As the year winds down, I was checking my scorecard to see how well we did against the year’s objectives.

In early January, in my look at the year ahead, I said these items topped my telecom agenda:

• Driving universal broadband adoption
• Online harms
• Regulatory overreach
• Mandated wholesale access
• Impacts of investment on coverage and resilience
• Digital literacy

How did we do?

Driving universal broadband adoption

Universal broadband adoption is turning out to be one of those “evergreeen” items. There are two sides: supply; and, demand. Most activity focuses on the supply side, ensuring the availability of broadband wherever people are, at home or on the road. Solving the supply problem is relatively easy. It reduces to an engineering and project management problem. Given sufficient financial, human and technology resources, we know how to deliver broadband. Demand is a tougher problem. It isn’t a matter of building it and everyone will join the party. Driving universal broadband demand means understanding all of the factors that contribute to resistance to get online. Stimulating the demand side of the adoption equation requires developing an understanding of the human factors resisting getting online, factors that don’t necessarily correspond to logic. This ties to the Digital Literacy bullet on the agenda as well.

Online harms

Canada’s Online Harms Act has been introduced, but it is stalled at second reading and has not yet been sent for committee study. It is at risk of dying on the Order Paper due to the Conservative filibuster over the $400M Sustainable Development Technology Canada scandal.

Regulatory overreach

I recently wrote about regulatory overreach because of the abusive process being used by the CRTC to pressure service providers. I also expressed concerns about elements of the CRTC’s strategic plan. The Commission is unable to release decisions in a timely way to the point that it will have to relax its grip on the industry.

However, as discussed in the next section, the CRTC is hardly an “independent” regulatory body, with so much of its workload being determined by Parliamentary actions and Ministerial references. Government is just as much to blame. I find it ridiculous that a Private Member’s Bill was able to amend the Telecom Act to have a permanent reference to last week’s CRTC public notice on internet nutrition labels. From the First Reading in June 2022, through Royal Assent in late June of this year, no one had the courage to publicly state that this didn’t need legislation.

Telecommunications is a sector that requires billions of dollars in annual investment – investment that abhors regulatory uncertainty. At some point, we need greater push back from the CRTC, and more knowledgeable parliamentarians and policy advisors, or we will continue to be mired in delays driven by consultative processes.

Mandated wholesale access

A post by my colleague Ted Woodhead displays optimism about improved balance in the CRTC’s interim wholesale fibre rates decision, released October 25. We’ll continue to watch that file. How will the final rates impact investment? But shortly after that decision was released, on November 6, Cabinet sent an earlier wholesale fibre decision back to the Commission for “review”. As I asked in my post “Tangled up in red”, didn’t the CRTC’s October rates order explicitly address the issues raised by the Cabinet reconsideration directive?

A few weeks ago, the CRTC announced the launch of 3 consultations “on making it easier for Canadians to choose the best Internet and cellphone plans”. CRTC 2024-293 (Enhancing customer notification), CRTC 2024-294 (Removing barriers to switching plans), and CRTC 2024-295 (Enhancing self service mechanisms) all have deadlines for submissions of January 9, 2025 with replies due January 24. For me, the risk of customer confusion arising from self-service mechanisms creates my greatest concern.

These consultations arose from a Parliamentary direction, in this case, changes to the Telecom Act introduced as part of the Budget Implementation Act. The Telecom Act changes were just two pages out of the 686 page Act, which provides a clue as to the depth of review (or lack thereof) that was applied to the legislation.

Keep in mind, the CRTC’s Wireless Code has been around since 2013, and modified in 2017. The Internet Code has been in force for nearly 5 years. These Codes were created following extensive consultations. Will the CRTC be able to find effective ways to work around the government’s naively constructed amendments to the legislation, using a short 6-week process? 

That same week, there was a fourth notice of consultation in response to political activity as the CRTC sought comments on the Cabinet instruction to reconsider the Commission’s wholesale fibre decision. For years, telecom policy reviews have called for less political interference in the workings of the CRTC. Indeed, the objectives set out in the Telecom Act call for “increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective”. This will be a subject worth examining in greater detail, especially as we head into an election in the coming year.

