I noticed that the US Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights is convening today to conduct “An Examination of Competition in the Wireless Market“.

Witnesses today include representatives of Cellular South, Aalborg University (Denmark), Verizon Communications, Mobile Future, T-Mobile USA, and Free Press. Some of the testimony is already available – I will try to update links here.

The US Senate hearing may be instructive for Canadian policy makers – there is a webcast starting at 10am Eastern. The CRTC will be exploring the state of competition in Canada’s wholesale wireless marketplace in a proceeding that was launched last week, with a process that includes an oral hearing starting on September 29, 2014. Perhaps just by coincidence, CRTC’s hearing is scheduled to take place during the period between Rosh Hashana and Yom Kippur, the days of penitence, and a time of special introspection for the religiously observant.

The CRTC’s paper process gets started with filings on May 1.

On Monday June 16, in one of the sessions at The 2014 Canadian Telecom Summit, we plan to bring together some leading economists to look at competition in telecommunications, in a session to be moderated by Dvai Ghose of Canaccord Genuity. So far, we have confirmed participation by Len Waverman (Dean, DeGroote School of Business at McMaster University), John Mayo (McDonough School of Business, Georgetown University) and Bob Crandall (Sr Fellow at Brookings Institute). It should prove to be an interesting session.

Early bird rates are still available for The Canadian Telecom Summit, through Friday. Register today!

Earlier this week, CRTC Chair JP Blais took to Twitter to have a chat about the second phase of the Commission’s Talk TV consultation.

The chat took place during the Olympic quarter-final men’s hockey game between Canada and Latvia, and the timing itself was the subject of one of the questions.

The tone seemed chippy at times; when the Chairman was asked if the CRTC had the jurisdiction to regulate Netflix, the response wasn’t a simple “yes” or “no”. Instead, the answer was “I don’t want to debate jurisdiction online. See section 4(2) of the Broadcasting Act.”

Let’s look at Section 4(2) of the Broadcast Act.

(2) This Act applies in respect of broadcasting undertakings carried on in whole or in part within Canada or on board

(a) any ship, vessel or aircraft that is

1. (i) registered or licensed under an Act of Parliament, or
2. (ii) owned by, or under the direction or control of, Her Majesty in right of Canada or a province;

(b) any spacecraft that is under the direction or control of

1. (i) Her Majesty in right of Canada or a province,
2. (ii) a citizen or resident of Canada, or
3. (iii) a corporation incorporated or resident in Canada; or

(c) any platform, rig, structure or formation that is affixed or attached to land situated in the continental shelf of Canada.

Clear on that?

I’m not sure how many Canadians would be able to readily find the Broadcast Act, let alone understand what spacecraft, ships, vessels or aircraft have to do with a computer app. And that was just the second question asked by a member of the general public.

The question didn’t seem to be baiting the Chair for a debate. It would seem reasonable for a “conversation with Canadians” to be able to get a straight answer to a pretty basic question: In the view of the Chairman of the CRTC, does the Commission have the jurisdiction to regulate Netflix?

I thought it might be helpful to capture the Twitter conversation to make it easily accessible for review.

The following is the English language Twitter chat that took place on February 19, 2014 at 1:00pm [eastern].

The 700 MHz auction is over at last. In the next 6 weeks, 8 Canadian carriers will be scraping together five and a quarter billion dollars to pay for their spectrum. Some were quick to compare this to the $4.25 B raised in the 2008 AWS auction, without realizing that the license being issued this time around are 20 years, not 10 years.

The final bids varied widely between carriers and comparative analysis is challenging without considering which blocks were acquired, whether the spectrum was adjacent to a block that can be aggregated to provide better performance, the demographics of the geography and the compatibility with existing networks for handsets and partnerships.

Not all spectrum is alike.

For example, SaskTel issued a press release expressing its concerns with the outcome. SaskTel paid just $7.5M for the C1 block in its home province, covering about 10.4 million megahertz pops (population times the bandwidth). But SaskTel said “device options are not available for the C1 band”, so its “rural customers will not see a benefit for some time”. As it has consistently claimed for a couple years (since the auction framework was announced), SaskTel said “This incredibly complex auction format is clearly biased against regional carriers, in addition to having a number of other systemic flaws.” It called for the Federal Government to continue to focus efforts on ensuring no spectrum remains unused in rural Canada.

Rogers acquired dual blocks in most of the most populous regions of the country, gaining the A and B blocks everywhere but Manitoba and Saskatchewan, Northern Ontario, Northern Quebec and the Northern Territories. As Minister James Moore said in the press briefing, Rogers paid the most ($3.3B), but they got the highest quality spectrum that was being offered. With aggregation possible across the two blocks, the purchase should allow Rogers to get higher performance from its network, and many of its existing customers already have compatible handsets.

