The 700 MHz spectrum is still filled with TV signals, but that isn’t keeping Canada’s wireless industry from starting to test the waters for what should be the auction policy.

At the BMO Capital Markets Media & Telecom Conference yesterday, Public Mobile CFO Jim Hardy said that he thinks the entire block should be set aside for new entrants. It is the first volley in what will be sure to be a hotly debated consultation over the spectrum auction policy.

A report in Cartt.ca says that Industry Minister Clement wants to “get the wheels rolling on the auction of the 700 MHz wireless spectrum.”

As the Minister told Cartt.ca editor Greg O’Brien: “You don’t have to finish all of the work to clear the bandwidth – and then start on working out the details of the auction.”

The 700 MHz band is considered to be particularly attractive for mobile use. The frequency is better at penetrating buildings and travelling farther than higher bands.

When the US auctioned off the 700 MHz band in 2008, the sale generated an average price per MHz pop of US$1.11, versus US$0.54 for the AWS band (auctioned in the US in 2006). The Canadian AWS auction in 2008 generated an eye-popping C$1.41, thanks in part to what has been considered to be a flawed auction design that enabled gaming by new entrants to drive up incumbent costs.

On August 31, the CRTC tried to get the final word on the deferral account.

As expected, Bell has filed an appeal – a review and vary application to ask the CRTC to reconsider its decision.

There are some interesting procedural points.

Bell has filed two separate appeals, each narrowly focussed. One of them looks at the majority ruling from the CRTC that insisted on selecting a specific technology (DSL); the other deals with the interest calculations on the massive balance of funds that the phone company has been holding.

The application regarding technology choice takes no issue with any of the fundamental policies that underpin the CRTC’s decision:

The Company takes no issue with the principle of least cost technology and the Commission’s determination (at paragraph 44) approving a drawdown of $306.3 million from Bell Canada’s deferral account for the expansion of broadband services to the approved 112 communities.

In terms of the DSL Technology Directive, the Company similarly takes no issue with the principle that the proposed retail and wholesale broadband service offerings to be made available in the approved communities must be comparable to those offered in urban areas. The point of disagreement here is solely with the Commission’s technology choice, rather than these service specifications.

As we asked in our September 1 write-up of the decisions, why wasn’t Bell given the same discretion of using its own choice of technologies, as long as it delivered a specified service within quality and pricing parameters?

The procedural aspects are interesting, both in splitting the two issues (technology choice and interest calculations) and in the manner in which the technology application is filed, as both an R&V as well as a new application. It is a new application because “it relies upon facts or circumstances which are different from those relied upon by the majority in issuing the DSL Technology Directive.”

But, Bell says that the DSL Technology Directive is also tainted by “doubt as to the correctness of the Commission’s decision to direct a DSL technology-based solution rather than provide the Companies with the flexibility to choose the technology that meets the Commission’s minimum service offering comparability characteristics.” 

The deferral account has become the song that never ends. With this latest twist, the affected communities will experience more delays in having broadband service deployed.

At some point, will the CRTC recognize that this program just didn’t work, despite all of the best intentions?

Maybe the best solution all around is to refund all of the money to the rate payers and let the competitive broadband marketplace fill in the rest. As I wrote last week, it is time to stimulate demand.

This evening marks the start of Rosh Hashana, the start of the Jewish calendar year 5771. Our offices will be closed for the rest of the week.

Rosh Hashana observance is different from the partying that characterizes each December 31. Instead, we listen to the stentorian blast of the shofar [ram’s horn] heralding a time of introspection, examining the past year and looking forward to a year of improvement ahead.

It is my intent for this blog to challenge you, my readers, to examine issues from different perspectives.

In doing so, if I have insulted or hurt through my words, I am sorry; allow me to express my regret.

May the year ahead be filled with good health and peace. I hope I can continue to provide points of view and critiques that inspire all of us to bring forward a bright, digital future.

The wrap up of the deferral account last week should cause a re-think of supply side broadband programs.