Impacts of investment on coverage and resilience

Checking my scorecard, I am reminded that I wrote about how easy it can be for regulators and policy makers to lose focus, to lose sight of the prize. The CRTC had just released its “Competition in Canada’s Internet service markets” decision which opens saying “The Commission is taking action to ensure that Canadians benefit from affordable access to high-quality Internet services.” The CRTC said the right things in that regulatory policy decision:

55. In setting out its regulatory framework, the Commission seeks to create opportunities for innovative competitors to differentiate themselves and bring new choices to consumers. Importantly, this is not the same as guaranteeing that one type of competitor can profitably compete without risk. In respect of wholesale HSA services, the Commission enables wholesale access at just and reasonable, cost-based rates. It is then up to competitors to find commercial strategies that deliver an attractive value proposition that responds to consumers’ needs.

As I wrote, we often lose sight of the prize. The wholesale framework is a means to an end, not an end in and of itself. It isn’t the role of the regulator to preserve the independent wholesale-based competitive ISP industry. We don’t guarantee “one type of competitor can profitably compete without risk.” This theme – and its impact on investment – is certain to continue playing a prominent role next year.

Digital literacy

Two weeks ago, I discussed the new analysis of Statistics Canada data on technology adoption. That report says “targeted solutions, including measures to improve digital literacy and skills, especially among older adults, would appear to be more logical and efficient than broader, more disruptive, industry structural changes.” Targeted measures to improve digital literacy and skills would require investment in training – an investment in people. Such investments are much harder work than building broadband access. Investing in digital literacy doesn’t create the same kind of photo op as an investment in infrastructure, but it is just as important. This item will once again be carried forward.

Looking ahead

Checking my scorecard from last year helps me prepare an agenda for 2025. What else would you like to see added to the Canadian telecom policy agenda?

A few weeks ago, Bell released a new report, Navigating the Generative AI and Cybersecurity Journey [pdf, 580KB]. The study, prepared with Maru Research, surveyed a diverse group of 600 business leaders, information technology (IT) and security professionals from medium and large-scale enterprises representing a wide cross-section of industries.

The report looks at how organizations have adopted Generative AI (GenAI) in their workplaces, as well as where the technology has been found to be most beneficial.

Among the highlighted findings:

• About 60% of Canadian organizations that have adopted AI, have limited to no AI strategy in place to guide deployment, risks and expected value.
• Reducing and automating tasks is the top GenAI use case amongst Canadian businesses, followed by drafting and editing documents.
• Improved quality of product (54%) and a decreased time to market (52%) have been cited as key return on investment areas for early GenAI adopters.

Bell found 71% of professionals at medium to large enterprises are using GenAI to some degree; and, 41% are using it on a regular basis, with tools like ChatGPT making the use of AI especially accessible.

While GenAI is revolutionizing workplaces, organizations are being prudent about the risks. Among early adopters, the study heard about cybersecurity concerns. A third of the organizations are anxious about bad actors tampering with their AI systems; a quarter worry about theft of sensitive data; and, about 10% expressed concern about bad actors manipulating inputs into their systems.

IT and security professionals were found to be focused on proactively mitigating the security, legal and reputational risks that GenAI may present before fully adopting. About three quarters said that concerns about potential risks slowed the adoption of GenAI fairly significantly, while other organizations have moved ahead by implementing safeguards.

A few months ago, I wrote about concerns that Canada’s Artificial Intelligence and Data Act (AIDA) could limit adoption of innovative technologies. There is currently a Code, the Voluntary Code of Conduct on the Responsible Development and Management of Advanced Generative AI Systems.

While some industries are still exploring the best use for GenAI, retail was found to be leading in adopting the technology for production use, including customer-facing applications and inventory management.

There is optimism reflected in the report.

Despite the challenges, many Canadian organizations are optimistic about the future of AI – almost half expect we are just at the beginning of AI model progress and much more progress will take place over the next five years. Looking at how AI adoption influences this sentiment, early adopters expect moderate advancements over the next five years, while mainstream businesses anticipate even more significant breakthroughs. The consensus is clear: generative AI is just getting started and its role in reshaping Canadian industries will continue to expand.

