My son tells me that the blog posts he enjoys the most are when I talk about the evolution of the industry, relating an important historical perspective to a current issue or trend. I like to think of those posts as teaching moments.

I was disappointed that a number of other commentators missed an important teaching moment in their discussions of the appeal of an important technical detail in the implementation timetable for the Wireless Code. Some were telling any news media that would listen that the appeal was filed “with hopes to delay safeguards until nearly 2017”.

A law professor selected excerpts from the transcripts of the proceeding to portray the appeal as a change of tune, completely missing the opportunity to discuss the formal legal opinion had been filed by SaskTel as part of the proceeding. But instead, it was SaskTel’s (and other carriers’) oral testimony on how most customers would be changed over to the code early that was presented as a “change of tune”.

The article quoted SaskTel at line 8922 of the transcripts (Volume 4). Just a few minutes earlier (line 8723), SaskTel was quite clear on the matter that is now in front of the Federal Court of Appeal:

Lastly, I would like to address the option outlined in the draft Code that the Code could apply to all existing customer contracts. With respect to that proposal, we were concerned that this might be retroactive ratemaking, and we have taken the liberty of obtaining a legal opinion which we will file on March 1.

Rogers also was pretty clear in how long it would take for all of its customers to be covered by the code. In response to a question by Commissioner Molnar, Rogers responded (at line 3965 of Volume 2):

… it occurred to me as I was hearing the question, it’s three years. I mean, to get every last customer who’s in — the person who signed the contract the day before the Code came into effect, it’s going to be three years later. Now, a lot will be doing an early hardware upgrade and getting a new contract, but every last one, the answer is three years.

Where is the change in tune? The carriers were pretty clear, from the outset, that they were not comfortable with the idea of applying the code in a manner that would relieve a subset of customers of their obligation to walk away without having fully amortized the cost of their device. The CRTC’s own numbers show that 1 in 5 Canadian consumers will be relieved of their contracts under the interpretation in the staff letter.

It might have been interesting to hear, for example, a law professor offer perspectives on the legal issue of the CRTC possibly overstepping its powers. After all, the CRTC was warned this would be an issue. It was, unfortunately, a missed teaching moment for some.

On this site, the issue of the implementation date was predicted, covered and we have even offered a possible resolution.

As always, your comments are welcome.

Canada’s wireless policy, like our national digital strategy, has been characterized by inconsistency and uncertainty.

In the past, I have referred to it as Calvinball, from the Calvin and Hobbes comic strip. A game where no one really knows the continually changing rules.

This week’s carrier appeal of the CRTC’s retrospective application of the Wireless Code highlights more of the uncertainty facing the sector as it prepares for “back to school” sales beginning next month.

Consumers and the industry alike don’t really know what the CRTC intended for implementation timing because of imprecise language used in the Wireless Code decision, and the contradictory clarifications [here and here] that have been provided subsequent to the Decision.

A number of carriers have filed with the Federal Court of Appeal because the CRTC appears to be asserting a power to retrospectively apply the Code to contracts that existed before the Decision, contrary to an Opinion that was filed as part of the proceeding that led to the release of the Wireless Code.

Even if an expedited schedule is granted, there is no way for the Federal Court of Appeal to make a determination before the summer is out. Uncertainty is bad for consumers, it is bad for the carriers and it is bad for the economy. It is hardly a satisfactory introduction for the national Wireless Code.

As such, a colleague and I wondered if there may be a solution that could allow the court case to be dropped while achieving most of the consumer objectives.

As I wrote a couple weeks ago, the trouble has been caused by the timing set out by the CRTC in Paragraphs 368 and 369 of the Code:

368. In light of the above, the Commission determines that all aspects of the Wireless Code will take effect on 2 December 2013.

369. The Commission finds that where an obligation relates to a specific contractual relationship between a WSP and a customer, the Wireless Code should apply if the contract is entered into, amended, renewed, or extended on or after 2 December 2013. In addition, in order to ensure that all consumers are covered by the Wireless Code within a reasonable time frame, the Wireless Code should apply to all contracts, no matter when they were entered into, by no later than 3 June 2015.

We wondered what the impact would be of changing the final date in paragraph 369 to 3 June 2016. Superficially, some would say that this provides the wireless carriers with an extra year, but in reality, the change creates the right incentives for the carriers to quickly shift to shorter contracts.

Had the CRTC responded to my June 7 tweet with such an erratum, I wonder if the carriers would have launched their appeal? Contracts entered into after the release of the decision (during the period between 3 June 2013 and 2 December 2013) fall into a grey area that are not as clearly beyond the CRTC’s power to change. Carriers would want to move quickly to shorter schedules for their device subsidies in order to avoid the risk of consumers walking out prior to the device being amortized.

It is a simple change – a single digit – and what is really being lost? Carriers will have the incentive to quickly shift operations to remove 3-year deals well in advance of the 2 December 2013 deadline. Carriers and consumers have the certainty that old contracts stand: a deal is a deal. The government isn’t going to retrospectively apply new rules to old deals. Going forward, from 3 June 2013, deals are being done with the new rules having been published. If carriers don’t want the risk of being left with an unpaid balance, they need to move more quickly to offer shorter amortization schedules, or shorter deals.

