I am trying out Bluesky, the relatively new social media app.

You can find me there at: @markgoldberg.bsky.social. Let me know if you are trying out a Twitter alternative.

What happened to Twitter? According to an article last week, Twitter has lost 90% of its value since being acquired by Elon Musk. “If X indeed proves a financial cataclysm, people are likely to forget the excuses, and examine the careening missteps from its mercurial sole proprietor.” I am certain there will be business school case studies written about the way $40 billion of value evaporated so rapidly through self-inflicted wounds.

“Move fast and break things” was an internal motto used by Facebook, as described in a 2009 Mark Zuckerberg interview with Henry Blodget for Business Insider. “Unless you are breaking stuff, you are not moving fast enough.”

But by 2014, another Business Insider interview had Facebook’s founder saying, “We’ve changed our internal motto from ‘Move fast and break things’ to ‘Move fast with stable infrastructure.'” Maybe Twitter’s owner Elon Musk missed that second part. (He has been very good at breaking things.)

“Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy” is the title of a 2017 book by Jonathan Taplin that might be worth revisiting.

From the introduction:

The astonishing and precipitous decline in revenue paid to content creators has nothing to do with the idea that people are listening to less music, reading less, or watching fewer movies and TV shows. In fact, all surveys point to the opposite – the top searched Google items are all about entertainment categories. It is not a coincidence that the rise of digital monopolies has led to the fall of content revenues. The two are inextricably linked.

The book helps to understand the motivation behind Canada’s Online Streaming Act and Online News Act. We can argue about whether these pieces of legislation followed the right approach. Indeed, Canadian policy makers, academics, and stakeholders are continuing to have those arguments.

Contrary to what techno-determinists want us to believe, inequality is not the inevitable byproduct of technology and globalization, or even the lopsided distribution of genius. It is a direct result of the fact that since the rise of the Internet, policy makers have acted as if the rules that apply to the rest of the economy do not apply to Internet monopolies. Taxes, antitrust regulation, intellectual property law – all are ignored in regulating the Internet industries.

I have been writing about “Taming the Internet” since the earliest days of this blog. Remember John Perry Barlow’s “Declaration of the Independence of Cyberspace”?

Just a couple years ago, I wrote “Taming the World Wild Web”, concluding, “It’s no longer a question of whether the World Wild Web can be tamed. The key question is how.”

How do we regulate internet content without infringing freedoms of expression?

Canada seems determined to chart its own path. We will track those legislative initiatives as Parliament resumes next week. But, how does Canadian regulatory action fit within a global context? Last Friday, an US appeals court ruled “that the Biden administration most likely overstepped the First Amendment by urging the major social media platforms to remove misleading or false content about the Covid-19 pandemic”.

You can find me exploring those issues and more on these platforms:

• as markgoldberg2 on LinkedIn;
• as mark_goldberg on Twitter (X);
• as markgoldberg.bsky.social on Bluesky.

I once wrote “Twitter is like Coffee Crisp”:

Twitter makes a nice light snack but it is no replacement for a complete and balanced dinner. Of course, we don’t always have time for a multi-course balanced spread, but I have to think that a diet comprised solely of junk food will catch up to you in time.

For your more complete telecom dining experience, pass up the social media snacking, and bookmark this site.

How do we encourage universal broadband connectivity?

In Canada, government funding programs have focused on stimulating access to broadband. Canada’s regulator has been tracking its objective for every household in Canada to have the ability to subscribe to a broadband connection with 50 Mbps down, 10 Mbps up and unlimited download by the year 2031.

In my post a few weeks ago (“Digital inclusion”), I wrote that it is one thing to have broadband available at every doorstep in Canada, it is something very different to get people to actually subscribe. Last week, I noted some of the research that is helping to understand the non-financial factors that are inhibiting broadband adoption.

It is worth highlighting a recent paper from the Information Technology & Innovation Foundation (ITIF), “Enabling Equity: Why Universal Broadband Access Rates Matter”.

High rates of broadband adoption benefit all of society, yet those who stand to benefit the most are also least likely to be online. Pushing hard for near-universal connectivity is crucial if we want technology to help bridge, rather than widen, existing divides.

