Legislation to force lower wholesale roaming rates is part of Bill C-31, The Economic Action Plan 2014 Act, No. 1, which was given first reading in the House of Commons on Friday. The Government’s budget implementation Act, formally known as “An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures” contains provisions that will change the Telecom Act, among its “other measures”.

As described in the Summary section of the Act,

Division 16 of Part 6 amends the Telecommunications Act to set a maximum amount that a Canadian carrier can charge to another Canadian carrier for certain roaming services.

There are two sections of the Telecommunications Act in play, as detailed in Sections 239 and 240 of Bill C-31. For the purposes of setting wholesale caps for voice, text and data, a new Section 27.1 is created, which contains the formula for what Canadian carrier can charge a second carrier. In addition, the budget implementation Act intends to give power to the CRTC to enforce these rates, by adding the new Section 27.1 to a list for which compliance is determined by the CRTC “as a question of fact”, amending subsection 27(3) to read:

3) The Commission may determine in any case, as a question of fact, whether a Canadian carrier has complied with this section or section 25, 27.1 or 29, or with any decision made under section 24, 25, 29, 34 or 40.

The proposed new section 27.1 is lengthy, but it results in setting a ceiling on wholesale rates through a simple arithmetic determination of carriers’ average retail rates:

27.1 (1) The amount charged during a year by a Canadian carrier to a second Canadian carrier for roaming services with respect to the transmission of all domestic wireless voice calls and the domestic portion of all international wireless voice calls shall not exceed the amount determined by the formula A/B where

1. is the first Canadian carrier’s total retail revenues from the provision of wireless voice call services to its Canadian subscribers, for calls both originating and terminating in Canada, for the preceding year; and
2. is the number of minutes provided for those calls for the preceding year.

(2) The amount charged during a year by a Canadian carrier to a second Canadian carrier for roaming services with respect to the transmission of wireless data in Canada shall not exceed the amount determined by the formula A/B where

1. is the first Canadian carrier’s total retail revenues from the provision of wireless data services in Canada to its Canadian subscribers for the preceding year; and
2. is the number of megabytes provided for those data services for the preceding year.

(3) The amount charged during a year by a Canadian carrier to a second Canadian carrier for roaming services with respect to the transmission of all domestic wireless text messages and the domestic portion of all international wireless text messages shall not exceed the amount determined by the formula A/B where

1. is the first Canadian carrier’s total retail revenues from the provision of wireless text message services to its Canadian subscribers, for text messages both originating and terminating in Canada, for the preceding year; and
2. is the number of those text messages for the preceding year.

(4) The Canadian carrier shall not charge the second Canadian carrier any other amount in relation to the provision of the roaming services referred to in subsections (1) to (3).

(5) The amount established by the Commission that a Canadian carrier can charge to a second Canadian carrier for roaming services prevails over an amount determined under any of subsections (1) to (3) to the extent of any inconsistency.

The budget Act has an interesting way to make the wholesale roaming legislation a temporary measure. Each of the two sections of Bill C-31 related to wholesale roaming [239 and 240] have two parallel subsections, (1) and (2). The first subsection gives effect to the changes; the second unwinds the changes. A subsequent Section 241 of the bill is entitled “Coming into Force,” designed to enable the unwinding the wholesale roaming provisions in Section 27.1 at some point in the future “on a day to be fixed by order of the Governor in Council.” The changes to enable the legislation creating wholesale roaming caps will come into force with the passage of the bill; these changes can be repealed “on a day to be fixed by order of the Governor in Council.” No further legislation will be required – effectively, just a cabinet directive.

How will carriers be impacted?

By using the overall average retail rates, the government roaming caps do not appear to be as aggressive as they might have been. Although incumbent carriers will see a reduction in roaming rates, the government could have set an even lower cap – such as by setting the formula along the lines of a most favoured nation clause, requiring that new entrants are charged no more than the best rates charged on a retail basis.

