Yesterday’s CRTC decision on unbundled local loops should signal many competitors that it is time to grow up.

Wholesale aggregated services have provided a safe arbitrage opportunity for too many, lulling operators into a comfort zone that had no incentive for investment and service differentiation. Now, coupled with usage based billing from August’s wholesale access services decision, the CRTC has updated the regulatory framework for competition in telecom services.

For nearly 20 years, the CRTC has enabled competitors to ramp up their operations by building an customer base using wholesale aggregation, followed by network optimization using local loop resale and ulimately encouraging investment in alternate facilities. The latter two steps require more investment, but these provide the opportunity for real competitive differentiation in price and services.

As such, consumers derive more substantial benefits as competitors mature in their network development.

The CRTC has approved new unbundled local loop rates for colocated service providers in Ontario and Quebec [Telecom Decision 2011-24].

The rates are as low as $6.75 per month (Band A) or $13.45 (Band B), permitting alternate service providers – including internet service providers – to build out an alternative to wholesale access to bundled telco offerings. The new rates are being applied 13 months retroactively to December 14, 2009.

An article in Wire Report says that the Canadian Association of Internet Providers (CAIP) doesn’t believe that colocation is the best strategy for third-party ISPs. According to the chair of CAIP:

[Colocation] can be cost prohibitive for anyone who is trying to set up at a small central office where [they] would have limited reach and limited coverage.

It raises the question of why smaller ISPs have not aggregated their requirements under a sharing group to spread the initial costs over a wider base of subscribers and investors. Up until now, the industry associations seem to be lobbyists. Perhaps the time has come for them to provide some shared network services.

There is now certainty in the pricing of unbundled loops. With the advent of usage based pricing on aggregated wholesale services, perhaps it is time for competitors to develop differentiated services using their own facilities. It would increase consumer choice and put more competitive pressure on the larger service providers, consistent with the CRTC’s long standing policy for competition.

Canada needs a million computers for lower income households.

We have computers in 81.7% of our households, heavily skewed by income. High income households are already computer equipped – better than 97% of households in the top income quintile have a computer and virtually all of them are internet connected. But in the lowest income quintile, only half of the households have a computer. I think this points to computer ownership being an affordability issue. 

Canada has about 12.5 million households, so each quintile represents 2.5M homes. We need to start with households with school aged children. If we want to have the world’s most digitally literate economy, we need to make sure that no kids are left behind because their parents couldn’t afford a computer to help them compete.

Of Toronto’s 1.8M households, around 225,000 are without computers. In Montreal, there are about 300,000 households without a computer. Vancouver: 100,000. Many urban centres lag the national average; Yellowknife has among the highest rate of computer ownership.

A million computers will bring the lowest income households to parity. One Laptop Per Child set out to provide the world’s poorest children with a connected laptop computer. Shouldn’t all Canadian children be comparably (if not better) equipped?

How many computers are being discarded from corporations that should find their way out of recyclers and into the hands of school kids? Are there low cost incentives to encourage re-use of business computers and stimulate investment in new machines? Can we develop a voucher system that encourages competition among retailers to win the business of eligible households?

Virtually all households with computers already have an internet connection, but one in five Canadian households lacks a computer. To grow the market for internet services, we need to increase the number of households with computers. That represents an opportunity for more than 2 million new household connections. What is the role of the telecom services industry in increasing computer ownership?

One million computers. What ideas do you have?

Forty years ago, my father participated on the Commission on Emotional and Learning Disorders in Children that issued a report called “One Million Children” providing a blueprint for meeting the needs of one million Canadian children with primary learning disorders. The title of that report inspired the title of this blog post. We need to ensure that all Canadian children have access to the tools to succeed. 

Last week, I mentioned the PIAC report that concluded that consumers have not benefited from nearly 20 years of telecom competition in Canada.

The document seems to be somewhat disparaging at the ineffectiveness of consumer stakeholder representation in communications tribunals:

The gaps in the demand and the ability of the public interest to be adequately represented in telecommunications issues and proceedings are substantial. The bridging of such gaps will likely require a separate study. This report will touch upon this issue again in the recommendations.

PIAC says that the solution will require a separate study, but this strikes me as the core issue. As I mentioned last week, consumer groups have been active lobbyists with politicians, regulators and policy makers in every proceeding.

The CRTC revised the funding formulae for cost awards just before the holidays with its Telecom Regulatory Policy 2010-963. But does not achieve the same result as that recommended by the Telecom Policy Review Panel. In its final report, the TPRP observed the need for improved policy research capabilities.

Recommendation 9-2
Industry Canada should make a multi-year commitment to fund ongoing policy research to support improved policy making and regulation in the telecommunications and information and communications technology sectors. Research grants should be awarded by a qualified, independent panel, and the research results should be made publicly available in a timely manner.

I agree. I also agree with the recommendation of the Panel in respect of long term funding for the participation of public interest groups:

Recommendation 9-30
The government should review the issue of public interest group participation in telecommunications regulatory proceedings. Funding for such participation should come from a multi-year commitment by government to subsidize such participation, rather than costs awards imposed by the CRTC on individual telecommunications service providers.

The entire industry – consumers and service providers – will benefit from an enhanced quality of representation of diverse perspectives made possible by an improved funding formula.

When will we bury the Public Switched Telephone Network?

That question is at the heart of a recent article at Webtorials, entitled “Can the PSTN be Shut Down?”

Wireless and broadband connections proliferate while the old copper pair connections offered by the Telcos are turned off, as many as 700,000 lines per month. The trend is all downhill for the PSTN and its legacy operation.

Interconnection, numbering, free calling areas, regulation: all of these are based on the primacy of classical public switched telephony networks dating back 130 years.

There are now more mobile lines than land phones in virtually every country in the world. Most corporations have long abandoned analog telephony and many are using integrated IP platforms.

The paper raises interesting questions that merit examination. Are we prepared to shut down the PSTN?