Ericsson is reporting that 40% of all phones sold worldwide in the last quarter were smartphones, driving a doubling of mobile data traffic over the past year.

Canada is running well ahead of the global pace of smartphone adoption. In the most recent quarter, Rogers reported that nearly two-thirds (65%) of its post-paid subscriber base was using a smartphone. TELUS is reporting smartphones are now 63% of its postpaid base. Bell is at 60% smartphone adoption.

Ericsson’s report confirms trends that we saw earlier in the month in Sandvine’s Global Internet Phenomena Report: data growth is largely being driven by video. According to Ericsson, video accounts for 25% of all smartphone traffic and 40% of tablet traffic. The Ericsson report is an interesting global snapshot that demonstrates how Canada’s mobile networks are actually ahead of most of the rest of the world. For example, well under 10% of the world’s 6.4B mobile subscribers have access to LTE service; most Canadians already have access to multiple, competing LTE networks.

All of this is background for a critical issue facing carriers and consumers: the need to expand networks for capacity. Initial network deployments tend to use taller towers to provide coverage. As adoption and consumption increase, there is a need to add more towers in order to be able to handle the load. This is pushing towers closer to neighbourhoods. Let’s face it, we want the networks to work where ever we are when we turn on our devices. I have written before about the need for more towers and dealing with community activists who have been mobilized by academic dishonesty.

Let me refer you to an interesting opinion piece at Forbes, How Activism Distorts The Assessment Of Health Risks, written by Geoffrey C. Kabat, a cancer epidemiologist at the Albert Einstein College of Medicine.

In March 2008, the CRTC issued its Revised regulatory framework for wholesale and definition of essential services, Decision 2008-17. This was a lengthy and extremely complex decision which restructured the way wholesale services were regulated, and categorized them into six service categories. That decision determined the pricing principles for each category and most relevant to this posting, the phase-out periods for a number of non-essential services.

At the time, I wrote that the decision appeared to be “Predictable, transparent and consistent“, calling it “a reasoned approach – a reasonable approach.”

The rationale provided by the CRTC at the time for phasing out tariffs for certain services was:

Services in the non-essential subject to phase-out category are those that the Commission has determined do not meet the definition of an essential service and that have not been classified as conditional mandated non-essential, public good, or interconnection services. The term “phase-out” means phasing out mandated access at the end of the transition period.

Earlier this month, Primus raised an alarm, recognizing that the 5-year time horizon set out in Decision 2008-17 was only 4 months away. Primus had asked Bell and TELUS for renewal pricing for the services that were categorized as “non-essential subject to phase-out” – in other words, these services will no longer be subject to CRTC regulation after March 2013. Primus has asked for the CRTC to extend the tariff phase out period to be 6 months following receipt of renewal prices.

The CRTC addressed the transition period in the original decision:

With respect to each non-essential service subject to phase-out, the Commission directs the affected carrier to provide written notice, to the Commission and all customers of that service, to permit customers to review and rearrange their provisioning arrangements as appropriate. The written notice must be made at least six months before the end of the phase-out period for that service, identify the tariff pages that will be withdrawn, and describe the carrier’s intentions with respect to the continued provision of that service in each geographic market in which it is offered at that time. The Commission notes that it may, at any time, request further information about these forborne services from affected carriers for data collection or other purposes.

Primus acknowledges that it received appropriate notice. It has not received pricing for the soon-to-be unregulated wholesale rates. Bell argues that 60 days is sufficient notice for a price change. It argues that competitors have had 5-years to find alternate sources of supply or to construct their own facilities.

At the time of Decision 2008-17, the CRTC had promised a review of the wholesale framework by March of 2014, following the conclusion of the five-year phase-out period.

Five years seemed a long way off at the time of the decision. More than 4½ years later, that deadline is fast approaching and competitors are recognizing that time for making alternate arrangements may have already run out.

The CRTC is reviewing this file on an expedited basis.

