The Times of India reports that the Telecom Regulatory Authority of India, TRAI, is expected to issue an order this week that will prohibit differential pricing for data services, a move that will impact Facebook’s Internet.Org Free Basics service and Airtel’s Zero service.

I have written extensively on these issues over the years:

• Restricting trade • February 10, 2011
• Zero is better than nothing • January 13, 2015
• Connecting the unconnected • April 20, 2015
• Intellectual purity of technology over people • May 4, 2015
• Zero is still better than nothing • August 19, 2015
• Zero-rating is “pro-competition” and “pro-innovation” • November 19, 2015
• No such thing as a free lunch • November 24, 2015

There are other postings as well.

As I wrote in 2011, “It is difficult to understand how consumers can benefit from restrictions in the types of offers available to them.”

I continue to have difficulties with the idea that consumers are somehow better off with fewer choices in the marketplace. Banning zero rating provides no benefits to anyone. Prices go up for some users and go down for no one. Consumers have less choice, not more.

More than 8 years ago, in a piece called “Leading a horse to water“, I asked “Are there some applications that might lend themselves to a toll-free model in order to reach the rest of the market?”

For example, would home health care warrant installing a broadband connection as part of a monitoring service? The broadband access would be enabling underlying service, but the costs would be incurred by the health care agency, not the infirmed. Like toll-free calling, the application provider would pay the charges.

We need creative, market approaches to increase the levels of adoption of digital connectivity among low income households. Limiting choice, such as removing services like Free Basics, looks like a step in the wrong direction.

I have written in the past that mental healthcare is the main line of business for my family. My older brother and my sister are both clinical psychologists, following in the footsteps of my father – a psychiatrist.

Bell Let’s Talk Day is about talking. It is a day for talking about something that makes many people uncomfortable. And as I have written for the past few years, we need to talk even more. Public perception is the leading reason that most of those living with a mental illness do not seek help. Bell’s willingness to have its brand associated with helping Canadians deal with mental illness is a brave and bold statement to open the national conversation about mental health.

This year’s ad campaign again highlights the need to watch the way we talk. The Bell Let’s Talk website suggests 5 ways to help end the stigma.

• Language Matters: Words can help…but they can also hurt. Pay attention to the words you use.
• Educate Yourself: Learn the facts and myths about mental illness. Be knowledgeable and help fight stigma with facts.
• Be Kind: Small acts of kindness speak volumes.
• Listen and Ask: Sometimes it’s best to just listen.
• Talk About It: Start a dialogue, not a debate.

This year, Bell Let’s Talk day is on January 27 – this Wednesday. Once again, Bell will contribute 5 cents for every Text message sent and every mobile & long distance call made by their customers on their networks. Bell will add another nickle for every Tweet using #BellLetsTalk and every Facebook image share – even if you are not a Bell customer.

Since 2010, Bell has committed $100 million to mental health initiatives in Canada.

The CRTC has launched the second phase of its “Review of basic telecommunications services” consultation, with a study being conducted by Ekos Research.

Although the CRTC said in its public notice that it contracted Ekos “to conduct a study of Canadians’ usage of telecommunications services”, the questionnaire itself is called “Let’s Talk Broadband Internet”, perhaps leading the respondents toward a pre-ordained conclusion. When the respondent is asked “Which of these telecommunications services do you use most frequently?”and “Which of these telecommunications services do you expect to use most frequently 5 years from now?” underneath a bold banner (in all caps) saying “Let’s Talk Broadband Internet”, one might sense there could be a bias that leads the respondent to choose “Home Internet data service” as the response over the other choices “Home (i.e. landline) phone service” or “Mobile phone service (i.e. cellphone for voice, text or data)”. Note that the word “Internet” does not appear in the description of “Mobile phone service”. So for many non-technically inclined, there was not really an option, for example, to indicate an expectation to migrate to all mobile services in 5 years.

Survey bias aside, it is worthwhile looking at what is meant by defining what is included in “basic” services. As the CRTC indicates in the consultation document, there are several regulatory measures to provide Canadians with access to basic telecommunications services: the obligation to serve; the basic service objective; and, the local service subsidy regime.

In its description, the CRTC connects the obligation to serve and the basic service objective. This is an important bundling.

The obligation to serve requires the ILECs to provide telephone service to (i) existing customers, (ii) new customers requesting service where the ILECs have facilities, and (iii) new customers requesting service beyond the limits of the ILECs’ facilities.

The Commission established the basic service objective in 1999, which reflected the level of service available at that time to most Canadians. The basic service objective ensures that Canadians in all regions have access to affordable, high-quality telecommunications services. Currently, the basic service objective consists of the following:

• individual line local touch-tone service;
• capability to connect to the Internet via low-speed data transmission at local rates;
• access to the long distance network, operator/directory assistance services, enhanced calling features and privacy protection features, emergency services, as well as voice message relay service; and
• a printed copy of the current local telephone directory upon request.

I’m not sure anyone reading this blog post would see a need for a printed copy of a phone book, but you can always ask for one, perhaps most useful for Toronto and Montreal residents to use instead of buying a booster seat for visiting children.

It gets interesting when we look at the third regulatory measure, namely, the local service subsidy regime. In certain areas, the cost to provide service that meets the basic service objective exceeds the price. Most telecom service providers pay a fixed percentage of their revenues into a fund – known as the National Contribution Fund – to cover the shortfall. Note that the cost of video relay services are also covered by this fund. (In 2015, the percentage was set at 0.55% of revenues.)

