The evolution of communications regulation has been at issue recently – for telecom, broadcasting and new media. There is a camp that continues to believe that government should preserve its historical role of managing the marketplace, regardless of the availability of diverse choices in the delivery of services.

When asked about net neutrality by Charlie Angus of the NDP in the House of Commons, Industry Minister Jim Prentice replied that the government does not regulate the internet. The supplemental question asked:

Mr. Speaker, the minister’s hands-off approach to hands-on interference is bad news for the development of a Canadian innovation agenda. Net neutrality is the cornerstone of an innovative economy, because it is the consumer and the innovator who need to be in the driver’s seat, not Ma Bell, not Rogers, not Vidéotron. They have no business deciding what information is in the fast lane or what information is in the slow lane.

Will the minister come out of the Gestetner age and take action on the issue of net throttling?

To which the Minister replied:

Mr. Speaker, I think virtually all members of the House could agree that if anyone inhabits the Gestetner age, it is the New Democratic Party. Members of that party would carry our country into the economic backwater that they propose.

We have a well advanced Internet system in this country. It is not publicly regulated. At this point in time we will continue to leave the matter between consumers on the one hand and Internet service providers on the other.

It appears to be clear that that the government’s policy for telecommunications regulation is to continue with its preference to rely on market forces to regulate. Can this be applied to broadcasting?

In a CRTC decision yesterday denying John Bitove’s proposal for a new national HDTV network, there was a dissenting opinion appended from the Commission’s Vice-Chair of Telecom, Len Katz. The dissent appears to call for the broadcast side of the Commission to prepare for the kinds of regulatory reform that are being experienced on the telecom side:

I question the role of the Commission in assessing the likelihood of success of a new entrant. I believe the Commission’s mandate does not include the responsibility of managing markets. New entrants bring with them different business models. Who is to say which model will be more successful? I would prefer to leave it to the marketplace. We must not confuse the Broadcasting Act’s objectives of protecting Canadian culture and identity with protecting Canadian markets… particularly where it relates to Canadian companies, built by Canadians for Canadians.

Will HDTV Networks appeal to a Cabinet that favours a reliance on market forces in place of government regulation?

Mark Evans wrote last week complaining about what is taking so long for iPhone to come to Canada. Alec Saunders jumps in with his review of an iPhone and he points to a new consultant study that claims iPhone has been worth billions for AT&T.;

I am certain that AT&T; has no regrets about launching the world’s coolest phone and indeed, AT&T;’s results are what they are in no small measure thanks to iPhone contributing to the bottom line.

But I had a look at the full report and there are a number of questions that I have with its data.

The study starts with an unusual measure of its expected error, using 90% confidence intervals, not the more commonly used 95% – this allows the authors to claim a tighter margin on its estimates, despite only interviewing 460 US based iPhone users. Let’s skip by that factoid to get to some more important numbers.

Their study group shows an average monthly bill of $97, up from $78 before iPhone. It is a great ARPU lift, but it seems to be on a base that was already pretty high. According to its most recent results, AT&T;’s ARPU is around $50, so these are extraordinary customers. The numbers should be examined relative to the iPhone rate plans.

According to the study, a third of their surveyed iPhone users have a second phone. That is also a number that seems high; do a third of the bills include charges for more than one phone.

Also, 13% of the iPhone users said that their phone was unlocked. It seems to me that this means one in 8 of the iPhone users interviewed are on a carrier other than AT&T.; So if 1 in 8 respondents is not using AT&T; as their carrier, is their phone bill skewing the study results because they are on a non-iPhone kind of plan?

The study raises lots more questions and fodder for lots of discussion.

Our family is planning to get its first iPhone toward the end of the summer when one of my kids heads south for grad school. I’m not planning to pay $97 per month.

Technorati Tags:
Apple, AT&T;, iPhone

Leading up to Industry Canada’s release of the list of qualified bidders on Monday evening, there had been considerable speculation about which applicants had the support of global players. Some were certain that AT&T; or T-Mobile were behind certain bids. Other names were circulated as documented in Peter Nowak’s story on CBC.

