My son sent me an article from the November 19, 2013 issue of Science magazine, written by the past president of the American Association for the Advancement of Science (AAAS), William Press. In “What’s So Special About Science (And How Much Should We Spend on It?)” Press writes about the challenges in justifying government funding for basic research in times of economic austerity.

It is a thoughtful piece that is applicable for Canada, and indeed, all countries to consider.

The author, a member of President Obama’s Council of Advisors on Science and Technology, notes that the US government allocates more than 100 times as much ($40B) for basic research as it does for the total of appropriations for the National Endowment for the Arts ($150M) and National Endowment for Humanities ($170M):

It is evident that society is willing to pay much more for curiosity-driven research in science than for the analogous thought and beauty-driven practice of the arts and humanities. It is easy to guess the reason: the link, sometimes subtle but repeatedly established over time, between investment in basic research and macroeconomic growth. Discovery leads to technology and invention, which lead to new products, jobs, and industries.

Still, Press acknowledges that “A skeptical and stressed Congress is entitled to wonder whether scientists are the geese that lay golden eggs or just another group of pigs at the trough.” In today’s economy, he says that scientists need to articulate the case for continued investment more powerfully and in a more sophisticated way than in more prosperous times.

The author identifies the case for government (versus private sector) funding of basic research, indicating that economic returns are large, but not “appropriable.”

The nature of basic research is that its results flow to the rest of the world. Although basic research can be turned into applied research—into patents, products, and eventually economic growth—this may not necessarily occur in the laboratory where the work is originally done or even in the same country. So the appropriability of basic research is low. The investor generally does not get enough of the reward.

Basic research leading to scientific discovery is thus a public good. It will benefit all. But, because the private incentive to pay for basic research is therefore attenuated, the private sector as a matter of economic self-interest is likely to underinvest in it.

The author observes that those nations spending close to 3% of their GDP on R&D are the ones that compete most successfully. The United States spends at that level today. Israel is spending more than 4%. Canada is spending 2%.

It appears that Canada is going to need to up our game as we play in a knowledge-based global economy.

Before we head out on a vacation, Canadians have learned to buy travel insurance; we don’t expect our provincial health plans to provide coverage when we travel, so we make arrangements in advance.

People need to do the same with their phone service. Despite years of horror stories, there are certain to be people who will return from vacations this winter with outrageous roaming bills, caused by teenagers talking to friends from cruise ships – nothing beats marine satellite rates – or claims that the consumer didn’t know what was meant by voluntarily removing restrictions.

Rather than undertake an education program to help teach travelers to make arrangements for international mobile services, the CRTC’s Wireless Code attempts to deal with the issue by putting a cap on roaming data charges:

the Commission requires WSPs to suspend national and international data roaming charges once they reach $100 within a single monthly billing cycle, unless the customer explicitly and knowingly consents to pay additional charges.

I think that a better solution would have been education and ensure clear information is made available to consumers. Unfortunately, some consumers relying solely on protections in the Wireless Code may still be subject to surprise charges while vacationing next month, since hard limits apply only to roaming data, not voice. Hopefully, the wireless industry, consumer groups and the media will start a conversation to help educate consumers as we head into a prime vacation period.

Consumers are informed with various messages when they land. For example, last week, I received a text message when I turned on my phone:

Welcome to Israel! FYI: a call home is $4/min, a text is $1.5 & data is $20/MB. For CS dial +1… & for VM press & hold 1 as usual. Enjoy your visit!

Part way through the trip, I received a warning message:

You are using pay per use data while off the *** network. To limit future charges, visit ***.ca/myaccount and disable data while roaming.

And later on, I received a message warning me that I was approaching the Wireless Code limits:

You are approaching the data roaming limit. Data will be disabled at $100. Remove this limit at ***.ca/myaccount. You are responsible for roaming charges.

There are lots of warnings for data, but voice is a different matter. If you don’t make other arrangements, if your phone is on and if you accept an incoming call, the meter is running at $4 per minute. The carriers have ranges of packages available for travelers and there are often pay-per-use services available in the destination country. For example, I have pay-as-you-go SIM cards that I keep active for the United States, England and Israel.

Still, for many Canadians, shopping for a SIM is not at the top of their list of plans when they are changing out of boots and into flip-flops for the beach. For others – who still have 12:00 flashing on their obsolete VCR – swapping out a SIM card is beyond their level of technical training. There are companies like Roam Mobility with a variety of plans available for Canadians heading to warmer weather in the US. Today, Roam Mobility announced a Snowbird Plan, designed for Canadians who spend 3 months or more in US.

