An Economic Note [pdf, 871 KB] from the Montreal Economic Institute (MEI) is challenging the premise for elements of mobile wireless policy deliberations in Canada. Whether it is consideration of a spectrum set-aside for “new entrants” or ordering the CRTC to revisit its refusal to mandate resale for WiFi based MVNOs, the MEI study says “the minister’s justifications for the proposed change are groundless”.

The Economic Note challenges the preamble of Order in Council 2017-0557, where it claims “Canada has among the lowest adoption rates for mobile wireless telecommunications services among industrialized countries.” MEI says:

This assertion is drawn from a misleading OECD comparison based on the number of SIM cards per inhabitant (as opposed to the proportion of wireless users in the overall population). In many countries, users have more than one card for the same device in order to save money, which results in absurdly inflated “penetration rates,” in many cases far above 100%. The fact is that the vast majority of Canadians (81.6%) had a wireless device in 2015, a proportion that keeps increasing. Canadians are among the biggest users of data on tablets and smartphones (sixth out of 21 countries surveyed by Cisco for both categories). Moreover, in terms of smartphone market penetration, Canada ranks third out of 21 countries surveyed with a total of 83% of mobile subscribers using smartphones. And it ranks fourth in terms of the proportion of mobile users connected to the fastest network.

In its press release, MEI warns “Innovation Minister Navdeep Bains runs the risk of discouraging investment in the telecommunications industry”. The report contrasts reseller investment levels of just $30 million per year with the $11.3 billion being invested by national and regional carriers.

As Canada has one of the best wireless infrastructures in the world, and Canadians are among the most avid consumers of data in the world, there is no need to intervene in order to catch up with other countries.

The Montreal Ecoonomic Institute says its Regulation Series of reports “aims to examine the often unintended consequences for individuals and businesses of various laws and rules, in contrast with their stated goals.” I have written frequently about this kind of effect, such as “Driving costs higher” as an unintended outcome of a number of government measures originally meant to benefit consumers.

A few weeks ago, MEI commented in the Financial Post about the plans for a set-aside in the next spectrum auction. “Experience has shown that such measures essentially constitute public subsidies that are either lost to weak new entrants that consistently fail, or wasted on established regional players that would have had the means to bid for the full value of the spectrum.”

Whether it is a spectrum set-aside or ordering the CRTC to have a fresh look at its decision on resale versus facilities based competition, the Montreal Economic Institute report again challenges the premise that appears to be motivating increased government intervention in Canada’s mobile marketplace.

Earlier this year, FCC Chair Ajit Pai observed that “Building 5G networks will require huge capital expenditures–spending best incentivized with light-touch regulation.”

Canada needs to carefully consider the potential unintended consequences of further intervention in its mobile sector. To date, the facts show that Canadian carriers are investing, our networks are world leading in coverage and speed, and Canadians are among the world’s top users of mobile data.

What problem are we are trying to fix?

How can cities and other levels of government create more favourable conditions to accelerate investment in digital infrastructure? Subtle changes in policies and processes can go a long way.

I have written before that cities don’t need to become “smart cities” overnight. They should try to get a little smarter every day.

Over the past 20 years, we have sometimes seen different levels of governments enact regulations and processes that seem to discourage or inhibit investment in fibre or use junk science to delay or prevent wireless service providers from improving coverage or adding capacity.

These kinds of behaviours seem inconsistent with a shared objective to build the networks that drive an electronically fueled economy. All levels of government should be looking for ways to encourage more investment, reducing the cost of deploying facilities, improving service quality, fuel increased competition and ultimately lead to lower consumer prices.

A couple of recent unrelated articles caught my eye with thoughts that might contribute to a better climate for private sector investment in advanced digital infrastructure.

In a blog post, Verizon’s policy group describes today’s pole attachment process to deploy new networks as very slow and inefficient when it comes to attaching new small cells and fiber. So Verizon is asking the FCC to adopt a rule for what it calls “One-Touch Make-Ready“, to improve the processes by which telecommunications providers attach new equipment to poles. With 5G networks based on even smaller cells, towers will be located even closer to the end users. As such, it is becoming increasingly more important to improve these processes.

