Mark Evans writes that “Canada Needs to Save RIM” which begs a few questions, like “what” and “how”? What help from the government does RIM need? How would the government help?

Mark writes:

Whatever tools at the federal government’s disposal should be used to make sure RIM stays vibrant as an independent company or division of another company with a strong Canadian presence.

As much as I’m not a big believer in government intervention economically, RIM is a special situation because it plays a crucial role within the Canadian economy – not only as a large employer but a company that spins off many start-ups by ex-RIM employees who want to use their expertise and wealth.

If the Canadian government, however, decides not to pro-actively help RIM, it risks having another Nortel on its hands. This is not to suggest RIM is going to seek bankruptcy protection but it may need the government’s help.

RIM is hardly a Nortel bankruptcy situation. Last quarter, the Blackberry maker had revenues of nearly $5B and net income of just shy of $700M. As Jim Balsillie said at the time of the earnings release,

RIM’s business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash.

So, our government’s cash isn’t needed. The government isn’t really known for its marketing prowess to help out on that side. Should we have special tax credits for Canadians using Blackberry devices? That may run afoul of various free trade agreements.

There is no question that RIM is an important, if not integral part of Canada’s high tech landscape. But what can Ottawa do? What should Ottawa do?

We have visitors from overseas this month who are traveling around central Canada this week. Of course, they each own mobile phones from their home country but we all know how painful roaming fees can be.

So, just as I own a half dozen SIM cards for my trips, they are now the proud owners of a Canadian pre-paid SIM.

But that isn’t the point of today’s story.

They forgot to take their charger with them for this week’s side trip. As a result, we had trouble reaching them yesterday; battery life was being conserved for emergency purposes. After last night’s consultation, we determined that the phone uses the standard micro-USB so it shouldn’t be much effort to borrow a plug for a top-up.

As we discussed airport pick-up arrangements and what we do if the phone runs out of power, it made us reflect on what we did “in the olden days”. Of course we all survived, but it is a lot easier with the variety of portable communications devices that nearly all of us carry.

Which raises the question being asked by CTIA today: what is the right age for children to get their first cell phone? The various stores and carriers have launched Back-to-School specials and product introductions. My kids had phones in high school, but I think in today’s world, I would want them to have phones even earlier. I have family overseas who equipped their kids with a phone in primary school.

I’d be interested in your comments and discussion.

The UK regulator, Ofcom, released its annual communications markets report yesterday and it is an interesting read [pdf, 4MB].

There is a wealth of information to be found there – not unlike the CRTC’s report. One table in particular caught my eye, especially in view of the attention being paid to Blackberry.

Apple’s iPhone is the most popular brand of smartphone, with a 32% share among adults. This is the brand of choice among ABC1s (37%) and is even higher among ABs alone (44%). But BlackBerry handsets have also taken a significant share of the market (24%) and are particularly popular among younger adults and teens (37% each). Female teens, in particular, appear to have a preference for BlackBerry handsets (44%). Anecdotal evidence suggests that this preference is driven by the BlackBerry messenger service (BBM) which offers a free alternative to texting (SMS). [click here for description of ABC1, AB, etc.]

What is driving UK teens to Blackberry? Would we not have expected this to be an iPhone or Android group? Is the UK market an outlier or is this phenomenon taking place in other geographies? Is it the Blackberry physical keyboard or BBM that is driving its success?

If usage isn’t curtailed, is an economic traffic management practice ineffective? If there is no congestion being experienced, should traffic management practices (economic or technical) be prohibited?

These are some of the questions raised in arguments submitted last Friday to the CRTC in its wholesale usage based billing review.

MTS Allstream cited evidence from Cogeco (that stated its traffic growth rate had not significantly been impacted by retail usage based billing) to state that

volume-based billing models does nothing to reduce the total amount of traffic on the network… In other words… volume-based billing is ineffective in achieving its stated objective of suppressing volume of data transferred in a month.

Is reduction in traffic really the objective, or are carriers that implement economic traffic management practices looking to align retail prices with the value of service received? If volumes of traffic aren’t being changed, is there a fundamental problem with the practice? What policy objective is being violated?

