The headlines on Twitter focus on the savings for Canadian cable bills. Starting in September, you will likely see your TV subscription price drop by half a percent, allowing you to get a coffee and a donut once a year thanks to the CRTC getting rid of the 3-year old Local Programming Improvement Fund (LPIF).

That may be as far as most people read.

However, at 22 paragraphs, the majority decision by the CRTC is actually pretty brief. It gets to be more interesting because there are 3 dissenting opinions and a concurring opinion appended to the end.

Commissioner Elizabeth Duncan dissented on the belief that the LPIF, as originally designed, was not yet properly implemented. She would have liked to see its mandate extended and given an opportunity to function properly.

Commissioner Suzanne Lamarre wrote a 66 paragraph dissent, plus extensive quotes, citing the legislative mandate of the CRTC. She concludes:

I believe that the majority decision has not taken into account the evidence presented therein, as is its inescapable duty in accordance with the obligations and powers of the Commission, and that the decision was made without regard for the Commission’s obligations under the Official Languages Act or the objectives of the broadcasting policy for Canada. I therefore cannot bring myself to support it.

Commissioner Louise Poirier wrote a dissent as long as the decision itself, concluding “I remain concerned because the evidence submitted in this proceeding has no direct link with the majority decision to discontinue the LPIF.”

Surprisingly, Commissioner Michel Morin wrote a concurring opinion. When the LPIF was originally created in October 2008, Commissioner Morin wrote a 45 page dissent; at the time, he said it was the longest ever written. His concurring opinion today is much more than an “I told you so”. It should be required reading for all observers of the Canadian communications sector. His harshest words are for the beneficiaries of the $300M that was generated over the life of the LPIF, who refused to track the local content of their news programming.

Innovating does not necessarily mean spending more, and what matters in the final analysis, to my mind, is the news and, above all, the local content of the news. This does not mean micromanaging as some interveners claimed, but rather ensuring that the $300 million paid by consumers is used to reach an end (local coverage) and an objective (minimum quantity of Category 1 local news). As for calculating “local segments” in each newscast, with this practice put into place, any production assistant could have done it in less than a minute at the end of the local news report. It isn’t rocket science, it’s not complicated to ensure that there is something for every consumer at the end of each broadcast week.

This is the subject I would have liked to discuss, and one that few participants raised in their final arguments. To them, I simply say, a word to the wise is enough. You do not want any condition in terms of minimum quantities of Category 1 local news, so do not count on me to impose regulatory fees of 1.5% on the bills of 11.3 million Canadian cable and satellite subscribers or their distributors! As a member of a regulatory body, my focus is accountability and transparency. There is no way I am going to give you $300 million on a silver platter for another three years, with no condition requiring you to produce truly local news for the benefit of consumers in each of these markets. Because in most cases it is the consumers who paid this $300 million over three years, I simply wanted to ensure that the content they receive actually does include local news, in the strict sense of the term. Better luck next time, if the opportunity ever arises again.

Slam. He turns his attention to the CBC and its budgets as well.

In his concluding remarks, Commissioner Morin cites the 15 dissenting opinions he has written in the course of his 5 year term.

On the eve of the end of my five-year mandate as a CRTC commissioner, I am leaving on a high note, so to say, by concurring with the majority opinion. This opinion adds to the 15 dissenting opinions I have already issued, the list of which can be found following this concurring opinion. But in this case as in the others, I have always been guided by the same principles.

In my opinion, demonstrating respect for the consumer’s opinion through a transparent public record is at the very core of my obligation.

His concurring opinion is an important piece to read. In many ways, it represents a farewell address. Commissioner Morin’s term comes to an end on August 5 and he says he is leaving on a high note, concurring with the majority opinion. His five years at the CRTC have demonstrated a passionate pursuit of respect for consumers’ interests. When his appointment was announced, I observed that he was starting as Commisioner Stuart Langford (the former regular writer of dissents) was leaving.

When there is a questionable call in baseball, the team manager comes out from the dugout and yells at the umpire. The call doesn’t change, but the umpire is put on notice to watch more carefully. After August 5, who will be the the one to kick up dirt at the plate at the CRTC?

