Sometimes, I think we need to hit pause, take a breath and appreciate the wonder of today’s technology.
It is too easy to take it for granted.
About 20 years ago, my daughter was studying overseas. We used what was then some relatively new software-based VoIP to keep in touch. I remember her complaining with a solid “What the hell” when a call dropped mid-sentence. I reminded her that she was travelling 100 km/hour on a train while I was in a car in stop and go traffic on a Toronto highway, with nearly 9500 kilometres between us. “Can we pause for just a moment, appreciate the wonder as we think about what it takes for this conversation to be taking place at all, let alone for free?”
I was thinking about that conversation as I conducted video chats over satellite connections this week with my west coast and overseas grandkids while cruising in the north Atlantic. The ship is delivering a perfectly respectable high speed internet service to thousands of users at sea.
I looked – there isn’t a giant spool of fibre trailing behind us.
Over the weekend, I read a post on social media from someone who wrote “Dear friends older than 42: You don’t have to put 2 spaces after the period anymore. That was for the typewriter era. You’re free”.
Dear youngin’s: some of us 60-somethings created word processing and that internet thing that set you free.
You’re welcome. Don’t patronize us.
I have been privileged in my career to have had the opportunity to work with some of the pioneers who developed some great network applications and technologies. I don’t expect people to take a peek behind the curtain to see how connectivity is delivered. But, even after 45 years in the telecom business, I am not one who takes technology – any type of technology – for granted.
I don’t mind the extra space after the period. Indeed, we might ask why the software doesn’t adjust for users (old and young) who insert an extra space. But above all, every once in a while, pause and appreciate the wonder of it all.
In 1909, when then-Governor-General the Earl Grey (of Grey Cup, though not tea, fame) and then-Premier Walter Scott laid the cornerstone of Sasktchewan’s Legislative Building, they inserted a time capsule. It remained nestled, and undisturbed, until the 2011 run-up to the legislative centenary. Among the items unearthed was a 1909 book listing government offices and their phone numbers.
The artifact was a century old and had been chosen to represent another era. But it held little mystery. Over the century that separated the capsule’s gifters from its recipients, generations had grown up using ever-thicker versions to look up neighbours, find a locksmith, block pucks, or see over a steering wheel. It was a phone book.
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It is those regulated exchanges, where the phone directory obligation made its last stand, that today’s majority decision targets, and from which I dissent.
I do not do so out of nostalgia. Wherever mobile and broadband services, and the software-based applications that these enable, have displaced the landline—the need for a phone book has waned accordingly. But the regulated exchanges where this obligation persisted are predominantly rural and remote. They are precisely where wireline and wireless competition is lacking, and where landlines often remain critical.
Nor do I dissent because the majority’s approach is facially unreasonable. Through my own lens as an urban and heavy user of mobile and broadband services, it is hard to imagine why anyone would still need a phone book.
But we consult to hear the perspectives of others, not to echo our own. When we began the phone book’s final deregulatory push in a pair of decisions last year – both, like this one, majority decisions of the Commission’s Telecommunications Committee — I found that the majority had (a)mischaracterized the regulatory history it relies on, (b)misapprehended the extent to which the matter had been considered previously, and (c)failed to consult those affected. I also noted that (d)the expected wave of similar applications would call into question whether taking this ad hoc route, rather than consulting on an industry-wide approach, would even be more efficient.
This is just an excerpt from the dissent, which (at 15 paragraphs) was longer than the 9-paragraph decision itself. It is the dissent’s call for improving the consultative process that connects the two documents. FRPC devotes 4 of its 14 recommendations toward an objective of more meaningful public participation.
There is much more to be found in the FRPC report – and I will try to return to the report in a future blog post. At the very least, it should serve to stimulate discussion on how to improve overall regulatory accountability at the CRTC.
In the meantime, here are its 14 recommendations:
With respect to transparency in decision-making the CRTC should
publish minutes of the meetings of the Commission and its Committees, including copies of any CRTC or third-party presentations made at these meetings within one week of such meetings;
ensure that all of its decisions – by the Commission and by its Committees – are
signed by the Commissioners who made the decisions (including those who dissented), and are
published, if necessary, by providing abbreviated summaries of the facts and outcomes of its now-secret Letter;
ensure that its Committees or the Commission publish decisions for not publishing applications and for not permitting public comment on matters resulting in now-secret Letter Decisions;
improve the timeliness of its decision-making by publishing decisions concerning
broadcasting, telecom and online news applications within 4 months of receiving the applications
broadcasting, telecom and online news policies within 6 months of its initiating proceedings;
make its ADR services more efficient, more transparent and timelier;
with respect to the petitions to the Governor in Council of which the CRTC is or has been the subject,
publish such petitions on a dedicated CRTC website page
include on that page links to any orders in council resulting from the petitions or from Cabinet, and
include on that page links to the CRTC’s response to such orders from Cabinet;
publish annual – or more frequent – statistical updates on the CRTC’s implementation of Parliament’s broadcasting and telecommunications policies.
