Month: August 2014

One of the best features of summer is the (almost) guiltless attitude to indulging in an occasional ice cream treat. In the area of my summer office, we have access to a few shops that feature more than 3 dozen varieties of Kawartha Dairy’s ice cream. Despite the availability of more modern flavours, such as Salty Caramel Truffle or Crème Brûlée, I like the nostalgia of Tiger Tail (orange ice cream with a black licorice swirl) combined with Creamy Orange.

I have used the ice cream metaphor a number of times on this blog. The first time may have been 8 years ago in reference to net neutrality, where I also invoked the imagery of the movie Pleasantville.

For all the talk of ensuring that networks will enable the creation of the next Facebook or Google, it is possible, perhaps likely, that calls to impose increased regulations, restricting services innovations, are going to have the opposite effect.

Canada led the world in actually creating regulations that give effect to net neutrality when the CRTC created its rules governing the internet traffic management practices of Canada’s internet services providers.

Mobile TV has been under examination by the CRTC to see if rules are being broken because people can’t get open internet video streaming for the same effective cost per megabyte as packaged mobile video. Frankly, my initial reaction would be to respond that mobile carriers marketing departments should be free to choose whatever products they want to offer. Some service providers only offer voice and text. Isn’t it up to the service provider to decide whether they offer data and at what speeds?

If you want open internet, here is the price per megabit per second and here are the terms and conditions. If you don’t accept those conditions, please feel free to find another service provider.

We don’t mandate that ice cream stores offer tiger ice cream – although maybe we should – nor do we limit them from offering more than vanilla flavour. We don’t even require them to offer vanilla.

As hard as it may be for some people to imagine, there really is a segment of the market that doesn’t want high speed open internet from their service provider. They may only want email. Others may want email and specific popular messaging. Some may want access to Facebook. Rather than having to take a $25-30 open data package, shouldn’t the service provider be able to target market segments based on specific applications? Might this get more people to get introduced to mobile digital services?

The government has continuously focused on supply side incentives for its digital strategy, funding infrastructure and avoiding the issue of demand side incentives. Although I have written about the need for Canada to help with targeted programs for low income Canadians, it has been the private sector that has done the best job segmenting the market and finding ways to launch services to get more customers.

It makes sense. It is self serving for the service providers to seek incremental growth. That is a good thing. Rather than discourage growth and investment, perhaps the focus of policy should be in encouraging that growth in targeted markets – such as services for disadvantaged Canadians or segments that have not yet gone on-line.

Arbitragers may want to have access to targeted service innovations; demanding equal access to the prices being offered for a different service. We have seen claims that some wireless carriers are taking advantage of their vertical integration, being affiliated with broadcasters or cable companies.

I might respond: “then switch suppliers”. Go across the street. The CRTC already made it easier to switch companies. If you don’t like the way your current company packages its bits and bytes, leave them.

I just don’t want to see central control of what flavours of services we can create through innovation, or examining the cost base for those services. If I wanted to add salty caramel truffles to my vanilla ice cream, it would cost a whole lot more than just getting the pre-mixed version. Should the dairy board be investigating why my ice cream shop charges the same price per scoop for truffle packed ice cream as it does for plain vanilla?

I doubt I would ever find tiger ice cream if my local shops needed to get bureaucratic approval.

The digital economy framework shouldn’t block service innovation and differentiation.

More than 8 years ago, on March 22, 2006, the Telecom Policy Review Panel delivered its report (pdf) to the Minister of Industry.

The panel had been created a year earlier, charge with responsibility:

to review Canada’s telecommunications policy framework and recommend on how to modernize it to ensure that Canada has a strong, internationally competitive telecommunications industry that delivers world-class services for the economic and social benefit of all Canadians.

In the report, Recommendation 9-4 called for legislation requiring the creation of periodic refreshers:

The Minister of Industry should be mandated by legislation to undertake a comprehensive review of telecommunications policy and regulation every five years.

Although this recommendation did not result in legislation, many would agree that we are long overdue.

Perhaps it is time now for a fresh look “to ensure that Canada has a strong, internationally competitive telecommunications industry that delivers world-class services for the economic and social benefit of all Canadians”.

The Washington correspondent for the Globe and Mail, Kevin Carmichael wrote last week that Canada should follow the lead of American regulators and impose further rules on wireless carriers here in Canada to “germinate” a fourth wireless provider (“U.S. telecom regime provides strong model for Ottawa,” August 1, 2014).

There is a strong gravitational pull in the telecommunications business to consolidate to achieve economies of scale. A government can counter those forces, but only if it is resolute about it.

It might be be worthwhile to review the state of Canada’s wireless industry.

Canada already has at least four wireless competitors in all major markets. According to a recent government study, Canadian wireless prices match and usually beat those in the U.S. And while the U.S. has just two national carriers offering the latest wireless network technology, 4G LTE, Canada already has three, despite the challenges imposed by our larger geography and more dispersed population. The quality of Canadian wireless services are similarly acknowledged as superior to those in Europe – where countries like Germany recently reduced their number of national carriers from four to three, in hopes of bringing wireless network investment to North American levels, with more countries expected to follow soon.
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The federal Government‎ has recently introduced some legislative changes, and the CRTC had a major ruling on Thursday, both contributing to lower costs for smaller new entrant players. Combined with generous terms in the next spectrum auction, we see Canada has already taken aggressive steps to benefit smaller competitors, the impact of which has not yet been seen, let alone measured.

Wireless is a part of everyone’s lives and discussing how Canada can continue to build our lead in the sector is always worthwhile. But we need an informed understanding of the real state of the Canadian marketplace before adopting foreign “solutions” for it.

You can’t manage what you aren’t measuring. Another reason that we need a better Digital Economy Scorecard.