Earlier this month, I wrote about “Maintaining incentives to invest,” asking how a change in regulatory framework might impact investment levels by incumbents and the regional carriers. What are the broader economic impacts of Canada’s mobile industry?

Earlier today, the Canadian Wireless Telecommunications Association (CWTA) released a report [pdf, 0.5MB] prepared by Nordicity that examines “The Benefits of the Wireless Telecommunications Industry to the Canadian Economy in 2017”. This is the 10th annual version of the report.

Nordicity found:

• In 2017, Canada’s wireless industry contributed $27.5 billion to the Canadian GDP, an increase of 9.1% from $25.21 billion 2016.
• The major contributor to this overall GDP increase was the $1.22 billion increase in the contribution of wireless network operators to the GDP.
• The wireless sector generated 151,550 full-time equivalents (FTE) jobs in 2017, including direct, indirect and induced effects — an increase of 13,500 FTEs or 9.8% from 2016.
• Canadian facilities-based network operators made capital investments in Canada’s wireless infrastructure totaling $2.92 billion in 2017 — an increase of $0.34 billion or 13.2% from 2016.

Robert Ghiz, President & CEO of CWTA, will be speaking at The 2019 Canadian Telecom Summit, taking place June 3-5 in Toronto. Have you registered yet?

There have been many stories about the latest Federal budget [pdf, 6.7MB] that sets out funding to achieve the CRTC’s objective to have broadband access available to all Canadians by the year 2030. I have said before that the CRTC’s December 2016 release of Telecom Regulatory Policy CRTC 2016-496, Modern telecommunications services – The path forward for Canada’s digital economy, was among the most mis-reported decisions to come out of the Commission.

While news coverage of the Budget rightly hailed the $1.7 billion over 13 years to establish a new Universal Broadband Fund, most accounts didn’t look at the actual funding breakdown over the next five years:

• $26M in 2019-2020;
• $162M in 2020-21;
• $220M in 2021-22;
• $216M in 2022-23;
• $92M in 2023-24.

Over the next five years, it is a total of $717M, ramping up as the remaining funds of the Government’s current Connect to Innovate program are disbursed. Of the $1.7B headline funding, a billion dollars, or about 60% is beyond the current budget window.

Indeed, in the coming year (starting April 1), the budget calls for more money to be spent on digital literacy than on the Universal Broadband Fund. The Digital Democracy Project in Canadian Heritage is allocated an additional $7M “for measures to support citizen digital literacy ahead of the 2019 General Election. This initiative will aim to equip Canadians with knowledge of deceptive practices and the tools to navigate the internet and better understand information consumption online more generally.” The new funding supplements an earlier allocation of $7.5M intended to support research and policy development on online disinformation. Canada aims to lead an international initiative to develop principles on how to “strengthen citizen resilience to online disinformation.”

An additional $30M for the next two years is being budgeted for youth training, developing digital skills within the CanCode program and aiming to help one million more young Canadians gain new digital skills.

Increasing broadband adoption has usually been viewed as a challenge for increasing the supply of infrastructure. Last October, I wrote “Is it time to focus on demand?“. At the time, I said:

I’m not just talking about teaching people how to turn on a computer and connect to the internet. We need to do more than teach kids coding as part of our literacy development. How do we teach how the importance of accessing diverse news sources and viewpoints? In a world where a generation has thought of The Late Show as a trusted news source, are we doing enough to invest in teaching how to read and watch with a critical eye?
…
It isn’t a matter of having to choose between supply side or demand side stimulation. We need to work on the balance. There is some investment in helping on the demand side of some programs. Maybe we need to work on putting our thumb on the scale a little bit more.

I am especially encouraged by the potential for Canadian leadership through the investment in the Digital Democracy Project. It is refreshing to see the government targeting both supply and demand for digital infrastructure and services.

I was disappointed to read an opinion piece in the weekend Globe and Mail entitled “When it comes to 5G health risks, what we don’t know might hurt us“.

The article plays to the anti-vaccination crowd, presenting data out of context and confusing issues to hype “the worry that the radiation from 5G networks could harm you.” The reader is left with the view that this is new, untested and unregulated technology. It isn’t. There are strict safety codes that regulate the placement of antennas and Canadian carriers operate their equipment far below the levels that have been found to be safe.

The Globe piece starts off identifying what the author, Eric Reguly, calls two ‘reality checks’ for the ‘utopian dreams’ that can be enabled by 5G: security; and, safety. The article then goes on to confuse the security issues with the issue of Huawei’s alleged trade sanctions violations. In fact, there are real security and privacy issues that need to be addressed when billions of devices are connected to networks, but the vast majority of those issues have nothing to do with Huawei. These security and privacy issues would exist even if all of the world’s network equipment was sourced from Canadian suppliers. But we’ll save security and privacy for another day – it will be the subject of a session on June 3 at The 2019 Canadian Telecom Summit.

There is considerable safety information available about radio frequency exposure and there have been numerous scientific studies conducted by serious research bodies. I have written about a number of these in the past and I thought the issue was exhausted years ago. For reference, you can look at these previous posts that talk about some of my responses to junk science and references to more credible research.

• Cell towers aren’t hurting you
• Academic dishonesty
• We need more towers
• Back to school

Also, ISED’s Spectrum management and telecommunications branch has a reference website, “Radiofrequency Energy and Safety” that addresses 5G:

The current Canadian limits already cover the frequency ranges that will be used by 5G devices and antenna installations.

