The Usage Based Billing debacle just won’t go away.

When the CRTC set new wholesale internet access rates nearly two years ago, problems with it led to a successful application by CNOC to “review and vary” that decision (I had written up the problem in a blog post in January 2012); the resolution of the CNOC review and vary triggered a challenge by TELUS that led to a decision by the CRTC to deny the TELUS application but the Commission varied, “on its own motion, the rate for this service.”

Are you following?

Our tale actually goes back to December 2008, when the CRTC approved an application by Cybersurf to get wholesale access to the same speeds of services offered by incumbents.

The federal cabinet expressed concern about the potential impact on incentives for incumbent investment, and at the deadline (one year less a day), Order-in-Council 2009-2007 sent the speed matching decision back to the CRTC for reconsideration.

That led to an August 2010 determination on the “Wholesale high-speed access services proceeding“. In the meantime, in May 2010, the CRTC had approved a usage based billing wholesale access service.

The public outcry that arose from these 2010 decisions, as well as a January 2011 rate setting decision, led the CRTC to launch a proceeding to review them on “its own initiative” in February 2011. Recall that the CRTC chose to review those decisions before cabinet had a chance to force such a review.

That review begat “Billing practices for wholesale residential high-speed access services“, the determination released two years ago, on November 15, 2011.

That triggered the CNOC challenge which led to a decision earlier this year, which in turn generated the TELUS appeal that led to today’s acknowledgement by the CRTC of at least 3 calculation errors.

Five years, multiple challenges to the CRTC and cabinet and at this late stage, the CRTC finds a typo in the decision and three calculation errors that partially offset each other but still result in a 7% change to the TELUS rates. It is unclear as to whether similar errors were made on rates for other carriers.

The wholesale internet file is not one of Canada’s prouder regulatory moments.

According to the 2H13 edition of Sandvine’s Global Internet Phenomena report,  real-time entertainment continues to expand its reach and impact on networks. Netflix and YouTube now represent more than half of North America’s downstream traffic loads. Only two years after launching in the UK, Netflix already represents 20% of the traffic on some British networks.

The CRTC’s 2013 Communications Monitoring Report shows that in 2012, more than 1 in 5 Anglophone Canadians subscribes to Netflix, versus just 5% of Francophones. This tremendous growth has driven the market capitalization of Netflix to more than $20B, its stock price quadrupling in the past year.

Sony has its own streaming video platform, Crackle, that has been available to Canadians since 2010. Crackle distributes content from Sony Pictures’ library of TV series and feature films across mobile and fixed internet connections and connected TV. The service is ad-supported, free to viewers. A Crackle App is available for Android, iOS and even the BlackBerry Z10.

Crackle has also been commissioning original programming, series and feature films, to supplement its growing library of full-length movies and TV series. Its latest series, Cleaners, includes Canadian actress Emmanuelle Chriqui.

Unlike Netflix, Crackle is free across all of its platforms.

As a further alternative, VMedia offers Canadians an over-the-top alternative to traditional TV, with a full range of channels and packaging.

As the CRTC continues its “conversation on the future of TV in Canada” over the next 10 days, it is important to recognize the ready availability of alternate choices for Canadians – subscription based or ad-supported. These have emerged without government intervention, without government measures for “Canadian families [to] be able to choose the combination of television channels they want”.

The marketplace appears to have been working just fine to create choices for consumers; if you don’t like what your TV provider is offering, it is unclear why the government believes it needs to intervene on the content delivery side of the business.

On the other hand, it is clear that competitive choice from unlicensed content providers is going to disrupt the cash flow for Canadian content production. Legacy providers of content fund the production system based on revenue taxes and a further tax on mergers and acquisitions; their new media competitors have no similar liabilities.

Promising government action to give consumers choice in programming is a distraction; consumers have lots of choice, if they don’t like the options being presented by traditional TV service providers. Like other recent actions, it is somewhat surprising to see a Conservative government promising such interference in a market that already has options. When did TV programming become so essential that such paternalistic intervention would be warranted?

How will government pick up the responsibility for funding media production? That may be the tougher issue not being addressed.

The Commissioner for Complaints for Telecommunications Services (CCTS) issued its sixth annual report [pdf] earlier this morning. While complaints increased by about 25% year over year, the CCTS acknowledged “this as evidence that our efforts to increase public awareness of CCTS have become increasingly effective.”

It isn’t really a surprise that wireless services represent 60% of all complaints. After all, there are now 28M wireless subscribers, compared to just under 12M residential phone lines and 11M internet connections. As such, wireless represents about 55% of all consumer access connections and of the three, it is the service that has variable pricing and would be most susceptible to variable connectivity conditions.

What is interesting is looking at comparative data between the carriers. There are clearly differences in the number of customers with each service provider, but in the area of contract disputes, Bell and Rogers (including Fido) each had about a third of all complaints, while TELUS had only one fifth the number of the other major carriers. Indeed, TELUS customers generated 20% fewer contract complaints compared to Wind Mobile, despite TELUS having more than 10 times the number of wireless customers – not even including millions of TELUS residential phone and internet customers.