In a strange twist of logic, some argue that users are generally not seeing evidence of congestion, so traffic management practices are not necessary. Would these people be happier to have degraded service levels first – the way cities manage road expansion. As if we would be better off to have carriers use “just too late” provisioning practices, instead of “just in time.”

Perhaps the most difficult piece to follow was submitted by CAIP. As an aside, CAIP’s piece was submitted late “due to technical problems”. It is somewhat ironic that a division of the Canadian Advanced Technology Association would be subjected to technical problems causing a two day delay in filing. CAIP raised the issue of Canada’s wireless industry to discuss network investment.

If we use wireless telephony services as an example, it becomes apparent that the frequency of investment and the value of these investments are complimentary [sic].

I’m not sure where CAIP was going with this. Like internet services, the wireless retail business is forborne from price regulation, Canada’s wireless industry does not have mandated resale requirements. CAIP acknowledges limited regulatory obligations on wireless:

Similar to the evolution of wireline networks, this is occurring because the three major wireless incumbents in Canada are desperate to gain market share from each other. In the wireless realm the key mandatory regulatory obligation is that the incumbent carriers provide access to their essential tower and site facilities and out‐of‐territory roaming.

Was CAIP suggesting that there may not be a need to have any requirement for regulated wholesale access, except for services provided to other facilities based carriers?

Ryerson Professor Catherine Middleton submitted comments to the CRTC’s usage based billing review that shared some international experience.

Perhaps most helpful was her reference to Australia:

The Australian Competition & Consumer Commission suggests that effective competition is characterized by rivalry in pricing and services, requires low barriers to entry for new providers, and enables competitors to hold “a reasonably sustainable market position.”

However, citing the CRTC’s recently released Communications Monitoring Report, Paragraph 12 of her comments assert that that “non-incumbent /competitor ISPs” hold just 6% of the market. In fact, the CRTC’s report shows that the major telephone companies had just 37.6% share. The 6% figure ignores the 56.4% by cable companies which cannot be combined with telephone company share. Surely the 62% share held by non-telephone company industry participants would be considered to be “a reasonably sustainable market position.”

I noted some other statements that might have drawn some questions from the CRTC, had she participated in the oral proceeding. For example, the comments assert

Taking the availability of fibre-to-the-home services as an indicator of innovation, with less than 1% of broadband Internet subscribers using a fibre connection, Canada is not a leader in providing innovative services.

Personally, I would not have considered the use of FTTH technology as an indicator of innovation, but rather an indicator of investment. As the CRTC’s monitoring report indicates, about 75% of Canadians have access to internet services at greater than 50Mbps, and nearly 20% of Canadian households have access to more than 100Mbps services. Both of these are substantial increases over the previous year.

Further, a reliance on OECD data would obviously not get my support, but there is a perspective that simply does not agree with the CRTC’s own data:

with just 6% of the market, non-incumbent/competitor ISPs in Canada have had minimal impact on consumer choice, pricing and the development of innovative services.

The CRTC’s figures show substantial changes in pricing [see Table 5.3.3], network development [Table 5.3.5] and availability of alternative networks [Table 5.3.4]. One cannot simply ignore the competition between telephone companies and cable companies. The submission refers to DSL and DOCSIS 2.0 as current generation while considering the broadband capabilities beyond these technologies as next generation infrastructure.

As Canadian Internet service providers build out next generation networks, it is essential that the regulatory environment continue to promote competition and ensure that Canadians have a choice of differentiated, innovative service offerings. In order for this to happen, competitive ISPs must remain in the market. The conditions in place in the wholesale market today will influence the nature of competition in provision of next generation Internet services tomorrow. It is essential that the CRTC preserve the viability of competitive ISPs so that they may continue to challenge incumbents and encourage the development of better Internet services for all Canadians.

It seems to me that the evidence shows that facilities based ISPs have been investing in these “next generation” technologies on the basis of inter-platform competition, far more than the competitive influence by independent ISPs. If the premise of the argument – that competitive ISPs encourage development of better Internet – doesn’t hold, is it no longer essential for the CRTC to preserve their viability? Is it the role of a regulator to preserve competitors or competition?