Ultimately, the new wholesale rates should provide improved economics for new entrants to remove off-network differential rates for trans-Canada voice, text and data services to their customers. At the same time, the rates are not so low as to remove the incentive for new entrant carriers to extend the reach of their own network facilities to lower their costs. In all, it appears to be a balanced approach.

This is certain to be the subject of some discussion during the Regulatory Blockbuster at The 2014 Canadian Telecom Summit, taking place June 16-18 in Toronto. Have you registered yet?

With the snow and ice from December still on the ground, it is hard to believe that The 2014 Canadian Telecom Summit is just over 10 weeks away. From June 16-18, the leading stakeholders in Canada’s ICT sector will be gathering in Toronto for three days of high-octane interaction, top-level keynote speakers and thought-provoking panel discussions.

Over the coming weeks, I’ll feature some of the themes being explored by various panels at the event.

This year, in addition to the ever popular Regulatory Blockbuster, we are featuring sessions devoted to:

• The Continuing Evolution of TV;
• Cloud, Big Data and the Transformative Power of the Network;
• Cyber Defense;
• Competition in Telecom;
• Customer Experience Management;
• Converged Business Models;
• The Digitization of Canada’s Economy;
• Rage of the Machine: The growth of NFC, M2M, Mobile Commerce & More; and
• CIO/CTO Roundtable.

Visit the conference website or check out the latest version of the conference brochure.

A visit to the conference website will show you a list of 25 companies that are supporting us with sponsorships that help us stage The Canadian Telecom Summit, which has become the place for Canada’s ICT leaders to meet, interact and do business. We appreciate the support of our sponsors and from all of our attendees.

The snow is melting and warmer weather is sure to be on its way. Time to get to your spring activities: tune up the barbecue and lawnmower; clean up the gardens; check the air conditioner; book your seat at The Canadian Telecom Summit. No need to wait. Why not register for The Canadian Telecom Summit today?

Is the world in the midst of a cyber-war? Who is winning?

Data breaches, such as credit card database intrusions, are not simply the domain of criminal hackers. In a post-Snowden era, we sometimes are left wondering who are the heroes and villains in the story being played out on the pages of national news.

On the morning of June 16, The Canadian Telecom Summit will be hosting a panel titled “Cyber Defense: cross-industry perspectives” to explore the issues and technologies surrounding network security. We have assembled a distinguished panel with a broad range of perspectives.

What are the range of implications of cyber warfare? What is being done to address the most notable recent cyber-attacks? How should carriers, vendors and the government address the information security landscape? To what extent are attacks ideologically motivated cyber warfare, rather than opportunistic cyber-crime? What techniques are being employed to safeguard IT operations in a theatre witnessing more sophisticated attacks?

Our panel brings together leaders to explore the issue from a broad range of perspectives. The session should be interesting and provoke considerable discussion.

Have you registered yet for The 2014 Canadian Telecom Summit?

With a press release this morning, the CRTC announced the initial launch of text messaging for 9-1-1 services for hearing or speech impaired persons.

Hearing or speech impaired persons in the Metro Vancouver and select surrounding areas will be the first to get access to text with 9-1-1. The CRTC also announced that the City of Calgary is expected to make text with 9-1-1 service available as of March 24, 2014.

CRTC Chair Jean-Pierre Blais says:

The availability of Text with 9-1-1 represents a significant advancement in emergency communications and will improve the safety of those who are hearing or speech impaired. We now call upon all emergency call centres across the country to work with their respective governments and expeditiously offer this important service in their areas.

It sounds great.

Regrettably, I am not convinced this is a service that truly meets the needs of the community it is intended to serve.

Just read the instructions on how to make a text 9-1-1 call. In addition to pre-registration being required, the number of steps required are hardly in keeping with what any of us expect from an emergency service bureau.