The amount of money that was directed to be poured into serving so few homes should make us pause. In Bell territory, $300M of subscribers’ money is to be used to subsidize access for 60,000 homes.

Because of the long delays in the CRTC’s processes, many of the so-called unserved areas already have access from alternate service providers who entered the markets without subsidies.

So you and I are spending $5000 per household to install the capability to subscribe to Bell’s DSL service.

Maybe three quarters of the homes will sign up, so we are spending more than $6000 per new DSL subscriber with no financial means test to see if these homes needed a subsidy. In a patronizing urban-centric way of thinking, we seem to have been caught up with a view that rural and remote subscribers all need financial help.

That doesn’t make sense to me.

If broadband access is an essential part of our modern households, then can’t we consider the connectivity cost as part of the total cost of the home? How many people in Toronto or Vancouver or Calgary would gladly trade their total household cost with that of rural Canadians?

As I told the Edmonton Journal, we need to turn our attention to focus on stimulating broadband adoption. We should be concerned that there are still so many households in Canada that don’t have access to a computer in the home.

How many households with school age children have no computer? As a country, we are hovering around 80% of households owning computers, but well beyond that with wireline broadband access. With wireless access added into the mix, we are in the very high 90’s for broadband access and satellite-based broadband completes the job (and yes, I have tried satellite broadband – it works well, thank you).

According to Statistics Canada, nearly every household in the upper income category has a computer (97.0%) with virtually all of these households (96.7%) subscribing to broadband access. On the other hand, only half of the lowest income households have a computer, and one in five of these homes weren’t connected.

How many of these households have school-aged children?

We should be ensuring that public funds being spent on broadband stimulus have clear targets and measurable objectives. It seems to me that we are getting diminishing returns from programs that artifically tilt the economics of extending the reach of DSL.

How many more Canadians would benefit from a broadband program that targets putting a computer with broadband into every household with children?

Following up on my recent post about about placing calls from with GMail, there is a need to clarify some issues and explore others.

First off, I received some clarification from a Google spokesperson:

The call phones feature in Gmail will generate revenue through international calling.  We’re not using this feature to sell ads, and have no plans to do so.

I understand that Google is not planning to make use of personal call data to place ads, including use of location information or destination of your calls to place ads either. Google is not listening in on the phone conversations, and it does not record them, contrary to what you may have read elsewhere. 

A history of calls made from your computer gets logged, but users will need to log-in in order to see this history, which enables users to view, manage, and delete this history from google.com/voice. When you delete the call history, Google anonymizes the data so it has no way of knowing who placed which calls.

We can leave these privacy types of issues to others to pursue; we will watch to see if there will be commitments from Google to hold to these initial design principles.

I have not yet heard back from Google regarding a registration with the CRTC as a Telecommunications Service Provider (TSP). From what I have seen, it certainly appears that Google is offering its international voice service to the public in order to generate revenue on a per minute basis – a pretty conventional long distance business model. As such, one would expect that Google should be registered as a TSP and apply for a Basic International Telecommunications Services (BITS) License. The same holds for Skype and others in this business.

 A Basic International Telecommunications Services (BITS) licensee is an entity that the CRTC has authorized to carry telecommunications traffic between Canada and another country. All Facilities-Based Providers and those Non-Facilities Based Providers that carry telecommunications traffic internationally must obtain a BITS licence.

These filing requirements ensure that all service providers are subjected to the same regulations, including contributions to the universal service fund and CRTC data collection.

An examination of Table 5.2.1 of the CRTC’s 2010 Communications Monitoring Report seems to indicate there may be a lot of missing minutes. In 2005, long distance minutes grew by 10% – about 6 billion minutes – over 2004, In 2006, the growth rate was about 8%.  But the last 3 years have seen virtually no growth – even a modest contraction in long distance minutes.

Some of this traffic is exempt computer-to-computer substitution. But do any of us believe that there is really less long distance calling today than there was 5 years ago? Where did those minutes go?

While some may disagree with the universal service subsidy mechanism, the CRTC needs to ensure that all of the industry participants are playing by the same set of rules and sharing equally in the costs.