An earlier version of this post erroneously attributed the dissent by Suzanne Lamarre to Elizabeth Duncan. This has been corrected.

Once again, Canada has missed an opportunity to lead in an area of digital skills development.

I shouldn’t be surprised.

At this stage, Canada’s National Digital Strategy is so long overdue that we should be asking some hard questions about what has gone so terribly wrong with a multi-departmental program that started so right, under the leadership of Industry Canada with participation by Human Resources and Heritage Canada. More than two years have passed since we were promised:

This consultation is the next step in developing the right environment for the greater adoption of digital technology. After it is complete, we take the results into account as we develop an action plan to address the digital issues facing Canada now and in the future.

Once again, the US is demonstrating leadership in creating “the right environment for the greater adoption of digital technology. The Connect2Compete initiative has launched a new digital literacy campaign, adding a job-training partner to increase its focus on broadband as an aid for training and to search for jobs. The US Department of Labor will provide digital literacy training at nearly 2,800 employment and training centers operated by the agency.

Canada’s counterpart, Human Resources and Skills Development was part of the initial launch of the consultation. Two years later, there is still no “Digital Literacy” heading on its website listing “Jobs and Training“.

I continue to be optimistic that we can develop a program to take on the challenge I set out 19 months ago in a blog post called “Digital Divide“: We need a connected computer for every home. We need to work on skills development and access to devices among low income households.

Connect2Compete demonstrates a framework that does not require massive cash injections from government. If government won’t lead, then what about the private sector showing the way?

I remember going to Telecom ’91 in Geneva when I was working at Unitel. The fall of 1991 was the golden era of telecom exhibitions and my team was being courted by various suppliers for our network technology business.

At the time, there were strong personal relationships that linked Unitel’s CEO with the head of Digital Equipment. We were being given a special tour of the multistorey DEC booth at the show when Digital’s Canadian CEO commented to me that 100% of DEC’s Canadian data network was running on Unitel’s facilities. Without skipping a beat, I said that if he had mission critical applications running, he should fire his CIO and immediately get some carrier diversity – at least 10%. Besides, it helps keep both service providers on their toes. It makes everyone more responsive.

My CEO nearly dropped the mini-cigar from his mouth.

I explained that it doesn’t matter how good we are, networks can fail. When that happens, do you really want all your eggs in one basket?

That was a little more than 20 years ago.

Think of the types of network failures that have happened through the years for all sorts of reasons: a fire that knocked out service to downtown Toronto with repercussions across the country; a satellite failure that isolated Nunavut last fall; and this week’s fire in Calgary are just a few examples.

It isn’t just physical damage that can knock out a network – many naive architects think that they can design around single points of failure, such as fires, satellite failures or fibre cuts. Sometimes it is a matter of software, such as Amazon’s network failure last year. Given the complexity of network systems, it is difficult to laboratory test every possible condition. A software upgrade can sometimes bring down an entire network, such as that experienced by AT&T in 1990.

These are some of the issues faced by everyone who tries to operate carrier-grade networks. Service outages are a fact of life; minimizing the impact and quickly recovering from the problem is the primary objective of everyone involved.

As an end user, carrier diversity provides improved reliability.

As public safety agencies move forward with making use of their spectrum, it seems to me that reliability and overall capacity can be enhanced through interoperability with commercial networks.

Following up on my blog post from earlier in the week and to try to correct some serious errors in the main stream media, I thought it would be worthwhile to capture some references to the origins of the CRTC’s tangible benefits program.

One story suggested that the purpose of the tangible benefits program is “a sort of tax, a percentage of the purchase price, toward the development of the entire system” designed “to help to offset the negative effect that the resulting industry consolidation has on our viewing and listening options.”

There was a CRTC public notice issued in 1992 that provides a good discussion of the origins of the concept of tangible benefits to be paid on the transfer of ownership or control of a broadcast undertaking. I recommend reading the “Background” section of Broadcasting PN CRTC 1992-42, if you have an interest.