When we are planning a trip, we make lots of advance arrangements: we have someone check the house and clear the snow, set the lights, get travel insurance, buy sunscreen. Depending on the destination, we may need to get shots and medications. Before leaving the country, I even notify our bank to expect foreign withdrawals, check the limits on my ATM card and credit cards.

Canadians need to take responsibility for their mobile devices and services and add that to their pre-travel check list.

Be sure to understand what is included in your communications services plan. There are options when traveling. Be sure to shop around and make arrangements in advance.

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Update: [December 9, 10:30 am]
Rogers has produced a video “Roaming Myths Debunked.”

Update: [December 13, 11:30 am]
TELUS has launched a “mobile data travel tracker” to help its customers manage data usage and costs in real-time while traveling outside of Canada.

Having just spent the past week in Israel, I have some interesting personal observations about the state of the small county’s information and communications technologies industries in general, with a specific focus on its wireless markets.

Israel is a hotbed of technology innovation. Information technology and bio-medical start-ups abound. [If you have not yet read “Startup Nation“, you should download it now.]

Israel has licensed 5 wireless service carriers. Three of them (Orange, Pelephone and Cellcom) have about 90% of the market; Hot Telecom and Golan Telecom are relative newcomers, although Hot Telecom (affiliated with the cable company) acquired the iDen network from a Motorola/Bezeq joint venture.

My son has been in Israel since September to do post doctoral research. He uses Golan Telecom. For 100 NIS per month (about $35), he gets 3GB of data, unlimited voice and national text, including calling to landline phones in a range of countries around the world. Golan leverages seamless roaming on competitor networks to provide customers with the appearance of broader reach. However, my son says that about half of his call attempts overseas fail to connect. Even in suburban Tel Aviv, Golan Telecom subscribers were roaming on the Cellcom network.

My daughter has lived in Israel for 3 years now. She used Cellcom and Orange and she is currently using an MVNO called YouPhone. It is affiliated with one of the grocery chains for affinity savings, somewhat similar to President’s Choice Mobile in Canada. Ever eloquent, she describes her experience surfing the internet on Israel’s cellular networks with colourful language. She says that she would have used more synonyms for “just awful”, but thesaurus.com loaded too slowly. Still, her YouPhone subscription is just 80 NIS per month ($25) for unlimited national talk and text and 1GB of data. For an additional 10 NIS ($3), she added 2 additional GB of data.

Customer service for Golan and YouPhone is done online. YouPhone uses Facebook for its customer support.

Comparisons with Canada are not easy. Electronic devices are expensive; an iPhone 5s (32GB) sells for 4,199 NIS or about $1250. There is no LTE yet in Israel. There are certainly low priced services available in Israel, but no access to the kinds of speeds that most Canadians have been able to get with LTE for more than a year.

Some people seem to be asking why none of Canada’s new entrants try innovative pricing models such as those from Golan Telecom. Did the government and new entrants fail to anticipate the growth of mobile data at the time of the AWS auction, as suggested in the University of Calgary study released in September?

While unlimited international calling wasn’t bundled into any of the Canadian offerings, the new entrants have been providing unlimited voice, text and data plans and in some cases, offered aggressive roaming options. Variants on international calling plans have been made available by some of the new entrants to target various segments of Canada’s multicultural communities. What works to attract customers in Israel will not necessarily be right for Canada, just as we have seen that what works in some regions of Canada doesn’t necessarily play well in other regions.

Would policy makers prefer to see lower prices, even if that results in lower quality networks and customer support? Canada has many more licensed carriers than Israel; how many operators are sustainable, with resources to invest in the market?

Working with Canada’s trade commissioner in Tel Aviv, I spent an afternoon last week speaking with a number of Israeli business leaders about opportunities that could come from cooperative projects with Canada’s telecom sector. There is so much we can learn from such exchanges.

Hopefully, some of them will be attending The Canadian Telecom Summit in June. I hope you will plan to be there too.

Earlier today I had a chance to speak with about 25 Israeli business people, consultants and entrepreneurs involved in different sectors of Israel’s ICT sector, discussing potential opportunities to do business with Canada.

For 2 hours this afternoon, we looked at Canada’s geography, industry structure, regulatory framework, markets, trends and more.

There is a lot of innovation in Israel, especially in the wireless space. The group was quite interested in some of Canada’s recent policy twists on the TV and telecom sides. Among the entrepreneurs was a firm that offers broadcast solutions over public internet.

Through the years, I have led a few of these sessions when I have been abroad, trying to help drum up international business relationships. It is good for Canada; it is good for the partner nation; good for the businesses and their employees; and ultimately good for the customers, who get access to a greater pool of solutions.