Under the current system, a new attacher must contact a pole owner to get permission to attach, wait for a survey, and then, wait some more as each existing attacher moves or adjusts their attachments – a process called “make-ready” (literally, making-the-pole-ready for the new attachment). Right now, this often proceeds sequentially, with multiple reviews and truck rolls for each of the providers already attached to the pole. It can take six months to a year – and piles of paperwork – to get a new attachment approved and placed on a pole.
…
Under the new proposal – called One-Touch Make-Ready – we suggest that new attachers should have the option of using pre-approved, licensed, and insured contractors to coordinate with all of the providers already attached to the pole and to do all the work to add a new attachment at one time.

Are broadband deployments being delayed by bureaucratic processes associated with accessing poles and towers owned by municipal and provincial power companies? Can these public agencies and companies help accelerate enhancements to broadband by improving access to their vertical assets?

Can we extend this to other public assets that can be used for wireless and wireline broadband deployment, such as municipal rights of way, water towers, easements, conduit in new road construction? All of these are mundane civic assets that can help stimulate network development to make the city a little smarter.

The other article I saw was an opinion piece in the Detroit News, advocating for Michigan to pass a bill that would “prevent local governments in the state from using public funds to pay for the cost of providing internet service.”

States have good reason to be concerned about municipal broadband projects. A recent study showed the financial performance of government-run broadband utilities is very poor, with only two of 20 municipal broadband projects for which transparent financial information was available expected to recover their costs within 40 years.

The University of Pennsylvania study cited in the article concludes “that municipal leaders should carefully consider all of the relevant costs and risks before moving forward with a municipal fiber program.”

In some communities, municipal offices, schools and hospitals could be anchor customers that encourage private sector investment in broadband. If a community establishes its own publicly funded network and migrates these institutions away from the competitive marketplace, the business case for private sector service providers can evaporate. Given the dismal financial performance of so many government-run broadband projects, communities should examine other models to encourage competitive private sector operators to make the investments to serve the entire population.

How can cities and other levels of government create more favourable conditions to accelerate development of digital infrastructure? Sometimes it doesn’t take millions of tax dollars; relatively simple changes to policies can significantly improve the climate for private sector investment.

Who are the Canadians who aren’t online? Do we know enough about them?

Billions of dollars are being spent in government connectivity programs; is it money well spent? Are we focused on the right areas?

Where is the Canadian research that looks at who isn’t online and asks “why”? Historically, data has shown that a disproportionate number of low-income households have no connection in their homes. But what is behind that data point? For example, in 2013 information from Statistics Canada showed that 28% of Canadians aged 65 or over in the lowest income quartile used the Internet, compared with 95% of individuals aged 16 to 24. In addition, we have seen significant increases in internet adoption among low-income seniors. Using the internet is not the same as having an internet connection at home.

Are there households who consider themselves on-line without subscribing to a broadband connection? For example, are some students finding that they can rely on broadband connections on campus and in coffee shops and use their mobile broadband for the rest of the time?

How many elementary and secondary school kids still don’t have access to a connected computer at home?

The latest Statistics Canada Survey of Household Spending (2015) shows that there are more households with internet use at home (86.9%) than households with a computer (84.5%). I find that to be fascinating. At least 2% of households in Canada make use of the internet at home and they don’t have a computer. What are the characteristics of these households and their internet use?

So in 2015, about 13% of Canadian households still did not have internet use from home. Of these households, how many are in urban versus rural settings? How many have access to internet, but have not subscribed? What are the reasons? What is the breakdown by age, by occupation, by income, by household composition? Are we targeting solutions in the most efficient manner?

Is Canada doing enough research to explore the nature of its digital divide? How can we find solutions for a problem that we may not fully understand?

Earlier today, Paul Lepage [President, TELUS Health] spoke at the Toronto Board of Trade about “Hearing the patient: How people, innovation and technology are transforming healthcare.”

