School aged kids in low income households are going to have access to affordable computers and connectivity when they head back to school this fall.

Rogers launched Connected for Success, a pilot program offering a $10 per month broadband internet connection, a $150 subsidized computer and software to residents of Toronto Community Housing. Rogers hopes to expand the program and Rogers’ President of Communications, Rob Bruce told The Canadian Telecom Summit in June that he would welcome other carriers to participate.

Most government programs that target the “digital divide” have looked at ways to narrow the gaps in coverage between urban and rural or remote geographies. Such programs have used government subsidies to stimulate supply based on geography, without regard to the ability to pay.

Regular readers know that Greg O’Brien of Cartt.ca and I have been calling for a change in that focus. We have been advocating for leadership in targeted, affordable access, stimulating the demand side. More than eighty per cent of Canadian households subscribe to broadband internet, but that is heavily skewed by income. About half of Canada’s lowest income households have no computer, let alone a broadband connection.

Michael Powell of the US cable industry association said it best in May 2012: “A child without access to the Internet will find life increasingly difficult in the information age.”

With no national digital economy strategy to deal with this, it is gratifying to see the private sector step up with the leadership to help provide low income kids with access to the tools that most of us take for granted for success in school.

Industry Minister James Moore is on a cross country tour, defending the government’s position for its wireless policy.

Various sides of the wireless debate have been lining up soundbites, trying to encapsulate complex issues into 140 character tweets.

It isn’t the way policy for critical digital economy infrastructure should be developed.

It is good that Canadians are getting engaged in the issue. It is important for economic development, for rural services, for our federal treasury.

So I am not sure Minister Moore is correct in stating that the major telephone companies have been unsuccessful in their publicity campaign.

As the National Post wrote:

He characterized the telcos’ campaign as “impressively unsuccessful” and said it has not, in his view, resonated with Canadians, but added it has stirred up enough questions that he felt the need to defend his government’s policy aimed at, he said, promoting competition for the benefit of consumers.

While the telco’s campaign may not resonate with consumers, it appears to have played well with editorial boards across the country. It is the newspaper editorials that may have created the urgent need for the government to respond with a defensive campaign.

Phone companies are an easy target. In my early days working in the telecom sector, we used to be thankful for the post office – it was the institution that people hated even more. These days, who cares about the mail. So that leaves the phone companies.

We all pay a phone bill every month and everyone wants that bill to be lower. I wrote a blog post years ago about a poll that clearly had a problem. The poll was reported as saying three quarters of Canadian consumers wanted lower prices for internet services. C’mon, now. Do you really believe 1 in four Canadians don’t want a lower price? Of course we want a lower price on something we buy monthly. But at what cost?

The issues are more complex and not well suited to simplistic solutions, as Industry Minister Moore has stated in interviews from this week. But Minister Moore also answered the question of why Canadian prices are not among the lowest in the world:

Canada is the second largest country in the world in size but 34th largest in population. We do have expectations and obligations to rural parts of this country to ensure that there is some comparable level of service

I have asked the question before: If Canadian wireless prices are so high vis a vis costs, doesn’t that create a great business opportunity for new entrants? Why aren’t competitors lining up to enter the market? Around the world, carriers get the same reports that show world leading average revenue per user (ARPU), but the carriers also understand that Canada also has world leading capital dollars per customer being invested by Canadian carriers.

Investors want to maximize their returns and perhaps as important, they would like some certainty they can exit a market when they choose to take their profits or cut their losses. This is where Canada’s ever changing policy framework creates the greatest risk.

In some of his interviews, Minister Moore has pointed out that the major carriers were comfortable with the rules set out in March. As he told IT World Canada:

The incumbent big three, by the way, were originally quite comfortable with our policies (announced March 7), they said good things about it. It’s only because in May Verizon made noises about exploring coming into the Canadian marketplace that the incumbents decided to put out a big joint effort to stop Verizon from coming into Canada.

I would suggest that the biggest issue wasn’t the new rules set down in March 2013, or the compromises found by “Solomon cutting the baby” with the 700MHz rules in March 2012. Our summer of wireless discontent was kicked off with the June 4 announcement that turned down TELUS acquiring Mobilicity.

