Over the past few days, I noticed a common theme – investment driving innovation – in two press releases (Bell and Comcast) and two executive profiles in the Globe and Mail (on TELUS CEO Darren Entwistle and Bell CEO Mirko Bibic).

Let’s take a quick look at the connections.

Earlier today, Bell announced Gigabit 8.0 internet service, offering symmetrical download and upload speeds of 8 gigabits per second (8 Gbps) over its fibre network. That is a blistering high speed service, said to be the fastest residential internet speeds available in North America. At the same time, Comcast announced that it had successfully tested technologies that enable it to offer symmetric multi-gigabit per second services over its cable plant – technologies that can be expected in residential networks over the next year. We can expect these capabilities to be deployed in Canada as well.

In the profile on TELUS CEO Darren Entwistle we read:

When Telus first started planning its copper-to-fibre migration, its leadership wasn’t in agreement about how fast to move. “We were not a house united, we were a house divided,” Mr. Entwistle said. “There was a lot of back and forth – not so much on doing it, but what’s the right pace? Should we take an incrementalist approach versus going all in? Thankfully, we went all in.”

Similarly, the ROB Magazine profile on Bell CEO Mirko Bibic has:

Since I became CEO, and since the pandemic, we have invested more. Built more, better wireless networks, better fibre networks, to more communities—urban, suburban and rural. At the beginning of 2020, we had no 5G networks. Now we’re going to have 80% of the country covered with Bell 5G networks. By the end of this year, we will have made our fibre internet services available to two million additional locations. And we’ve invested in more resiliency and security.

I saw a common theme in facilities-based competition driving investment. Not just for the sake of investment, but because of the strategic value of networks as the platform upon which the overall economy can grow. As Mirko Bibic said when asked what the telecom landscape looks like in five years:

In terms of the connectedness of the country, what I really hope is, well before five years from now, we will have shifted the public policy focus from not only talking about price, quality and coverage, to serious discussions about how to use these networks. How do we encourage more investment in networks, more technology adoption by large and particularly by small businesses? More R&D investment by domestic and global players. Because if you want to invent something, in the metaverse or whatever it is, come here. Because we can give you the best network experience in order to make your inventions work. That’s what I hope we’ve accomplished, well before five years from now.

Investment drives innovation. Facilities-based competition drives investment.

Congratulations to Pierre Poilievre, the new leader of the Conservative Party of Canada, and leader of His Majesty’s Loyal Opposition.

Over the past few years, I have been somewhat critical of some telecom policy position papers to emerge from the Conservative party. Truth be told, I have been critical of a lot of telecom policy… full stop.

Let’s face it, Canadian telecommunications policy hasn’t won a lot of fans among consumers, or among service providers for that matter. Yet here we are, continuing to pursue the same approach, with spectrum set-asides and using number of competitors as a lazy substitute to measure competitive intensity.

But, with a new leader of the opposition, a “champion of free markets”, it just might be an opportunity for a fresh look at developing a “free market telecom policy”, as a key enabler of Canada’s digital economy.

So, in the spirit of the start of a new school year, let’s review our initial reading list, kicking off our graduate-level course in Free Market Canadian Telecom Policy.

• Telecom Policy Review Panel: Report [pdf, 1.6MB], 2006
• The Logic: No downside to making Bell, Rogers and TELUS compete with foreign companies, according to secret government analysis, Zane Schwartz, November 2018
• Financial Post: Telecom policy needs to be rebooted, Jack Mintz, September 2013
• Toronto Star: Should foreign telecoms be allowed into Canada?, Walid Hejazi, Daniel Trefler, Vass Bednar, April 2021
• Rotman School of Management: Foreign investment limits cost Canadian economy almost $10 billion a year says new study, Walid Hejazi, Daniel Trefler, June 2019
• Journal of International Business Policy: Implications of Canada’s restrictive FDI policies on employment and productivity, Walid Hejazi, Daniel Trefler, April 2019
• Conference Board of Canada: Competition in Canadian Telecom, implications of consolidation, June 2022
• Fraser Institute: Eliminating barriers to competition—the overlooked remedy for high cellphone bills, November 2019
• Fraser Institute: Governments should stop shielding Canadians from benefits of competition, May 2019
• Macdonald-Laurier Institute: Turning the channel on failed telecommunications policy: MLI analysis by Paul Beaudry and Sean Speer, March 2016
• Macdonald-Laurier Institute: Making the Connection Between Smart Telecoms Policy and the Innovation Agenda [pdf, 986 KB], Paul Beaudry and Sean Speer, March 2016
• CD Howe Institute: Canada needs a better approach to foreign direct investment, Globe and Mail Op-Ed, July 2018
• Business Council of Canada: Compete to win: the Wilson panel report six years later, March 2015
• Canadian Chamber of Commerce: Canadian Chamber urges independent review of Competition Act, June 2022

There you go.

That should be a good start for some background reading on a more free market approach to Canadian telecom policy. I’m happy to hear if there are others to be added.

Be ready for a pop-quiz in the next few weeks. I’m looking forward to seeing proposed topics for your term papers. And don’t forget – class participation represents a significant piece of your final grade.

Through the weekend, I saw an interesting exchange on Twitter related to a Chicago Law Review paper by Herbert Hovenkamp, a professor at University of Pennsylvania Law and the Wharton School of Business. The paper postulates “when antitrust pursues a goal of higher output in product markets it is benefitting labor and consumers alike.”

According to Professor Hovenkamp,

Both antitrust’s neoliberal right and its Progressive left have advocated policies that are harmful to labor. The right did so by developing a cynical vision of “consumer welfare” that incorporated producer profits into the definition and advocated for lower output in product markets. The left has done the same thing with its hostility to large firm size, even when dictated by scale economies or network effects, and its protection of small business.