Now, many people instinctively want to say that internet service has to be considered to be a basic telecommunications service. After all, how can one survive in a digital age without it. But, look beneath the emotional reaction to consider what it means to declare internet access as part of the basic service obligation.

Upon whom would an “obligation to serve” fall? After all, the incumbent local phone companies were not the first to offer broadband internet service in Canada. Should they be obligated to provide the service in unserved areas? Would they be the only ones eligible to be compensated out of the Contribution Fund? In many of these regions, there are niche internet service providers; what are the implications for their business plans if suddenly there is a subsidized ILEC obliged to extend its service?

The Government of Canada has poured hundred of millions of dollars into various rural and remote broadband service programs, such as Tuesday’s announced project in Newfoundland. Connected Canadians has been budgeted for $305M to extend broadband to 280,000 households, an average cost of about $1100 per household.

The current Contribution Fund subsidizes the cost of providing basic phone service (with no internet) for about one million phone lines – about 900,000 in the territory of major telcos and over 100,000 in smaller phone companies’ operating areas. The subsidy for those lines, as well as a couple million dollars for video relay services, came to a total of $113M in 2015, including $800,000 in administrative costs. Most of the readers of this post paid a non-tax deductible extra 0.55% on top of your phone bill to cover that donation to rural and remote customers.

Now, consider the hundreds of millions of dollars that has already been poured into rural and remote broadband and consider the kinds of additional ongoing subsidies that could be required, if broadband internet is added to the definition of basic service. Also, consider that internet services are currently exempt from paying into the National Contribution Fund. If internet service in high cost serving areas are going to be subsidized, would there be any reason why the majority of Canadian internet users (in lower cost urban centres) should not be funding that subsidy? Is this kind of internet tax one that Canadians would find to be acceptable?

As my frequent readers know, I am not a fan of subsidies based on geography rather than financial need. I have stated before that the CRTC should have started by looking at “who” doesn’t subscribe to broadband, not perpetuating and potentially extending the system of telecommunications subsidies based on “where” you are located, regardless of your ability to pay.

As I wrote last May, affordable broadband isn’t just a rural issue.

Incidentally, this isn’t the first time that the CRTC has looked at including broadband in the basic service objective. Back in 2010, the CRTC also asked for public input on that issue as well as exploring whether mobile service could be considered a substitute (see my post from that time: “Asking for help to define ‘basic service’“). As a result of its 2010 consultation, the CRTC elected to “continue to rely on market forces and targeted government funding” when it determined “that it would not be appropriate at this time to establish a funding mechanism to subsidize the deployment of broadband Internet access services.”

Do we want all Canadians to have a broadband connection at home? Of course. But with all of these considerations, should broadband be included in what the CRTC defines as “basic telecommunications services”?

Yes, it really has been 15 years.

From June 6-8, The 2016 Canadian Telecom Summit will mark the 15th year that we have been getting together the leading stakeholders involved in shaping Canada’s communications and ICT sectors.

Join your colleagues in listening to and participating in executive presentations from those who have the greatest influence on the direction of Canadian telecommunications, broadcasting and information technology. Hear from global leaders and local trend-setters. Meet with your suppliers, customers and partners. Challenge your competition.

For three full days, The 2016 Canadian Telecom Summit will again deliver thought-provoking insights from the prime movers of the industry. The Canadian Telecom Summit gives you the chance to hear from and talk with them in both a structured atmosphere of frank discussion and high-octane idea exchange and schmooze in a more relaxed social setting of genial conversation over espresso or cocktails.

The Canadian Telecom Summit reviews where we have been as an industry, provides an understanding of the dynamics that propel it and forecasts future trends and expected developments. Attendance is a must for telecom, broadcast and IT industry professionals – corporate users, carriers, content providers and manufacturers – financial analysts, consultants and investors.

Attracting the senior-most professionals from around the globe, The Canadian Telecom Summit is the forum for the broad cross-section of stakeholders to meet, exchange views, share ideas, challenge assumptions and plan for the future.

Be sure to take advantage of early bird pricing by registering by February 29.

I look forward to seeing you there. Have you registered yet?

With Shaw Media being acquired by Corus, it might be worthwhile to review the ownership requirements in the Canadian communications industry.

Both Shaw and Corus are controlled by the Shaw family although both companies are publicly traded (SJR.B and CJR.B respectively on the Toronto Exchange).

Shaw is being characterized now as focused on telecom, while Corus will have the broadcasting assets. However, from a regulatory perspective, Shaw’s cable TV service is considered to be a “Broadcast Distribution Undertaking” and as such, it is governed by the Broadcast Act. The rest of Shaw’s operations fall under the Telecom Act.

Under the Broadcast Act, foreign control simply is not permitted:

3 (1) It is hereby declared as the broadcasting policy for Canada that
(a) the Canadian broadcasting system shall be effectively owned and controlled by Canadians;
…

The Telecom Act allows companies that have less than 10% of Canada’s total telecommunications services revenues to be exempted from foreign ownership restrictions. A foreign owned telecom company is permitted to grow organically beyond the 10% threshold, but it may not do so through acquisitions.

The latest Communications Monitoring Report from the CRTC showed $45.9B in total telecommunications services revenues (2014). Shaw’s 2015 annual financial reports indicated revenues of $5.488B, of which $1.080 came from Media, leaving revenues of $4.408B, including cable TV (which would be a substantial portion of the $3.752 in Consumer revenue.

So, while Shaw has less than 10% of Canada’s telecommunications services revenues, broadcast distribution continues to be a poison pill that would block foreign control of the company.