As the CRTC continues its process to develop a Code of Conduct for the Wireless industry, yesterday it released a draft Code working document, once again inviting the public to comment on it.

There is a section that caught my eye because of an inconsistency.

In Section D3, under the heading of “Contract cancellation, expiration, and renewal”, there is a complex paragraph that describes an option under consideration for the calculation of early termination fees (Option 2 of D3.3). I have inserted two additional line breaks to make the section easier to read:

Early termination fees may apply to fixed-term and monthly wireless services as follows.

{line break inserted}Fixed-Term Service: If the consumer received an economic incentive and cancels the fixed-term service before the end of the commitment period, the cancellation fee may not exceed the sum of (1) the price of the services provided up to the effective cancellation date, and (2) any remaining economic incentive balance. The service provider automatically reduces the economic incentive balance by an equal amount each month over the commitment period. This reduction equals the value of the economic incentive for that fixed-term service divided by the number of months in the commitment period, and the cancellation fee can therefore be calculated using the following formula: (Economic Incentive) x (Number of Contract Months Remaining/Total Months in the Contract).

{line break inserted} If the consumer did not receive an economic incentive and cancels their fixed-term service before the end of the commitment period, the cancellation fee will be the sum of (1) the price of the services provided up to the effective cancellation date, and (2) the lesser of $50 or 10% of the monthly rate for unexpired months of the commitment period.

I understand the payback of the economic incentive portion. In effect, the CRTC is setting up the free phone offer or the discount on a phone as a kind of zero interest payment plan over the life of the contract. If you leave the carrier early, then you have to pay the remaining balance on the device.

If you didn’t get a phone or other upfront incentive, then you have to buy-out the remaining term of the service commitment, by paying $50 or a 10% of the service fees times the number of months remaining.

But notice: there is no service penalty for customers who got an upfront incentive. They pay off the phone if they leave early, but they don’t have to pay an additional $50 or 10%  of the remaining balance on the service portion.

Why would you ever pay full price for a phone again? In fact, why would you ever buy a phone from anyone other than a phone carrier that offers a discount?

Was it the intent of the CRTC to end the sale of devices without subsidy, or did the CRTC fail to repeat the service portion of the early termination fee?

While some people may superficially view this as a consumer benefit, it is worth considering the alternative. View the device subsidy as a separate transaction from the service contract. Do you want the device “financed” by the carrier – no problem; or, shop around for the device – maybe the electronics stores will also offer financing or low enough prices to make the purchase from them more compelling. Then negotiate your services deal. Maybe you pay $5-10 a month less if you agree to a longer term contract and you separate the device discount from that discussion.

Would such a scenario lead to lower services prices for people who don’t get a new phone from the service provider with each contract?

The current reading of the termination fees could lead to unintended consequences that harms the sale of devices from independent electronics stores. These independent retailers help discipline the price of replacement phones, for those of us who drop them in the lake or leave them in the seat-back of planes.

Indeed, there could be a negative impact on the “no-contract” offers from alternate carriers that do not offer device subsidies. Will this ultimately lead to an increase in the price of devices?

Or was this just a typo?

Last week, PIAC released a report [full report (1 MB pdf)] calling for better disclosure about speeds being delivered to subscribers of internet services. Increased transparency and knowledge about services is always a good thing. The report is a good read; it includes a discussion of the factors that can lead to misleading speed test readings from many of the commonly used measurement tools. Of the 6 recommendations in the report, many tie into recommendation number 5: “Greater consumer education is needed surrounding broadband advertising claims.”

I agree. It is important for consumers to clearly understand what they can reasonably expect when subscribing to their telecommunications services.

However, there is a particularly misleading chart in the PIAC report that warrants mention; that chart turned out to be the highlight of CBC’s coverage of the report. On page 25, the report says:

data testing the measured download speed using the Network Diagnostic Test (NDT) tool on the Measurement Lab platform was compared against the data about advertised download speeds collected by the OECD in 2010. This chart shows that the OECD determined that the average advertised download speed in Canada according to 18 offers was 20.82 Mbps but 114,165 tests using the NDT tool showed an average measured download speed of 3.11 Mbps.

CBC highlighted this in its coverage which was titled: Advertised internet speeds not backed up by data.