Similar to current wireless devices and installations, 5G devices will need to meet RF exposure requirements before they can be sold in Canada. Antenna systems operators using 5G technology will continue to have the same RF exposure compliance obligations. Furthermore, compliance with RF exposure requirements will continue to be an ongoing obligation.

The failure by the author to present data from Canada’s governmental oversight bodies, including Health Canada’s Safety Code 6 (Limits of Human Exposure to Radiofrequency Electromagnetic Energy in the Frequency Range from 3 kHz to 300 GHz [pdf, 175KB]) is inexcusable. We should be discussing issues associated with 5G deployment in a serious manner.

As you might expect, we will be examining 5G from every angle at The 2019 Canadian Telecom Summit, taking place June 3-5 in Toronto. Have you registered yet?

A little over 8 years ago, I wrote a piece called “Losing ground on diversity?” that looked at the composition of the executive offices of Canada’s major communications companies. In December 2010, just 13 out of 83 (15.6%) executive positions were filled by women.

What do the executive ranks look like today? A visit to the corporate websites shows little progress in women joining the highest echelons of Canada’s executive ranks over the past decade.

• Bell
• Cogeco
• Rogers
• Sasktel
• Shaw
• TELUS
• Videotron

Of 67 listed corporate executives at these 7 companies, just 12 are women (17.9%). Although the percentage increased marginally, the absolute number of women shown in leadership has declined from 13 to 12. Only Sasktel has comes close to gender parity, with 5 women among its 11 member executive listings.

As I wrote in 2010, we need to identify whether there are factors that inhibit increased representation by women in our schools. “Are we doing enough to ensure that the industry benefits from the rich diversity that defines Canada’s cultural mosaic? Is there is sufficient diversity in the secondary school programs that lead to technology fields in our universities?”

As we drive digital literacy in Canada, we need to be sure that all Canadians are actively engaged.

Much has been written about the proposed Policy Direction released last week by ISED Minister Bains to the CRTC, and the Commission’s subsequent Mobile Wireless Services Notice of Consultation.

My regular readers know that I like to cover these kinds of things from paths that are less traveled, trying to bring a fresh perspective. As such, I’d like to examine last week’s releases from the perspective of incentives to invest.

The term “investment” appears 13 times in the CRTC’s notice of consultation; it appears just once in the proposed Policy Direction, and that instance is in relation to “stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services.” However, the proposed Policy Direction also speaks about “innovation in telecommunications services, including new technologies and differentiated service offerings” and ensuring “affordable access to high quality telecommunications services is available.”

That kind of language needs to be contrasted with the CRTC’s consultation that speaks in terms of the need “to make significant investments in network infrastructure” for 5G. The Commission’s concern about maintaining incentives for continued capital investment is set out in the core of the proclamation for this proceeding:

21. The Commission is hereby initiating a proceeding to review mobile wireless services in Canada. This proceeding will focus on three key areas:
    • Competition in the retail market
    • The current wholesale mobile wireless service regulatory framework, with a focus on wholesale MVNO access
    • The future of mobile wireless services in Canada, with a focus on reducing barriers to infrastructure deployment
22. The scope of each of these issues is described in detail below. In addition, parties may raise other matters, issues, or proposals that are relevant to and appropriate for a broad policy review of mobile wireless services. The Commission’s focus in this proceeding is to ensure that its mobile wireless service regulatory framework facilitates sustainable competition that provides reasonable prices and innovative services, as well as continued investment in high-quality mobile wireless networks in all regions of the country.

I observed on Twitter last week that network investment frequently falls into 1 or more of the 3 C’s: Coverage, Capacity, or Capability.

Many carriers have focused their investments on coverage and capacity enhancements, adding reach to the networks to previously under-served regions and adding capacity to increase data connection speeds and relieve congestion. Most carriers have upgraded capabilities for most regions to enjoy access to advanced fourth generation technology and are readying to deploy 5G.

Mandated wholesale access has the potential to impact the business case for investment. Of course, in core urban areas, there are strong incentives to invest driven by competitive behaviour, where carriers will ensure that their networks are able to offer top speeds as part of their bragging rights. However, it is clear that the business case for such investments is not limitless, otherwise we would see 5 bars of LTE-Advanced everywhere in Canada.

So, we know that there are already certain areas with lower population densities that already cannot support a business case for some carriers to invest. Now, imagine that that the carrier will no longer be able assume the same level of retail revenues. What happens to the business case for those marginal areas? If potential revenues decrease, one would expect that fewer areas will be able to support a business case for enhanced levels of investment. People in under-served areas today should carefully consider whether mandated MVNO and lower retail prices will help or hinder their cause.

Recall that when the current CRTC Chair was welcomed to his job, he received a letter from the Ministers of Heritage and of Innovation, Science and Economic Development, saying, “All Canadians and Canadian businesses deserve high quality telecommunications services at affordable prices.” At the time, I wrote “It is a delicate balance. Quality and coverage require significant levels of capital investment, especially in a country like Canada.”

The proposed Policy Direction echoes that language in the clause suggesting that the CRTC should consider the extent its regulatory measures “ensure affordable access to high quality telecommunications services is available.”

The CRTC consultative process will most likely be informed by engineering economic analysis, assessing the potential impact on investment in marginal areas for coverage, capacity and enhanced capabilities.

Maintaining incentives for investment requires a delicate balance.