A number of reports were released in the past week that are worth collecting for future analysis.

• Last week, the International Telecommunications Union released its latest edition of Measuring the Information Society (2013). The report, less Annex 4 (Statistical tables of prices used to compute the ICT Price Basket), is available as an 8.5MB pdf. Be sure to watch for simplistic analysis that ignores examination of source data!
• Today, Akamai released its Second Quarter 2013 State of the Internet report (4.8MB pdf) and Executive Summary (2.7MB pdf). Among other information, it confirms the error in the CRTC’s Communications Monitoring Report that was highlighted in this blog a few weeks ago.
• Also today, as reported in the mainstream media, we saw PCMag.com release its test of US and Canadian wireless networks.

Urban Canadians can get online fast, often at speeds that would make south-of-the-border Americans green with envy.

The peak speeds delivered by the big three carrier’s new LTE networks are nothing short of breathtaking. We saw a 92Mbps download on Rogers’ 2600MHz LTE network in Vancouver, the highest result we’ve seen anywhere in four years of testing in North America.

When shopping for services, we know network technology and quality can be competitive differentiators.

Canada’s wireless association, the CWTA, has told us that Canada’s wireless industry invested $2.6B in capital in 2011 alone, as wireless has “become a critical component of our economic prosperity.”

Just a couple of months ago, differentiating on wireless network quality was a matter before the courts, after the Competition Bureau challenged an ad campaign where Rogers’ Chatr brand boasted fewer dropped calls than the new entrant wireless carriers and said that its subscribers shouldn’t worry about dropped calls.

Other failures have been on the application side. There have been some celebrated outages for Blackberry users affecting customers around the world.

The CRTC has toyed with quality of service reporting requirements over the past 20 years. In its original Long Distance decision, the CRTC required local phone companies to provide their long distance competitors “with the earliest possible notice of all network outages affecting the operation of [their] network.” In 2000, the CRTC codified this and required “that the telephone companies should report all service outages that affect competitors and that exceed 15 minutes in duration.” Further, the CRTC required filing: a) the duration and reason for the outage; b) the extent to which service to the telephone company’s other customers was affected; c) the time at which service was restored to the competitor; and d) the time at which service was restored to the telephone company’s other customers.

Driven by the Policy Direction, as part of a paperwork reduction initiative, in 2009, the CRTC eliminated this reporting.

Also in 2000, the CRTC had required reporting of major service interruptions affecting large groups of customers. In Decision 2000-24, the CRTC defined three categories:

• Category 1 – Local network outage causing small community isolation lasting 60 minutes or longer.
• Category 2 – Local network outage relating to 10,000 lines lasting 60 minutes or longer.
• Category 3 – Local network outage relating to 30,000 lines lasting 60 minutes or longer.

The world of telecommunications has evolved since quality of service indicators were established. Wireline services are in decline; the latest CRTC monitoring report shows there are now nearly three times as many wireless connections as there are residential phone lines. Over the past five years, Canadians disconnected more than 1 million wired lines and added 5.8M wireless services.

In a competitive environment, consumers have choices. In announcing the Wireless Code, CRTC Chair JP Blais said:

The wireless code is a tool that will empower consumers and help them make informed choices about the service options that best meet their needs. To make the most of this tool, consumers also have a responsibility to educate themselves.

To make informed choices, consumers need to have access to useful information upon which they can make decisions. What network quality information should consumers have available? What services should be reported? Should VoIP, Long Distance, Wireless, internet access all be captured or just local wireline services? What about TV distribution? What about applications like Blackberry Messenger, Skype, Twitter, Facetime, etc.?

The three pillars of the CRTC’s 3-year workplan are Create, Connect and Protect. The Connect pillar is described as:

The CRTC’s activities under this pillar ensure that Canadians can connect to quality and innovative communication services at affordable prices and have access to creative content. This includes services that facilitate access to the communication system by Canadians with disabilities. By fostering competition, the CRTC strives to provide Canadians with choice and improved rates and services.

In the United States, there is a Network Outage Reporting System operated by the FCC. The system, applicable to wireline, wireless and interconnected VoIP services, is considered essential enough that the FCC has kept that system running during the current US Government furlough. Because of the impact on consumer access to emergency services, the reports to the FCC are made available to the Department of Homeland Security.

