The Regulatory Blockbuster is an annual highlight of The Canadian Telecom Summit and the 2017 edition did not disappoint.
Once again, the session was moderated by Greg O’Brien, editor and publisher of CARTT.ca, Canada’s news leader covering the Canadian cable, radio, television and telecom sectors.
The panel consisted of:
• Bram Abramson, Chief Legal & Regulatory Officer, TekSavvy Solutions;
• Mirko Bibic, Chief Legal & Regulatory Officer and EVP, Corporate Development, Bell Canada;
• John Lawford, Executive Director and General Counsel, Public Interest Advocacy Centre;
• David Watt, SVP, Regulatory, Rogers; and,
• Ted Woodhead, SVP, Federal Government & Regulatory Affairs, TELUS.
Each year, this session brings a different perspective to the regulatory and policy issues being reviewed in the National Capital.
He was joined on the panel by:
• Samer Bishay, President and CEO, Iristel & Ice Wireless;
• Keith Liu, SVP, Products & Innovation, Klick Health;
• Jacques Magen, Chairman, Celtic Plus; and,
• Angelique Mohring, CEO, GainX.
As Namir said in his opening remarks, “It’s about disruptive innovation. We all know that disruptive innovation, to put it in its context, is the essence of any high performing economy. It is central to the operation of markets and the evolution of markets and what decides competition and, at the end of the day, also drives even further innovation. … Today’s discussion is about how we enable innovation, how do we nurture it.”
I thought it would be beneficial to share the panel discussion with you.
The 2017 Canadian Telecom Summit featured a number of sessions on innovation policy, including a keynote address by Dan Breznitz, Professor and Chair of Innovation Studies at the Munk School of Global Affairs at University of Toronto. I hope to post his address next week.
We also had a panel discussion led by Len Waverman, Dean of the DeGroote School of Business at McMaster University and featuring Christine Calvosa, Deputy CIO at the Federal Communications Commission, Jack Mintz, President’s Fellow, School of Public Policy at University of Calgary and Daniel Schwanen, VP, Research at C.D. Howe Institute. I plan to post that panel soon.
Christine appeared later that same day in a dual keynote role with FCC CIO David Bray, who is about to join the National Geospatial-Intelligence Agency as the organization’s first chief ventures officer, responsible for driving NGA’s internal and commercial innovation efforts.
The closing address by FCC Chairman Ajit Pai included the following remarks on innovation policy:
Innovation isn’t limited to the so-called edge of networks. Innovation within networks is also critical, especially in the mobile space. To realize the digital future, we need smart infrastructure, not dumb pipes.
…
In short, America’s approach to broadband policy will be practical, not ideological. We’ll embrace what works, and dispense with what doesn’t. That means removing barriers to innovation and investment, instead of creating new ones. That means taking targeted action to address real problems in the marketplace, instead of imposing broad preemptive regulations. And that means respecting principles of economics, physics and law, and acting with humility as we regulate one of the most dynamic marketplaces history has ever known. This vision will unleash the massive investments that the digital world demands.
The Canadian Telecom Summit provided important guidance to industry stakeholders from the private sector and public policy makers. There is no other event like it.
I remember the day really clearly. I remember walking across the bridge to Hull to get to the lock-up. I was hoping for a positive decision, not sure of what would be in store for our young family if the CRTC had ruled the other way.
And as it turns out, it was a positive decision.
It had been more than a year since I had been the lead on the first panel of witnesses in the hearing. It seemed all the news media covered the April 15, 1991 start of the CRTC’s months long hearing that featured sworn witnesses and cross examination by all of the parties. Our panel, covering network interconnection, was on the witness stand for a full week. We had exchanged paper filings for a year before that. I had started assembling my team in the fall of 1989.
