How does immigration impact the telecommunications sector?

As I noted in January, more than one million immigrants entered Canada in 2022. This has led to a number of political and economic discussions in the country, such as how immigration has contributed to the cost of housing and rental prices. A year and a half ago, I first looked at the impact of immigration on Canada’s mobile markets.

Adding to the discussion, Morningstar DBRS recently released a report, “Canada’s Immigration Influx Spurring Telecom Subscriber Growth”. The report identifies these key highlights:

• Canada’s immigration influx has fueled Telecom subscriber growth.
• Reduced immigration inflow or maturing wireless market could significantly increase market competition.
• Over the near-to-medium term, Telecom players have a number of levers to mitigate such headwinds; however, continued investments are required to boost network and technological advancements.

The report says that Canada’s population growth continued to lead its G7 partners in 2023 and likely among the 20 fast growing countries in the world last year. “Canada’s population growth of 3.3% during the first nine months of 2023 had already exceeded the total growth for any other full-year period since Confederation in 1867 following a record growth of 2.74% in 2022. Ninety-six percent of this population growth came from international migration.”

While much of the discussion of high population increases has focused on pressures on accomodations, healthcare, and infrastructure capacities, Morningstar DBRS has joined other financial analysis in identifying the implications of high immigration for Canada’s telecom sector. Further, Morningstar DBRS says plans to admit 500,000 immigrants annually will continue to provide future growth.

Of course, the flip side is the potential for a shift in the flow of people. Will political pressures lead to lower rates of immigration? Will high costs of living contribute to people leaving Canada?

Overall, mobile prices continue to decline. Rates of mobile adoption are approaching 100%, creating a more mature market. Morningstar DBRS also notes changing policy and regulation as factors that can impact the industry. How will the market react?

Some wireless carriers are expanding into adjacent markets, such as residential broadband, by offering fixed wireless access to reach homes outside their wireline service areas.

The Morningstar DBRS report complements the agency’s “Global Telecommunications Outlook: Highlighting the Critical Nature of Connectivity” issued 2 months earlier. That report identified challenges facing telecom worldwide, while recognizing overall resiliency of the sector. “We anticipate a more conservative approach to capital allocation going forward.” We have seen that in Canada.

When I started in the telecom industry, there used to be a department in the phone company that would produce a “General Planning Forecast” to help guide our analysis of traffic and equipment utilization, and to support capital spending requirements. It is important to understand these kinds of economic trends, anticipating such factors as the immigration impact on investment and markets.

Do regulators and policy makers appreciate these issues?

Will online digital literacy training drive increased digital inclusivity?

As I mentioned last month, Alberta launched free digital literacy training. I thought it might be worthwhile to take a closer look at what the courses look like.

Training is available online in English and in French – at no charge. It has two streams: beginner, and intermediate. The beginner stream has 10 modules; there are 9 modules in the intermediate stream. Each course module is designed to be completed in 30 minutes or less.

Alberta’s digital literacy training program was developed with support from the federal Skills for Success program. That could explain why the online program appears to be open to all, including non-residents of Alberta.

The lessons are designed to be practical, focusing on skills that every internet user should have.

Last summer, I wrote that digital inclusion needs more than just money. Building broadband access is only part of solution for digital inclusion. We need to understand the non-price factors inhibiting people from connecting to broadband services. And then, we need to solve those factors.

The Alberta Digital Literacy program provides a mix of basic skills and it includes courses to develop sensitivity to online safety and security. The first intermediate course teaches about different types of online content, and how to tell if a website is reliable. Modules include Online Content; Qualities of Good and Bad Content; Evaluating Online Content; Sharing Online Content; and a Knowledge Check.

The program is designed for those with little to no experience using computers, but it also incudes a range of topics helpful for boosting and tuning up digital literacy skills.

Please share this with friends or family who may need help. I’d be interested in hearing feedback from readers.

Over the past couple of years, I have been more assertive in defending my identity.

I am proudly a Jew (in case you didn’t already know). I have never hidden that fact. In university, I refused to write exams scheduled on Jewish holy days or on the Jewish Sabbath (Friday evenings and Saturdays). On my first day of work at Bell-Northern Research in early September in the late 80’s, I informed my boss that I would be missing work in a few weeks for the High Holy Days of Rosh Hashana and Yom Kippur. He responded that I wouldn’t have earned any vacation time by then. I made it clear that I wasn’t asking for time off. I wasn’t going to be at work those days; he and HR could figure out how to code it.