It is perhaps appropriate that the the CRTC launch an inquiry today looking at “Matters related to emergency 9-1-1 services“. At paragraph 151 of the Inquiry Officer’s Report, there is a reference to the concerns in the United States about network reliability, and at paragraph 181, there is reference to improved data collection requirements. At paragraph 245 of the Inquiry Officer’s report, he suggests that a multi-stakeholder organization be charged with “Devising performance metrics for carriers, databases, and other networked participants, including levels of service to [Public Safety Answering Points].”

Should the CRTC be collecting and disseminating network outage information that helps consumers make informed choices? Should that information be restricted to Public Safety purposes, or be used to help consumers make informed choices about their communications services?

I saw some erroneous articles [such as this one] and tweets [such as this one] today that makes me think that there are a lot of people who don’t know a lot about Allstream, the target of the acquisition denial issued by the government last night.

Allstream doesn’t play in the consumer market; it doesn’t offer cell phones so most of us don’t ever see their ads. But the company has a rich and storied history.

Let me quote from the for Long Distance Application, filed with the CRTC by Unitel in May of 1990 when it sought to introduce competitive services [disclosure: I was part of the Unitel team at the time]:

On December 19, 1846, thirty years before the telephone was patented, the first telegram transmitted in Canada was sent from Toronto to Hamilton by a small telegraph company that would evolve into what became Canada’s first national facilities-based telecommunications carrier…

That pioneering achievement of the Toronto-Hamilton-Niagara and St. Catharines Electro-Magentic Telegraph Company marked the birth of Canada’s telecommunications industry…

At the time of Confederation, much of the telegraph traffic in Canada was routed through the United States. With Confederation, however, the new Canadian government was presented with the challenge of linking the scattered parts of Canada into a nation from sea to sea.

Resolved to establish an all-Canadian communications link from coast to coast, Parliament granted a charter to the Canadian Pacific Railway Company in 1881. The charter empowered the company to construct, maintain, and operate telegraph lines and to provide both telegraph and telephone service to the public.

The railway based telegraph companies merged to form CNCP Telecommunications, which successively became known as Unitel, AT&T Canada and Allstream – with a restructuring or two thrown in for good measure.

The company has evolved a lot over 167 years, sporting an 18,000 km intercity fibre optic backbone, 8 border crossings into the United States, 30 local city networks and nearly 3000 buildings connected by fibre. Allstream offers an array of advanced communications services riding across that fibre, as well as connectivity through its global partnerships. Its revenues peaked in the order of $1B.

As I mentioned in yesterday’s blog post, Allstream has won some significant government business recently. Government has always been an important vertical market for all of Canada’s major carriers. Frankly, it isn’t surprising that national security concerns might arise in connection with Allstream’s communications network.

But a fair question might be raised about why it took so long – nearly 5 months – for the government to say “no”.

It seems to me that financial markets – and industry participants – would like to have clarity, consistency, and predictability in the policy framework.

Should foreign ownership reviews trigger greater disclosure in order to increase transparency for the industry, the investment community and Canadians?

As I have explained before, Calvinball is a game that has rules, but the rules keep changing.

Here is how Wikipedia describes the game, which was introduced about 20 years ago in the comic strip Calvin and Hobbes:

The only consistent rule is that Calvinball may never be played with the same rules twice. Scoring is also arbitrary, with Hobbes reporting scores of “Q to 12″ and “oogy to boogy.” The only recognizable sports Calvinball is similar to are the ones that it emulates (i.e., a cross between croquet, polo, badminton, capture the flag, and volleyball.) Equipment includes a volleyball (the eponymous “Calvinball”), a soccer ball, a croquet set, a badminton set, assorted flags, bags, signs, and a hobby horse. Other things are included as needed, such as a bucket of ice-cold water, a water balloon, and various songs and poetry. Players also wear masks that resemble blindfolds with holes for the eyes. When Rosalyn asked Calvin what the reason for the requirement was, Calvin responded, “Sorry, no one’s allowed to question the masks.”

For the past 4 years, I have used Calvinball to describe Canada’s communications policy, such as here, here, here and here.

The government has been advertising that it welcomes foreign investment in telecommunications; foreign investment apparently forms a key part of the government’s strategy to encourage competition in the sector. Yet, this evening, the government turned down the sale by Manitoba Telecom (MTS) of Allstream to Accelero Capital for “national security reasons,” having taken four and a half months to make a decision. According to MTS, the government “rejected an offer from MTS and Accelero to take whatever actions are necessary to address the government’s concerns.”