Rate setting for wholesale essential services is a complicated but incredibly important exercise. Rounding error can lead to millions of dollars in misdirected payments if rates are set with insufficient significant digits of accuracy to take into consideration the thousands, or millions or billions of units that are being acquired.

There are simply not enough experts in engineering economics to enable regulators and industry participants to check each others’ work.

A CRTC reversal issued today may indicate why the CRTC decided last month to open up the wholesale rate setting process to greater transparency.

The CRTC has agreed with Allstream that it had made significant errors when it previously set the rates for unbundled local loops, the basic building blocks of many competitive local voice and internet services.

The details can be seen in the decision itself; the resultant change in rates is more than 10%, depending on the rate band. The CRTC has made the revised rates retroactive three years, to December 2009.

Today’s adjustments were a direct result of the persistence of competitors in convincing the CRTC that there had been a mistake in a painfully detailed process – and then assisting the CRTC in reaching the correct decision.

To what extent did this decision influence the CRTC to mandate greater transparency and disclosure in future rate setting proceedings? The reversal today showed the benefits of extra eyes checking the numbers.

It may be more than 6 months away, but work is progressing on The 2013 Canadian Telecom Summit, which will take place in Toronto next June 3-5.

The Canadian Telecom Summit is the largest and most prestigious gathering of stakeholders interested in the Canadian communications and IT industries. Each year we attract between 400 and 500 top level delegates and more than 70 of the senior-most executives as speakers. Over half the attendees are VP level and higher representing a broad cross-section of interests including cable and telephone carriers, equipment vendors, customers, applications providers, solutions developers, professional services organizations, government leaders and the financial community.

Since 2002, the Summit has developed a reputation of presenting an unequalled program that over the past several years has featured the absolute cream of the crop of Canadian and international communications executives and personalities. For 2013, we have already confirmed more than a half dozen sponsors and a larger number of speakers; we appreciate their support.

And we have already started to receive registrations. The registration system is able to provide an instant receipt for people who need to get expenses filed before the end of the year.

Over the coming weeks, we will be turning our attention to developing the panels and continuing to confirm more speakers.

It is the event where Canadian telecommunications professionals get a chance to communicate with each other. We hope you’ll be joining us in June.

There are limits to the enforcement tools available to the CRTC. For certain violations, the CRTC is able to impose Administrative Monetary Penalties (AMPs) and we see these frequently being levied for companies that breech the telemarketing rules.

CRTC orders can be registered with the Courts, which means that parties that ignore the orders can be prosecuted for contempt. To my knowledge, this has only taken place once and the Court was ultimately unwilling to throw an executive in jail over illegal telephone service discounts.

In a decision today, the CRTC has announced that it will consider another approach: withholding funds from the high cost serving area subsidy fund.

At issue is the delay in implementing network modifications to enable competition in the serving areas of four small Quebec independent phone companies (CoopTel, Téléphone Guèvremont, Téléphone Milot, and Sogetel). Cogeco and TELUS had both indicated an intent to enter these territories and competition was supposed to have been implemented by July 23, 2012. By failing to meet that date, the CRTC found “that the Quebec small ILECsdid, and continue to, subject Cogeco to an unreasonable disadvantage by not having implemented local competition by 23 July 2012, contrary to the Commission’s local competition decisions, and in violation of subsection 27(2) of the Act.”

Cogeco had asked the CRTC to order a billing insert to announce whatever new date competition would be set to arrive and publicize the availability of Cogeco as a service provider. The CRTC disagreed with that approach, in effect amounting to free publicity for Cogeco, a company with much larger resources than the small ILECs.

Instead, the CRTC has launched an expedited consultation, seeking comments on the CRTC’s “preliminary view that, starting 31 January 2013, payments of subsidies to the Quebec small ILECs that have not yet implemented local competition should be withheld until local competition has been implemented in their territories.” Comments are due in just 2 weeks, with reply a week later.

The subsidies to these 4 companies is over $4 million per year, so there could be more than $350,000 per month at risk.