As the dust settled Monday, there is certainly foreign capital getting involved in the auction, but no evidence yet of major brands lending their marketing experience, buying power or names to any of bidders.

The equity markets breathed a big sigh of relief with incumbents Rogers and Telus seeing nice gains on their stock prices.

The reality is that it may not be smart for a serious partner to declare their intentions, yet. The Industry Canada rules for the auction may make it more advantageous for carriers to be sitting back at this stage. There is plenty of time to pounce later.

For now, there are a number of possible new national carriers to emerge, plus a collection of regional or niche players. At least 6 bidders have sufficient bid points to try to acquire 20 MHz coast to coast, including Globalive, Shaw, MTS Allstream, Videotron, DAVE Wireless and 6934579.

It seems to me that last company, 6934579, a partnership to be funded by Novacap Technologies, is going to need a better name or alternatively, will they adapt the song Jenny by Tommy Tutone for their ads?

As you know, Rogers has announced caps, called “usage allowances,” on downloading for its range of internet access products: 95GB for Extreme and Extreme Plus; 60 GB for Express; 25 GB for Lite; and, 2 GB for Ultra-Lite. Considerable discussion has taken place on a number of blogs and newspaper articles.

It seems to me that these caps are a necessary step in aligning revenues with costs, which will ultimately alleviate much of the need to arbitrarily apply network management to applications. But it is just the first of a number of steps.

I compared my recent downloading to some friends and neighbours and an trend emerged: many of the heavy downloaders report a marked reduction in January and February from previous months. Why? When asking their kids what is going on, the answer is uniformly: writers’ strike. There haven’t been new TV shows to download.

A caution to parents that when TV production gets back to normal, almost coinciding with real charges for exceeding download caps, you may want to watch the ‘bit-meter’ or risk some hefty charges.

It will be interesting to see the impact of the price increases for people exceeding their usage allowance. Paying for higher consumption may result in some people changing their patterns of usage; it will also lead to an appropriate alignment of revenue to capital drivers.

Technorati Tags:
Rogers, download caps

The qualifying round is over and now Industry Canada has sifted through the applications and reduced the field from 30 down to 27 [the official list of qualified bidders can be found here].

Eliminations could have resulted from any number of defects in the applications that were unable to be cured over the past two weeks. Many, I suspect, were due to failures in coming up with the appropriate form of deposit.

Canadian consumers are clearly going to see increased choice for wireless services, whether in major cities or in many rural areas that seem to be attracting specialized regional players.

On a national level, at least 3 of the bidding groups have substantial funders behind them: Data & Audio Visual Enterprises (DAVE) Wireless has enough points to assemble 10 MHz nationwide with spare points to increase its bandwidth to 20MHz for half of the country’s population. DAVE is a venture controlled by XM Canada’s John Bitove with funding from Paul Allen’s Vulcan Capital.

I continue to see Sasktel to be a likely partner in all of the national alliances thanks to the anomaly in the AWS rules that defines them to be a ‘new entrant’ despite their overwhelmingly dominant position in the Saskatchewan marketplace.

What happened to Niagara Networks, the company it seems everyone had been speculating about for the past two weeks? For all the previous talk, it appears their cheque didn’t clear.

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Update [March 31, 10:20 pm]
As we review the pages describing each bidder, it appears that some of the qualified bidders are going to need to rework their business plans.

Triple Five Universal Enterprises, currently 100% owned by Nader Ghermezian, has had a significant change from the time of the original application. Two weeks ago, Triple Five asked for 1240 bid points, sufficient for 20 MHz in every part of Canada. However, it has only qualified for a fraction of that, 280 points or 10 MHz for a little less than half the national population.

Golden Spike, a company that appears to be partly owned by former 360 Networks CTO Steve Baker, also came up short. Its original application called for 384 points for $23.8 M, but it only qualified for 12 points, the equivalent of enough to bid for 20 MHz in Regina.