My key take-aways from the report? The best outcomes for adopting GenAI in the workplace will be achieved by organizations placing a priority on governance, deploying multi-dimensional approaches to security risks, and improving threat detection using AI to manage those risks.

A new report looks at technology adoption and affordability through analysis of recent Statistics Canada data. I promised a look at this report in my recent post on rural broadband solutions.

Communic@tions Management Inc. (CMI) published “Technology adoption, use, and affordability in Canada” [pdf, 1.1 MB], documenting key indicators for how Canadians relate to the internet and smartphones. Through the years, CMI has developed an expertise in analyzing and interpreting Statistics Canada publications, in addition to developing custom tabulations and correlations of the raw Statistics Canada data.

CMI estimates that in 2023, 95% of Canadian households had home internet connections, and 90% of households had smartphones. An additional 5% of households had mobile devices that were not smartphones, for total mobile adoption rate of 95%.

CMI notes that in 2021, more than half of Canadian households now rely exclusively on cell phones for their phone service – a notable milestone.

CMI took a look at spending by income quintile (similar to what I have done in the past) and added in a comparison to spending by income quintile in the US. “Across most income groups, Canadian households spend less on cellular service than do Americans.”

While we know that the mobile phone has become a substitute for wireline phone service, CMI says “it is not unreasonable to state that the smartphone has substitution effects for landlines, photographic services, newspapers, and magazines and periodicals.” Looking at other data from the 2021 Survey on Household Spending, CMI found the following changes in average household spending on each of these items from 2010 to 2021:

• Landline telephone services -56.4%
• Photographic services -42.8%
• Newspapers -27.3%
• Magazines and periodicals -50.0%

During that period, the number and percentage of households with cell phones was increasing – from 78.1% of households in 2010 to 93.9% in 2021. And, within those totals, an increasing number of devices were smartphones.

CMI also notes that the Survey of Household Spending estimated there were 13,297,000 households, of which 10,378,000 had cell phones. Using Statistics Canada data, CMI estimated there were at least 17,772,000 cell phones in use at that time. By 2021, 14,197,000 out of Canada’s 15,123,000 households had at least 26,759,000 mobile phones. “In other words, from 2010 to 2021, the number of total households went up 13.7 per cent; the number of households with cell phones went up 36.8 per cent; and the number of cell phones in those households went up 50.6 per cent.”

Using data from custom tabulations of Statistics Canada’s General Social Survey, CMI found that smartphone owners were almost twice as likely to read news online daily, compared to those that do not own smartphones; and smartphone owners were less than half as likely to read a print copy of a newspaper daily, compared to those that do not own smartphones.

To examine affordability, CMI turned to Statistics Canada’s 2022 Canadian Internet Use Survey (CIUS). As seen in the figure, “home Internet is nearly ubiquitous for Canadians, and “no need or interest” is the most important reason for non-adoption.”

Adoption varies by age, ranging from 99.3% in the age group 15-24; 98.8% for ages 25-34; 98.0% for ages 35-44; 96.7% for ages 45-54; 93.1% for ages 55-64 and 83.7% for those 65 and older. In each segment, “No need or no interest” was the dominant reason for non-adoption, beating out “the cost of equipment” and “the cost of the service”. CMI stated “In other words, there is much more likely a demographic link based on age than an affordability link based on income.” Similar results were found for smartphone adoption.

There are clear policy implications that arise from CMI’s work. As CMI says,

Thus, one might say that the adoption of Internet and smartphone technology in Canada is nearly ubiquitous, with age and attitudes a much greater factor than affordability when influencing non-adoption.

To the extent it is a goal of public policy to maximize adoption – and use – of these technologies, targeted solutions, including measures to improve digital literacy and skills, especially among older adults, would appear to be more logical and efficient than broader, more disruptive, industry structural changes.