Had the government simply said that the original AWS rules called for a 5 year hold and the acquisition was premature, that would be one understandable, and consistent message. But the government went further when it said:

Our government has been clear that spectrum set aside for new entrants was not intended to be transferred to incumbents. We will not waive this condition of licence and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit,” said Minister Paradis. “Our government will continue to allow wireless providers access to the spectrum they need to compete and improve services to Canadians. We are seeing Canadian consumers benefit from our policies and we will not allow the sector to move backwards. I will not hesitate to use any and every tool at my disposal to support greater competition in the market.

In addition, the Government also outlined improvements to the policy on spectrum licence transfers that will be released in the coming weeks, which followed consultations launched in March 2013. Going forward, proposed spectrum transfers that result in undue spectrum concentration—and therefore diminish competition—will not be permitted. This policy will apply to all commercial mobile spectrum licences, including the 2008 AWS licences.

That June 4, 2013 policy changed the AWS investment rules in the middle of the game. When the government set down the rules for its $4.2B AWS auction in 2008, it had effectively bet that 5 years would be long enough for the new entrants to disrupt the marketplace through increased competition. The licenses all had the same transfer condition:

Licences acquired through the set-aside of spectrum may not be transferred or leased to, acquired by means of a change in ownership or control of the licensee, divided among, or exchanged with companies that do not meet the criteria of a new entrant, for a period of 5 years from the original date of issuance.

On June 4, 2013, two weeks after Industry Canada met with Verizon on May 21, the rules got changed. Investors in Canada’s telecom sector – new entrants as well as incumbents – got the rug pulled out with another change that I like to call Calvinball.

That isn’t how any game is supposed to be played, and especially not where the stakes are measured in billions of dollars.

Despite billions of dollars in Canadian equity value being played with, the level of hyperbole by both sides has gone over the top. When John Cruickshank, publisher of the Toronto Star said Prime Minister Harper “betrays the interests of his country for a foreign power“, it is difficult to take anything else in his commentary seriously. “Leninist economic planner”?

Really?

Such a sophomoric level of discourse is perhaps driven by responding to those who think Verizon is the white knight to fight “Big Telecom”. I have been unable to get a response to a question about whether Verizon is also part of the “Big Telecom” clique. As I wrote on Twitter:

It is time to raise the level of the debate, stop the name calling, deal in issues at the level of depth that it deserves.

The government knows very well that Canada actually has lower concentration of its wireless market than most countries. Nearly half the OECD has 100% of their wireless in the hands of 3 or fewer carriers. The OECD average is 93% share among the top 3, so Canada has more competition already despite what the Minister acknowledges as a small population across a large landmass.

Petitions from the Conservative Party or Open Media are going to do nothing but build a mailing list for their partisan fundraising. If Canadians want more competition in wireless, people should sign up for services from the competitive providers that are already out there.

It would be helpful to see the scorecard by which the government is measuring the state of competition, as implicit in its June 4 policy announcement.

It would also be helpful for people outside our urban centres to understand the lack of meaningful obligations to extend networks to rural communities under the current 700MHz framework.

I continue to believe it is time to push the reset button.

Minister Moore told Cartt.ca that the spectrum auction has been delayed twice already and it will not be delayed again.

We are playing a high stakes game; opening bids in the auction will be just shy of a billion dollars. With Parliament prorogued, is there really no time to take a breath, get everyone to dial down the rhetoric and ensure that we get it right?

As Tim Harper wrote in The Toronto Star, Minister Moore is well within his rights to decide against, or even ignore, the arguments being set out. But it is unseemly, on both sides, to turn this important debate into a white hats – black hats showdown.

Is the public interest best served by pushing ahead?

As hard as it may seem to believe, it wasn’t so long ago that the government of Canada rejected competition in telecommunications services. I moved back to Canada to join the team that was proposing the introduction of facilities based competition back in 1989. We worked for a few years, building business models and assembling evidence to prove, among other things, that facilities-based competition in telecommunications services was in the public interest.

In the present proceeding, … in order for the Commission to determine if approval of the applications is in the public interest, it must assess the advantages and disadvantages of various scenarios for lowering long distance rates.

That’s right. The CRTC had to assess the advantages and disadvantages of various scenarios for lowering prices.

Read section II of Decision 92-12 – Advantages and Disadvantages of Competition.

It wasn’t always self evident to the regulator. We had to demonstrate that, among all the various scenarios for lowering consumer prices, our approach was the best.

That decision – indeed the 2-year long proceeding that led to that decision – transformed my career and significantly influenced my views on the benefits of facilities based telecom competition.