With respect to accountability, the CRTC should
improve the timeliness of its decision-making by publishing decisions concerning
broadcasting, telecom and online news applications within 4 months of receiving the applications
broadcasting, telecom and online news policies within 6 months of its initiating proceedings;
make its ADR services more efficient, more transparent and timelier;
publish annual – or more frequent – statistical updates on the CRTC’s implementation of Parliament’s broadcasting and telecommunications policies based on valid and reliable measures of these policies.
With respect to participation by the public, the CRTC should
enable parties interested in its proceedings to sign up for updates to these proceedings, including additions to the public record or changes to the CRTC’s processes;
convene an annual meeting of interested parties to determine their needs for and respond to their questions about the data published by the CRTC;
invite and respond to proposals concerning the CRTC’s selection of measures of Parliament’s broadcasting and telecommunications policies; and
invite interested parties to comment every two years on the measures it uses to evaluate its performance with respect to Parliament’s broadcasting, telecommunications and online news statutes.
There is competition for capital, and that competition is global. Dollars naturally flow to projects where the returns on investment are highest, where the investments meet the least resistance. Canada has a capital funding problem – and it isn’t just telecom.
A recent article about pipeline investment provides an example in a critical Canadian infrastructure sector. Canadian pipeline giants Enbridge and TC Energy are investing in the United States, despite the rhetoric from politicians pushing for “nation-building infrastructure” on the north side of the border.
François Poirier, the chief executive of TC Energy, said the company’s returns in the U.S. “are meaningfully higher than in Canada,” which means it will focus on the much larger market, despite hopes for a pipeline project on its home turf.
“Canada gas has to compete for capital with the other business units in the company,” Poirier said this week during a conference call on quarterly earnings.
“We are going to be allocating capital predominantly in the U.S. until competitive projects in other jurisdictions present themselves that compel us to allocate capital elsewhere.”
That has a familiar ring to it for those who follow the Canadian telecom sector. The need for government to ensure there is a friendly climate for investment is a theme that has inspired more than 100 entries on my blog.
At its core, this action is about the transferability of spectrum licenses. But significantly, it is also about the extraordinary and unusual conduct of Government officials with respect to the Mobilicity spectrum licenses in particular.
The Mobilicity affair, perhaps one of the most underplayed telecom policy stories in Canada, was conducted during the previous Conservative government. But independent of who is in power, we have seen too many regulatory and policy changes that ignore the impact on investment decisions. With thinner margins and tighter capital, the impacts of unpredictable regulatory environments are amplified.
Canadian telecom business units have competition for capital, competing with other business units in the company, or globally in the sector. For that matter, investment dollars will simply exit the telecom sector if the opportunities for financial returns are easier to find elsewhere.
In pipelines, and in telecom, the story is similar. It is going to take more than political rhetoric to stimulate investment in critical infrastructure, especially when global trade markets are undergoing such disruptive forces driven by the US administration.
How do we ensure Canada’s private sector industry leaders – in both telecom and energy – continue to find the appropriate incentives to invest in critical infrastructure? Predictably, a stable regulatory and policy environment is an important prerequisite for investment.
A year ago I wrote about a CRTC decision to award more than a quarter billion dollars to the Government of Nunavut to build a 1,300-kilometre fibre connection to four remote Inuit communities in Nunavut. That Decision stated “Through its Broadband Fund, the Commission contributes to a broad effort by federal, provincial, and territorial governments to address the gap in connectivity in underserved rural, remote, and Indigenous communities across Canada.” I don’t like how the CRTC pats itself on the back as it spends other people’s money. The Decision was especially noteworthy because of a dissenting opinion filed by Commissioner Claire Anderson.
I have frequently complained about the CRTC’s off-the-books social subsidies, managing wealth redistribution on behalf of the government, without it being part of the Parliamentary budget process. There is no more egregious example than the CRTC awarding more than $270M to another level of government (the Government of Nunavut) in order to fund a fibre project for roughly 10,000 residents of Iqaluit, Kinngait, Coral Harbour (Salliq), and Kimmirut.
Since the original decision, the CRTC approved the project’s statement of work, which attracted yet another dissenting opinion from Commissioner Anderson. Under that Order, the Government of Nunavut was “required to submit quarterly progress reports and expense claims beginning no later than 26 May 2025”. I haven’t seen the first (or any) of those reports. I find the whole arrangement somewhat remarkable.