In the early 90’s, the CRTC was running behind schedule during a multi-week hearing. The Commission wanted to have sessions on Saturdays in order to catch up. I refused to testify on a Saturday. My boss pressured me, reminding me that I wasn’t “that” religious. I replied saying it is one thing for me to choose to do some work on Saturdays, but it is a different matter for my government to require me to work on my Sabbath. I held firm. Instead, the hearing ran later each day. An observant Jewish member of one of our competitors came up to me and thanked me for holding my ground.

And, that is why I am using this platform to write this post.

When I am publicly defending my identity, I am also standing up for those who don’t have a public persona. I get to raise my voice on social media, and often, some like-minded followers will amplify that message well beyond my customary reach. It is a network benefit.

Back when the Laith Marouf affair was percolating, the story gained traction when Jonathan Kay raised the profile of my complaints. It is for that reason that I believe it is important to write to you.

Followers of this website know that I frequently travel to Israel. Israel is an intrinsic part of my Jewish identity. When Jews pray, we face toward Jerusalem. Our prayers and our bible contain references to Israel. Major Jewish festivals are tied to agrarian timetables and practices in Israel. I am not an Israeli citizen, but I have family who are.

The events of October 7, 2023 have been deeply troubling to me. The response – or more correctly, the lack of moral leadership – by Canadian officials has been disturbing. The sacking of British Columbia’s NDP cabinet member Selina Robinson demonstrates a pervasive rot – or latent antisemitism – among many political leaders.

I am tired of politicians thinking that the way to respond to antisemitic acts is to write on Twitter that “This is not who we are” or claim that “Hatred and violence against Jewish communities have no place in Canada.”. Condemnations on social media are no match for intimidation by throngs calling “Death to the Jews”. Tweets are ineffective against firebombings and shots fired at synagogues and Jewish community centres.

In defending freedom of expression, I have frequently quoted Aaron Sorkin’s brilliant speech from The American President. “You want free speech? Let’s see you acknowledge a man whose words make your blood boil, who’s standing center stage and advocating at the top of his lungs that which you would spend a lifetime opposing at the top of yours.”

Still, there are limits to those speech rights. As CIJA said in its statement yesterday, “We cannot allow mob-driven demonstrations to obstruct our right to participate fully in society.”

Which brings me to how you fit in to help in defending my identity. In resigning from the NDP caucus, Ms. Robinson wrote, “I don’t need your hugs and your emojis. What my community needs however, is for you to stand up to antisemitism.”

Call out hate when you see it online. Tell your elected officials that antisemitism isn’t just a problem for Canada’s Jews. Demand action.

And every once in a while, I’d be OK with a hug.

Consequences of regulatory overreach are discussed in a recent Truth on the Market blog post. Lessons in Regulatory Humility Following the DMA Implementation resonated with me, even before Canada’s Online Harms Act was tabled in the legislature. Peter Menzies and Michael Geist each write about the extreme overreach in Bill C-63, the Online Harms Act.

In response to regulatory overreach, I have been writing about the need for greater humility for almost as long as this blog has been around. Last year, I wrote “Politicians looking to score points with intervention in the digital marketplace should carefully reflect on whether new laws are actually needed.” Seven years ago, I observed “Canada was among the first regulators to set out a light-touch approach to internet regulation” (in 1999).

The Truth in Markets post warns about unintended consequences arising from the European Union’s Digital Markets Act (DMA).

To comply with the DMA, digital platforms will have to adapt their business models, governance, and even their “digital architecture,” which will affect how they provide services and monetize their assets. These changes will be felt not only by the platforms themselves, but also by the services that run on them (whether called “business users” or “complementors”) and by consumers, all of whom will be forced to grapple with new risks or a potential reduction in quality.

Canadians have experienced platforms reducing the quality of user experience in response to government legislation. Facebook removed news from Canadian feeds because of the high costs associated with compliance with the Online News Act.

Apple has warned that aspects of the DMA creates new risks for users. “The new options for processing payments and downloading apps on iOS open new avenues for malware, fraud and scams, illicit and harmful content, and other privacy and security threats.”