• Unlock the cell phone keypad if it is locked. Some cell phones do not allow receiving and/or sending text messages if the keypad is locked, even though they allow a user to dial 9-1-1. “Unlocking” means entering your personal password or pressing an unlock button on the phone.
• Dial 9-1-1 on your cell phone to place an emergency voice call.
• Monitor the cell phone display to ensure that the call is connected. Shortly after the call is connected, you should receive an initial text message from a 9-1-1 call centre. If you do not receive the initial text message within two minutes, you may end the voice call and redial 9-1-1.
• The number you will see on your cell phone will have 13 digits and will begin with 555911.
• Once the initial text message is received, you should reply to this text message and provide the 9-1-1 call taker with the information that they are requesting, such as the nature of the emergency and your location. Keep your text messages brief and concise.
• You should keep the 9-1-1 voice call connected during the entire text messaging session if possible. This will permit the 9-1-1 call taker to hear any background noises that can be helpful to assess the emergency, and will provide enhanced 9-1-1 functions.
• You will know that the T9-1-1 session has been concluded when you receive the message “End of 9-1-1 Call”.
• After receiving the “End of 9-1-1 Call” message, if you need to further communicate with the 9-1-1 call centre, you will need to initiate a new text session by dialing 9-1-1 to re-establish contact with the 9-1-1 call centre and communicate again by replying to the text message.

I lost faith with the line “If you do not receive the initial text message within two minutes, you may end the voice call and redial 9-1-1.”

Not every phone is even compatible with the requirement to keep a voice call active while simultaneously opening up a texting session. Each carrier has a list of compatible phones on their text 9-1-1 web pages. We have a solution designed to enable text messaging – a 20 year old technology – that can only be used from a phone that supports more advanced messaging applications. The service simply will not work from older devices.

The CRTC was warned last Friday by the Ontario Provincial Police (OPP) that there were serious concerns with today’s announcement.

There is great risk that many believe the 9-1-1 system can provide fast and effective response to emergencies, when the technological reality is quite the opposite.

The OPP letter says that the police had previously asked the CRTC to consider province wide roll outs of the service to ensure members of the affected user community could be more confident of service in all areas of each province. Instead, the instructions page tells users to confirm they are in a coverage area.

The OPP letter concluded “urgently and respectfully request[ing] the CRTC either reverses the decision or discourages the practice of sending Text with 9-1-1 calls on legacy 9-1-1 networks.”

How did the CRTC respond to this urgent appeal? Given today’s announcement, it appears that the Commission did not give police concerns enough weight to justify a delay in implementation.

The text to 9-1-1 solution appears to be a solution that sounded better in the design than it turned out in practice. Was there sufficient consultation with the user community and consideration of broad user adoption?

How well did this solution score in focus groups considering user interface alternatives?

Should people need a training course and have to invest in new mobile handsets in order to make emergency calls?

It used to be so much easier to manage a system of cross subsidies for communications.

If a regulator wanted consumer services to be subsidized by businesses, rural to be subsidized by urban, local subsidized by long distance, TV production subsidized by distribution, it could just issue an order to make it so. So let it be written; so let it be done.

There were few, if any, other suppliers of those services, so there were limited arbitrage opportunities.

There is a political appeal to using the communications regulator to engineer payment plans for social benefits. It is a hidden tax on communications services, managed outside the government tax system. The government gets to take credit for providing social benefits without the blame for higher taxes.

Then competition came along. First we saw new companies enter the market using similar technologies and the regulator found ways to manage the system of subsidies.

But increasing pressures on the system coming from substitutable services and applications threaten to erode the system of cross subsidies. An article in the New York Times reports that the US regulator, the FCC, is setting up a task force to examine the US Universal Services Fund which administers billions of dollars in subsidies for schools, rural markets and low income users. The panel is expected to examine both sources and uses of the fund.

Skype and Facetime and other non-interconnected communications services don’t contribute to telecom subsidies. They shouldn’t. Frankly, they couldn’t. Over the top video providers don’t contribute to production funds. How would one even define the class of apps that would need to register as payors?

As end users transfer from legacy, subsidy-paying services to applications and service providers that are outside the system, the burden increases for those who remain. As the burden gets spread across a shrinking base of users remaining, the taxation rate can increase, creating even greater opportunities for arbitrage, unless there are changes to the funds being drawn.

In a competitive environment, how should the system of subsidies evolve?