I was at a municipal telecommunications meeting last night.

The meeting was looking at developing a protocol for the placement of telecom infrastructure within the community. I was struck that community groups who are engaged by the subject appear to be uniformly opposed to new towers. Some of the opposition is based on aesthetics; some is based on generally discredited health concerns.

But most importantly, it strikes me that there must be a constituency who really want improved wireless coverage, but aren’t showing up to advocate for better service.

Four years ago, I wrote a post that summarized my views: Cell phones save lives. As I wrote then, we want our doctors, our police, our families, our friends to be available when we call. We want to be able to place calls, connect our devices.

The vast majority of Canadians now have mobile devices. They presumably want a strong, reliable signal from their service provider.

City councillors typically hear from community groups complaining about new antennae being located in their neighbourhoods. It is time for the other side to come forward. If more people are like me and want 5 bars, why aren’t they writing their city officials.

I still remember when most of the world had phone service provided by the government post office and telegraph department. It was a very sorry state of affairs. Service was predictably awful; in some countries, new installations could take years.

You would have difficulty finding people who recall that era fondly, other than those beautiful old  British phone booths.

Governments have a short memory, I guess. As a result, we have seen a number of places where governments have decided to build their own local communications infrastructure, stepping in where they believe the private sector would not. There may be an argument for such intervention in rural markets, but you would think that urban markets should be able to support the business case for private sector leadership in advanced infrastructure.

Apparently, not so in the UK. In its 2012 Budget, the government announced £100 million to roll-out super-fast broadband in the 10 largest cities of the country.

Perhaps the UK’s functional separation regulatory framework isn’t delivering the kind of incentives for investment that have been touted by some as a model for Canada?

Industry Minister Christian Paradis will get the final word at The 2012 Canadian Telecom Summit, delivering an address to close the conference on June 6.

Minister Paradis spoke at last year’s event less than 2 weeks after being named Industry Minister. With a year on the job, we will be looking to hear from him on a range of digital economy issues. Last week’s announcement of spectrum auction policy for the 700 MHz and 2.5GHz bands, while liberalizing foreign ownership restrictions sets the stage for this year’s appearance at the Canada’s foremost gathering of the information and communications industries.

Join more than 500 colleagues, suppliers, analysts, regulators, policy makers, clients and competitors at The 2012 Canadian Telecom Summit, which takes place June 4-6 at the Toronto Congress Centre near the airport.

No other event matches it.

This year, in addition to addresses from 18 industry leaders, we are featuring sessions devoted to exploring a range of topical issues, including our always popular Regulatory Blockbuster panel and so much more:

• The Performance Cloud
• Mobile Commerce
• Social Networking
• Consumers & Businesses in a Multi-Screen World
• Customer Data: Opportunity or Minefiel
• Unified Communications
• Building a Digital Canada
• Wireless Spectrum: Paying for Air.

Now in its 11th year, The 2012 Canadian Telecom Summit has become Canada’s most important annual ICT event, attracting attendees from around the world. For 3 days, The Canadian Telecom Summit delivers thought provoking presentations from the prime movers of the industry. This is your chance to join in a structured atmosphere of frank discussion while enjoying our high-octane idea exchange. Or schmooze in a more relaxed social setting of genial conversation over an espresso while solving how to place Canada at the forefront of the global digital economy.

Have you registered yet?

Hank Intven of McCarthy Tetrault has produced a big black book – the Canadian Telecommunications Regulatory Handbook, to serve as a convenient single reference source for telecommunications law and regulation. In addition to a synopsis of the rules, the 1200 page book includes the text of the laws, treaties, regulations, directions, orders, rules and other key documents that govern Canadian telecommunications regulation.

Hank is one of Canada’s leading telecom lawyers, with more than 25 years at McCarthy Tetrault, following serving as Executive Director at the CRTC.

The Handbook (certain to become known as the Black Book) was inspired by his colleague Peter Grant’s Red Book, the Canadian Broadcasting Regulatory Handbook.

