I spend a lot of time thinking about unintended consequences that emerge from telecommunications regulations.

A year ago, I wrote a piece asking “Will regulation inhibit innovation?”

That article was looking at technology solutions to deal with unsolicited calls from telemarketers. In response to a CRTC notice of consultation asking “what regulatory measures, if any, should be established,” at the time I observed, “Each time a regulatory measure is introduced, there are limits imposed on the degrees of freedom for innovation.”

Twenty years ago, permission-less innovation, sometimes in the form of spoofed calling identifiers, helped bring down the cost of delivering international long distance calls using line side connections. If caller ID had been verified, many low cost calling arrangements may not have emerged.

I continue to be troubled by the CRTC’s decision on differential pricing practices (Telecom Regulatory Policy CRTC 2017-104) issued last April. The language in the decision seems to ignore the potential for interference in service innovation. For example, the CRTC provided a specific direction, explicitly favouring certain types of innovation over others: “Rather than implementing marketing practices such as zero-rating, ISPs in the retail Internet access services market should focus on innovating by enhancing, for example, the speed, coverage, capacity, security, and reliability of their existing networks, for the benefit of Canadians.”

Early in the decision, the CRTC quoted a witness who asserted “that differential pricing practices would end the era when entrepreneurs are free to innovate without permission, which is a core net neutrality principle that has fostered innovation up until now.”

While the decision claimed to establish an ex-post complaints based regulatory regime for evaluating differential pricing innovations, it simultaneously established a regime for service providers to have the regulator pre-authorize innovations:

If an ISP is unsure as to whether a differential pricing practice would be consistent with the framework, it may file an application seeking a Commission determination prior to implementing the practice in question.
…
to encourage ISPs to seek a determination in advance of offering a differential pricing practice as appropriate, the Commission, in dealing with a complaint about a differential pricing practice and in accordance with its powers under section 72.003 of the Act, may consider imposing an administrative monetary penalty.

I sense an imbalance in permission-less innovation. In the early days of smart phones, differential data plans were the norm, with offers of low priced, flat rate access to popular applications intended to get people to try out mobile internet. None of these plans needed to be reviewed in advance by the regulator. We might want to consider whether any would have survived a review under the current Canadian regulatory framework. Yet, did the practice of favouring certain social media and messaging applications reduce incentives or opportunities for entrepreneurs to innovate without permission?

Hardly. These pricing practices encouraged more people to get online.

Can we do better anticipating the risks and opportunities that arise from intervention in the marketplace in order to avoid unintended consequences? Can regulators avoid the temptation to intervene and allow the marketplace to decide which business models will succeed?

How can policy makers ensure Canadians have the opportunity to derive the full benefits from innovation and disruption in an increasingly digital economy?

The theme for The 2018 Canadian Telecom Summit [June 4-6, Toronto] is “Innovation and Disruption in ICT: reinventing and securing our business and personal lives.” Save more than $200 by registering before the end of February. Why not register today?

Earlier this week, The Globe and Mail carried an article in which Conservative leader Andrew Scheer said his party supported “the concept of net neutrality” and the newspaper portrayed this as being in contrast to his Innovation critic, Maxime Bernier.

Mr. Scheer added that his party supports the concept of net neutrality, the rules that require all internet traffic be treated equally. This comes in contrast to his innovation critic and former leadership rival, Conservative MP Maxime Bernier, who publicly advocated against it in favour of less government control and more free competition.

Are these positions really in conflict with each other?

Every so often, I like to refer back to the report of the Telecom Policy Review panel [pdf, 1.6MB]. While that panel reported back to parliament more than 11 years ago, most of its work still holds up today. Recall, the panel defined net neutrality in terms of “the right of Canadian consumers to access publicly available Internet applications and content of their choice by means of public telecommunications networks that provide access to the Internet.”

The panel said:

Given the complexity of this area, the rapid evolution of technologies and the market dynamics, the Panel believes the regulator here should have more discretion than in other areas of regulation. However, the Panel also believes this discretion should be exercised with a view to encouraging reliance on market forces and customer choice as much as possible. For example, there may be situations in which a customer wants an ISP to block access to particular applications or content. In addition, some customers may be willing to accept a reduced degree of access in exchange for a lower price. Such consumer choices should be respected.

In the Panel’s view, the purpose of a customer access rule should be consumer protection, and there should be a strong emphasis on ensuring that customers have the information required to make informed choices. In this way, the rule would promote the efficient operation of market forces.

Recall, this was a panel originally created by a Liberal government, that ultimately delivered its report to Maxime Bernier, the Conservative party Industry Minister at the time.

It is possible to support the principles of net neutrality, “the concept”, and still support the implementation of rules that encourage “reliance on market forces and customer choice as much as possible.”

We should not presume that supporting the concept of net neutrality is inconsistent with a light touch regulatory approach to its implementation.

Which posts resonated with my readers in 2017?

Looking at the analytics, these 5 blog posts had the most individual page views:

1. “Driving innovation in healthcare” [October 30]
2. “Parting is such sweet sorrow” [June 8]
3. “Deconstructing the CRTC” [May 8]
4. “A mandate letter for the new CRTC Chair” [June 23]
5. “25 years of telecom competition” [June 12]

Thanks to links from other sites, that October 30 post (Driving innovation in healthcare) has become the single most viewed post since I started my blog nearly 12 years ago.

Like last year’s list, an honourable mention goes to a post from way back in 2006, “Knock-down versus knock-out,” which talked about challenges chasing illegal content off the internet. I find it fascinating that this post continues to attract attention, perhaps because recent news articles have raised the discussion of blocking internet sites that host pirated content.