Personally, I have never been crazy about the CRTC’s Broadband Fund. When it was established in 2016, I wrote “today’s CRTC decision sets up yet another funding program. These are taking place ten years after the report of the Telecom Policy Review Panel, 16 years after the government first set its policy goal.” Five years ago, I asked if the program was fundamentally flawed in that it fails to address the higher ongoing operational costs associated with operating a network in rural and remote territories.
There have been a number of calls to review various aspects of the CRTC’s broadband funding program. In December 2022, Bell complained about how the CRTC was collecting funds and failing to disburse the money in an efficient manner. As Cartt.ca reported at the time, “Part of the reasoning is that there have been many more funding programs available since the Broadband Fund was launched and that the unused money held by the CRTC and not distributed could be used by service providers to do things like build networks.” A year after Bell’s application, the CRTC rejected it.
when the Commission initiated its review of the Fund in March 2023, it modified the Fund’s financial schedule by deciding that TSPs would contribute $150 million per year until the Commission concluded the review. The review is still ongoing over two years later and the level of appropriate annual funding of the Broadband Fund going forward remains unclear. At present, TSPs have no knowledge of how long they will continue to make contributions to the Fund and how much these contributions may be.
At a time when capital for telecom infrastructure investment is so tight, when there is continued pressure for the major carriers to lower rates, the CRTC needs to carefully reconsider how it collects and distributes other people’s money.
A report today by Maher Yaghi of Scotia Capital suggests that Canadian wireless pricing needs to move away from data buckets. I wonder if the CRTC may be standing in their way.
“We believe it will be essential for Canadian telcos to transition away from commoditized data buckets to value based wireless offerings, a transition that US telcos have successfully done unlike in Europe where commoditization of wireless data buckets drove rate plans into the ground.”
Scotia warns that Canada’s wireless operators will need to navigate decelerating population growth and the shifting consumer consumption in order to successfully grow ARPU (average revenue per user). Scotia observes that the rate of mobile data growth has slowed, although it still remains healthy at more than 10% per year (down from 30% just a few years ago).
As these trends were seen in the US, Scotia says “In the US, the three incumbents essentially moved to an all-you-can-eat data model a couple of years ago and ever since, they have changed the narrative and purchasing habits of consumers to focus more on speeds, handset financing, perks and entertainment and away from pure data pricing.”
The pricing models of the three US incumbents are tiered based on different levels of service quality – not quantity. The plans generally have all-you-can eat voice and data buckets. Differentiation comes from what comes with it. As Scotia observes, the move from “how many Gigabytes to add features and perks serves to reduce the risk of commoditization. Moving from quantity to quality escapes the cycle of price matching between service providers as companies create their own set of attributes to are differentiate themselves.
Verizon offers pricing tiers to access their Ultra Wideband network; T-Mobile offers pricing tiers on content (Apple TV, Netflix etc) and coverage with satellite, etc. We are starting to see small moves by Canadian telcos to price based on other aspects than volume, but this is still very embryonic. TELUS has recently introduced pricing tiers geared towards premium vs regular handset financing levels (5G standard tier vs 5G+ Complete) but unfortunately, now the line is blurred between the premium and flanker brand on 5G vs 4G). Rogers is trying to move towards pricing related to quality/coverage (satellite, etc) while Bell’s pricing is not very differentiated as Crave is offered on all levels, and pricing remains very heavily influenced by data buckets.
Nearly 14 years ago, I disagreed with a CRTC decision that interferes with some of the differentiation that Canadian carriers attempted in the past, denying Bell’s NFL Mobile offering. The CRTC Chair at the time said “Canadians shouldn’t be forced to subscribe to a wireless service from a specific company to access their favourite content. Healthy and fair competition between service providers will promote greater choice for Canadians.” Videotron also tried differentiating with its “Musique illimitée” (“Unlimited Music”) service add-on, but the CRTC intervened finding “that Quebecor Media Inc., Videotron Ltd., and Videotron G.P. (collectively, Videotron) are acting in violation of subsection 27(2) of the Telecommunications Act by exempting the Unlimited Music program from data charges.”
A couple years ago, I wrote “we have countless examples of overly simplistic analysis of digital issues that fail to consider the logical responses (and counter-responses) of the marketplace to new legislation and regulations.” I mentioned NFL Mobile and Musique illimitée, saying “These innovative services were competitive differentiators, offering new choices to consumers. Rather than letting the market place respond with either lower prices or competitive differentiators, the CRTC just said “no”.”
The CRTC needs to review these decisions. The nature of the industry has changed. Services have evolved. The mobile industry needs to be allowed to compete with differentiated services. Since this blog post is written during a summer heat wave, let me close by referring back to an earlier post that talks about flavours of ice cream. The regulator should allow service providers to offer consumers a wider range of differentiated flavours of service.
If you want vanilla, great. But I’ll take a scoop of Tiger Tail, thank you.