Under the area of roaming, Rogers and Fido were responsible for more than half the complaints, Bell and Virgin were about a quarter while TELUS was again behind Wind Mobile. Some perspective is important. Despite all of the attention being placed on roaming and data surcharges on wireless and bandwidth charges on internet, last year had only 1500 complaints related to roaming, data and bandwidth charges, filed with CCTS out of 40M connections.

Western Canadians seemed to be happier with their service providers than Ontario residents. With 38% of Canada’s population, Ontario generated 52% of CCTS complaints; BC and Alberta have roughly a quarter (24.4%) of Canada’s population, but represented only 19.6% of the complaints.

When everything is running normally, it is often hard to distinguish between different service providers. Technological advantages of one over another can be transient as capital investment catches up. The biggest differentiation can be in how different service providers handle problems: how difficult is it for customers to get through to a real human who shows empathy and somehow projects a smile through the phone line; are customer service agents empowered to take ownership and resolve issues in one call?

In my corporate executive life nearly 20 years ago, I spent part of an afternoon fielding calls in the residential service call centre; it was the toughest 2 hours in my business career.

Many superficial commentators on the Canadian telecommunications industry lazily lump service providers together – incumbents versus new entrants; Monopolists; Big 3. The CCTS report shows there are differences in customer service and complaint handling.

As we head into the peak Christmas season for wireless sales, will consumers refer to the CCTS report as an indicator of customer satisfaction?

On reading a story that said Ottawa rejected Lenovo as a possible suitor for BlackBerry, I tweeted “Didn’t fit national digital strategy” in reply to Greg O’Brien’s comment “How unsurprising.”

I was only partially facetious.

I am convinced that somewhere in Ottawa there must be some kind of an undisclosed national digital strategy.

As millions of dollars were handed out three years ago today, in coordinated events, multiple news releases [such as this one] on Industry Canada’s website indicated “Canada’s Economic Action Plan provided $225 million for the development and implementation of a strategy to extend broadband coverage.”

Development and implementation. We couldn’t have the implementation without the development, could we?

Six months earlier, then Industry Minister Tony Clement said, “Now is the time for the private sector to step up and contribute their ideas for a digital strategy and, when that strategy is in place, to implement the plan.” First you have a plan, then you implement it.

The private sector stepped up at the time and contributed thousands of hours of time, millions of dollars of effort, to contribute their ideas. They bought into the vision.

To date, three Ministers have failed to deliver government’s part of the deal – the promised strategy.

In 2011, the Industry Minister Christian Paradis referred to different elements of the strategy in his remarks to The 2011 Canadian Telecom Summit. He spoke of different elements: encouraging investment, encouraging adoption, building a skilled workforce, growing the ICT sector and developing content. It was as though he was reciting from the table of contents. “Our government considers a digital economy strategy to be one of its most important objectives.”

A year later, in June 2012 at The Canadian Telecom Summit, Minister Paradis said, “We are still developing a Canadian digital economy strategy. And I am committed to delivering it by the end of the year.” That was a year and a half ago.

“As the foundation of our digital economy, it all starts with you — the telecommunications industry. From equipment manufacturers to service providers and from industry associations to consultants, you play an essential role.”

The global digital economy doesn’t wait. While investors have placed multi-billion dollar bets, trying to acquire companies like Mobilicity, Allstream, or BlackBerry or competitors investing in digital spectrum and physical infrastructure, the government has failed to deliver “one of its most important objectives.”

Six months ago, I wrote about “Inconsistent messages; predictable turmoil” saying “The lessons for Ottawa: Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives.”

Three and a half years later, it is time for the Government to “step up” and lead by releasing a coherent, consistent national digital strategy. Jobs and investment dollars are at stake.

An OpEd in Forbes says net neutrality rules could block innovation that can offers more services at a lower cost. Everett Ehrlich was a former undersecretary of commerce in the Clinton administration. In his piece, he writes that net neutrality could be keeping consumer bills higher than they might be otherwise:

Moreover, getting rid of “neutrality” would lower consumers’ bills. That’s because the Internet is something economists call a “two-sided market.” A newspaper such as USATODAY is such a two-sided market – it charges advertisers to reach its readers, and it charges its readers to see its advertisements.

If a newspaper wasn’t allowed to take money from its advertisers, the reader would have to pay more. It’s the same with the Internet; if a provider can’t charge the big websites for a premium connection (if they want one) then the consumer has to pay instead, meaning consumers subsidize the companies sending big data packets.

Ehrlich is looking for the new FCC Chair to “end this tired debate” in the United States. “The rules that governed e-mail two decades ago won’t bring us the new services that lie ahead, and an Internet stuck in “neutral” isn’t going anywhere.”

What are the implications for Canada? The CRTC imposed the world’s first regulations on what we call Internet Traffic Management Practices more than 4 years ago? Will we retain the quaint principle from the email era dictating that a heart monitor connecting “a patient to an online medical service crosses the Internet no faster than a video of a cat playing the xylophone”?