That section refers back to a 1977 decision by the CRTC where it stated:

The transfer of control of a licensed broadcasting undertaking frequently results in additional financial obligations being imposed, directly or indirectly on the undertaking involved. In such circumstances the Commission must be fully satisfied, before granting approval, that such a transfer will not affect the ability of the licensee to maintain existing broadcasting services; that it will benefit the subscribers and the communities concerned; and that it is in the public interest.

The 1992 public notice resulted in a determination in 1993 with the kernel of the policy in force today. It is noteworthy that there is considerable latitude to the breadth of expenditures that are permitted:

Tangible benefits generally fall into three broad categories: operating expenditures, such as in the areas of additional staff or programming improvements; capital expenditures for technical improvements; and grants and contributions to Canadian talent or program development funds.

The Commission considers that publishing a comprehensive list of acceptable benefits would be limiting, as many benefits that are accepted are tied to the particular circumstances of a transaction or a market.

The applicability of capital improvements proposed for Northwestel territory (as described in my blog post) could have been inspired by a statement in the CRTC’s 1993 document:

The Commission notes with respect to cable that it will also accept as benefits certain “normal course” capital expenditures identified in subsection 18(5) of the Cable Television Regulations, 1986 in cases where the applicant waives its right to submit fee increase applications for these items…

There are clearly competitive concerns that come into play as I mentioned earlier in the week. But it was inappropriate to suggest that the proposal is an attempt by Bell to weasel out of its tangible benefits obligations.

As I wrote last December, the CRTC had harsh words for the state of Northwestel’s aging infrastructure in its review of regulatory framework for the north (Telecom Regulatory Policy CRTC 2011-771). In that Decision, the CRTC required Northwestel to file a network modernization plan.

Three months later, BCE moved to acquire Astral Media for about $3 billion. As part of the regulatory approval process, the CRTC requires tangible benefits to be proposed, as described in the public notice released earlier today:

Under the Commission’s tangible benefits policy, applicants are required to propose tangible benefits amounting to at least 10% of the value of the transaction for all conventional and specialty television assets and 6% of the value of the transaction for all radio assets.

The Commission, in applying its benefits test, has been consistent and rigorous in requiring that (1) expenditures proposed as tangible benefits be truly incremental; (2) such expenditures be directed to projects and initiatives that would not be undertaken or realized in the absence of the transaction; and (3) applicants demonstrate that expenditures proposed as tangible benefits flow predominantly to third parties, such as independent producers.

BCE has proposed a tangible benefits package valued at about $200M, which includes $40M allocated to funding parts of the Northwestel modernization program. I was initially surprised to see that BCE has proposed that allocation. After all, the network modernization plan would have been required regardless of whether Northwestel’s parent company, BCE, decided to purchase Astral Media.

This is why it is important to read the filings. It is one thing to develop a network modernization plan; it is something else to fund that plan and implement it.

48. This Modernization Plan is very aggressive, but it reflects Northwestel’s desire to deliver the most possible benefits to the residents of the North in as short a timeframe as possible. However, absent the Astral funding, this very ambitious and far reaching Modernization Plan cannot be achieved.

49. Approval of BCE’s proposed uses of the Astral public benefits funding is the subject of a separate regulatory proceeding currently before the Commission. Northwestel respectfully requests that the Commission carefully weigh the considerable public benefits that would be realized through the proposed use of $40 million of Astral pubic benefits funding as part of the Modernization Plan. The Company reiterates that the expansion and upgrading of telecommunications and broadcasting infrastructure in the far North is a very capital intensive undertaking which for many communities cannot be economically justified. Such circumstances demand bold vision and choices to realize that which would not otherwise be possible. The Company strongly urges the Commission to approve the Astral funding component of the Modernization Plan as contained in BCE’s public benefits filings.

The CRTC opened the north to competition (as I wrote here), which created interesting challenges for a market friendly resolution to funding Northwestel’s upgrades. Without its monopoly, Northwestel is less able to finance the uneconomic portions of its upgrade plans. On the other hand, in a multiple service-provider environment, how can the CRTC grant the benefits funding without distorting the competitive landscape?

I am still hoping that a major carrier will show the leadership to launch a program for low income households to acquire connected computers. Perhaps this can be a fallback tangible benefits program?

The CRTC hearing opens September 10.