Press reports suggest the government may liberalize foreign direct investment in the telecommunications sector by going with Plan B.

When the consultation was first launched (at The 2010 Canadian Telecom Summit) three options were set out:

1. The CRTC approach, which would see symmetric liberalization for broadcasting and telecom, but only opening up the market for both sectors to 49% foreign ownership;
2. The approach described by the Telecom Policy Review Panel (TPRP) and endorsed by the Competition Policy Review, which would remove restrictions on telecommunications carriers that have lass than 10% market share;
3. Open the doors to foreign direct investment in all carriers.

A colleague reminded me that Option B is more nuanced than the simple 10% threshold might suggest. As the original foreign investment consultation paper acknowledged, the 10% solution was described by the Telecom Policy Review Panel [report no longer available on-line]:

In the first phase, the Telecommunications Act would be amended to give Cabinet the authority to waive the foreign investment restrictions applicable to a Canadian telecommunications common carrier based on a foreign investment or class of investments being deemed by the Cabinet to be in the public interest. The TPRP proposed that, during the first phase, a presumption should be made that investments in any new start-up telecommunications investment or in any existing telecommunications common carrier with less than 10 percent of the revenue in any telecommunications service market would be in the public interest. This presumption could be rebutted by evidence related to a particular investor or investment.

Prior to the second phase, the TPRP recommended completion of a review of broadcasting policy to resolve issues related to the separation of Canadian policy on broadcasting content from policies for the carriage of telecommunications. It recommended that there should then be a broader liberalization of foreign investment rules in a manner that “treats all telecommunications common carriers including the cable telecommunications industry in a fair and competitively neutral manner.” This liberalization would apply to the carriage business of broadcasting distribution undertakings, while new broadcasting policies would focus any necessary ownership restrictions on content businesses. The Cabinet would retain authority to screen significant investments to ensure they are in the public interest.

In other words, there would be reviews of the ownership by Cabinet, but there would be a presumption of approval in the case of smaller players. Presumably, a larger player could have increased foreign investment, if it can demonstrate the public interest benefit.

Note that the TPRP was clear that foreign investors would remain exempt if they succeed in growing their market share above 10%.

As we await an announcement, we should be aware that there are important subtleties to watch for.

The Christmas crunch is on.

In the wireless segment, this is the season that sees the greatest level of activation activity – meaning that the next 45 days may predict or even determine which service providers will survive on their own for another year. Which devices will win the hearts and minds of consumers? In a tweet, Kaan Yigit said that people may aspire to iPhone, but many settle for an Android.

There are a lot of price plans in the market and it isn’t always easy to compare offers between competing service providers.

I am often asked which service provider is better. Whether it is wireline, wireless, internet or TV, my answer is almost always the same: it depends.

It depends on what you want to do with the device and the service.

A good retailer will help you work through the answers, but it helps if you know what questions to ask. Here are a few that I think are most important.

Most important is confirming whether the service works optimally where you want to use it. Parents of college students need to remember that what works in downtown urban centres may not work in smaller college towns. Price is irrelevant if the thing just isn’t going to connect to the network. Conversely, just because the parents may want the service to roam across Canada or around the world doesn’t mean that the device for your grade school kid needs to.

If it is internet: what kind of speeds will I get at home? If it is mobile phone service: will you get 5 bars at home and along your regular commute? Do you travel? If so, will it work and what will it cost when I am away? Is the device unlocked for me to buy a foreign SIM card?

What kind of things do you want to use the service for? Are you interested in downloading music or watching videos? What kind of data plan is available? How much do I save by signing a contract? What are early termination charges if I change my mind?

I won’t even begin to look at the choice of operating systems on smartphones. That would be wading into a religious debate. But do be sure to consider intra-familial communications. How will the new device fit in with the rest of the household? 

By the way, I had a chance to try out a great phone over the past few weeks. In an age that focuses on full featured smartphones, the Doro is a throwback to another era. Big, easy to read buttons, large text display. If you have parents or grandparents who still don’t have a phone, then consider getting them a Doro or something similar.

As I wrote earlier this week, consumer education beats government intervention. What other questions should consumers be asking when shopping for communications services this season?

It was only a matter of time before Canada would officially engage with its citizenry using the same tools we use to stay in touch with each other.

Treasury Board President Tony Clement announced a new Guideline for External Use of Web 2.0 this morning at a conference.

Government of Canada departments are encouraged to use Web 2.0 tools and services as an efficient and effective additional channel to interact with the public.

A lot is bound up in that sentence. Use tools, such as Facebook, Twitter, LinkedIn etc. as an efficient and effective channel, in addition to (not instead of) presumably the older means to interact with the public.

The new guideline notes that interactive web tools can facilitate more rapid communication and engagement between government departments, including:

• Recruitment;
• Risk and emergency communications;
• Services to the public;
• Stakeholder outreach and education;
• As a collaborative tool; and
• Consultation.

