Industry Canada issued its Consultation on the Licensing Framework for the 700 MHz Band, proposing the use of a Combinatorial Clock Auction (CCA) format to replace the Simultaneous Multiple Round Ascending that has been used for 5 of the 6 auctions held to date.

The proposed CCA format has many advantages. The exposure risk is eliminated, anti-competitive behaviour is reduced, substitution among similar licences is enhanced and the auction duration will likely be reduced.

The proposed switch to a new auction format appears to be a recognition by Industry Canada that there were problems with the last format, as the incumbent carriers had charged:

The use of a set-aside can also impair the auction process. As Rogers, Bell and TELUS all illustrated, the set-aside created gaming opportunities that were exploited by almost all the new entrants, removing hundreds of millions of dollars from the wireless industry.

The department will hold an information session for potential bidders on May 30 (registration required by May 14). The session will be held in Ottawa, but it will also be webcast.

And it will certainly be a source of discussion and debate at The 2012 Canadian Telecom Summit on June 4-6 in Toronto. Have you registered yet?

 

I have just returned from a trip to Israel where I had an opportunity to engage briefly with Gideon, a friend of my son, a graduate student at the Technion. His research combines mathematical game theory with development of inter-carrier agreements, so my son thought that we should meet.

During an interesting range of discussions, he and I shared different perspectives on competition in telecommunications. How many carriers are enough? How much profit is fair? Why are roaming rates and SMS charges so high?

But prices exceeding costs are not unusual in other businesses. For example, I paid $4 at a snack bar for a bottle of cola – coloured water, flavour and sugar. We routinely pay huge mark-ups on coffee.

There are competing options for travellers. I turned the mobile network connectivity for my Blackberry off for the past week, sync’ing when I was within range of a WiFi hotspot; I have prepaid SIM cards for a number of countries that are frequent destinations. Yes, lower priced roaming might have been convenient for people in Canada trying to reach me, although the locals in Israel would have needed to international long distance prices to reach me. So I chose to pay for great coffee and get free WiFi, rather than pay for higher roaming rates for my data connectivity.

But, I also tried out a Wind Mobile phone while I was there. Wind has recently enabled roaming with Orange and I was happy to test the arrangements for them. When I turned on the phone, I received a message that clearly set out the terms of use:

Welcome to Israel! FYI: a call home is $4/min, a text is $1.50 & data is $20/MB. For CS dial 611 &  for VM 777 as usual. Enjoy your visit!

Clear information about the rates enabling consumers to make choices about how to deal with their communications needs.

Lots of consumers choose international mobile services based on trade-offs. Paying for convenience; value based pricing. That is how the market works. Isn’t the fact that some people pay for roaming indicative of the products being priced to market? Of course, it might be great for consumers if overseas roaming rates were pennies, not dollars, but there are alternatives, like buying a local SIM card.

Gideon and I chatted about profits in less capital intensive businesses, some related to communications and content; why do people harbour such resentment for profit by some sectors while casting no slings and arrows toward firms making outrageous fortunes?

Why such different perspectives?

The Canadian Telecom Summit, June 4-6 in Toronto, is where Canada’s information and communications stakeholders exchange perspectives and engage in a frank exchange of ideas. You should plan to attend.

Have you registered yet?

Seeking Alpha reports that US wireless companies lost customers in the first quarter.

According to Phillip Cusick, a JPMorgan Chase & Co analyst in New York, US wireless carriers shed a combined 20,000 contract customers in the first quarter.

Where did they go?

Is this a single quarter aberration or the beginning of a new trend? Does the ability of employees to bring their own device to work result in fewer subscriptions overall? Is pre-paid gaining at the expense of post-paid customers? Are customers looking for increased flexibility and avoiding contracts?

To find out more about trends in communications, you need to come to The 2012 Canadian Telecom Summit, June 4-6 in Toronto. Have you registered yet?

Bloomberg released news yesterday that Public Safety Canada has national security concerns about the liberalization of foreign ownership restrictions for telecommunications carriers in Canada.

According to a letter to Industry Canada dated February 25 obtained by Bloomberg:

The security and intelligence community is of the view that lessening or removing restrictions from the Telecommunications Act, without implementing mitigation measures, would pose a considerable risk to public safety and national security.

Without wanting to fully debate the merits of these concerns, the timing is interesting to examine. The letter predates the announcement of the liberalization by a few weeks, meaning Industry Canada was aware of these concerns but went ahead anyway.

Why?

What made Public Safety suddenly wake up to the possibility that foreign ownership liberalization may actually occur? The issue has been on the horizon for years. There have been countless public consultations, but “mitigation measures” were not previously raised as an item for public input. Why were the Public Safety Canada concerns not set out in the 700 MHz consultation or the previous consultations that looked at opening up the market? Specifically, in the June 2010 consultation, Industry Canada asked:

Are there potential unintended effects of increased foreign direct investment in the Canadian telecommunications sector? What are the potential benefits and risks of having more global players in the market?

Wasn’t this the time for Public Safety Canada to respond? Why did the organization fail to identify the kinds of concerns that gave rise to its secret memo obtained by Bloomberg? If liberalization of foreign ownership poses a “considerable risk to public safety and national security”, why did Public Safety Canada, the organization charged with responsibility for such matters, not speak up sooner?

 Update: As the first comment indicates, the letter from Public Safety appears to have been sent during the comment phase for the 700 MHz consultation, so my comments regarding the timing of Public Safety’s comments were not appropriate.

When I visit Israel, I like to drink cafe hafuch – upside down coffee. It is a perfect variant on a cafe latte, best consumed with an extra shot of espresso and a small piece of dark chocolate while gazing out on the Mediterranean or overlooking the walls of one of the biblical era old cities.

There are different theories on the origins of the name, but “upside down” is a perfect term for the drink. To properly consume a cafe hafuch, you need to stop and sit and enjoy it.

Israelis live and work and play in a fast paced environment but they pause for coffee. Cafe hafuch is not fast food; you need to devote time to it. So cafe hafuch helps to provide a change-up to the status quo; a break in their otherwise frenetic day.

The cafe provides a venue to meet with friends and colleagues to discuss – often loudly – the political, social or personal issues of the day or contemplate their challenges at work.

That is an environment we try to replicate at The Canadian Telecom Summit. Our espresso bar, this year sponsored by Allstream, is a favoured meeting place over the 3 day event. Each year, it is always interesting to take a glance at the meetings over coffee. You can see strategy sessions among colleagues preparing for a presentation; business deals and pitches between suppliers and clients, competitors negotiating improved interconnection or taking time to understand each other’s perspective.

This is the eleventh year for our annual gathering of the leadership of stakeholders interested in Canada’s communications and information technology sector. From June 4-6, leaders from government, service providers (large and small), suppliers, financial sectors, advisory firms, and very large customers will get together for 3 days of high-octane schmoozing. Thanks to ORION, once again scholarships are available for a number of students to be able to join us.

Each morning, Michael Sone and I kick off the day at the front of the big room. But after that, you are likely to find me at espresso bar with my double-shot latte – the closest facsimile I can find to a proper cafe hafuch. Be sure to stop by.

The 2012 Canadian Telecom Summit will take place at the Toronto Congress Centre from June 4-6. Have you registered yet?