The key takeaways in the report resemble themes common on these pages:

• High broadband connectivity rates are positively linked to factors such as GDP growth and stability. They enable jobs, promote resiliency in the face of disasters, and support the massive and growing digital economy.
• Huge online marketplaces of every stripe are subject to network effects: They become more valuable to every user the more users there are. For all these reasons, increasing connectivity rates is broadly beneficial.
• Broadband enables cheaper, more convenient access to critical resources such as health care and government programs, so people with the fewest resources are often the ones who stand to benefit the most from being connected.
• From every angle, getting offline groups online—and aiming for as close to universal connectivity rates as possible—should be a policy priority.
• Doing so requires both completing deployment and increasing adoption rates.

It is notable that broadband subsidy programs in the United States are funded by the US Government, not by the carriers. A White House press release in February estimated that as many as 40% of US households could qualify for subsidies. “Over 16 million households now saving $500 million per month, thanks to the Affordable Connectivity Program (ACP)”.

Such a broad program of subsidies would not be sustainable if funded by the carriers themselves.

The ITIF report’s list of key takeaways concludes with a call for Congress and the administration to “sustain funding for subsidy programs such as the Affordable Connectivity Program (ACP), build economic impact analyses into them, and survey households that remain offline.”

ITIF recognizes that it will take more than low cost broadband to get every household online.

Canada’s communications industry has stepped in to provide the social services support for disadvantaged households where other jurisdictions rely on government funding. It is notable that NorthwestTel recently filed a proposal with the CRTC to offer deeply discounted broadband services to disadvantaged households.

Targeted offers of lower rates aren’t enough to drive universal broadband connectivity. But, these programs are an important part of the solution.

How do we develop a more holistic approach to connect the unconnected?

As we near completion of the job of bringing a broadband pipe to every household, what will encourage everyone to drink from that fountain?

I think that the greatest skill I picked up in university was critical thinking, gathering evidence, facts, observations and forming a judgement by the application of rational, and unbiased analyses. I learned to be skeptical of so-called conventional wisdom and I have become the family’s resource for urban legend mythbusting.

That is a role that keeps me busy. There is a lot of misinformation masquerading under academic imprimatur in newspapers and online journals.

An article in yesterday’s Globe and Mail included a line that caught my eye. “A 2022 study found that Canada’s wireless rates were the second most expensive in the world – seven times more expensive than Australia, 25 times more expensive than France and Ireland and 1,000 times more expensive than Finland.”

Canadians complain about mobile prices, but does anyone in Canada actually believe that they are paying one thousand times more than what they would pay in Finland?

In fact, we don’t.

So how did the author, a university professor and Academic director for University of Toronto’s Victoria College, make such a claim? The online version of the article links to a study from the widely discredited Rewheel/Research, criticized as “a prime example of misinformation on the Internet.”

Three years ago, a report signed by two dozen academics and economics experts detailed factual errors and logical inconsistencies in Rewheel’s report, and concluded Rewheel’s approach is fundamentally flawed. “The Rewheel story is easy to understand. It is also completely wrong… Rewheel’s rankings are of no value in comparing prices and assessing the level of competition in wireless markets… Rewheel’s assumptions are unsupported and create distorted rankings.”

Yet, the professor had no trouble writing that Canada’s wireless rates were 1,000 times more expensive than Finland. Last year, I was paying $85 per month for my plan (my prices have dropped considerably earlier this year). Does anyone think you can find a plan for less than 10 cents per month in Finland?

Critical thinking.

The article is also flawed when it states,

This spring, Industry Minister François-Philippe Champagne approved Rogers’s $26-billion takeover of Shaw, further consolidating its dominance in an already concentrated telecom space. Proponents of the deal, including Mr. Champagne, argued that it could “drive down prices across Canada,” despite reducing consumer choice in Alberta and B.C.

In fact, there has been no reduction in consumer choice in Alberta and British Columbia. The logo on cable and internet bills for Shaw subscribers may have changed to Rogers, but Rogers had never been a wireline services option in those provinces. Shaw’s wireless services were spun out to Quebecor (Videotron), a company that did not previously operate in Western Canada. Not only was there no reduction in consumer choice, but Freedom Mobile is now owned by a company that is willing and able to invest in more competitive technology.