For example, [PIAC Report co-author Janet] Lo said, at a time when the Organisation for Economic Co-operation and Development listed the average maximum advertised internet speeds in Canada as 20 megabits per second, the average internet speed among Canadians who used Google’s Measurement Lab to test their internet connections was just three megabits per second.

Now, frequent readers know that I don’t approve of the OECD methodology, but my complaint today has nothing to do with the OECD ranking. The problem is that the report itself is comparing a sampling of advertising of speeds with the average embedded base of what people subscribed to. The two have very little to do with each other. Car companies may advertise vehicles with fuel efficiency, but this has little to do with the average fuel ratings that consumers may experience. Not everyone owns a brand new fuel-efficient hybrid car (there is a large embedded base). Many new car shoppers elect to purchase a vehicle that may not be as fuel efficient as those being advertised.

Similarly, many consumers may not choose to subscribe to the higher level services, despite the high speeds being offered. If the objective is to understand whether consumers are getting what they are paying for, why is a comparison being made to what speeds are currently featured in ads?

The far more important comparison, for this purpose, is the average speed to which consumers are subscribed. That data is available from Table 5.3.3 of the CRTC’s Monitoring Report. For 2010, the CRTC stated the weighted average download speed was 7.060 Mbps and 8.238 Mbps in 2011.

The 3.11 Mbps measured still comes up short, but it is far less dramatic a concern than the attention grabbing tactic of comparing to a completely irrelevant metric like Average Advertised Speed. Such reporting does not contribute to better consumer understanding of the real issues.

How will the industry and regulator respond?

Last November, I wrote that Rogers was already engaging SamKnows to verify the speeds being delivered to its customers. At the time, I wrote that the CRTC already has in its 3-year plan an intent to monitor ISP upload and download speeds. I also observed:

As the broadband internet market matures to approach universal adoption, such confidence building measures can be expected to be used in marketing its services. How confident are you that you are getting what you pay for?

Will ISPs engage similar verification services as SamKnows or will they wait for a CRTC (or Competition Bureau) order to do so?

The President’s Council of Advisors on Science and Technology (PCAST) is an advisory group of leading scientists and engineers in the US who advise the President. Last week, PCAST released a report [full report (pdf)] providing an updated assessment of networking and information technology (“NIT”) R&D activity under the supervision of the US Government.

the report cites notable steps forward in multi-agency work to advance “big data,” health IT, robotics, and cybersecurity, and calls out significant progress toward creating infrastructure for network scaling and NIT testbeds.

The report also notes that many important areas have received less attention and investment than is needed, making recommendations for stronger coordination among agencies to meet continuing NIT challenges in educational technology, data privacy, energy, transportation, and other important sectors.

Cynically, one might expect a report to call for more investment in a number of areas. After all, acceptance of such recommendations will direct funds to the types of institutions that employ the members of the advisory board.

However, there was a recommendation that caught my eye. Under the heading of Government Leadership, the advisory board called for the National Science and Technology Council “to lead in bringing about the education of more children and adults in NIT [Networking and Information Technology], both through the efforts of its Committee on Science, Technology, Engineering, and Mathematics (STEM) Education in multi-agency programs to provide workers with skills in topics of importance to national priorities and in the creation of opportunities for high-quality continuing education in NIT.”

Getting more children and adults educated in digital technologies is part of developing the leadership of the future.

Skills development is a critical piece of a digital strategy. Nearly every job has a digital component – or it will soon – as I wrote in a blog post called “Menial no more“.

A digital strategy is more about setting our sights toward a better future. Will Canada ever see a statement setting out a national digital vision?

On Monday, Treasury Board President Tony Clement announced red tape reduction measures that will save small and medium sized businesses $10M. One of the measures will save 15,000 pharmacists a total of $8.7M per year ($580 each). Another measure announced will save $1.2M for 32,000 businesses, a savings of $37.50 each.

The government has been proudly announcing a string of red tape reduction measures, with a website devoted to its Red Tape Reduction Action Plan.

