I received a note from a researcher in the UK over the weekend who offered an interesting observation about open access initiatives.

The researcher was dismayed with the “lack of objectivity” in recent university branded reports on the state of telecommunications. In the case of the Harvard report commissioned by the FCC, the bias is evident that the report was to endorse an open network agenda.

Unbundling might have been an effective strategy to maximise consumer benefits from the existing copper infrastructure, but it is a positive hurdle to next-generation investment, unless one can set the access pricing formula correctly. And that’s the whole trouble because one can’t.

In the pharmaceutical sector, once a new drug has been developed, it would be better for consumers if the government took that drug off-patent immediately, and allow generics to compete with it. But if the government did that, then it would need to consider the effect on the pharmaceutical sector’s incentives to invest in R&D.;

The warning from abroad: opening next generation networks to mandated sharing could yield short term consumer dividends without appropriate incentives for innovation in the future.

Policy makers may choose to follow that route, but they should do so based on sound economic evidence, not by fiddling with the numbers.

The Information Technology & Innovation Foundation released a report [ pdf, 330KB] last week called Policies to Increase Broadband Adoption at Home. That policy paper follows a study [ pdf, 600KB] conducted by Janice Hauge of the University of North Texas and James Prieger of Pepperdine University that examined Demand-Side Programs to Stimulate Adoption of Broadband: What Works?

The impetus for these reports was a statistic that should ring a familiar tone for us in Canada: between 92 to 94 percent of U.S. households can subscribe to broadband but only approximately 65 percent subscribe. Why?

We have asked that question a number of times over the past year or more in respect of Canadian broadband adoption and most recently, we raised the issue in our October report [ pdf, 944KB], Lagging or Leading. The ITIF report suggests that there are a variety of reasons why people choose not to subscribe to broadband. The three factors cited in the ITIF report are:

• affordability (e.g., of the service or a PC),
• usability (e.g., lack of digital literacy skills, physical handicaps), and
• lack of relevance or perceived value (e.g., consider Internet a waste of time).

The report finds variability in the relative importance of these factors based on the type of individual. For example, among higher income, older Americans a lack of interest may be a more important factor than the cost; for lower-income, younger households, cost may be more of a deterrent.

If the United States is to achieve near universal broadband adoption—on the order of telephone adoption rates—at least in the near to moderate term, the federal government will have to develop and implement policies designed to spur broadband adoption.

The North Texas / Pepperdine study examined the evidence available on the degree to which demand-side programs have fulfilled their purpose of stimulating broadband adoption.

On the spectrum from national to local programs:

• Nationally funded programs with inadequate oversight can lead to waste, fraud, and abuse.
• Local programs have more complete knowledge of the barriers to adoption in the community.
• Local efforts can better ensure that programs are utilized by the intended recipients.
• Local efforts may have limited capability to collect and evaluate data.
• National efforts may have more capability to collect and evaluate data.

We need to ensure that our national broadband strategies provide incentives for continued investment in advanced infrastructure, a topic to be picked up further at another time.

But, we also need to emphasize the demand component of broadband adoption. Both of these reports reports are worthwhile reading – adding to the knowledge base as Canada continues to develop our national digital strategy.

Last week, a report was released about Canada’s top performing research companies and sectors.

According to RE$EARCH Infosource, Canada’s telecommunications sector again leads the pack, with 2008 research spending on telecom products and services representing 40% of total industrial R&D.; Of the top 100 R&D; performers, 15 were from the telecom sector, including number 1 ranked Nortel at $1.7B and number 2 BCE at just under $1B.

In 2008, Nortel spent more on R&D; than Bell and number 3 Magna combined. There are serious implications for Canada’s knowledge economy. Next year’s report will likely see the pharmaceutical sector replace telecom products as the leading performer of R&D; in Canada.

The analysis [ pdf, 111KB] from RE$EARCH Infosource is worth reviewing.

The full effect of the deteriorating world economy will be reflected in next year’s Fiscal 2009 corporate R&D; spending results. It is hard to envisage better overall performance than in 2008. For one thing, it appears that Canada’s perpetual R&D; spending leader (Nortel Networks) will be absent from the list in 2009. In consequence, total corporate R&D; spending will undoubtedly be affected – in a downward direction.

There is little doubt that total corporate R&D; spending will be dropping in the 2009 report, but there may be a more fundamental shift at play as well.

What is happening to the Nortel people and their jobs?

Although many of the researchers from Nortel may find employment with the acquiring companies [such as Ericsson’s expected doubling of its R&D; efforts], others have started their own firms or found a home with a smaller company.

