Young adults increasingly go online just for fun and pass the time.

We all suspected that. Now there is a study from the Pew Internet & American Life Project that proves it.

On any given day, 53% of all the young adults ages 18-29 go online for no particular reason except to have fun or to pass the time. … Indeed, 81% of all young adults in this age cohort report they have used the internet for this reason at least occasionally.

While this is a US based study, there is no reason to suspect the results would show a lower percentage in Canada. Indeed, it is likely higher – much higher – given that Canadians are recognized as being online more than any other people on the planet.

What troubles me is wondering about the young adults who aren’t going online to have fun and pass the time. Having fun and just passing the time is evidence of comfort, of digital literacy, of access. Shared access in a school or community centre or library doesn’t afford the same level of access as having a connected device at home.

But, as I have written before, computer ownership is highly correlated to household income and half the Canadian households in the bottom income quintile do not own a computer.

So we have a sizable part of the population that may be excluded from online social interaction because they lack computer access and are missing out on development of current digital literacy skills. The lack of comfort operating in a digital environment will have cascading economic impact, with more employment – even those jobs considered menial – increasingly demanding computer literacy.

The Pew study breaks down their results to show that spending time online, just for fun, is tied to income levels and age. There is also a gender factor that appears to have significance: 62% of males versus 54% of females.

How do we make sure that all Canadians have the ability to get online, even if it is for “no particular reason”.

Is telecommunications exclusively under federal jurisdiction in Canada?

We used to think so, at least since the Supreme Court of Canada ruled on the AGT/CRTC case in 1989 and the Guèvremont/Quebec case in 1994. But, recent cases suggest that federal authority may merit “new reflection”.

My friend Michael Ryan has an article in the November issue of Canadian Bar Review that suggests that the division of powers may not be so clear in the case of non-facilities-based telecommunications services providers – specifically those entities that are not physically involved in transport across provincial boundaries. In 2009, the Supreme Court ruled on Consolidated Fastfrate versus Western Canada Council of Teamsters.

Referring to Fastfrate’s role, [Rothstein J] said that its “presence at both the originating and terminating ends may mean that it can provide a comprehensive service to its customers, but this does not change the fact that it is still only a shipper using an interprovincial railway or trucking company.” [emphasis in original]

The article reviews various cases in depth, and specifically identifies provincial consumer protection legislation as an area where questions of authority may arise.

As a consequence of the recent decisions of the Supreme Court of Canada, the bounds of federal authority over telecommunications undertakings are less certain than they have been for many years. It is left to future decisions to determine more precisely where the new boundaries lie.

Given that my legal training used to consist of tele-training for the California bar through episodes of LA Law, my interest in the article is somewhat voyeuristic. I’m sure some members of the Canadian bar will be looking at opportunities and challenges inspired by this article.

Innovation drives productivity. I understand that point. But what is the best way to drive innovation?

A much tougher question. Governments around the world are doing what governments typically do when they want to incent behaviours: use the lever of money.

A couple weeks ago, Canada threw $80M toward the problem, issuing a press release saying that it was “invest[ing] in Canadian business innovation [to make] Canada a global leader in the digital economy.”

But if money is the only lever that is being used, a country can only “lead” until some other region opens its wallet even more. Europe is now proposing to spend €80B (that’s right – B as in Billion – Euros) in funding for research and innovation, citing “a €120 million research investment by the EU enabled the 3G mobile market that we know today, worth €250 billion”. The implication being that the EU got a 2000 times return on its investment in 3G. That kind of economic analysis may be what makes Europe such a beacon of fiscal leadership that guides global markets today.

But that is not what I want to talk about. Nor will I look at whether the EU can actually write a cheque for €80B.

I’m just not convinced that we have the right approach in governments throwing money toward selected performers of research and innovation. It seems to me that application based programs have winners and losers. Some group of bureaucrats sit in judgment over projects and determine which are naughty and which are nice, which get funding and which get rejected. There are just so many problems with this approach, not the least of which is that governments are not known for making winning decisions.

Are innovation incentives rewarding the wrong kinds of companies? As I wrote earlier this week, if an innovation is going to result in a productivity improvement, why isn’t the business doing it on its own? Why wouldn’t the business be trying to improve its profitability without the need for cash from a government program?

Let’s not forget to look at where the government program is being funded – the source of those tax dollars. Profitable companies – including those that took the risks and innovated on their own prior to the program – are seeing their profits taxed so that companies with lower risk tolerance could get a handout. There seems to be something inherently wrong with the kind of Sherwood Forest code of justice, that takes taxes from winners and innovators and hands it over to their competitors who weren’t willing to innovate on their own.

Governments need to innovate in their approach to managing behaviour. Protective tariffs block competition, reducing incentives to innovate and increasing costs for consumers and businesses that use the goods as inputs. Restrictions on trade, investment, paperwork and more need reform to be part of government leadership in innovation. Government handouts aren’t innovative. Getting out of the way would be a novel approach for government.

Can we use the levers of increased competition, coupled with increased willingness and need to take risks, in order to more systemically drive an innovation economy?

It’s only $2M, so why get worked up?

I’m referring to the decision by FedDev Ontario to give $2M of your tax dollars to some associations of angel investors. Four groups are getting $50,000 each to develop websites and promote their organizations in order to expand their memberships and attract additional investors. A national organization (NACO) and its Ontario affiliate (NAO-Ontario) scored more than $1.8M.

While the press release claims that this money will “attract greater angel investment” and uses language like “increasing the investment pool”, call me cynical.

If the investors who are members of these associations actually believed that the money would have a benefit, why aren’t they ponying up the risk funding themselves?

Would any of these investors put money into a company that didn’t have its own website? Are their investments going to be looking for the government to fund their promotion?

Why is the government picking these associations to support over any other associations or groups of angel investors?

Sure, it is only $2M, but as I wrote a couple weeks ago, (and echoed this weekend by Michael Geist) this seems to be yet another play being run without an overall Digital Strategy.

At what point do broadcasters stop being broadcasters?

At the IIC conference in Ottawa earlier today, Greg O’Brien of Cartt.ca reported that much money “can be diverted to content by switching off expensive OTA transmitters in favor of satellite.”

Most Canadians watch TV using a cable or satellite based broadcast distributor. Those distributors are often accessing the station using a satellite or fibre feed which raises the question in my mind: what is actually being broadcasted?

At what point does a broadcaster cease being a broadcaster? If there is no need for the radio frequencies for over-the-air transmission, then how do we distinguish between that TV station delivering content and say, a website delivering content? More and more of the set-top boxes are IP based, essentially acting as specialized personal computers many of which are Microsoft powered.

So, in many homes, the family entertainment room has already been transformed into a 40-60 inch computer monitor, connected to a specialized computer with a non-alphabetic infra-red keyboard (the remote control), which is connected to an IP based network. Instead of entering a “www” address, the user enters a shortcode, such as 16, in order to view content coming from another site.

Ignore the legacy model and I look at how my kids are buying entertainment. The set-top box driving the big screen TV is an old computer with Netflix; it could just have easily been Apple TV. Little stands in the way of what we currently think of as network programming being delivered over that same computer network.

Which begs the question: At what point does our home entertainment shift away from being regulated by the CRTC?

This question becomes important since it ultimately determines the amount of choice available to consumers. It has implications for consumption of domestic content and the Canadian production industry. Indeed, as consumers start to access programs directly, are local stations going to have a role beyond serving as a portal selling local advertising?