A cornerstone of the Red Tape Reduction Action Plan is the One-for-One rule:

Through the “One-for-One” Rule, the government will reduce the administrative burden in two ways:

1. When a new or amended regulation increases the administrative burden on business, regulators will be required to offset – from their existing regulations – an equal amount of administrative burden cost on business.
2. It requires regulators to remove a regulation each time they introduce a new regulation that imposes new administrative burden on business.
   • Regulators are required to provide offsets within two years of receiving final approval of regulatory changes that impose new administrative burden on business.
   • The value of the administrative burden cost savings or cost increases to business will be made public in the Regulatory Impact Analysis Statement when the regulatory change is published in the Canada Gazette.

There has been an in depth series of analyses of the impact of the yet-to-be-proclaimed Canada’s Anti-Spam Law (CASL) published recently by Barry Sookman of McCarthy-Tetrault. I recommend reading the entire series:

• Evaluating the Industry Canada CASL regulations: why they are needed
• Evaluating the Industry Canada CASL regulations: how to assess them
• Evaluating the Industry Canada CASL regulations: family relationships and personal relationships
• Evaluating the Industry Canada CASL regulations: the B2B exception (Part I-SMEs)
• Evaluating the IC CASL regulations: the B2B exception (Part II-Non-business entities)

It appears clear that there will be an overwhelming administrative burden imposed on businesses, hospitals, charities, clubs, schools and others, associated with attempting to comply with CASL.

As Mr. Sookman writes:

CASL’s “ban all” approach to regulating CEMs will inevitably result in not-for-profit entities, educational, charities, and other organizations finding themselves barred from communicating with others electronically. They can’t send CEMs without express consent and it will be illegal to send an email or other electronic message to even ask for consent. These inadvertent consequences flow from CASL’s flawed “ban all” structure. When all commercial speech is “banned” subject to certain conditions, it is impossible to enumerate or properly craft or fairly develop all of the needed exceptions to prevent truly undesirable consequences; in this case, treating non-business organizations more harshly than business organizations.

There is no good policy reason for treating educational institutions, hospitals, medical providers, charities, and other non-business organizations more onerously than businesses.

It is clear that CASL will  “increase the administrative burden on business”. As such, the Red Tape Reduction Action Plan requires that “regulators will be required to offset – from their existing regulations – an equal amount of administrative burden cost on business.”

Have we seen the “Regulatory Impact Analysis Statement” for CASL? With so many regulatory bodies involved in enforcement of CASL, will each develop its own set of red tape reduction measures?

The intent of anti-spam laws was to increase confidence in electronic commerce. In its implementation, it may do nothing to reduce the the number of emails and phone calls we receive promoting pharmaceuticals, credit score improvements or vacations, while killing the adoption of electronic communications from legitimate organizations and businesses.

Episode 9 of “The Newsroom” includes Aaron Sorkin’s vision for the evolution of political leadership debates.

Yesterday’s Liberal debate in Vancouver might have benefited from Will McAvoy’s prosecutorial interrogation style to probe the candidates’ positions.

The Liberal party’s format of 20, 60 or 90 second sound bites didn’t really lend itself to an in-depth understanding of where the 9 candidates stand on complex issues.

Among the group of 9, George Takach and Marc Garneau continued to stake out claims to being the technology candidates.

From his opening statement, Takach clearly showed that his focus is on digital issues, calling for universal superfast internet access and a digital bill of rights.

Garneau reminded the audience that he too is a technology candidate, having circled the globe 350 times in space. He called for leadership candidates to set out their policy platform in the course of this race. “I have clearly outlined my policies on the issues that are important to Canadians including: the economy and jobs, trade and investment, sustainable development, Aboriginal partnerships and democratic reform.”

But it was Takach who kept returning to the role of digital issues in his vision for Canada.

For example, in responding to questions, Takach suggested high speed internet as a key component in reforming economic opportunities for First Nations. Via Twitter, he clarified that satellite and cellular will be part of the solution.

George Takach is seeking crowd sourced assistance in generating a Digital Bill of Rights. He sets out a number of starting points:

When participating in online activities, Canadians have the right to:

• Be free from surveillance not authorized by a court of law
• Be free from abuse of personal information
• Enjoy an open, uncensored, unobstructed internet
• Enjoy network neutrality and be free from traffic shaping and bandwidth throttling
• Enjoy anonymity, as long as they act responsibly
• Enjoy access to the Internet no matter where they live

What would you add, delete or change?

Will other candidates recognize the importance of digital issues in creating the platform for the Liberals in the next election?