An access to information response revealed that the government has spent $9M on its ad campaign attacking Canada’s wireless industry.

The Globe and Mail and National Post have both published opinion pieces on the appropriateness of taxpayers paying for such partisan messages. I’m not even going to get into the content of the ads or try to understand how the government reconciles the contradiction between the messaging and the department’s own pricing study.

The $9M is a small fraction of more than half a billion dollars in such ads over the past 6 years.

Indeed, the $9M is reflective of policy that may be costing taxpayers much, much more.

Last night, we learned that yet another group has dropped out of the bidding for 700MHz spectrum, leaving us with just 11 remaining. Catalyst Capital, one of the main bond holders for “struggling startup carrier Mobilicity,” has withdrawn.

We could have a situation where there is un-sold spectrum when the bidding stops. Fewer bidders participating coupled with spectrum caps means the auction will generate less money for the treasury. The AWS auction generated $4.25B to pay down the national debt. Thanks to that auction, the savings on interest alone have more than covered the government’s partisan advertising bill.

Back in September, the Financial Post reported Industry Minister Moore said to Reuters:

the government was concentrating on an intensely watched auction of wireless spectrum, where it is encouraging new entrants to challenge the Big Three.

“Our policy is the auction and we’ll see what happens through the auction”

When the initial list of bidders for the auction was release in September, I wrote that inconsistency in the application of spectrum transfer and foreign investment rules have added regulatory risk that diminishes the attractiveness for investment in Canadian wireless.

A favourable investment climate doesn’t just mean that foreign money is welcome. Investors need to be confident about the rules are for taking their money out again.

Failure to approve the VimpelCom-Wind Mobile and Accelero-Allstream transactions have raised questions about how open our markets are to foreign investors. If our policy is the auction, one might have thought that government actions are consistent with optimizing the outcome of that auction.

Little kids often play chess without looking ahead, considering the secondary and tertiary implications of each move. In the spring, I wrote “Thinking 3 moves ahead“:

How will investors respond to being told that they cannot get the best deal for their money, that the company may have to be sold in a fire sale. With its accumulated tax losses, the best offer for Mobilicity will come from companies that can make use of those losses – that road leads to the doorsteps of the big three carriers. A rejection of the deal will impact more than just Mobilicity’s backers; Canada’s Industry Minister has been trying to drum up interest in market entry from investors around the world, in hopes of securing more bidders for the upcoming auction of the 700 MHz band. All of these potential global players will be watching to see whether they will face a friendly investment climate before they risk billions of dollars.

Our policy is apparently relying on the 700 MHz auction and “we’ll see what happens through the auction”. Is it time to start considering the next move?

University of Ottawa professor Michael Geist’s column in the Toronto Star this week makes for an important read. “Ottawa’s complete e-government failure” observes that just ten years ago, Canada was the top country for breadth and sophistication of electronic government services being offered. A decade later, Canada’s e-government rankings have declined, “a victim of astonishing neglect by the current Conservative government.”

Last week, the auditor general issued a scathing report on the state of e-government in Canada, noting the lost opportunities for reduced expenses and greater efficiencies as well as the complete absence of strategic vision.

The column got me thinking, once again, about lost opportunities caused by the government’s failure to release a cohesive national digital economy strategy. Three and a half years ago, shortly after the consultation was launched, I documented the consultation questions in a blog post “Succinct or superficial.” There were 24 questions organized under 5 themes plus 2 questions that might have inspired development of some kind of digital dashboard:

Improving Canada’s Digital Advantage

• Should we set targets for our made-in-Canada digital strategy? And if so, what should those targets be?
• What should the timelines be to reach these targets?

Over the summer, I wrote a piece called “Measuring success” that called for the government to take a look at measurable objectives and tracking against those objectives. I cited a Peter Drucker principle: “you can’t manage what you can’t measure.”

I would also refer back to a piece I wrote in late May that concluded “The lessons for Ottawa: Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives.”

You’re covered.

As of today, for all new or amended wireless service contracts, Canadian wireless carriers have to comply with the Wireless Code, released 6 months ago by the CRTC [original press release, Wireless Code Regulatory Policy, CRTC information page].

According to the Commission:

The Wireless Code will

1. make it easier for individual and small business customers to obtain and understand the information in their wireless service contracts;
2. establish consumer-friendly business practices for the wireless service industry where necessary; and
3. contribute to a more dynamic wireless market.

Many carriers had already started to implement parts of the code over the summer; I haven’t seen 3-year terms for smartphones since before the back-to-school sales began.

Consumers rights are set out in the original decision:

Your Rights as a Wireless Consumer

The CRTC’s Wireless Code comes into effect on 2 December 2013. The Wireless Code establishes basic rights for all wireless consumers and puts new requirements on service providers. The Wireless Code significantly limits cancellation fees and requires your service provider to unlock phones, to offer a trial period for wireless contracts, and to set default caps on data charges to help you avoid bill shock.

Do you know your rights? This checklist will help you to understand the most important things that the Code does for you. For more information, visit the CRTC’s website at www.crtc.gc.ca/eng/info_sht/t14.htm [website corrected], where you can find the Wireless Code, which explains all of your rights as a wireless consumer in greater detail.

Do you pay a bill after you use your wireless service? If so, you use postpaid services, and you have the right
□ to cancel your contract at no cost after a maximum of two years
□ to cancel your contract and return your phone at no cost, within 15 days and specific usage limits, if you are unhappy with your service
□ to have your phone unlocked after 90 days, or immediately if you paid in full for your phone
□ to have your service suspended at no cost if your phone is lost or stolen
□ to receive a Critical Information Summary, which explains your contract in under two pages
□ to receive a notification when you are roaming in a different country, telling you what the rates are for voice services, text messages, and data usage
□ to limit your data overage charges to $50 a month and your data roaming charges to $100 a month
□ to pay no extra charges for a service described as “unlimited”
□ to refuse a change to the key terms and conditions of your contract, including the services in your contract, the price for those services, and the duration of your contract
Your contract must
□ use in plain language and clearly describe the services you will receive
□ include information on when and why you may be charged extra

Do you pay before you use your wireless service? If so, you use prepaid services, and you have the right
□ to cancel your contract at no cost after a maximum of two years
□ to cancel your contract and return your phone at no cost, within 15 days and specific usage limits, if you are unhappy with your service
□ to have your phone unlocked after 90 days, or immediately if you paid in full for your phone
□ to have your service suspended at no cost if your phone is lost or stolen
□ to receive a notification when you are roaming in a different country, telling you what the rates are for voice services, text messages, and data usage
□ to a minimum seven-day grace period in order to “top up” your prepaid card account and retain your balance
Your contract must
□ use plain language
□ clearly describe the conditions that apply to your prepaid balance and how you can check your balance

The courts are reviewing a challenge from some of the carriers over a provision in the Wireless Code that would have the code apply (as of June 3, 2015), to all Canadian wireless customers. As I described when the Code was released, this provision (in paragraph 369) creates a problem that may be retroactive rate setting – a power that the CRTC does not have. The carrier concern deals with recovery of the phone subsidy in the case of early contract termination by customers who bought phones on 3-year agreements over the past year or so.

Note: Wireless customers in Saskatchewan will not have the benefits of the international data roaming and data cap provisions of the Wireless Code until June 2014, due to an inability to accelerate implementation of a replacement billing system.

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.