My home is very close to Highway 407, the toll road that runs north of the greater Toronto area.

When it was first opened in 1997, the road was available toll free for people to try out. It was a delight to drive on a state-of-the-art multi-lane highway with no traffic.

Imagine two cars starting off in Mississauga in the west-end. They decide to race to Canada’s Wonderland in the middle of the work week. One car would use Highway 401 to 400 and the other would use the (as yet) unopened Highway 407. Both agree to keep their speed to the maximum allowed by law. Which car would win?

How is this tale relevant to Canadian telecom?

I have been reading some of the ads for the new HSPA+ networks. One of the carriers claims to have the fastest network in Canada. Apparently, they ran tests of their own data speed performance versus their primary competitor back in September 2009. But there is a problem with this boast. The new network didn’t open for business until two weeks ago.

Let’s face it, under those conditions, if they didn’t win the race on an empty network, well, that would have been an indicator of a serious problem. It will be interesting to see what those same tests look like next September, after close to a year of real operating experience.

As we see in car races, it takes an excellent driver and a disciplined pit crew to win consistently when all the teams are racing with the same machines.

Sandvine has released its annual study of global internet traffic [ pdf, 535KB].

They have found a shift in consumer behavior towards real-time applications, away from bulk “experience later” traffic. Real-time entertainment traffic (such as streaming media, Flash video, etc.) accounts for more than a quarter of all traffic in 2009, doubling its proportion from 2008. This demonstrably highlights the rapidly shifting nature of internet traffic, especially since network volumes have also continued to grow.

Adding to the challenges for network operators, the Sandvine research found that the top one percent of subscribers account for 25 percent of total traffic. However, the top users during a given peak hour are largely distinct from the peak users of the preceding month.

Among other findings, a more broad-based adoption of applications is driving peak utilization. According to Sandvine, peak-time total usage was only slightly influenced by the top users, suggesting that usage management and network congestion management are distinct objectives.

Sandvine’s 10 page executive summary is a very readable source of interesting statistical data and analysis about the state of internet traffic. Plenty of interesting observations; plenty of fascinating implications for networks and policy makers.

Beirut is supposed to be nice this time of year, although it doesn’t quite make my list of top 10 vacation destinations. The ITU has been holding its Global Symposium for Regulators and Global Industry Leaders Forum in Beirut for the past few days. The theme of the event, Hands-on or Hands-off? Stimulating growth through effective ICT regulation, seems to target the intellectual conflict that arises in evolving regulation in competitive telecommunications markets.

On the opening day, FCC Chair Julius Genachowski spoke, delivering a message that increasing adoption of communications services like broadband & mobile will contribute to advancing the goals of delivering peace, prosperity, education and health.

It is an optimistic vision. The text of the speech is below.
FCC DOC-294594A1 http://d1.scribdassets.com/ScribdViewer.swf?document_id=22405725&access_key=key-2a50fdgzamptecmoqzjq&page=1&version=1&viewMode=list

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.