June 12, 1992 was the culmination of more than 30 months of work that had seen my young family move back to Canada to build a small team of young network engineers who designed the way competitive networks could connect to each other in Canada. Our goal was to enable equal ease of access: enable customers to route their calls over the service provider of their choosing, with no extra effort. Our team, working for Unitel, not only had to counter the arguments put forward by armies of regulatory engineers and economists working for the monopoly phone companies, such as the risk of errant emergency calls and the impact on rural phone rates; we had to demonstrate to the government that competition was in the public interest. Imagine, we actually had to prove to the regulator that competition would bring lower prices, service innovation and increased consumer choice.
Ours was a great team and we bonded well, still staying in touch – though not frequently enough – to this day. Two members of the group got married. As we dispersed, we populated executive levels at various phone companies and suppliers around the world. Others from the Unitel team continue to impact the Canadian communications sector, as do some of the people who were on other sides of the table, as well as those who assessed the evidence and wrote the decision at the CRTC.
Much was captured in a few paragraphs at the beginning of the decision.
The Commission is in agreement with most parties that increased competition should not be based on a regulated duopoly market structure. In order to exploit fully the benefits of competition, the Commission considers that it would be in the public interest to provide a framework which would allow other applications for interconnection by facilities-based interexchange carriers (IXCs) that would be subject to federal regulation, if the shareholders of such applicants are prepared to assume the risks and obligations associated with the terms and conditions set out in this Decision. Accordingly, the Commission has indicated its willingness to order the BCRL respondents to interconnect with BCRL, if BCRL wishes to enter on terms and conditions comparable to those approved for Unitel.
While the Commission considers that a more open marketplace is more likely to increase the benefits of competition, such entry must ensure that consumers are protected from potential abuses. Accordingly, the Commission has imposed certain restrictions on pay telephone and operator service activities and access to billing and collection and database services to avoid problems such as overcharging that have occurred as a result of unregulated alternative operator service (AOS) activities in the U.S.
The Commission does not consider that resale and sharing, absent facilities-based entry, would provide a sufficiently sustainable form of competition, given that reseller viability is so dependent on the rate structures of the respondents.
The decision itself was remarkably well crafted, and it continues to be worthwhile reading, setting out Canada’s official policy favouring facilities-based competition and enshrining the concept we created of Interconnection Steering Committees that continue to operate today, resolving issues on an industry-wide level with regulatory oversight.
There are so many stories that could be told of the 30 months that led up to June 12, 1992. I remember going to the regional hearing in Whitehorse, and flipping through the front pages of the phone book in my hotel room to see what long distance rates were. I came down for dinner excitedly asking our lawyer “did you read the phone book in your room?” I didn’t understand why he hadn’t. Some of the stories are found in “Wire Wars: The Canadian fight for competition in telecommunications,” a book written by Lawrence Surtees who had covered the regulatory battle as a reporter for the Globe and Mail.
I’ve now spent 37 years in the telecommunications industry and it has never been just a job for me.
I continue to marvel at the technology and the opportunities it enables. I’ve mentioned before that I will sometimes be driving on a highway here in Canada, talking to my daughter sitting on a high speed commuter train halfway around the world, without either of us having to think about the cost. It wasn’t always that way. Twenty-five years ago today, we created the framework that enabled today’s competitive communications environment.
Competitive communications in Canada: Happy 25th anniversary.
On the same day that Ajit Pai was named chair of the FCC, Minister Melanie Joly unceremoniously announced that applications were being taken for the position of Chair of the CRTC. The reign of JP Blais as CRTC CEO and Chair is finally coming to an end, and that is cause for Canadians of all feathers to chirp in celebration. As I indicated in my opening remarks at The 2017 Canadian Telecom Summit earlier this week, “these have been a challenging 5 years, marked by turmoil and uncertainty within the Commission and an unusual (and frankly, unnecessary) level of acrimony.”
Among his Commission’s most significant policy failures was an inadequate response to the challenge of connecting low-income Canadians. In the midst of the so-called #TalkBroadband hearing, looking at the Basic Service Obligation, Blais interrupted the proceeding on April 18, 2016 and said “Every day that goes by without a more robust Canadian broadband strategy means a Canadian who is socially and economically vulnerable continues to be profoundly disadvantaged.”
