Last fall, we released a report called “Lagging or Leading” to take a fresh look at the state of broadband infrastructure in Canada [pdf, 1.0 MB]. It is a sizable piece, that assesses a number of comparative international studies and identifies many of the problems associated with comparing apples and oranges.

In Saturday’s Globe and Mail, there was an essay that seems to validate many of the messages of our report last fall. The piece was authored by noted economist, Leonard Waverman, dean of the Haskayne School of Business at the University of Calgary. Professor Waverman does research on the growth and productivity impacts of the rollout of telecommunications and computers. He is also lead author of The Connectivity Scorecard, [we wrote about it here] which ranks countries according to a new definition of how telecom infrastructure, ‘smart’ usage and complementary skills and capital drive economic growth and productivity. The co-author of the essay was Scorecard collaborator Kalyan Dasgupta, of the London office of global expert consultancy LECG.

The essay is important reading. It observes that

Economists with extensive practical experience of telecommunications regulation have already rebutted the Berkman Center report that harshly assessed Canadian broadband performance

Still, the essay takes time to highlight difficulties with attempts to transplant measures from other countries.

The “lines per 100 persons” measure is misleading and less conceptually solid than measures based on household and business adoption rates. Indeed, both business and household adoption rates should be measured separately and in different ways.

As the essay observes, “broadband cognoscenti often look upon European regulation with admiring eyes.” Perhaps that is why they are willing to allow ideology to cloud their analysis of data.

International comparisons almost always suffer from limited data and limited comparability, particularly comparisons of prices and speeds. This is why great humility and caution are required in drawing policy conclusions from such comparative data. Regulation curtails economic freedom, which is why a very high standard of evidence is required to justify regulation.

On Tuesday June 8, Dr. Waverman will be participating on a panel at The 2010 Canadian Telecom Summit looking at International Perspectives on ICT Strategies. These issues are especially important given the plans by government to develop a national digital strategy.

Have you registered yet?

A week ago, a tweet was directed to me asking about download caps.

It was possibly a rhetorical question, but it may also demonstrate a lack of understanding of capacity constraints and cost drivers on wireline and mobile broadband networks.

An unlimited buffet advertised (but not necessarily offered) in other markets won’t last forever. AT&T’s CEO has already said that the company will need to “progress more toward variable pricing. Heavier consumers will pay more than lower consumers.”

In the old days of email, file transfers and news groups as the main applications on the internet, delays due to queuing of transmissions was less of a concern. Who would notice a second or two delay? Streaming content, gaming and voice are far less tolerant of these.

I wonder if we can frame the network engineering problem as having two components when we define broadband capacity: the throughput speed and the volume of traffic to be carried. Think of it in terms of a car. You can put a powerful engine into a car to make it go fast, but the size of the gas tank and how much fuel is on board determines how far you can go.

Are unlimited offers sustainable?

The new Federal Budget raises more questions than answers in respect of liberalization of foreign ownership:

The Government of Canada is committed to ensuring that Canadians can benefit from increased competition and investment in the telecommunications sector, which will lead to greater innovation and lower prices for consumers. Increasing foreign investment is an important way of strengthening market competition and attracting new capital and innovative ideas from abroad.

Consistent with the recommendations of the Competition Policy Review Panel, the Government is acting in Budget 2010 to remove the existing restrictions on foreign ownership of Canadian satellites. This will allow firms to access foreign capital and know-how and to invest in new and advanced technologies. The removal of restrictions will also allow Canadian firms to develop strategic global relationships that will enable them to participate fully in foreign markets.

Yesterday’s throne speech said “key sectors, including the satellite and telecommunications industries”. That was sectors, plural. Not just the satellite telecommunications sector. Well, what about removing restrictions on foreign ownership of Canadian carriers? Small ones, new ones, big ones. Only foreign ownership of satellites?

Enabling strategic global relationships? We were able to do that before, but ask just AT&T how well that worked out.

We’ll need to get some clarity on what is driving the focus on satellites.

Yesterday afternoon, amidst traditional pomp, the Usher of the Black Rod summoned Members of Parliament to the Senate chambers to hear the Governor General deliver the agenda of the Government: The Speech from the Throne [pdf, 1.74MB] .