The Twitter exchanges he had through the weekend looked at a number of major anti-trust cases in the US, including AT&T, Google and Facebook. On AT&T, Professor Hovenkamp said, “I cannot identify a single upside from the regional separation and as far as I know no one has. The interconnection obligations are a completely different matter.”

But the post that caught my eye was his reply to a lawyer who suggested splitting Facebook-parent Meta vertically and horizontally to create more competitors.

“More competitors is not the measure of more competition.”

I thought that statement was worth capturing, especially in view of the various mergers and acquisitions under examination in Canada’s telecommunications market.

I have had an interest in looking at demographics ever since my graduate research paper examined the impact of Quebec politics on the growth of a subset of Ontario’s population.

That may explain why I was particularly taken by a research report released by Scotiabank Global Equity Research that looked at Canada’s increased rate of immigration and the impact on the mobile services market.

I was particularly interested in these key points raised in the Scotiabank report:

Strong wireless loading in Q2 likely not a one-time event. Net wireless loading for publicly listed Canadian service providers totaled 450K in Q2, the highest level for a second quarter in the last 15 years. This level of wireless loading is usually reserved for a normal Q3 or Q4 (i.e., the back-to-school and winter holiday seasons). In “normal” times, Q2 usually saw 200K-350K net new activations.
…
Canadian immigration surge fueling recent population growth. Interestingly, the Canadian population grew by 128K in Q1 2022 (the last data set published by Statcan), the highest level for a first quarter in at least the last 15 years. Of that increase, 127K came from new international migration, of which, 114K were due to new permanent residents. The increase in new permanent residents is a proactive government directive that is expected to boost new immigrants to around 443K per year over the next 3 years from around 300K on average in the last 7 years. Just to frame the impact of immigration on population growth, the Canadian population grew by 1.3% yoy in 1Q22, excluding immigration the growth would have been 0.1%.
…
Some companies will feel the benefit more than others. Population growth was not even across Canada. Ontario and British Columbia saw an outsized increase compared to Quebec which was closer to recent levels. The reason we highlight these divergences is due to the higher market share that Rogers has in Ontario and TELUS in BC in normal times. This also could explain why Quebecor did not see a material increase in yoy net loading in Q2 vs previous years as population growth in Quebec has not increased to the same extent as Ontario or BC.

To what extent are these trends contributing to business strategies, including M&A activity, among national telecommunications companies?

Last week a number of Canadian regulatory and policy folks talked amongst themselves to craft a letter that was sent to Minister of Heritage Pablo Rodriguez, and the Minister of Housing and Diversity and Inclusion Ahmed Hussen.

The letter was an unusual display of unity, as indicated in a tweet from Teksavvy’s Andy Kaplan-Myrth: “This may be a surprising list of individuals to sign a letter together — we are rarely if ever on the same side of issues. That’s how clear, important, and nonpartisan this was.”

The letter itself opens with an introduction to the group. “We are a group of Jewish Canadian communications lawyers and professionals. We are writing in our personal capacities to express our concerns with revelations that Canadian Heritage chose to retain a person with a demonstrated history of antisemitic statements.”

The group included people from Bell, CCSA, Distributel, Rogers, Teksavvy, TELUS, a former CRTC vice-Chair, academics and lawyers from small boutique firms as well as large Bay Street firms.

While we are happy to learn that the government has terminated CMAC’s funding through this program and that there will be a review of the program from which CMAC received funding, there has been no indication that the government will undertake a broader review of its processes across Canadian Heritage or other departments, and to date no Minister and no senior public servant has taken responsibility for this affair.
…
In your publication “Building a Foundation for Change: Canada’s Anti-Racism Strategy 2019–2022“, you state that “The Government of Canada must take a leading role addressing systemic racism and discrimination when found to exist within our federal institutions and in public policies, programs and services.” We agree, and ask that in the spirit of this commitment, you commit to the following actions:

1. Apologize and take responsibility on behalf of Canadian Heritage for retaining Mr. Marouf to provide anti-racism training;
2. Undertake the inquiry into how this occurred in consultation with Canadian Jewish communities, and report publicly on your findings; and
3. Provide a detailed plan on how the Government intends to include Jewish Canadians in its anti-racism strategy going forward.

I found it particularly gratifying to see these regulatory and policy colleagues set aside their differences to come together to craft a strong message to these two cabinet members.

I thank them.

If you want to provide your support, please consider signing this petition.

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In order to bookmark a few articles about the affair, let me point you to:

• Jonathan Kay in Quillette: The Line Between Anti-Racism and Racism Keeps Getting Fainter
• Joshua Lieblein in The Line: Anti-Semitism from an anti-racist? How unusual.
• Rex Murphy in the National Post: The Trudeau government’s hypocritical stance on hate and its targets
• Michael Geist on his blog: Silent No More: Liberal MP Anthony Housefather Calls on All 338 MPs to Speak Out on Anti-Semitism and Ensuring No Government Funding for Anti-Semite
• Anthony Furey (with Jonathan Kay) podcast on National Post Full Comment: Oops, we hired a raving bigot to teach anti-racism
• Barbara Kay in the National Post: The private organizations trying to get to the bottom of the Marouf affair
• Dan Donovan in Ottawa Life Magazine: Why Jewish people in Canada should fear the Trudeau government.
• Marie Woolf in the Globe and Mail: CRTC launches payment review over Laith Marouf affair
• Robyn Urback in the Globe and Mail: Why was the government silent on Laith Marouf’s antisemitic tweets for an entire month?
• Marie Woolf and Marieke Walsh in the Globe and Mail: PM’s office knew of derogatory tweets a month before contract was cancelled
• Michael Geist on his blog: Government Funding For an Anti-Semite: They Knew For a Month. And Did Nothing.