I have known Hank for for more than 20 years; he was one of the lawyers who advised our team at CNCP / Unitel during the proceeding that led to the introduction of long distance competition in 1992. He has advised carriers, corporations, regulators and government agencies in Canada and around the world on business, regulatory and policy matters.

Many of you will recall that he was one of three members of the Telecommunications Policy Review Panel. That panel recommended precisely the form of liberalization of foreign investment restrictions in Canadian telecommunications, among many other policy recommendations, back in March 2006. It took the government two unnecessary further consultations, to adopt what was recommended by Hank’s panel 6 years earlier.

In flipping through the Black Book, I can see that it will be a handy reference guide for my work. Despite the availability of web-based versions of Acts and Regulations, sometimes paper-based books are the right form factor. Most importantly, the book collects the highlights and most relevant cases and decisions from the tens of thousands cases and files that have been adjudicated by the CRTC, Industry Canada and the courts.

It shouldn’t be part of your library; it should be on the corner of your desk within easy reach.

In a strange choice of settings, Industry Minister Christian Paradis delivered the long overdue 700 MHz spectrum announcement. The details of the Policy Framework can be found here.

There will be lots of coverage of the highlights of the announcement (Globe and Mail, National Post) – I’ll try to touch on points that aren’t receiving as much play.

Competitive measures

New entrants and Open Media had been calling for spectrum to be set aside, restricting Rogers, Bell and TELUS from competing for the new frequencies. The major carriers wanted an open auction. In a typical governmental compromise, Solomon went ahead and cut the baby in half.

Oops.

Excuse a little bit of technical detail here. The 700 MHz band consists of blocks:

• Paired blocks (6+6 MHz each): A, B and C;
• Paired blocks (5+5 MHz each): C1 and C2;
• Unpaired blocks (6 MHz each): D and E.

As Industry Canada describes, the best blocks are the ones in use already by AT&T and Verizon in the US:

Two non-interoperable equipment ecosystems have emerged in the United States, which correspond to the specific 700 MHz spectrum holdings of AT&T (blocks B and C) and Verizon (blocks C1 and C2). In the short to medium term, it is expected that most of the available equipment will operate either on blocks B and C and be compatible with AT&T equipment ecosystem, or on blocks C1, C2 and be compatible with the Verizon equipment ecosystem.

In fact, the Verizon blocks are less desirable, since Verizon’s gear is designed to interoperate with CDMA, not the GSM/HSPA ecosystem. CDMA has been largely abandoned by Canadian carriers. The large providers are restricted to bidding on only 1 paired block of prime 700 MHz spectrum, in order to leave at least one block available for new entrants.

It is a great compromise in theory, except it virtually guarantees that Canadians will not have access to the fastest mobile speeds. While LTE can operate on 10MHz of spectrum, it can operate that much better on 20MHz. In other words, Solomon went ahead and cut the baby.

Another complication comes up in the middle of the country where there will be four incumbents bidding: SaskTel and MTS have been recognized to be incumbents. Long time readers will recall that this was a problem in the last auction. So, there is a high probability that new entrants will be shut out of acquiring a national network since there will be a large hole in the midwest portion of the country.

Rural build out

The announcement was held in Russell Ontario, a community that has attracted rural broadband subsidies in the past. Perhaps the Minister was looking to emphasize the rural benefits to be derived from Canada’s new spectrum policy. After all, a number of carriers had told the government that 700 MHz was the key to extending broadband to rural markets.

The Minister announced

The measures I am outlining today will ensure the timely availability of world-class wireless services at low prices for Canadian families, including those in rural areas.

But look at the details:

The government will require companies having access to two or more blocks of paired spectrum in the 700 MHz band, through auction licences or through spectrum sharing, to cover 90 percent of the population of their current high-speed population coverage within five years and 97 percent within seven years of licensing.

In other words:

• The rural build won’t apply to all winners of 700 MHz spectrum, just those acquiring 2 or more blocks;
• If the rural build requirement applies, it doesn’t require extending the networks beyond the reach of today’s HSPA footprint – in fact it only applies to 97% of the current footprint after 7 years.

