or widespread MVNOs.” In the view of TD, network quality, spectrum costs, scale, and population density all impact operating expense and capital expenditures for Canadian carriers relative to their global peers and should be considerations in the various regulatory and policy reviews of consumer wireless pricing.

“But even if we ignore these factors and just look at what Canadian consumers pay on average per month to incumbent carriers (keeping in mind that reported ARPU for new entrants Shaw and Quebecor is even lower than that of Rogers/BCE/TELUS), we no longer see a problem that policymakers need to fix.”

I said it 5 months ago: “Declare victory. Consumers are winning”.

At the April 30 meeting of The Standing Committee on Industry, Science and Technology, Minister of Innovation, Science and Industry Navdeep Bains engaged with Bloc Québécois communications critic Martin Champoux in a discussion about the need to improve rural broadband, a problem accentuated by the current pandemic.

Mr. Martin Champoux: Minister Bains, I’ll come back to my question. You acknowledged that a high-speed Internet connection is now an essential service in 2020. We can see this clearly with the current crisis. When we spoke, you said that you intended to speed up the process and shorten the time frame for connecting Canadians. This means that 100% of Canadians and Quebeckers will be connected within a much more reasonable time frame than initially anticipated

Hon. Navdeep Bains: Once again, thank you for your question. You’re right. We must adjust the time frames for high-speed Internet. My colleague Maryam Monsef is responsible for this initiative. I’m sure that she’ll outline solutions that will help people in rural communities.

Mr. Martin Champoux: Am I to understand that you can’t provide an estimate at this time, that there’s still some uncertainty and that we don’t know whether this will take two years or five years?

Hon. Navdeep Bains: Yes. My colleague Maryam Monsef will outline exactly how long this may take and the relevant programs. All I know for sure at this point is that the time frame must be changed, because the current reality is very problematic. This issue is a priority for our government.

Mr. Martin Champoux: Thank you. You also said that you would get this work started as soon as the crisis is over. However, this matter is urgent right now. I imagine that teams are ready to proceed with the installation or, at least, to continue to implement measures to speed up the project. Why can’t this work begin immediately, Minister Bains?

Hon. Navdeep Bains: We’ll start soon. The strategy and the program already exist. We invested a great deal of money in them in the most recent budget, about $1.7 billion. I’m sure that my colleague Maryam Monsef will be outlining solutions soon.

A little over a month later, on June 8, Rural Economic Development Minister Maryam Monsef told the Rural and Remote Broadband Conference that a call for applications for Canada’s Universal Broadband Fund would be issued “in the coming days.”

That was 2 months ago. It is now more than 3 months since we were told there was a recognition that the “current reality is very problematic”, and the “issue is a priority for our government”.

A few weeks ago, I wrote, “It is sometimes painful to watch the glacial pace of government responding to the need for more investment in broadband facilities.” Sometimes, it seems governmental timetables can be measured better in geological terms.

What is taking so long? Part of the delay has to be in the mapping exercise: what areas should have the highest priority for funding? Government subsidies for broadband facilities creates a distortion in the market. The government subsidy means one service provider will have an advantage over any other provider that hopes to offer service, now or in the future. That is why funding programs need to target areas that do not appear to have any other economic way for service to be launched.

“Almost everyone who is already connected needs, or at least wants, to get connected faster and connect more devices to that faster connection.” [see: Too many pots; too little being served]

A month ago, I suggested a quick, low cost way for ISED to help rural ISPs increase broadband speeds [“An easy way to increase rural broadband speeds”]. Problem is, the theoretical reduction in collected spectrum fees means the solution requires interdepartmental approval. When Cabinet is dealing with multi-billion dollar bail-out programs, it must be tough to get the attention of other Ministers with a relatively low cost proposal. It is unfortunately a missed opportunity that could have brought immediate increases in speed and capacity to many rural areas.

The fact is, even if a rural broadband funding program was announced today, money won’t start flowing until next year. In many areas, construction season is effectively over for 2020. It is too late for detailed engineering, equipment ordering and delivery, permitting and installation before winter.

With kids heading back to school in just a month, most households will need access to computers and broadband, even if some classrooms open up for in-person instruction. The state of internet access must be frustrating for many parents.

How do we move forward?

Stakeholders need to have realistic expectations. Management consultants like to say goals should be specific, measurable, attainable. relevant and timely. There was a good reason why the CRTC didn’t set universal gigabit internet as its aspirational goal; that wouldn’t be attainable.

Further, contrary to the assertion by North Grenville Mayor Nancy Peckford in her Ottawa Citizen column, the CRTC did not set 50/10 internet as a “basic minimum standard for internet service”; it was part of a CRTC aspirational goal, to be achieved over the next 10 years (not this summer). And while just 43% of rural Canadians had access to 50 Mbps download speeds in 2018 (the latest year of data), nearly double that (72.1%) had access to at least 25 Mbps.

Those are two year old data points.

Already this year, even without federal government funding, there have been a number of significant announcements for extending higher speed rural broadband to more households [such as here, here, here, here, and here].

The federal government isn’t the only source of funding for broadband expansion, as we saw with last week’s announcement from SWIFT, awarding funding to Teksavvy for fibre-construction to serve Delaware Nation, a First Nation community located in Chatham-Kent, Ontario.

The CRTC has recognized that certain regions may need to take steps toward achieving that target. I wrote about that in “Isn’t some broadband better than nothing?”

It isn’t helpful for so-called internet advocates like Open Media to tell its followers to expect rural Canadians to have access to the same services and the same prices as urban Canadians. That simply isn’t realistic. Affordable internet doesn’t necessarily mean low cost, or low price; it doesn’t mean rural prices should be identical to urban.

Building rural broadband in Canada is expensive and low population densities mean those capital expenditures are amortized across very few people. As a country, we believe broadband should be affordable to all Canadians, but someone has to pay. Lower household densities also means more unproductive “windshield time” for technicians making service and installation calls.

As such, fibre simply isn’t an economic option for many areas. We can, and should, expect wireless to be a significant part of the rural broadband solution space for the foreseeable future. For 5 months now, I have been living and working in rural Ontario with a 25 Mbps fixed wireless service, consistently delivering service, able to support multiple HDTV streams and multiple simultaneous video conference sessions.

How do we improve the business cases for rural broadband?

How can the government help wireless ISPs expand capacity to connect towers?

How can local land use authorities simplify and expedite the process for new antennas?

Are there other regulatory or policy levers that don’t require direct subsidies to improve the business cases for rural expansion?

Like many, I’m expecting an announcement that is certain to impact rural broadband.

It will be coming any day now. But, I’m not holding my breath.