It is worth emphasizing that sentence: “Targeted solutions, including measures to improve digital literacy and skills, especially among older adults, would appear to be more logical and efficient than broader, more disruptive, industry structural changes.” This resonates with themes you have seen before on these pages.

The distillation of data in the report is worth keeping in mind as we turn our minds toward 2025 plans and objectives. Targeted solutions will be an approach for policy strategists to keep in mind when developing platforms for the 2025 election.

The full report is a worthwhile read.

Most of us take network reliability for granted. We expect our devices to be connected wherever we are. We expect calls to get through, emails to clear the outbox, direct messages to be received.

In a survey of US mobile consumers, Opensignal reports that reliability ranks second only to cost when deciding on a wireless carrier. Network reliability is considered twice as important as data transmission speed.

And indeed, most of the time, the networks work.

Still, we have all had the frustration of entering a dead zone, or experiencing a networks failure. Canadian carriers are investing billions of dollars each year improving coverage and extending network reach. As reported by PwC [pdf, 5.5MB], Canadian mobile carriers are reinvesting 17.9¢ of every dollar of revenue, a capital intensity 23% higher than that of the US (14.6¢) and upwards of 50% more than Australia (11.6¢).

Earlier this year, I wrote about network resilience. In that post, I referred to a White Paper by Dr. Georg Serentschy, the former head of the Austrian telecom regulator and past chair of BEREC (Body of European Regulators for Electronic Communication). That paper included a recommendation calling for the establishment of a central coordinating body as “an important step towards overcoming the usual historically fragmented governance structures.”

A few weeks ago, I took a somewhat critical look at the CRTC’s recently released strategic plan. A year ago, the CRTC’s action plan included a bullet point to “Work with government partners to improve the reliability of Canada’s networks, including access to emergency services”. No comparable activity is listed in this year’s plan. The closest is an action calling for “issuing a decision to help improve the reliability, affordability, and competitiveness of telecommunications services in the Far North.”

To me, that doesn’t go far enough.

More than a year ago, the file closed for the CRTC’s consultation on “Development of a regulatory framework to improve network reliability and resiliency”. We still have not seen the outcome of that consultation.

Innovation, Science and Economic Development Canada released “A Telecommunications Reliability Agenda” last year, with “three pillars at its core”:

• Robust Networks and Systems
• Strengthening Accountability
• Coordinated Planning and Preparedness

As Dr. Serentschy writes, “governments cannot tackle these challenges alone, nor can industry.”

When we are accustomed to always-on, high quality communications services, it is easy to become complacent with the concepts of network reliability and resilience. The topic should remain a focus for carriers, regulators, and agencies at all levels of government.

Last week, my post included a discussion of what can happen to capital resources when network operators find an inhospitable telecom policy environment.

Building effective network resilience requires a regulatory and policy framework that actively promotes network investment. Consider the resultant improvement in network reliability to be an intangible public dividend.

A couple of weeks ago, I saw two articles by academics writing in the Hill Times, each looking at rural broadband solutions. Each presented a different perspective.

In “Tackling the ‘wicked’ rural broadband gap”, by Professor Gregory Taylor of University of Calgary, the subtitle says: “Policymakers must resist the temptation to throw up their arms in frustration, or—worse—leave the entire problem to the whims of Elon Musk.”

“Towards a new Canadian broadband future?” was written by Professor Erik Bohlin, the Ivey Chair in Telecommunication Economics, Policy, and Regulation at Ivey Business School at Western University. The subtitle on his article reads “We will need to face the reality that the fundamental competition now is not primarily between the telecom carriers, but with other value systems.”

Professor Bohlin writes about “Canada’s lagging productivity and weak investment climate, especially around broadband infrastructure, which provides a foundation for a thriving digital economy… Long-standing gaps with the United States in both labour productivity, and information and communications technology investments have been identified by the Organisation for Economic Co-operation and Development”

In the past two months, we have seen two major corporate transactions among Canadian telecom operators. Bell announced a $5B acquisition of US-based Ziply Fiber. adding 1.3M addresses to its fibre footprint. Rogers invested $4.7B to take majority control of Maple Leaf Sports and Entertainment. Each deal represents investment in businesses that are independent of Canada’s telecom policy framework.