The reaction to some of the gatekeepers’ announcements regarding their DMA-compliance plans shows how we could quickly be thrown into a downward spiral in which regulations beget more regulations. Once the first layer of regulations fail to yield the desired results, politicians, consumers, and business users demand more regulation. This leads, in the end, to more heavy-handed rules like the aforementioned price controls or structural separations.

Regulations beget more regulation. Former CRTC Vice-chair Peter Menzies warns about the Province of Quebec seeking to create its own streaming rules. Will another layer of regulations increase the availability of French language content? Mr. Menzies warns, “there is a widely held view that should the regulatory burden be viewed as overly cumbersome, many smaller streaming companies might make their services unavailable in Canada. And it’s not entirely out of the question that some large companies could follow suit.”

Legislation and regulations are almost always designed with aspirational objectives. Unfortunately, there is often insufficient analysis of the consequences of regulatory overreach. Truth on the Markets warns about jurisdictions rushing to be first with digital market legislation. “Countries that take their time, however, to study markets, perform proper regulatory impact analysis, and enact a serious notice-and comment-process, will be those most able to learn from the experience of other regulators and markets. These regulatory impact analyses should, of course, also consider the possibility that the regulation in question may not be necessary at all”.

As I have written before, “we need to explore policies for the digital economy with the thinking of a chess master”. There is a real need to think at least three or four moves ahead.

Parliamentarians on the Standing Committee on Industry and Technology (INDU) have mustered faux outrage in their undertaking of a study on “Accessibility and Affordability of Wireless and Broadband Services in Canada”.

So far, the Committee has questioned witnesses from Quebecor / Videotron, the Competition Bureau, the CRTC, Bell, Rogers and TELUS. The Quebecor / Videotron panel was led by CEO PK Peladeau, but the Committee wanted the CEOs of the other major carriers to appear before them. Instead, the designated witnesses were a Chief Financial Officer, the President of the Wireless business unit, and the Executive Vice President of legal and regulatory affairs.

In other words, the carriers were represented by the kinds of experts equipped to answer questions related to the study. That was clearly the approach used by the Competition Bureau and the CRTC. Both agencies sent representatives responsible for areas expected to be the focus of the study. The CRTC Chair didn’t appear; the Commissioner of the Competition Bureau wasn’t there. No summons to appear were issued to the leaders of the agencies.

But the INDU members displayed faux outrage at the corporate CEOs who sent mere mortals to actually respond to questions, when the parliamentarians wanted their faces, if not their heads.

A couple years ago I wrote, “Giving elected officials the chance to ask questions of regulators is an important part of our democratic process. It can be very informative when used wisely. Unfortunately, the opportunity is wasted if Committee members are unprepared or do not have a solid understanding of the industries they are overseeing.”

The same can be said when MPs are armed with flawed or seriously outdated information. Rather than relying on official government data from ISED, the CRTC, or Statistics Canada, MPs were citing deeply flawed and widely discredited reports from Rewheel Research to mistakenly charge that Canadian mobile prices are the highest in the world. Recall, the International Center for Law and Economics referred to Rewheel as a “careless mish-mash of data points from which no reliable conclusions can be drawn.”

It simply isn’t true that Canadian prices are the highest in the world. Not by a long shot. Last November I wrote about a PwC study laying out a fact-based narrative on telecom affordability in Canada, painting a very different picture from the conventional wisdom.

MPs acknowledged that Canadian prices are coming down (as you have been reading here), but claimed prices are falling slower than in peer markets. That is also not true. In fact, prices have been going up in the US, the UK, and Australia (as well as many other countries).

MPs confused ARPU (a proxy for monthly bills), with prices – a mistake about which I write too frequently.

Witnesses have delivered information that is actually relevant to the study. That Canadian government fees for spectrum are the highest in the world, adding $5 per month in extra cost to mobile phone bills. That capital intensity by Canadian carriers is among the world’s highest, delivering high quality service across a challenging geography. That prices have fallen more than 15% in the past 12 months, roughly 50% in the past 5 years, despite price increases of close to 20% over the past 5 years in the overall Canadian economy. That the industry has created (and fully funded) targeted affordability programs to deliver home internet, mobile services, and devices to vulnerable communities.

The information that demonstrates the “Accessibility and Affordability of Wireless and Broadband Services in Canada” is available to members of INDU. Hopefully, we will see the MPs shed their faux outrage and open their minds to the answers being shared at the next meeting.