I had one tweet that attracted more attention than any other – it was a re-tweet of something posted by CNN, with me simply highlighting one of the quotes in the article:

Thank you for following me here on this blog (and on Twitter) and engaging over the past year. Let me extend to you the very best wishes for health, happiness and peace in the year ahead.

Happy new year!

Once again, it is the season to reflect and make forecasts for the year ahead.

I have not been as prolific in my writing on this blog with only 81 posts in 2017, compared with 102 posts in 2016, 103 in 2015 and 109 in 2014. The archives now have close to 2700 posts over the past 20 years. I encourage you to take a walk through the evolution of Canada’s telecom sector by browsing “My back pages” on the side-bar menu. If you like what you have been reading, feel free to try the “Donate” button on the side of this page.

Why am I writing fewer posts? I suppose part of the reason is that I am spending more of my time on Twitter [follow me: @mark_goldberg] and, as the grandfather to two adorable little boys who happen to live 7 time zones away, I have taken a fair number of days to spend time with them. Let me add that I think I have my priorities arranged appropriately.

Like last year (and for many years before that), my wish list for 2018 includes seeing more carriers getting involved in increasing computer ownership and broadband adoption among low income households with school-aged children. As I noted last year, Rogers and TELUS launched programs on their own, but both of these programs would be enhanced by the Federal Government assisting in identifying those households that would benefit the most. Broadband adoption rates are made up of a numerator (demand) and a denominator (supply); much opportunity can be found in stimulating the demand side of that equation.

I am not convinced that Canada’s broadband expansion programs, with ever diminishing returns on government expenditures, are the most cost-effective way to bridge the various digital divides in this country. Hundreds of thousands of low-income households continue to be without computers (let alone broadband) in Canada’s largest cities. Kids can’t do homework if they don’t have access at home to a connected computer. If our objective is to increase broadband adoption, perhaps more homes can be brought online by focusing attention on this community.

I can’t help but wonder what kinds of innovative pricing plans are being inhibited because Canada’s more restrictive regulations on internet access compared with the light touch approach approved last week by the FCC. Canadians have been denied the choice of plans with innovative pricing structures offering mobile TV from one service provider and another carrier offering mobile music. As predicted, the CRTC’s intervention resulted in no customers seeing lower prices while thousands ended up paying more.

Industry Minister Bains recently said “An open internet is critical to our economy and our democracy.” I agree. We need an open internet.

But, I don’t believe that an open internet has been called into question by the FCC. The real question is the level and type of government intervention required to achieve an open internet, while still preserving an environment that fosters innovation and investment.

I’m not convinced Canadian consumers benefit from the CRTC having extended net neutrality rules beyond the elements that were recommended by the Telecom Policy Review Panel. I don’t share the view of some others that the US will lose its status as the innovation leader, and I suspect US consumers will find that they benefit from the framework south of the border.

As observed recently in the NY Times, it will be a fascinating controlled experiment to study how the ICT sector evolves on both sides of the 49th parallel.

While setting objectives for next year, I guess I still wouldn’t mind losing 20 pounds, but on the other hand, I know my grandsons appreciate having a soft place to rest when we take naps, “watching the game” together on the afternoons when we happen to be on the same continent.

For 37 years, I have experiencing (and in a few cases, leading) dynamic changes in the telecommunications sector that have made every day one in which I can say that I love my chosen field of work. In 2018, I look forward to continuing engaging with my readers and followers, hopefully continuing to provoke you with different perspectives on issues facing the sector.

Over the break, please take time to look at the program for The 2018 Canadian Telecom Summit (June 4-6, Toronto), which will be looking at “Innovation and Disruption in ICT: reinventing and securing our business and personal lives.” Registrations are now open, in case you want to use up some 2017 budget and save money at the same time. I hope to see you there.

Have a safe, healthy and peaceful holiday season.

The House of Commons Standing Committee on Industry, Science and Technology (INDU) has released its report [pdf, 4.3MB] following the statutory review of Canada’s Anti-Spam Legislation (CASL) and the Committee has made a number of recommendations to “ensure the Act continues ‘to promote the efficiency and adaptability of the Canadian economy.'”

Ever since its enactment, CASL’s main challenge remains to balance, on the one hand, restricting the transmission of unsolicited commercial electronic messages in order to limit the costs associated with such messages and protecting Canadians against spam, and, on the other, allowing individuals and organizations to promote their lawful activities. Meeting this challenge requires clear legislative action that does not lead to unintended consequences.

The report has a total of 13 recommendations, ranging from the trivial to far more substantive. Recommendations 1 and 13 deal with the name of the Act itself, recommending that the Act be called the “Electronic Commerce Protection Act” (ECPA) as contrasted with the name that rolls off no one’s tongue: “An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act“. Catchy, right?

The bulk of the recommendations incorporate the phrase “unintended cost of compliance”, evidence that the message has been received: CASL has led to unintended costs for Canadian businesses which ultimately are borne by consumers.

Three of the recommendations target the CRTC: increasing education efforts; sharing information with law enforcement agencies; and, increase transparency in its investigations and determinations of penalties.

The INDU Committee is recommending changes, made clear from the title of its report, “Canada’s Anti-SPAM Legislation: Clarifications Are In Order.” The report concludes with a clear message to the Government:

While improving guidance and education should be a priority moving forward, it can only achieve so much. The Act and its regulations require clarifications to reduce the cost of compliance and better focus enforcement. Provisions defining CEM, consent, and “business-to-business” messages, among others, warrant the attention of the Government of Canada. The Government will be in a better position to assess the impact of the coming into force of the private right of action once these clarifications are implemented.

As longtime readers of this blog are aware [just use search word “CASL” to see], I agree. Clarifications are in order.