Earlier this month, the UK moved closer to approving the merger of mobile operators, Three and Vodafone. The Competition and Markets Authority set out a remedy package that would permit the deal to go through, taking the UK down to 3 carriers in a market with 93 million mobile subscribers in a land area a quarter the size of Ontario.

My immediate reaction to the Bell transaction was that this is another indictment of Canada’s telecom regulatory and policy framework. I wasn’t alone with this line of thinking. TD Securities wrote “Having some diversification into the U.S. could be useful if Canadian market conditions do not improve, and we like the flexibility to allocate less capex to Canada and more to the U.S. if future government/regulatory policies do not reward investment in Canada.”

Professor Bohlin points to the CRTC’s mandated wholesale access to fibre networks as “pivotal for investment incentives.” He notes that for 25 years, the European Union “followed a primary emphasis on mandated access in telecoms, and has lower rates.” The EU identified a telecom investment gap in the order of 200-billion euros required to achieve connectivity targets for 2030. An EU white paper [pdf, 555KB] calls for an increased focus on investment incentives for advanced communications infrastructure.

Incentives to invest is a common theme on this blog. Professor Bohlin calls for “increased dialogue between industry and government about the fundamental objectives for developing a strong, viable Canada, and the enabling role that telecom infrastructure may play in achieving that vision”.

I read the Taylor piece with a more critical eye, given that he erroneously states “most telephone service of the 20th century was provided by public provincial, and, in some cases, municipal services — MTS, SaskTel, Alberta Government Telephones, Edmonton Telephone, and BC Tel — which had to step in when the private sector came up short.” (One of those companies – BC Tel – is not like the others.)

Professor Taylor’s article complains about the number of rural Canadians who still lack access to broadband services that meet the CRTC’s national objective.

It has been eight years since the CRTC made the bold 2016 objective that “Canadians in urban, rural, and remote areas can access affordable, high-quality telecommunications services,” and set 50 megabits per second (Mbps) download and 10 Mbps upload as the ambitious targets to qualify as the required speeds. That audacious goal doubled the 2015 Federal Communications Commission (FCC) target when the American regulator set benchmark speeds at 25/3 Mbps. However, this once-bold policy stand is starting to look increasingly timid in 2024. In its recent 2024 Broadband Deployment Report, the FCC raised its fixed speed benchmark for broadband to 100 Mbps download and 20 Mbps upload.

I have written before that when some Canadians are wanting for any kind of affordable broadband, it takes a measure of arrogance to proclaim that 50 Mbps isn’t good enough.

The latest CRTC’s data is nearly two years old. At year-end 2022, 93.1% of Canadians had access to broadband exceeding the objective. That blended average is composed of 99.4% urban and 67.4% rural. So the focus on rural connectivity is understandable. Still, it is unclear why Professor Taylor used even older 2021 data in his article, saying that only 62% of rural households had access to the broadband objective. We can see a significant improvement was made between 2021 and 2022, growing from 62% to 67.4%. More work needs to be done, but 5.4% represents more than 350,000 people, a substantial achievement.

In the coming weeks, I am working on a post that takes an in-depth look at technology adoption and affordability. Watch for it on these pages

Professor Taylor’s article concludes with a reference to wholesale access to fibre networks, somehow seeing increased competition as a regulatory initiative promoting investment. The CRTC itself recognizes the deleterious impact of mandated access on investment incentives and its decisions attempt to mitigate those concerns.

A few years ago, I wrote “Isn’t some broadband better than nothing?”. For people without access, the best rural broadband solutions are the ones that can be delivered now. Three years ago, I wrote, “Le mieux est le mortel ennemi du bien.”

In developing rural broadband expansion, it is impractical to restrict solutions to universal fibre access. It is better to get some broadband service to unserved areas rather than wait for so-called future-proof connectivity.

We can’t wait for a perfect solution for broadband for all Canadians. But we can strive to do a lot more, a lot better, and a lot sooner.

That means improving the conditions that promote investment in advanced digital infrastructure.