Indeed, the finding by the Competition Tribunal, a judicial body, stated [pdf, 1.25MB]:

It bears underscoring that there will continue to be four strong competitors in the wireless markets in Alberta and British Columbia, namely, Bell, Telus, Rogers, and Videotron, just as there are today. Videotron’s entry into those markets will likely ensure that competition and innovation remain robust. … Moreover, instead of the two firms (Telus and Shaw) that offer bundled wireless and wireline products in those markets today, there will be at least three (Telus, Rogers, and Videotron).

The strengthening of Rogers’ position in Alberta and British Columbia, combined with the very significant competitive initiatives that Telus and Bell have been pursuing since the Merger was announced, will also likely contribute to an increased intensity of competition in those markets.

It was difficult for me to take the rest of the article seriously when the sections on telecom were so seriously flawed.

As students return to school this week, be prepared to challenge instructors and lecturers. Carefully examine references and resources to test for credibility.

Critical thinking is the most important skill I developed in my university days.

Welcome back to school.

For almost 7 years, I have suggested that we need more research to improve our understanding of Canada’s digital divide. A couple of weeks ago, I wrote “We need more research to understand and solve the non-price factors inhibiting people from connecting to broadband services that are at their door.”

A recent report, “Views of the Divide: An Investigation into Canada’s Wireless Divide”, provides a good starting point to help policy makers become more attuned to the kinds of barriers faced by individuals who are not currently accessing “constant connectivity”.

The study [pdf, 1.3 MB], undertaken by Vivic Research (commissioned by TELUS), “combines quantitative data in Statistics Canada’s 2020 Canadian Internet Use Survey (CIUS) with qualitative interviews with organizations working with individuals experiencing the wireless divide in Canada”.

In addition to making a number of interesting recommendations for action, the report calls for some improvements in the data being gathered by Statistics Canada in CIUS.

• Increasing access to wireless programs. Interviewees highlighted the usefulness of industry programs that make wireless connectivity more accessible (such as TELUS’ Mobility for Good program, which is the only mobile-specific subsidy program we found in our search). However, they also stressed that these programs may be inaccessible to some who need them because they are often tied to receipt or participation in government programs, like the Guaranteed Income Supplement for older adults. These government programs may have high administrative barriers for some potential recipients, which has knock-on effects for accessing wireless programs. Expanding access to these wireless connectivity programs my modifying their eligibility criteria may increase their effectiveness.
• More prepaid and pay-as-you go options. For unhoused individuals and those living in unstable housing, wireless serve may in inaccessible because they do not have a stable address. Additionally, people with poor or no credit may also face barriers to accessing wireless service offered though a subscription. Increasing options available for prepaid and pay-as-you go plans in the market would enhance access to wireless connectivity for underhoused, low-income and new Canadians in particular.
• “Pull” digital skills development. Data from the CIUS show that there is scope for innovation in how we support people in developing digital skills. People in the divide are less likely to pursue learning opportunities than people outside the divide, and when they do they tend to rely on informal instruction from friends and family. Learning supports could be retooled to emphasize “pulling” rather than “pushing” skills development by tying learning opportunities to the current needs of recipients. This approach could look like providing technology or training to people that require connectivity to access support programs, helping them fulfil a concrete need rather than build digital skills in the abstract.
• Evaluation. Full evaluations of both public and private programs addressing the wireless divide, such as TELUS’ Mobility for Good program and the Connecting Families Initiative from Innovation, Science and Economic Development Canada, should be undertaken to establish their effectiveness and identify specific areas of improvement.
• Measurement of the wireless divide. A method for measuring the wireless divide over time should be developed to enable policy makers and industry partners to set goals for closing the divide and track progress.
• Surveys. Unhoused individuals and people with unstable housing are likely not captured in the Canadian Internet Use Survey. However, information on wireless connectivity of these individuals could be gathered as part of point-in-time homelessness counts. Furthermore, questions could be added to the Canadian Internet Use Survey that would enable researchers to gain more insight into the potential drivers of the wireless divide and to define the wireless divide more precisely.

It is gratifying to see progress in the development of research to improve our understanding of factors inhibiting digital adoption.