Can changing a single digit crack the code? Would the carriers withdraw their motion and focus on introducing innovative new deals for the student market? Would the CRTC consider this a friendly amendment, maintaining the incentives to quickly transition from 3-year contracts?

There are a number of sessions from The 2013 Canadian Telecom Summit available for viewing on-line. For those of you who couldn’t be with us, or those who want to refresh their memories of some of the highlights, here are links for a few of the sessions:

CPAC Video on Demand allows the viewer to choose English or French:

• June 3, 2013: Opening Keynote – Rob Bruce (Rogers Communications)
• June 3, 2013: Keynote – Bernard Lord (CWTA)
• June 4, 2013: Keynote – Jean-Pierre Blais (CRTC)
• June 4, 2013: Panel – Regulatory Blockbuster
• June 4, 2013: Panel – The Customers Speak Out
• June 4, 2013: Panel – The Revolution of TV

YouTube:

• June 5, 2013: Panel – Building an Innovation Economy

I have to admit that my favourite moment from this year’s event was the announcement by Rob Bruce that Rogers Communications would be developing a special broadband package with low-cost home computers to target low income households with school children. With the media focus on Ottawa’s management of the mobile wireless sector, it is unfortunate that this important initiative didn’t attract more attention and national support from other carriers and grass roots consumer organizations.

Which sessions did you enjoy the most?

The 2014 Canadian Telecom Summit will take place June 16-18, 2014 in Toronto. What sessions would you like to see?

As I suggested two weeks ago, the major wireless carriers have filed an application [2 MB, pdf] seeking leave to appeal certain aspects of the CRTC’s Wireless Code.

The appeal deals with the timing of the Code coming into effect. There are contradictory messages in the Decision itself (in paragraphs 368 and 369), followed by a tweet from the CRTC:

At that time, I responded via Twitter to ask if the CRTC planned to issue an erratum to clarify the decision.

The CRTC tweet was followed by a letter of clarification from CRTC staff (responding to a request from CWTA) that appears to contradict the Twitter statement.

There had been a legal opinion filed during the proceeding that led to the Wireless Code which identified the problems with the CRTC issuing a decision that would result in retrospective application to as many as 5 million existing contracts.

The carrier application seeks an award of legal costs if it is successful.

Will lawyers advising the CRTC suggest settling, retracting the staff opinion, before risking a sizable bill for having ignored the evidence, (based in part on a 2009 Supreme Court decision in CRTC vs Bell)?

The legal filing appears to demonstrate inconsistencies between the Decision, the social media feed and the staff letter. Does the CRTC need to examine its social media policy to ensure that its public messages are clear and consistent?

Lots of people are wondering what Verizon is up to in its discussions with a number of Canadian new entrants.

Plenty of folks are giving reasons why it makes no sense; I’d like to understand why Wind Mobile might be worth the $700M being reported.

When you think of AWS players in the US market, T-Mobile is the carrier named most frequently. But Verizon has been busy acquiring AWS spectrum as well, with about $4B in deals to secure spectrum from cablecos: Comcast, Time Warner Cable, Bright House Networks and Cox Communications. According to a report in March, Verizon plans to add support for AWS to 5,000 of its towers by the end of this year, about a quarter of its total towers.

Verizon has been offering LTE devices that are equipped to run LTE on the AWS band. Its new Samsung Galaxy S4 will run LTE over AWS.

If Verizon acquires Canadian AWS spectrum owners, it may be a play to offer seamless cross border data roaming. Data roaming rates for US customers coming north of the border can run $2 per MB or $25 per 100MB. Demand for data by roaming customers can be expected to continue to grow with new, faster devices.

That is why I wonder to what extent is Verizon looking at reducing its settlement payments for cross border data roaming to justify a capital investment in Canada.

With the new entrants using AWS in Canada for HSPA, and the continued delays in Canada’s 700MHz auction, there is currently a challenge for Verizon to find  negotiating leverage in setting up roaming agreements for its LTE customers.

But this leads me to wonder what the impact could be on existing customers of the AWS new entrants in Canada. If it proceeds in acquiring a Canadian operator or two at bargain prices, would Verizon focus on quickly changing the Canadian networks to the LTE protocol in order to tear down the border for its US clients?

This may not bode well for current clients of the Canadian targets who will find their devices unable to connect to the LTE network. It isn’t clear that Verizon would target average Canadian consumers. Will Verizon even want to keep the low ARPU customers that are currently on Wind Mobile and Mobilicity, the Canadian networks under discussion?

On the other hand, if Verizon buys both carriers, with largely overlapping spectrum, it may signal a migration plan: move the customers of one network over to the other for HSPA, while converting the first network to LTE. Customers would need new devices to take advantage of LTE, but could still keep their existing HSPA service running..

To what extent is Verizon entering Canada in order to defend and extend its US roaming position? To what extent is Verizon playing hardball in its roaming negotiations?

Canada’s new entrants need a migration strategy for LTE in any case. Will Verizon be the catalyst to bring the new entrants together?