Affordability of telecom services is a major theme in the CRTC’s review of telecommunications in the far north. The far north is one of the only areas where broadband service is price regulated, and prices in many areas are substantially higher in the north than consumers typically pay in urban areas. Of course, prices for virtually everything are substantially higher in the north.

For more than 15 years, I have been writing about the relationship between income and the adoption of computers and broadband, observing as early as 2008 that the rate of adoption of broadband are as much an issue of getting computers into households as it is an issue of affordability of telecom services.

Economists typically define affordability as the ability of individuals or households to purchase or access goods, services, or resources without undue financial burden or hardship. Various measures of affordability relate costs to a personal (or household) income, expenses, and financial situation.

There are various ways to measure affordability, depending on the context. Some common methods include:

• Income-based affordability: This approach measures affordability by comparing individual (or household) income to the cost of a particular good or service. For example, a common measure is the “housing cost-to-income ratio,” calculating the proportion of household income spent on housing costs such as rent or mortgage payments.
• Expense-based affordability: This approach measures affordability by considering overall expenses for an individual (or household) in relation to income. It takes into account not only the cost of a particular good or service, but also other expenses such as transportation, utilities, food, and healthcare.
• Relative affordability: This approach compares the affordability of a good or service across different groups or locations. For example, economists may compare the affordability of housing in different cities or countries by looking at factors such as median incomes, housing prices, and cost of living indices.
• Subjective affordability: This approach takes into account perceptions of affordability. It may involve surveying individuals or conducting qualitative research to understand their subjective experiences and perceptions of affordability, including their ability to meet their basic needs, maintain a certain standard of living, or achieve their financial goals.

Affordability is a complex and multifaceted concept that varies depending on the context and the goods or services being considered. Economists may use one or a combination of these approaches to assess affordability in different situations. Policy makers must rely on such measures to inform policy decisions related to income redistribution, social welfare programs, or market regulations, especially as the CRTC considers acting as an agent to provide social welfare subsidies for telecom services in the north.

In a 2015 report [pdf, 2.1MB], the Public Interest Advocacy Centre (PIAC) said “We suggest that communications services are “affordable” where, as a guideline, they make up about 4% to 6% of a household’s income.” In 2017, PIAC found that low income households considered home internet to be equally important as health care.

At the hearing on telecom services in the Far North, NWTel announced that it will be joining Connecting Families, an industry-led program to bring affordable broadband services to the most disadvantaged households. Connecting Families provides 50 Mbps (down) / 10 Mbps (up) speed service for just $20 a month to families receiving the maximum Canada Child Benefit or low-income seniors receiving the maximum Guaranteed Income Supplement. There is also a 10/1 service available for just $10 per month.

Too many people confuse affordability with the overall desire to lower prices across the board. We all want lower prices for everything. The best approach for affordability of telecom services is to target help to those who need it most, with programs like Connecting Families.

A recent study by UK regulator Ofcom found that half of those eligible were unaware of “social tariffs” that could reduce household broadband rates by about £200 per year for millions of households.

Savings opportunities for eligible Canadian families are even greater than in the UK. But, the industry, including service providers, policy makers and the regulator, may need to develop partnerships with trusted community groups and social service agencies to understand (and overcome) the reasons why some households are not adopting broadband, even at deeply discounted pricing, with services priced well below costs.

It isn’t enough to make affordable broadband service available to targeted communities. Collectively, we need to make sure people actually get online.

The Canadian Wireless Telecommunications Association announced it is rebranding itself, dropping the ‘wireless’ qualifier, explicitly expanding its scope to include wireline communications. Its new Twitter tagline reads “Dedicated to building a better future for Canadians through connectivity”.

Welcome to the Canadian Telecommunications Association, a new name reflecting the organization’s broadened role. The Association promotes the “importance of both wireless and wireline telecommunications to Canada’s economic growth and social development, and the crucial role of ongoing investments by facilities-based service providers in delivering world-class internet and mobile-wireless services to Canadians.”

The rebranding represents the latest chapter in a nearly 50-year history for the organization. In many ways, the evolution of the Association’s name and branding over the decades reflects the changing nature of telecommunications in Canada. The association says it will continue to do more than advocate on behalf of its industry members. It facilitates industry-wide initiatives such as the Mobile Giving Foundation Canada, Canadian Common Short Codes, STAC and wirelessaccessibility.ca.