In my view, it is long past the time for ending regulated cross-subsidies.

Three years ago, I wrote “Cross subsidies in a competitive marketplace”. Nearly a decade ago, I wrote “The future of communications cross subsidies”, noting “It used to be so much easier to manage a system of cross subsidies for communications.”

In the old rate-regulated monopoly days, if the regulator wanted consumer services to be subsidized by businesses, rural services to be subsidized by lower cost urban rate-payers, basic local phone service subsidized by discretionary long distance services, Canadian TV production subsidized by cable TV distributors, it could just issue an order to make it so. “So let it be written; so let it be done.” The rates were regulated to ensure service providers had an opportunity to make a resonable return on their investments; consumers had nowhere else to go to arbitrage artifically elevated rates.

As I wrote before, there was a political attractiveness to the communications regulator engineering payment plans for these social benefits. Effectively, these cross subsidies were a hidden tax on communications services, managed off-the-books outside the government tax system. The government could take credit for providing social benefits (lower consumer rates, lower rural prices, increased Canadian content development) without politicians assuming any blame for what would have otherwise been higher taxes to fund these social benefits.

Then, along came competition. Thirty years ago, when long distance competition was first launched, there were explicit fees charged beyond the costs of interconnection – “contribution” (as though it was a charitable donation) – to offset the loss of the excess profits used to subsidize residential phone prices. Rate rebalancing largely reduced these requirements, and a recent CRTC consultation (2023-89) is looking at the evolution of the CRTC’s Broadband Fund.

Today, virtually every segment of the communications industy is competitive. Telecommunications services are provided by countless service providers in Canada and abroad, using multiple technologies, rendering obsolete those regulations that presumed telecommunications over traditional twisted copper wires. Two-way voice (and video) communications are just another app, using analog or digital signals riding on copper, fibre, coax, wireless, or any internet protocol connection. Video services are delivered using regulated broadcast distribution systems or using over-the-air transmission, and people are subscribing to a seemingly infinite array of global streaming services.

How can a system of cross subsidies survive, when consumers are able to choose from service providers that aren’t encumbered by such additional regulated costs?

For that matter, how can traditional broadcasters compete, when there is an imbalance in the burden of regulatory obligations? In a competitive environment, I would suggest that imbalances in regulatory obligations are another form of cross subsidies.

Over the past month, the issue of cross subsidies has come up in two different contexts.

In the first, the CRTC is requiring Rogers to offer a wholesale service to its competitor, Videotron, saying that the financial shortfall can be made up “through other telecommunications services,” all of which are competitive.

In the other instance, an opinion piece in the Globe and Mail says people should ignore concerns about the financial viability of broadcasters because the parent companies are making lots of money in other lines of business:

BCE (which owns CTV, and Noovo in Quebec), Rogers (CityTV) and Quebecor (TVA) complain that competition from CBC/Radio-Canada for scarce advertising dollars is hurting their conventional television networks. Yet, they can hardly plead poverty. Their wireless businesses generate billions of dollars in profits and enable them to cross-promote their networks’ news content on customers’ phones.

It is a ridiculous argument.

A company may choose to subsidize one line of business, if there is a promise of growth and profitability in the near-future. But, if the money-losing line of business is spiralling downward, with its main source of revenue under threat from competitors operating with fewer regulatory obligations, the company will either have to cut costs, find new sources of revenue, or try to shed some of those assets.

The idea that a private sector business should perpetually subsidize a money-losing line of operations with revenue from stronger lines of business makes no sense. A rational business will restructure, or shut down those units that have no opportunity to climb out of the red.

Cross subsidies are simply not sustainable in a competitive environment. Such schemes also cut against Canada’s stated objective of lower wireless prices and increased investment to expand coverage and improve quality. As Dvai Ghose recently wrote in the Globe and Mail, “While the CRTC may have good intentions, it demonstrates naiveté when it comes to the private sector, and the consequences could be incredibly destructive for wireless investment and quality in Canada, risking our ability to compete globally.”

How many contortions will legislators and regulators perform in order to capture all communications services within the so-called “system”?

It is long past time to end Canada’s system of regulated cross subsidies and the market distortions caused by trying to maintain them.