Highlights from the perspectives of the Telecom Industry include a plan to liberalize foreign ownership:

Our Government will open Canada’s doors further to venture capital and to foreign investment in key sectors, including the satellite and telecommunications industries, giving Canadian firms access to the funds and expertise they need.

While some wondered whether this includes broadcasting, I suspect that this move is to apply on the telecom side only, leaving broadcasting ownership restrictions in place. We shouldn’t forget that the CRTC has asked the Federal Court of Appeal to rule on whether the Broadcast Act applies to ISPs. That could add a wrinkle to these ownership liberalization plans.

In some ways, this move tries to undo the uncertainty over investment rules that have clouded the sector going back further than just last year’s Globalive mess. Mentioning satellite could be a nod to concerns about inconsistencies with the approval of the sale of Telesat as well.

If the government adopts the first steps recommended by the telecom policy and competition review panels [as we discussed last month], the gates would first open up for new entrants and carriers with less than 10% market share. Could this mean liberalized access to additional capital for MTS Allstream? Changes will almost certainly take place too late to enable a Canadian location for Google Fiber.

The final frontier is discussed in another paragraph in the speech, perhaps a nod of recognition that Canada’s most remote regions will be reliant on advanced space-based technologies to provide a virtual umbilical to the masses of Canadians whose separation sometimes seems to be infinity and beyond:

Canada has been a space-faring nation for nearly 50 years. Our Government will extend support for advanced research, development and prototyping of new space-based technologies, especially in support of Arctic sovereignty. 

The government has listened to the many calls for the development of a national digital strategy and it plans to strengthen its Science and Technology strategy as well as modernizing intellectual property rights:

To fuel the ingenuity of Canada’s best and brightest and bring innovative products to market, our Government will build on the unprecedented investments in Canada’s Economic Action Plan by bolstering its Science and Technology Strategy. It will launch a digital economy strategy to drive the adoption of new technology across the economy. To encourage new ideas and protect the rights of Canadians whose research, development and artistic creativity contribute to Canada’s prosperity, our Government will also strengthen laws governing intellectual property and copyright.

Note the focus of “adoption” of new technology.  

Finally, the throne speech recognizes the challenges of law enforcement and national security operating in a digital environment:

… our Government will introduce legislation to give police investigative powers for the twenty-first century.

and

Working with provinces, territories and the private sector, our Government will implement a cyber-security strategy to protect our digital infrastructure.

Details will hopefully emerge later today with the release of the Federal Budget. Typically, the promises of the Throne Speech become more tangible when we see funding attached to the programmes in the Budget.

Liberalized ownership, modernized law enforcement and intellectual property protections will require legislative changes which can be challenging in a minority government. Will any one of the opposition parties set aside partisanship in favour of progress on the digital agenda?

It can be a fascinating exercise reading comments on news stories and blog posts about the state of Canadian broadband. People can be so passionate about the issue. Sometimes I wonder if some childhood traumatic psychological experience has made some of the writers so hostile. Did a phone company truck run over their bicycle? Maybe an installer drilled a hole through a lucky hockey stick when he was fishing wires through the wall?

Is Canadian broadband being sold to consumers for a lower price per month than what some residents of some countries pay each month?

No.

And I didn’t need OECD rankings or an econometrically-challenged study from Harvard to tell me that. After all, when  billions of dollars are thrown by some governments at building network, one would hope that there would be some kind of reduction in the monthly bill paid by consumers.

But let’s not make the mistake of saying that this makes those broadband networks less expensive. Not necessarily. Where do you think that government money came from? At some point, someone is paying the bill. So everytime you look at your paystub or make your monthly tax remittances, give thanks that there isn’t a hidden “broadband network fee” added onto the bill. 

Just one of many problems with comparative studies. 

This is why an overall literature review is required, to understand why differences exist. Not all experiences can (or should) be replicated.

I think all Canadians can all agree that we want to see continued investment in broadband connectivity: more fibre; more spectrum; more choices of services and packages; and, for solutions to be developed to provide reasonable connectivity to Canadians who are outside the urban corridors.

But we have to ask a number of questions. Given the fiscal realities of our Government in 2010, who is going to invest in new infrastructure? How do we create the right climate for the financial community to back that investment?

As we watch today’s Throne Speech for signals about federal leadership that may guide Canada’s digital future, keep those considerations in mind.