A number of times in the past, I have written about opportunities for improvement that we should be able to implement in Canada’s healthcare system, such as:

• Wringing efficiencies from improved e-Health
• Adopting technology to manage your health
• Ontario’s glacial pace of electronic health

At the Board of Trade, Paul shared some of the things TELUS Health has learned from its work in digital health solutions:

• Surveys show patients want digital health solutions, but there is a gap between patient expectations and the solutions available to them.
• Patient appetites for more digital health solutions are validated by looking at usage patters on today’s solutions.
• Mobility is key

While the past 5 years have seen physician adoption of electronic health records double from 40% to over 80%, he suggests that “if we want to really drive transformation in healthcare, we need to get the different parts of the ecosystem to talk to each other, collaborate, and evolve the way patients and all healthcare providers interact.” TELUS Health has been involved with the Canada Health Infoway to deliver a national electronic prescription solution, trying to tackle the challenges of prescription errors and costs for prescription renewals. And TELUS Health has introduced MedDialog, a secure messaging platform for healthcare providers, enabling them to communicate and conduct digital patient consultations, sharing notes and providing referrals.

How do we drive more innovation in healthcare? He described drivers for TELUS Health that really could apply in any market:

1. Ensuring funding for companies:
• Since 2001 TELUS Ventures has invested in over 50 companies and has close to 25 in its portfolio today
• TELUS Health plans to invest over $750M over the next 5 years
2. Market access
• TELUS Health is creating an ecosystem for smaller companies, leverage its customer base via the TELUS Health Exchange
3. Availability of talent
• TELUS Health has about 2000 people working on health IT
• TELUS Ventures Bench provides companies in the TELUS Ventures portfolio with access to TELUS leaders with varying skillsets to act as advisors
4. Appropriate regulatory frameworks
• Making sure that the healthcare systems encourage the right behaviours to drive innovation
5. Tolerance for failure
• Recognizing healthcare is complex and evolving, like the regulatory and political context in which it operates
• Innovative firms extract the “tuition value from failure”, celebrate it, and move on

In the past year, with friends, colleagues and family members, I have had too many interactions with healthcare providers in clinics, hospitals and doctors offices in Canada, the US and Israel. In his talk, Paul Lepage referred to innovations in health IT being deployed by Clalit Health Services in Israel, a leading group that is now delivering more than 60% of their pediatric consultations on-line. I have seen first hand the excellence in service delivery at Clalit.

Some of the ways we do things make me shake my head and wonder if executives at our hospitals are taking enough time to observe first hand how patients are being treated from the time they enter the campus. As I have said about communications companies, if employees and executives aren’t being treated like the general public, change the way you handle internal accounts immediately. Hospitals, retailers, communications firms alike need to see how your customers are being handled.

Each negative interaction represents an opportunity for innovation in our healthcare system. Each innovation represents an opportunity for improved processes and systems. Each improved process represents an opportunity to deliver better patient outcomes with significantly lower costs.

As Paul said in his concluding remarks, to drive innovation goes beyond technology. It requires changes in people, policies and processes. Implementing those changes may be the biggest challenge in transforming delivery of healthcare in Canada. Indeed, finding the leadership, recruiting and retaining the people to effect those changes, may be the biggest challenge for Canada’s national innovation agenda.

A recent commentary in Cartt.ca by former CRTC Vice-chair Peter Menzies observed that “A more open CRTC is a great leap forward.” The article comments on “the significance of a recent tweak by the CRTC regarding how it runs its hearings” signalled by a simple tweet from the official CRTC account:

It was a small, but notable change in procedure that may be signalling a cultural shift within the regulatory institution.

Last Friday, FCC Chair Ajit Pai tweeted a notable shift south of the border:

I wonder how many regulations Canada still has on the books for services that no longer exist? How many regulations are on the books from a different era before new media and over the top services became serious competitors and have led to significant substitutes for consumers? Indeed, how many regulations have been enacted in recent years for services that face far more competition than ever before?

Whether it is TV distribution or telecom services, despite the availability of unregulated and unlicensed competitive alternatives, one can point to an increased number of regulations that limit the flexibility for legacy service providers to be creative in responding. Many of these regulations have led to increased prices with questionable benefits to consumers. What consumer benefits are being restricted by these limits on the degrees of freedom for marketing departments in Canada’s regulated service providers?

Typically, to change a ruling, the regulatory review process is triggered by an application from a service provider. Canada’s Telecom Act allows for the CRTC to review on its own motion virtually “anything prohibited, required or permitted to be done”.

What was the significance of that “tweak by the CRTC regarding how it runs its hearings”?