On the communications front, we have seen the CRTC establish a Twitter presence (@CRTCgcca) and there have been a number of proceedings that have seen use of tools such as YouTube and collaborative consultation. Of course, the use of these tools does not seem to have resulted in faster delivery of a National Digital Strategy – which is a risk highlighted by the new Guideline. Among other risks, the Guideline observes that negative perceptions can arise from Web 2.0 initiatives because of an inability to fulfill reasonable expectations of timely two-way communication.

The Guideline is pretty extensive and should be reviewed on the government’s website. The complete Table of Contents follows:

Table of Contents
1. Publication Date
2. Purpose
    2.1 Application
3. Background
    3.1 What is Web 2.0?
    3.2 Benefits of Use
    3.3 Risks of Use
4. Key Considerations for Web 2.0 Initiatives
    4.1 Governance and Oversight
    4.2 Planning and Design
    4.3 Rules of Engagement
    4.4 Evaluation and Measurement
5. Establishing Guidance for Personnel
6. Additional Guidance Sources
7. Related Legislation and Policy Instruments
    Legislation
    Policy Instruments
8. Definitions
Appendix: Specific Policy Guidance (in alphabetical order)
    A. Accessibility
    B. Communications
    C. Federal Identity Program
    D. Information Management
    E. Official Languages
    F. Political Activities
    G. Privacy and Access to Information
    H. Procurement and Contracting
    I. Security
    J. Values and Ethics

I saw that Finland has issued new rules that are intended to simplify comparison shopping for broadband consumers:

The speed included in the contract must depict the true speed range of the connection with sufficient precision. It is not sufficient to only express the maximum speed or theoretical maximum speed of the broadband connection. In the future, the speed range must be expressed either by using the average data transmission speed or the range of data transmission speed with unambiguous minimum and maximum caps. The speed must be defined so that the promised quality can also be delivered during rush hour or during any sequence of maximum of four hours.

I understand what the Finnish regulator is trying to do, but it seems to me that it has missed the mark. For example, what consumer benefit is derived from having an “unambiguous maximum cap” on the speed? We have service providers in Canada that allow consumers access to extra fast speeds during off peak periods – this consumer benefit appears to be forbidden in Finland, in the interest of comparitive clarity.

It is an unintended consequence of nanny like regulations, protecting consumers from themselves. By removing flexibility in service delivery options, Finland is unintentionally reducing the flexibility of service providers to innovate and differentiate their services.

Consumers might be better served by improved education – getting better armed with questions to ask when shopping for service.

The CRTC had a fundamental principle at the core of its review of wholesale billing practices: will independent internet service providers continue to be in a position to offer competitive and innovative alternatives compared to those offered by the larger facilities based ISPs?

Services provided by the independent service providers bring pricing discipline, innovation, and consumer choice to the retail Internet service market.

Based on the outcome [press release, residential Decision, business services Decision], the CRTC has achieved, at least for now, a Solomonic balance.

Its task was not easy. Some of the major carriers advocated a usage-based approach while others were comfortable preserving the status quo. Adding confusion, virtually all carriers sought to keep business services on a flat rate model, and the CRTC concurred.

So the real interest is on the residential pricing model. The Commission decided to approve two different wholesale structures. Bell Aliant (Atlantic Region), SaskTel, Shaw and TELUS will be able to preserve their flat rate structures for whatever traffic happens to be generated; the remaining companies are expected to go with plan B: a model that has a network capacity element – the retail ISP pre-arranges network throughput capacity in lumps of 100Mbps.

Carriers build networks with such capacity considerations. The capacity model is a form of usage based pricing, but it leaves management of the capacity in the hands of the retail ISP. The question of user impact is dependent on the rates set for the capacity. Those rates, in turn depend on a variety of assumptions which explains to an extent the variability in wholesale rates between the carrier ISPs.

Last week, I noted an observation in Sandvine‘s most recent Internet Phenomena report:

Within North American fixed networks, Real-Time Entertainment applications are the primary drivers of network capacity requirements, accounting for 60% of peak downstream traffic, up from 50% in 2010. Furthermore, subscriber usage is becoming increasingly concentrated in a smaller band of the evening, driving up network costs despite relatively constant per-subscriber monthly data consumption.

To what extent will the increased concentration of traffic into a consistent busy period drive up the costs of independent ISPs? Will these ISPs seek to develop innovative pricing models that discourage coincident peak usage within their client base?

That in turn raises the question of whether the CRTC’s internet traffic management rules are flexible enough to permit users to choose a price plan that helps smooth out the ISP’s traffic profile.

Based on the experience of wholesale access for long distance services, the pricing models set out today could be with us for some time. Did the CRTC make the right adjustments to encourage independent ISPs to stay in the market? Are the right incentives in place for all ISPs to continue to invest in facilities to promote a healthy competitive market for the benefit of all consumers?