Technology evolution and consumer demands tend to blur lines between the capabilities and use of wired and wireless telecommunications. Many policy priorities overlap between wireline and wireless carriers.

“We remain dedicated to building a better future for Canadians through both wireline and wireless connectivity.”

Consumers want faster, more reliable internet connections, driven by streaming video and other bandwidth-intensive applications. So, service providers invest billions of dollars each year to expand and upgrade access and transport networks.

Canadian Telecommunications Association CEO Robert Ghiz said: “Our members are committed to ensuring that Canadians continue to enjoy world-class telecommunications services that are the cornerstone of Canada’s digital economy and an important contributor to the social fabric of our country. For this to happen, Canada must maintain a regulatory environment that incentivizes the high-level of private sector investment needed to connect all Canadians and build the next generation of connectivity infrastructure and services.”

“Canada’s future depends of connectivity” is a phrase that has appeared many times on these pages since it was used by former ISED Minister Navdeep Bains in August 2020.

The rebranding recognizes that connectivity can be delivered over wireline and wireless facilities, building digital infrastructure for a new era.

Canada’s innovation-based economy depends on connectivity – connectivity delivered by the investments made by members of the Canadian Telecommunications Association.

In what may be considered a premature exclamation, the CRTC chair issued a statement on the Online Streaming Act (Bill C-11) having received Royal Assent. (The Globe and Mail has an excellent summary of the bill.

The Media Policy blog had talks about ambiguity as “the fuel source for the never-ending flame of controversy” surrounding the legislation.

So, in some ways, it was smart for the CRTC to try to introduce some calm reassurance by issuing a statement about next steps.

The CRTC will establish a modernized regulatory framework where all players contribute equitably. The broadcasting system will ensure that online streaming services make meaningful contributions to Canadian and Indigenous content. Creators will have opportunities to tell their stories and Canadians will have access to a greater variety and diversity of content. The CRTC has no intention to regulate creators of user-generated content and their content.

Hold on.

That last sentence may be premature.

As Media Policy notes, “It’s been well established that social media users — ranging from major movie studios to individual YouTubers— won’t be directly regulated as businesses, only YouTube will be. But their programs might be if they are sufficiently ‘commercial,’ a line drawing exercise delegated to the CRTC.”

There are going to be consultations and the CRTC should be making determinations based on evidence. So, was it premature for the CRTC Chair to say the Commission “has no intention to regulate creators of user-generated content and their content“?

For that matter, how will we define a “creator of user-generated content”? How do we define content that is user-generated? At some point, does user-generated content become successful enough to be considered a commercial venture? At what point did the 4 brothers (Harry, Albert, Samuel, and Jack) transition to become Warner Brothers Entertainment? (As an aside, Jack Warner was born in London Ontario). What about that Saint John, NB scrap dealer, Lou Mayer, who turned his mind toward entertainment and co-founded MGM?

There is much ambiguity to be resolved by the CRTC in order to give effect to the Online Streaming Act. We need confidence that there won’t be political interference impacting the independence of Canada’s telecommunications regulator.

Let’s ensure that premature exclamations don’t prejudice the ultimate evidence-based determinations by the CRTC.

Will government regulations addressing online harms make it less safe to be online?

That is what the heads of a number of messaging apps have told the UK government. A recent article on Telecoms.com reports that executives from WhatsApp, Signal, Viber, Element, OPTF, Threema, and Wire have signed an open letter calling on the UK to rethink its Online Harms bill (that I have discussed previously).

“The UK Government must urgently rethink the Bill, revising it to encourage companies to offer more privacy and security to its residents, not less.”

The companies warned that as “currently drafted, the Bill could break end-to-end encryption, opening the door to routine, general and indiscriminate surveillance of personal messages of friends, family members, employees, executives, journalists, human rights activists and even politicians themselves, which would fundamentally undermine everyone’s ability to communicate securely.”

Writing about various states’ legislative bills aimed at protecting your from harms on social media, Ben Sperry of the International Center for Law & Economics opined, “It’s understandable that legislators would seek solutions to address the perceived harm that social-media usage may cause, especially for teen girls. But where these proposals go wrong is in substituting lawmakers’ own preferences for the decisions of parents and teens on how and when to best use social media.” Sperry says the predictable result would be for social media platforms to invest more in excluding teens from their platforms altogether, rather than investing in creating safe spaces for them to connect and learn online. “This may even be the goal of some legislators, but it’s not beneficial to teens, parents, or society in long run.”