Keep in mind that the principals of Accelero are well known to the government. These are the same people that were permitted to buy spectrum and operate WIND Mobile. Indeed, the government seemed to bend over backwards to approve their entry into the market, overturning a CRTC decision that denied WIND Mobile’s right to operate (prior to the liberalization of foreign investment rules).

The Government says:

The Government of Canada has concluded its review of Accelero Capital Holdings’ proposed acquisition of the Allstream division of Manitoba Telecom Services Inc. (MTS) under the national security provisions of the Investment Canada Act. The result of this review is that the transaction will not proceed.

MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada.

Just last December, Allstream announced that it had been awarded a multi-year contract to manage theMPLS network, for Shared Services Canada, the Government of Canada department responsible for providing telecommunication services, email and data centres. Allstream also appears to be a major supplier to Canada’s civil aviation navigation services provider, NAV Canada, among other government sector clients.

This evening’s government press release seems to be saying that foreign companies will not be permitted to acquire telecom companies that are providing services to the Government of Canada.

As MTS states,

the transaction would have, among other things:

• contributed to increased competition in Canada’s telecommunications sector;
• sent a strong message that Canada’s telecommunications sector is, in fact, open to foreign investment;
• enabled Allstream to accelerate the introduction of innovative products to increase the productivity of Canadian businesses;
• provided MTS the capital necessary to increase its investment in Manitoba’s telecom infrastructure, such as fibre-to-the-home for rural Manitobans; and
• resulted in $165 million of funding for MTS pension plans benefitting more than 10,000 Plan members.

Will MTS still be in a financial position to bid in the 700 MHz auction? Will it be able to continue its FTTH program, introducing some of the world’s most advanced services and competitive TV distribution in small rural Manitoba communities? What will become of Allstream and its need for continued capital investment? Accelero said that it had planned to inject an additional $300M into Allstream “to increase Allstream’s competitiveness and accelerate the introduction of innovative new products to increase the productivity of Canadian small, medium and enterprise businesses”.

The government’s “Fact versus Fiction” page talks about concerns that Canadians might have dealing with foreign owned telecommunications companies. One of its “Fictions” is “Your privacy is at risk if you choose a foreign cell phone provider” with a response “FACT: Canada has strong privacy laws to ensure our citizens’ personal information is safeguarded. These laws apply equally to all organizations that collect such information in Canada. The laws prevent any provider from disclosing personal information except with consent or when permissible by Canadian law.”

Maybe the government doesn’t have as much faith in dealing with foreign owned telecom service providers as it wants you to have.

Later this morning we will see the launch of the TELUS WISE initiative today, a program available to Canadians free of charge to help advance “Wise Internet and Smartphone Education”.

TELUS WISE will offer seminars and online resources that will help keep all members of Canadian families safer online. It is not just an online resource; TELUS WISE ambassadors will come out to any local community group to conduct in-person seminars on Internet and smartphone safety – a workplace, community centre, school, parenting group or senior’s centre, for example. Individuals can also book a one-on-one session with trained staff at more than 200 TELUS stores. Educational materials will also be available on a secure portal, available to anyone who wants to educate themselves on the safe use of smartphones, tablets and computers.

It is a two tiered program, both of which are free, with TELUS WISE, targeting education for adults and TELUS WISE Footprint, aimed at kids aged 8-18. The TELUS WISE Footprint program is a secure online portal, offering interactive challenges for kids to learn how to stay safe online. There are comic-strip scenarios, identifying common mistakes children often make online with key topics like cyberbullying and predators. School-age children can earn money for their school’s cyberbullying and digital citizenship programs by completing interactive challenges.

Over the past 11 years, Cybertip.ca has received over 94,000 reports from the public, which have led to over 125 known arrests, and more than 62 children removed from abusive environments. The Canadian Institutes of Health Research has some interesting and disturbing statistics on cyberbullying in Canada. Any participation in bullying increases risk of suicidal ideas in youth.

Jane Tallim, co-executive director of MediaSmarts.ca said “Our belief is that children and youth need critical thinking skills to engage with media as active and informed digital citizens.”

I applaud the private sector leadership in developing and promoting this national digital literacy and cyber-safety program. It is the first of its kind in Canada. The TELUS WISE program promises to not only assists parents in the education of their children of any age, but it also wants to help start a dialogue with aging parents about identity theft and how to stay protected against scam artists and other exploiters.

It is great to see TELUS working to improve Canada’s digital literacy, so wisely.