Nearly 4 years earlier, I had written to Chairman Blais, asking to meet to discuss ways to accelerate getting connectivity and computers into low income households with kids. He replied saying, “Happy to meet at a mutually convenient moment. My office will make arrangements.” That was December 17, 2012. Over the course of the next four years, his office couldn’t find a spare moment to even try to schedule a meeting. No calls, no replies to my repeated attempts to follow up. Every day that went by meant those socially and economically vulnerable Canadians continued to be disadvantaged.
I had indicated to him that what was needed was leadership, not money. Unfortunately, that leadership was not forthcoming.
I don’t really know what I did to cross him, but there is no question that I fell off his Christmas card list early in his term. I am apparently in good company.
“No one benefited from three-year contracts being phased out,” David Watt, senior vice-president of regulatory affairs at Rogers, said at a conference in June. “That made many consumers pay more for their wireless service.”
Far be it for me to criticize the decisions taken by seasoned business people, but I can’t help but be surprised when major players throw in the towel on a platform that is the future of content—just two years after it launched. I have to wonder if they are too used to receiving rents from subscribers every month in a protected ecosystem, rather than rolling up their sleeves in order to build a business without regulatory intervention and protection.
He conveniently forgot that, in fact, the regulator had intervened in how Shomi would operate, not content to allow “rolling up their sleeves in order to build the business”. His intervention was an attack on Canadian investors trying to experiment with their own business model to address “the future of content”.
Most recently, the CRTC again decided that it had to intervene in the marketplace with its differential pricing decision, “together with the Internet traffic management practices framework, the Mobile TV decision, and the decision regarding Videotron’s Unlimited Music program, effectively comprise the Commission’s policy framework for net neutrality.” Remarkably, the CRTC intervened in how competitive retail internet can be packaged and sold. Chairman Blais said: “Rather than offering its subscribers selected content at different data usage prices, Internet service providers should be offering more data at lower prices. That way, subscribers can choose for themselves what content they want to consume.” Such heavy handed regulation removed the choice that so many of Videotron’s customers elected to consume. The CRTC recommended that service providers consult with government bureaucrats to review marketing strategies for pre-approval, with the threat of fines for failure to get pre-clearance.
to promote compliance with the Act and with the evaluation criteria in this decision, and 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 if the practice in question is found to be in violation
Contrast Canada’s heavy handed internet regulation with the lighter touch approach in the US that the FCC Chair predicts “will unleash the massive investments that the digital world demands”
On at least five occasions, the Chair demonstrated a remarkably thin skin, especially for someone heading up an organization that most Canadians feel they have a right, if not a duty, to criticize:
The Rogers simsub tweet: The tweet from the Rogers representative was accurate, and given the 140 character limitations of the medium, should not have attracted the response it did – perhaps being at the root of the CRTC’s Super Bowl policy [in at least one media account, the Commission spokesperson noted that “Canadians annoyed about missing the original ads… would often unfairly blame the CRTC.”]
The Crull affair: The Crull affair was a response to a newspaper article. No proceeding, evidence was sought, no interrogatories. The Statement by the Chair made it impossible for a fair hearing to ever take place – the Chairman himself had prejudged any case.
My own criticism of a CRTC commissioned survey: The CRTC refused to consider my critique of the shoddy survey methods, and did not return any of my calls prior to my publication of the criticism. Data released in the 2016 Communications Monitoring Report confirmed that I was correct.
Clarifying the TV license renewals for French language groups through a letter to the editor, indicating that the decision was unable to speak for itself.
Each of these responses are notable in their own right, tied together only by their demonstration of a leader who did not like being criticized. Or, being told “no” as Netflix did in September 2014.
As I said earlier, Ms. Parker, we’ve known each other for a while. And, you know, there’s an expression in Australia in sports — and you may not be a fan of sport — but they say, “You play the ball, not the man.” I think that’s also true on the regulatory field. And I am wondering if Mr. Denis McGrath is a member of your leadership team at the Writers Guild.