There is a lot of R&D; activity among home-based entrepreneurs, some of whom have little knowledge of or interest in government SRED tax credits.

RE$EARCH Infosource offers a dozen recommendations to boost research and innovation. I’m not sure I agree with all of them, but this is an important issue to be more prominent on the national agenda.

More than just tax credits and grant programs, we need to invest in the development of multi-disciplinary education programs.

We should make sure that ICT education includes opportunities to develop skills associated with entrepreneurship, understanding enough about safeguarding intellectual property rights, business, accounting and export literacy, among other areas.

It seems to me that we need to be concerned with more than just incubating the next Nortel or Newbridge or RIM. How do we ensure that we have the right environment to foster hundreds of small, nimble innovators?

A recent commentary was written by Angel Gurría, the Secretary General of the OECD, citing a need for statistics to give a more accurate picture of society and the economy.

As Mr. Gurría wrote in European Voice:

We need tools to measure what is going on in our society – where we are progressing, where we are failing and what are the consequences of our actions. There is nothing wrong with the quality of the indicators, but some of them are not looking at what matters.
…
Statistics are not an end in themselves. Their importance lies in the policy discussions they stimulate as much as the evidence they provide.

I agree. We have to get the numbers right to empower intelligent policy discussions.

In last month, we saw university logos applied to papers, statements and ideological manifestos, giving credence to data analysis that would have trouble holding up to serious scrutiny in peer-reviewed journals of academic research.

A jewel from a recent broadband study would raise the eyebrows of any reasonable statistician reviewer:

Speedtest data is not perfect, but it offers an enormous database of actual tests, which provide insight into the speeds users experience on their computers. The dataset we analyzed included about 41 million actual tests from the OECD countries, from the fourth quarter of 2008.

Translation? Even though the source data smells funny, there’s so much of it that maybe we can find something useful. Perhaps. But we’re not convinced that the correct conclusions were drawn.

There is much more wrong with these reports, as Suzanne Blackwell and others wrote a few weeks ago. The Harvard study penalized Canada for OECD sampling errors (that I walked you through), such as ignoring Quebec as being part of the country. And as I wrote a couple weeks ago, the folks at Harvard tell us on one page that Canada had no 35 Mbps services and then 3 pages later, oops – they discovered one! Just not in time to use in their rankings. A rebuttal published on Wednesday by the study author did not address this mistake that resulted in erroneously ranking Canada as 30th for these very high speed services. Since the Harvard study also used flawed OECD sampling, this error was doubled in unfairly scoring Canada.

No matter how many studies adopt flawed speed and pricing survey data, the source just won’t smell any better. By wrapping it up with impressive academic logos, the data might have taken on a better appearance – just don’t get too close and be sure to wash your hands after touching it.

On Monday, a remarkable letter [ pdf, 71KB] was filed with the FCC.

Of particular note was the signature line – 6 leading academics who describe themselves as “professors of law who have spent many years devoted to research on the architecture of the Internet and its related policies.”

• Jack Balkin, Yale
• John Blevins, South Texas College of Law
• Jim Chen, University of Louisville
• Larry Lessig, Harvard
• Barbara van Schewick, Stanford
• Tim Wu, Columbia

In their letter, the authors note that several have testified or filed comments with the FCC, and they have published widely on the topic of Network Neutrality and related internet issues. Why did they collaborate on this special letter?

We submit this extraordinary early letter only to flag what we believe are two ambiguities in the Notice that we hope can be addressed early to provide a clearer foundation for comments.

The ambiguities are “Defining Non-Discrimination” and “Reasonable Network Management.”

Regarding the second point, these distinguished professors of law ask if the FCC is asking for comment on what the standard should be, or proposing no clear standard at all? The letter suggests that the FCC should consider the distinction used by the CRTC in defining certain tests for an acceptable internet traffic management practice.

These US law professors seem to be squarely at odds with the statement by the NDP’s critic, Charlie Angus:

South of the border, the FCC has taken clear steps toward the establishment of internet neutrality on U.S. networks.

The professors say that the FCC’s statement is ambiguous and they point north of the border for clarity. Who should we believe?

On Monday, the same day that the academics cited the CRTC’s approach, CAIP issued another press release that said:

Despite putting in place proceedings that appear like they are progressive thinkers, the Commission has been issuing regressive decisions related to competitive issues.

Both press releases from CAIP play loosely with language, saying that the CRTC’s approach was calling for “higher prices for Internet services” to deal with growing demand.

The letter to the FCC from the US internet law professors seems to contradict CAIP’s assertions that the CRTC’s decisions are regressive.

We stand by our observation that Canada is a leader in setting out the world’s first clearly defined framework for managing internet traffic.