I won’t begin to speculate on Videotron’s spectrum strategy. I will just observe that in 2008, the company spent $555M to acquire AWS spectrum, mainly in Quebec, and on a 10 year license. Today, the company spent 60% less, just $233M for a 20 year license on Quebec, Southern and Eastern Ontario, Alberta and British Columbia. It picked up spectrum in the most populous and most valuable markets in the country, with spectrum that has far better performance characteristics than its current inventory. Videotron spent less for its 20 year 700 MHz spectrum than Mobilicity spent for less coverage with its 10 year AWS purchase ($243M). Allocated on a population basis, Videotron’s “out-of-territory” 700 MHz spectrum cost about $150M of the $233M that they spent.

Does this set an upper bound for the value of Mobilicity’s spectrum?

The CRTC announced the second phase of its “Let’s Talk TV: A Conversation with Canadians”, inviting Canadians to complete Choicebook, a 30 slide interactive questionnaire with a series of scenarios that reflect the realities of the television system.

Some of the questions appear to indicate the CRTC testing whether Canadians might accept taxing internet access, certifying online services or other forms of regulation of the internet.

For example, Slide 27 asks “Should online services be required to provide closed-captioning and adhere to programming standards?” As a follow-up, the CRTC asks if Canadians would be willing to pay a few additional cents per month for online services to meet these requirements. In the preamble to these questions, Netflix and YouTube are cited as examples of online programming.

The CRTC asks if respondents agree with a perspective that “online services like Netflix are getting a free ride by not contributing to the production of Canadian-made programming”, enabling more jobs to be created and allowing Canadian stories to be told on all platforms. If respondents agree with this perspective, they are asked if they would be willing to pay an additional $0.50 per month.

Another question in that section asks:

If streaming content from online services that meet the above requirements didn’t count against your Internet access data cap, would you be willing to pay a small flat fee of $5 per month to cover increased usage costs?

There are a lot of issues raised by this particular question. Exactly which “requirements” are meant? Is it all three of the requirements described two pages earlier in the Choicebook [closed captioning, adhere to broadcast standards, contribute to Canadian content production]? Is $5 really a “small flat fee”? Would this be mandatory for all internet access providers, or would it be a cap on excess data charges for “conforming” content providers.

The CRTC appears to be testing the concept of not all internet content being treated alike: streaming content that conforms to Canadian broadcast standards could be exempt from data metering; non-conforming streaming content would be charged. Is the CRTC considering a licensing process to certify internet content providers as conforming?

How might this work? Could the CRTC identify all internet service providers in Canada and impose a flat fee per subscriber to fund a streaming media fund? Content providers would be under no obligation to get licensed, but those that do might be able to draw from the fund. Still, there is a question of developing a good definition of who is an ISP, let alone identifying which subscribers would contribute. Does it include coffee shops? Internet cafes? Hotels? Airports? University dorms? Do smartphones with dataplans count as subscribers? What about data sticks and mobile hotspots? Business versus residence?

It will be interesting to see what emerges from this consultation. For the next three and a half weeks, through March 14, Canadians are invited to complete the CRTC’s questionnaire.

It’s about more than just TV.

The 2014 Canadian Telecom Summit, taking place June 16-18 in Toronto, will be looking at “The Continuing Evolution of TV: Content Anywhere, Any Screen, Anytime” in a panel discussion. Early Bird discounts are available for the next 10 days, through February 28. Have you registered yet?

In my Family Day reading, I came across a couple of different articles that struck me as somewhat related.

First was a news release from last week announcing the expansion of the Verizon Financial Network to reach more new markets, services and data centers in Europe and North America. The Verizon Financial Network is designed to provide dedicated infrastructure for many of the world’s largest financial institutions with enhanced security, resilience and low-latency.

Then I read an analysis in European Voice, warning that “Europe must beware of a Balkanised internet“. The article warns that it would be a mistake to heed the calls by some to force protectionist measures to keep European data within EU boundaries. “Isolating Europe’s data behind a protectionist wall will not only harm Europe’s economy as a whole.”

How will networks evolve to enable service providers and CIOs to provide their clients secure, responsive, reliable service level guarantees? Will we see the return to tiered, specialized networks for different classes of applications and customers?

A couple sessions will be looking at related issues at The 2014 Canadian Telecom Summit. A Cyber Security panel, with speakers such as Ron Deibert, Director of University of Toronto’s Canada Centre for Global Security Studies and Carl Herberger, VP of Security Solutions for Radware. There is also a session looking at Cloud, Big Data and the Transformative Power of the Network with a range of speakers from Ciena, Broadsoft, Blackberry and Zimory.

The 2014 Canadian Telecom Summit takes place June 16-18 at Toronto Congress Centre. Early Bird prices are available through February 28. Have you registered yet?