MS. PARKER: Yes, he is.
THE CHAIPERSON: And does he speak for you when he makes comments?
MS. PARKER: At times.
THE CHAIPERSON: You know, in a post-truth era, I guess it’s normal to have rude comments and hear defamatory statements about public figures. I guess I have to live with that. It’s become the norm, but we’ve known each other for a number of years. And when you say to a regulatory official that they’re not listening, that raises a legal issue.
So for the record, do you think your WCG’s position has been heard in this proceeding so far? Are we listening? We may not agree in the end with your position, but are we at least listening?
MS. PARKER: I would say it’s a very convivial discussion. We would like to talk to you more about, you know, the percentages.
THE CHAIPERSON: Sure.
MS. PARKER: And but yes, I think we’re having a nice little chat.
THE CHAIPERSON: Good. Well, perhaps Mr. McGrath is not helping you as much as he thinks he is.
MS. PARKER: Well, I will say that Denis does speak the truth in some cases, and I would never want him to be told not to have his free voice.
It is a remarkable exchange on the public record, combining the veiled threat of legal action, together with Blais’ warning the Writers Guild that its submissions are being discounted due to the comments by a member.
I have also personally experienced a phone call from the CRTC’s top lawyer, asking me to remove a tweet because I “didn’t have all the facts.” Never mind that my tweet asked a question, it didn’t make a statement. The tweet was looking for the facts. When the CRTC chair had told a newspaper that he had to haggle for lower rates, I asked on Twitter how he did that in a manner to “avoid benefiting from his position”. I thought that was a reasonable question. The CRTC’s General Counsel thought otherwise and I decided to remove the tweet, rather than risk a protracted and costly legal battle against taxpayer-funded lawyers. It is too bad. We may never know how the Chair thinks he was able to get a better deal.
The Blais era will also be remembered for the discord among Commissioners and staff alike. That is a whole other blog post. Indeed, it has filled court dockets.
There are a few institutions about which Canadians love to complain. We have Canada Revenue Agency; we have Canada Post; and, we have the CRTC. If someone agrees to take on a leadership role in any of these organizations, one should be prepared to be targeted for criticism, warranted or not. In order to help the next CRTC Chair avoid the same mistake, let me advise that if you aren’t prepared to let it roll off your back, then maybe you should be looking for a different line of work.
In his first (and only) address to The Canadian Telecom Summit in 2013, Blais quoted Mary Kay cosmetics founder May Kay Ash saying “Everyone has an invisible sign hanging from their neck saying, ‘Make me feel important.’ Never forget this message when working with people.”
His address had an impact on me. ‘Make me feel important’ are the defining words that I associate with the term of CRTC Chair Blais. He likes to say that he sought to put Canadians in the centre of their communications system. But what he really accomplished was inserting himself into that central position.
FCC Chairman Ajit Pai was unable to make it to Toronto for The 2017 Canadian Telecom Summit, but he sent a special video message, addressing the conference’s themes of Competition, Innovation and Investment and what the FCC is doing to promote each.
Greetings from Washington, DC, and thank you for this opportunity to address The 2017 Canadian Telecom Summit.
I’m sorry that I cannot be there in person. Mark Goldberg feels like a kindred spirit to me. He’s from Parsons, Kansas and moved to Toronto; I lived in Toronto and eventually moved to Parsons. And the last time I attended, I had the pleasure of listening to and learning from my good friend, former CRTC Commissioner Raj Shoan.
Let me begin by thanking our Canadian counterparts for your long standing friendship and collaboration on telecom issues. Our recent incentive auction is just the latest example. We jointly developed a uniform North American band plan for UHF TV signals and the new 600 MHz wireless band, paving the way for cross-border inter-operability of devices and networks. I look forward to continuing to work together to craft solutions that benefit Americans and Canadians alike.
Now, I see that the theme for this year’s Summit is Competition, Innovation and Investment, so I will take the radical step of talking about Competition, Innovation and Investment and what the FCC is doing to promote each.