This strikes me as not being a particularly aggressive requirement.

Foreign ownership

There has been a fair bit of confusion about which companies are covered by the foreign investment liberalization announced.

The government will amend the Telecommunications Act to exempt telecommunications companies with less than 10 percent of total telecommunications Canadian market revenue from foreign investment restrictions in that Act. This change will promote competition by improving access to capital. In order to encourage long-term investment in Canada’s telecommunications industry, companies that are successful in growing their market shares in excess of 10 percent of total Canadian telecommunications market revenues other than by way of merger or acquisitions will continue to be exempt from the restrictions. Restrictions on foreign ownership under the Broadcasting Act would remain for all companies with broadcasting distribution activities. As is the case with any direct foreign investment, the provisions of the Investment Canada Act will continue to apply.

Let’s parse this. According to the CRTC’s Communication Monitoring Report, total revenues in 2010 were $41.7B. So, companies with less than $4.2B in revenues pass the first gate. Only the Telecom Act is being modified, so carriers with broadcast distribution undertakings (BDUs) will not benefit from the announcement. Note that BDUs aren’t radio or TV stations; BDUs are telecommunications carriers that deliver TV programming. By virtue of delivering IPTV, most local phone companies became licensed as BDUs.

There are only three companies that exceed the 10% threshold: Bell, Rogers and TELUS. All three are BDUs, so it is interesting that the government chose to set a market share metric at all. Further, the Minister reminded us that the Investment Canada Act provisions remain in place, which require an application for review if the investment exceeds $330M. In other words, Industry Canada will still have to review and make a determination for as low a threshold as less than 1% of the telecom market.

the purposes of this Act are to provide for the review of significant investments in Canada by non-Canadians in a manner that encourages investment, economic growth and employment opportunities in Canada and to provide for the review of investments in Canada by non-Canadians that could be injurious to national security.

As such, why couldn’t liberalization be offered to all carriers? Bell, Rogers and TELUS would still have needed to restructure their BDU businesses and be subject to Investment Canada review.

Public Safety

Among the most overlooked aspects of the announcement was the designation of 10 MHz of spectrum for public safety users, with the strong possibility of a further 10 MHz of spectrum to be added.

B2-1: The bands 763-768 MHz and 793-798 MHz (PSBB block) are designated for public safety broadband use. Consequently, these bands will not be part of the 700 MHz auction.

B2-2: A decision on the use of the bands 758-763 MHz and 788-793 MHz (the D block in the Upper 700 MHz band) will be made following a separate consultation.

99. Industry Canada will initiate a further consultation on the technical, operational and licensing issues related to the spectrum designated for public safety broadband use in the 700 MHz band.

Who will actually own and operate the networks that make use of this spectrum? It is 20 MHz of spectrum designated for use by agencies that do not necessarily have the financial means to implement a national network. This could be a really interesting opportunity for a company to emerge to build and operate the network to deliver public safety broadband services.

It is a lot of spectrum to be designated for a limited group. Could other users be loaded onto the network during off-peak periods? Would this help enhance the business case for development of a device ecosystem?

Other observations

The foreign investment liberalization will ease the corporate gymnastics that many companies have had to undertake to comply with the whims of less-than-transparent review processes. A number of companies were created with the sole purpose of laundering foreign ownership through Canadian partners in order to own spectrum or become a CLEC. Watch for these structures to be simplified in the coming months.

In the Minister’s remarks, we heard “The measures I am outlining today will ensure the timely availability of world-class wireless services at low prices for Canadian families, including those in rural areas.” The 700 MHz auction is scheduled for the first half of 2013, followed by the auction of the 2500 MHz spectrum within the following year. Canada should be moving forward more aggressively to get this spectrum deployed, encouraging more rapid investment in our national digital infrastructure.

The spectrum announcement indicates follow-up processes and consultations leading up to the auction. The 2012 Canadian Telecom Summit, June 4-6 in Toronto, will be the place to review these issues with a special panel on June 6 examining spectrum. Watch for further announcements regarding our program in the coming days.

Have you registered yet?