Over the past 20 years, the federal government has continued to endorse market forces over regulation. In December 2006, a policy direction was sent to the CRTC by Cabinet, requiring

(a) the Commission should

1. rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives, and
2. when relying on regulation, use measures that are efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives;

Further, the 2006 Policy Direction states

(b) the Commission, when relying on regulation, should use measures that satisfy the following criteria, namely, those that

1. specify the telecommunications policy objective that is advanced by those measures and demonstrate their compliance with this Order,
2. if they are of an economic nature, neither deter economically efficient competitive entry into the market nor promote economically inefficient entry,
3. if they are not of an economic nature, to the greatest extent possible, are implemented in a symmetrical and competitively neutral manner, and
4. if they relate to network interconnection arrangements or regimes for access to networks, buildings, in-building wiring or support structures, ensure the technological and competitive neutrality of those arrangements or regimes, to the greatest extent possible, to enable competition from new technologies and not to artificially favour either Canadian carriers or resellers

To this day, there is a section that discusses compliance with the Policy Direction in each decision by the CRTC that relies on regulation. For example, See paragraphs 397-401 in the Wireless Code issued just 10 weeks ago.

Now, these rules apply to the CRTC, not Industry Canada, but would it be unreasonable to expect the department to observe the same policy direction?

Do we support the principles of ensuring government regulations “neither deter economically efficient competitive entry into the market nor promote economically inefficient entry”?

Can we confirm that measures promote “innovation and investment in and construction of competing telecommunications network facilities”?

A Canadian union is calling for the Canadian government to get into the competitive telecommunications business:

The Communications, Energy and Paperworkers Union of Canada is calling on the Harper government to rescind advantages offered to Verizon Communications to set up as a fourth major carrier and to instead establish a Crown Corporation to fulfill this objective.

Has it really been such a long time that most of the planet got rid of their government owned telecom monopolies? They were called PTTs – agencies that ran the post office, telephone and telegraphs on a monopoly basis for most of the world. New housing developments and business parks could wait for years before new lines were run, unless proper political connections were had, strings were pulled, contributions were made.

A tweet suggested that we look at roads, power and water as examples of how government runs critical infrastructure:

Look at our roads. As you sit in traffic and see construction taking place during rush hour, instead of at night, think about how customer friendly that approach is. As you drive through potholes, ask yourself if roads are really being planned, engineered and maintained on a just-in-time, or always-too-late basis.

Ask almost any Quebec resident how happy they are with the state of their roads and bridges.

Think about political interference in the construction and operation of electrical generation. Think about water and sewer lines cracking, flooding roads and causing sink-holes, well past their “best before” dates.

Let’s not forget the customer service call centres – those always friendly interactions when entering the country, renewing your health cards, passports, or paying your taxes.

There could be some cost savings for national security agencies if they are able to deal directly with another government department to access your call records. That should save time and money.

There can be exceptions. SaskTel provides an interesting model worth thoughtful study.

But we need to bear in mind that the introduction of wireless communications was an overwhelming success in many countries precisely because of the sorry history of government owned communications. As much as Canadians love to kvetch about their phone company, do we really want a government agency to take its place?

As regular readers know, I spend my summers working from my cottage north of Toronto. More than ever before, I rely on Canada’s wireless communications industry for running my business and staying in touch. I dropped my land-line connection to the cottage in the fall of 2012, so we operate with our mobile phones and satellite-based broadband.

However, the switch to 100% wireless connections is not why 2013 will be remembered as the Wireless Summer. Instead, it is the debate triggered by Canada’s policy and regulatory environment in the run-up to the 700 MHz spectrum auction.

In the fullness of time, I suspect there will be numerous interdisciplinary studies that look at this summer and how Canada’s digital economy was influenced by the government’s intervention into the structure of the telecommunications industry. Political science scholars, students of telecom law, economists, communications strategists could all earn doctorates exploring the lead-up and the lasting impact of a single sentence on the blog of the Industry Minister:

I think Canadians know very well what is at stake and they know dishonest attempts to skew debates via misleading campaigns when they see them.

This would be the season-ending cliffhanger if all of this was a TV series, the titles would start scrolling and you would start counting down ’til the next season opened.

I don’t pretend to know how this story will end. All I can predict is that we aren’t close to the end.

Be sure to save the clippings and links from this summer’s papers. You can tell your kids that you were there when it all happened.