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.

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?