Let me start with innovation. We begin with the premise that breakthrough advances are going to come from private sector entrepreneurs, not government policy makers. We want to empower inventors to bring their ideas to life. Now often that just means getting government out of the way. That also means promoting competitive markets and providing key inputs, like spectrum, that aid the incentives to create.
So, what exactly are we doing? For starters, we are reviewing the FCC’s rules across the board, from media to wireline, and deciding which ones still make sense in the digital age. As part of this review we are asking whether the costs of a rule outweigh the benefits. When the facts warrant, we won’t hesitate to revise overly burdensome rules or repeal them altogether. We’ve also put in place a process to ensure that, if an innovator seeks FCC approval of a new technology or service, we’ll make a decision within one year. That’s light-speed in our world.
We also began the process of allowing television broadcasters to use the next generation TV standard, ATSC 3.0, on a voluntary market-driven basis. This standard, which marries the best features of broadcasting and the internet, would allow broadcasters to fully enter the digital era.
On the spectrum front, we moved quickly to open up nearly 11 GHz of spectrum in the bands above 24 GHz for mobile use. This gives operators a clear path to launching 5G and other innovative millimeter wave services in the United States. And we’re currently considering opening up even more of this spectrum.
Now, as we move to 5G, regulators also must recognize something many people often don’t. Innovation isn’t limited to the so-called edge of networks. Innovation within networks is also critical, especially in the mobile space. To realize the digital future, we need smart infrastructure, not dumb pipes.
And that brings me to investment. For almost two decades, the FCC pursued a light touch approach to regulation, one that produced tremendous investment and innovation throughout our entire internet ecosystem, from the core of our networks to providers at the edge. But two years ago, the US Government’s approach suddenly changed. The FCC, on a party-line vote, decided to slap an old regulatory framework, called Title II (after the section of our statute where the rules are found) originally designed in the 1930’s for the Ma Bell telephone monopoly, upon thousands of internet service providers, big and small.
We’ve already begun to see the harms from this shift to more heavy-handed regulation. From 2014 to 2016, the broadband infrastructure investment in the United States dropped, the first decline ever, outside of a recession. Last month, the FCC voted to initiate a process to reverse the Title II decision and seek public input on how to secure the Open Internet that we all favour. I enter this process with an open mind, and we will go where the facts lead us, but I’m confident that this move puts us on the path to more broadband infrastructure investment, which would mean more Americans with high-speed internet access, more jobs building those networks, and more competition, the third topic that I wanted to discuss.
When it comes to competition, small ISPs are critical to meeting consumers hope for a more vibrant broadband marketplace and closing the digital divide. But the simple reality is that the smallest providers simply don’t have the means or the margins to withstand the Title II regulatory onslaught. Now, since we launched our proceeding, 22 small ISPs, each of which has about 1,000 broadband customers or fewer, told the FCC that the Title II order and utility-style regulation had affected their ability to obtain financing. They said that it had slowed, if not halted, the development and deployment of innovative new offerings, which would benefit our customers. And they said that Title II hung like a black cloud over their businesses.
In my first week as Chairman of the FCC, I proposed to relieve small ISPs from costly and overly burdensome reporting requirements associated with the Title II order. Reversing that Title II order altogether would encourage smaller competitors to enter the broadband marketplace or expand their networks. This would mean more competitive choices for the American people.
In short, America’s approach to broadband policy will be practical, not ideological. We’ll embrace what works, and dispense with what doesn’t. That means removing barriers to innovation and investment, instead of creating new ones. That means taking targeted action to address real problems in the marketplace, instead of imposing broad preemptive regulations. And that means respecting principles of economics, physics and law, and acting with humility as we regulate one of the most dynamic marketplaces history has ever known. This vision will unleash the massive investments that the digital world demands.
I am proud to reaffirm my nation’s commitment to promoting more competition, innovation and investment.
And I look forward to working with all of you to bring the benefits of the digital revolution to the people of Canada and the United States.