Similar to what we have seen with digital legislation in Canada, the UK’s review of the Online Harms bill has been deeply polarizing. The author of the Telecoms.com article is pretty clear about his views on the legislation. “Given the degree of technological and ethical illiteracy shown in the drafting of this bill and its passage through the House of Commons, there seems little hope that the Lords will understand what’s at stake. But we’d be delighted to be proved wrong and cross our fingers that the Bill is returned to the government with lots of red ink on it.”

Budget myopia: It is a lot easier to prepare a 1 year forecast than a 5-year, or 10-year plan. Any questions about that bromide?

I remember in the early years of my consulting, entrepreneurs asked me to help prepare 10 and 20 year business plans for their revenues to show their investors. I politely refused to put my name to revenue forecast pulled from the air for new untested products and services. Other consultants happily created those wacky dot-com era forecasts. Remember those hockey-stick shaped revenue curves, the slope of which was sufficient to make the business case wildly positive?

I created and managed budgets at a few major service providers, so I fully appreciate the challenges.

With that in mind, today let’s take a look at budgets and planning at Canada’s communications regulator.

Last July, I noticed (and wrote about) the CRTC’s decision to hike telecom fees by 25%. Those are fees paid by telecom service providers, and ultimately consumers, to cover the cost of running the Commission.

How well does the CRTC perform in its budget planning and management?

Each year, the CRTC publishes its departmental plan, including a forecast (and actuals) for financial and human resource requirements. Some interesting trends appear when you look at the staffing levels in the past few plans.

I created this table from the budget summaries in the CRTC’s Department Plans: for 2019-20 [pdf], 2020-21 [pdf], 2021-22 [pdf], 2022-23 [pdf], and 2023-24 [pdf].

For each plan, actual results are provided for two years (shown in blue), the forecast for the current year (shown in red), and two years of planning looking forward (shown in black italics).

Notice that total CRTC staff levels increase 40% from 460 during the year ending March 31, 2017 to a forecasted 640 in the year ending March 31, 2024. Over the same period, CRTC spending increases nearly 60%, from $59.1M to $92.7M.

Look at the shape of forecasted spending, especially over the latest two plans. Last year’s plan called for a “temporary” bump in staffing to 547, falling back to 525 by March 2024. Surprise! The newest departmental plan no longer shows a reduction. Indeed, it calls for the CRTC to grow by another 12%, from 550 to 640. But, don’t worry! The plan drops back to just 603 the following year.

Uh, huh. More budget myopia?

The CRTC forecasted expenditures in 2022–23, in comparison to 2021–22, show a significant increase primarily due to the preliminary work undertaken related to the potential adoption of the Online Streaming Act (Bill C-11) that will continue in 2023–24, and to telecommunications-related activities.
…
Funding authorities increase in 2023-24 to undertake preliminary work for the potential implementation of the Online News Act (Bill C-18), and then decrease in 2024-25 as a result of the sunsetting of temporary funding authorities.

The CRTC’s 2019–20 Departmental Plan attributed the significant jumps in staffing and spending “to the implementation of the Broadband Fund regime.” The industry funds the CRTC’s Broadband Fund itself, as well as its administration.

In November of 2020, I asked, “When other agencies and departments at federal provincial and regional levels of government are already in the business of awarding grants, did we need the CRTC to create yet another broadband capital funding program?”

The CRTC has already started significant levels of spending for the Online Streaming Act and the Online News Act. The bills have not yet been passed and proclaimed. As the Commission continues expanding its mandate, are there appropriate and sufficient checks on its spending?

The CRTC has long operated an off-the-books alternate social benefits system outside the government’s tax system. I described this before in 2016 and 2018 among numerous other times.

These added costs of regulation inflate costs to Canadian service providers, ultimately raising monthly consumer bills. It doesn’t help that there appears to be an increasing level of political direction being given to the CRTC, that is supposed to operate “at arm’s length from the federal government”.

Do Canadians support a 40% bigger CRTC, costing 60% more?