Rule #186: Don’t pay for something you can get for free.

And that something free is telephone service.

Fibernetics’ freephoneline.ca has developed a VoIP application for Labatt’s Budweiser unit, Budphone, giving people an opportunity to assign incoming Canadian phone numbers for their PCs and Macs.

For our kids travelling this summer with a notebook computer, it is a way for them to stay in touch with home – calls to most of Ontario, Quebec, Alberta and BC are free from the application and there is a phone number assigned to the user which will allow family and friends to call to them.

The timing of the release should make college students think about including the free service in their communications plans.

I noticed that there are plenty of warnings about the limitations of 911 access from the application, just in case there is anyone who thinks that making an emergency call from their PC is the most effective way to report a fire. The warnings are at the top of the terms of service and there is a further warning splashed across the screen when the application loads for the first time.

Sponsored phone service has been tried before, with traditional phone lines calling a local number, listening to an ad and then connecting to another number.

Budphone is targeting a demographic that has the highest likelihood of having no home phone line.

The announcement that Netflix is coming to Canada helps crystalize some thoughts I have had since a family trip last month.

While driving  to Vermont, we stopped at a post office near Albany so that I could send a backpack filled with goodies out to my son. While we were looking for a box to fit, the postal clerk said that we could just tape up the plastic bag, throw an address sticker on it and send it as it was: $10.75 for 2 day express delivery. This was on a Friday morning. On Monday, the package arrived at his school on the other side of the country.

This experience struck me as being very different from Canada, where CD sized cushioned envelops are considered to be “oversized” and it seems everything has surcharges. At the time, I wondered to what extent our post office has been an inhibitor for the adoption of e-commerce.

Having access to low cost, flexible, reliable, and speedy distribution networks needs to be considered a key enabler for a digital economy, but too often, our focus seems to be on broadband, not the fulfillment of orders. The postal network may not be as sexy as telecommunications, but it is an important enabler.

That experience came to mind when I read that Netflix was only planning to offer Canadians its streaming video service, not its popular DVD rental by mail service. Why?

The other thought had to do with the impact of Netflix on residential broadband networks. Increasing streaming video will increase demand for higher monthly download caps. Some consumers may opt for higher speed offerings from the cable companies, which generally include higher download caps. The telephone companies have two options: accelerate their fibre to the home / fibre to the node investments; or, increase the download caps.

Current speeds are adequate for streaming movies to the average home; Netflix could help trigger a battle for competing offers for greater throughput.

Much has been written about the way countries other than Canada are investing billions of tax dollars upgrading telecommunications infrastructure in creative business models.

Government cash injections for information networking makes for good photo opportunities and allows politicians to show constituents how much they “get it”, all the while making references to how their teen-aged kids have so much more technological aptitude.

But looking at recent news articles, it should be apparent that we will not likely be able to deliver affordable terrestrial broadband to every household – at least not in my lifetime. And this isn’t because Canada is only investing $225M versus the A$43B (roughly C$40B) from Australia.

Two stories caught my eye last week. First was confirmation that Australia will be using satellite to finish the job of providing universal access to broadband, spending nearly a billion dollars to invest in two Ka band satellites.

The other news item was that the UK is not going to meet the aggressive timetable for universal broadband connectivity by 2012, an objective that it had set out just a few months ago.

So in Australia, tens of billions of dollars won’t get fibre to the home for everyone; satellite will connect up to 10% of their households. And in the UK, with much higher population densities, there is now a recognition that broadband connectivity isn’t as easy to accomplish as simply making an announcement.

On the other hand, we have seen the private sector in Canada investing in satellite broadband, having realized that there is no other realistic choice in the foreseeable future for many rural and remote residents.

We can continue to have parliamentary and senate committees study alternatives forever, and have armchair critics pontificate about how Canada is woefully underserved while we flush hundreds of millions of dollars trying to defy the geographic realities that define our national demographics. Or, we can be more pragmatic, and accept that not all Canadians will have the same technology powering their choices for broadband service.

Satellite works way better than dial-up for every application and it delivers a more than adequate broadband solution for almost every on-line requirement. 

In the past couple weeks, the federal government spent more than $1000 per household passed in order to make broadband available to a few select communities in BC, Alberta and Ontario.

How many households could receive lower cost satellite service if the government developed a direct user subsidy? Is it time for Canada to develop a national satellite strategy?

Governments can’t run networks.

It seems that our collective memories are short.

There was a time that most of the world’s telephone networks were agencies of the government: PTTs – Posts, Telephone and Telegraph departments. Those agencies were real life examples of how effectively – actually, how ineffectively – communications services could be delivered by governments. Indeed, the migration to mobile, with high adoption rates outside of North America, was stimulated in part by citizens revolting against pathetic landline networks that were built and operated by their government-run telcos.

The Digital Economy consultation provided a predictable opportunity for some closet Marxists to put away their anti-corporate protest posters and call for a return to nationalized communications networks. [The submissions can be found here]

The submissions are more subtle – perhaps learning from the recent G20 that the public has trouble sympathizing with black-hoods rampaging through the streets – but the message from these folks is that big businesses are bad; only governments can make the necessary investments to do right.

WRONG!

Government may be have been great at initial investments – the oversized cheques create photo ops that are important for re-election – but one look at our roads and electric grid will hopefully remind you that the public sector does a lousy job at ongoing maintenance, repair, upgrading and continuing capital planning. It is partly because government accounting doesn’t distinguish between capital and operating expense – a buck is a buck – and partly because routine maintenance can be deferred in favour of emergency snow removal or sewer repairs.

And let’s not forget the multi-zillion dollar deficits that aren’t really conducive to massive capital investments in communications infrastructure and operations. All those in favour of tax increases, please board the next flight to Greece.

Anticipating a rush to find counter-examples, let me offer up Sasktel – Canada’s last provincially owned crown communications company. It is, sans doute, a leading performer in the sector. Sasktel offers a quintuple play: landline and wireless voice, internet, TV and premises security. It has always led in fibre optic deployment in its backbone and it offers broadband internet to every home and business in the province.

Which begs the question: why is this an exception? Why has Sasktel been able to succeed where so many others have failed? Academics – can we get some research on this?

That solitary counter-example isn’t sufficient to change the overwhelming pattern of failure of governments to run public works effectively. The power blackout in Toronto last week provides an exhibit of how public works most often just don’t work for the public. 

Those submissions that call for government investment in community networks are asking for our tax dollars to be bet on the spin of a roulette wheel. Those are lousy odds.

As if to follow up on my blog posting yesterday, today Allot Communications released a special Mobile Report about the impact of the World Cup on network traffic.

Allot says that mobile devices did not replace big screen televisions during the World Cup, but created a new category where the two operated alongside each other – the small screen enhancing the viewing on the big screen, with additional football and match-related information in real time. The mobile devices were seen providing an ability to watch replays and distribute them virally.

Among the highlights of the report,

• Lunchtime matches showed the largest bandwidth increase with 31%
• Video streaming and P2P increased moderately by 11% and 13% respectively
• Mobile data bandwidth usage experienced a 16% overall increase during post-match mornings

Traffic on YouTube was seen increasing by 32% on the mornings after matches.