Over the coming weeks, I’ll talk a little more about some of the solutions being developed by the companies I met. Some of these firms will hopefully be coming to The Canadian Telecom Summit in June. I hope you will meet them there.

There are a few groups upon which the CRTC relies to represent consumer interests. The CRTC also has its own consumer group.

A little tarriff approval notice was issued today that caught my eye. Telecom Order 2013-607 provides approval for MTS to increase the rate for its “Compensation Per Call” service.

Most people have never heard of Compensation Per Call. As the CRTC describes it,

This rate is charged by a payphone service provider to an interexchange carrier for each completed toll-free call (such as a call to a 1-800 number) made from one of the payphone service provider’s payphones to access the interexchange carrier’s network. The amount of compensation to be collected is billed to the interexchange carrier and not to the person making the toll-free call from the payphone.

In other words, you go up to a payphone and make a toll-free call – say to a hotel reservation office. You don’t have to put in any coins, since it is a toll-free call. But the payphone operator needs to get compensated somehow. So, the payphone service provider charges the long distance company that is providing the toll-free service. The long distance company in turn passes the charge (likely plus a markup) on to the hotel.

As MTS noted in its application, the number of payphones (and the call volumes) have declined over the years. Of course they have; most of the people reading my blog would be hard pressed to think of when they last used a payphone thanks to our mobile devices. So MTS provided evidence that the current compensation per call rate is no longer compensatory.

MTS proposed increasing the rate from 20.15 cents per call up to 54.58 cents per call; nearly tripling the per call charge. The CRTC received no interventions regarding MTS’s application. As the CRTC’s service description indicates, the Commission felt that the charge is billed to a long distance company, “not to the person making the toll-free call from the payphone.”

Unfortunately, this description didn’t consider whether the IXC passes on the charge.

Consider the pre-paid long distance card business. Many customers are visitors to Canada or new immigrants who find that specialty pre-paid cards are a convenient way to place overseas calls. In some cases, those calls are made from work because time differences make it impossible to wait until people are at home. The caller places a toll-free call to the pre-paid platform. When the pre-paid platform answers, the person making the call punches in their card information and the destination phone number. Keep in mind that the pre-paid service provider has been charged for the toll-free call, even if their end user hangs up at that point or misdials. What was a 20 cent charge for a mistake will now be a substantial 55 cent charge.

How will pre-paid service providers respond to this rate increase? Most likely, pre-paid services will institute a higher per-call charge. What may have been passed along as a 25 cent per call connection charge (on top of per-minute rates) may now turn into a 75 cent charge per call attempt – whether the call goes through or not.

I fully understand the need for MTS to raise the rate. As the CRTC said in its decision “the approved rate should help the company maintain its payphones, thus maintaining customers’ access to them.” But the CRTC continued that sentence saying “without unreasonably impacting interexchange carriers.”

The interexchange carriers are indifferent to this increase; they will pass the charges onto their customers. Customers who are airlines, hotels, car rental agencies are unlikely to notice the increase. The pre-paid phone card companies will pass the charge on to their card holders.

My concern is that the decision does not appear to have heard from any of the people who are supposed to be looking out for consumers. CRTC interrogatories indicate questions about the volume of calls from prison inmates and the response confirmed “that inmates can make toll-free calls to prepaid calling platforms from inmate pay telephones in some situations.”

It was just a little tariff notice, so it is understandable that the consumer advocates missed it. But it makes me wonder who is looking out for consumers who aren’t in prison?

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Update: [November 14, 5:30 pm]
A reader provided some additional history that merits an update.

In August 2012, a competitive payphone provider, AFX, applied for an increase in toll-free compensation from the rate of $0.25 per call set more than a decade earlier, in 2000. AFX asked for the rate to be increased to $0.64 per call. Of course it was reasonable to review the rates to bring them up to date. In its decision this past June, the CRTC said that the AFX cost study looked fine except for one small thing: AFX should have asked for more! So, on its own accord, the CRTC added a 25% mark-up to provide a contribution to the recovery of costs such as legal, accounting, and advertising services.

Again, there is no evidence that consumer advocates or the CRTC’s own consumer group understood the potential impact on vulnerable end-users using pre-paid calling cards.

I should also note that MTS is not the only carrier that has updated its toll-free compensation rates. In early 2012, the CRTC approved a September 2011 application from TELUS to raise its rate from $0.2054 per call to $0.2630 per call. And on the same day that the CRTC approved the AFX rates (including that 25% windfall), the Commission approved a SaskTel application to raise its rate from $0.2055 per call to $0.5048 per call.