Many questions raced through my mind in the wake of the late Friday night announcement of a deal for Quebecor (Videotron) to acquire Freedom Mobile as a remedy to address Competition Bureau concerns about the Shaw – Rogers transaction.
The deal sees Quebecor pay $2.85B to acquire “all of Freedom branded wireless and Internet customers as well as all of Freedom’s infrastructure, spectrum and retail locations. It also includes a long-term undertaking by Shaw and Rogers to provide Quebecor transport services (including backhaul and backbone) and roaming services.”
Upon closing, Videotron will be a facilities-based mobile competitor in Canada’s 4 most populous provinces, covering 13 of the country’s 15 largest cities – the company will still not have a presence in Manitoba, Saskatchewan or the Atlantic provinces. Videotron will have mobile spectrum covering about 85% of Canada’s population. Of all the new entrants in Canada’s mobile market, Videotron has secured the strongest share of subscribers in its home province of Quebec.
As an aside, let me remind readers that long before CRTC Chair Ian Scott indicated a preference for facilities-based competition during an interview in May, 2021 at The Canadian Club, in its submission to the CRTC in 2019, the Competition Bureau stated as a matter of fact “All else equal, facilities-based competition is the most sustainable and effective form of competition.”
What does a divestiture of Freedom Mobile to Videotron mean for competitive providers operating in other provinces? Could we see the emergence of a cooperative alliance between the “other” service providers in Saskatchewan (SaskTel), Manitoba (Xplornet), and Atlantic Canada (Eastlink)? What advantages might arise in doing so?
Competition in the Alberta marketplace will be interesting to watch. According to data from Michael Sone Associates “2021 Mobile Wireless Communications & 5G Services Market Report”, TELUS had about half of the market, Freedom had about 5% and Rogers and Bell split the remainder. Freedom has a higher share of BC and Ontario, ranging from 8% to 10%. Saskatchewan could also face some significant shifts, since Rogers is seeking to acquire Shaw’s wireline operations, and be in a position to be the first to offer full home service bundles in competition with incumbent SaskTel.
Having reached this point – announcing a deal with Quebecor – one might expect that there have already been discussions with the Competition Bureau and the Minister’s office. Will the transaction be sufficient to gain the necessary final approvals enabling these multi-billion dollar deals to close?
What branding and approach to marketing will Videotron use in its new markets? As the deal gets reduced to contractual terms, will Videotron and Rogers come to an agreement on outstanding litigation between the parties?
Will the timetable for approvals be completed in time for the new industry structure to participate in the important back-to-school marketplace?
More questions (and hopefully, even more answers) will arise in the coming weeks. Always interesting times in the Canadian telecom space!
The intersection of telecommunications policy and public safety has been failing Canadians.
There have been failures on two distinct fronts: public alerting and the development of a public safety broadband network.
As reported by Colin Freeze in the Globe and Mail, Canada has had a “direct-to-cellphone” alerting system (Alert Ready) operating since 2018, but the RCMP in Nova Scotia didn’t know how to use it.
The Alert Ready website describes the roles and responsibilities of various agencies in the delivery of public alert messages, which are transmitted to compatible mobile devices, TV and radio broadcasters and satellite and wireline broadcast distributors.
The system starts with a government-authorized user (provincial, territorial and federal government organizations, and emergency management officials) who:
Specifies the type of alert [e.g. amber alert, tornado, etc.] as well as whether it is to be broadcast immediately because of imminent threat to life.
Chooses the content of the message, including which language(s) the message will be issued in.
Chooses the format of the message, including whether the message will be sent as text only, audio only or in both text and audio formats.
Specifies why and when the alert is sent.
Ensures that the alert is updated and/or cancelled.
Specifies the geographical areas covered by the alert.
Given the amount of testing that the system has undergone, and the number of Amber Alerts or other alerts that many of us have received at all hours of the day and night, it seems inconceivable that anyone responsible for public safety communications would be unaware of the system.
How is it possible that management in an emergency services organization like the RCMP did not ensure training and procedures were in place? Where was leadership from the federal government?
The CRTC ensured that a working notification system was developed, and paid for it by an artificial tax on TV distributors, part of the government’s parallel tax scheme that I described 4 years ago in “A taxing situation”.
This was a failure in leadership by those responsible for public safety.
When the police receive a new vehicle, the car manufacturer may be responsible for training the police agency on how to activate the lights and how to activate the siren, where to find the hood release, how to accelerate and how to brake. But ultimately, it is up to the police to develop procedures on when it is appropriate to use these capabilities. Police car makers can build high performance vehicles, but it is up to the police to determine when it is appropriate for the police engage in a high speed chase. The vehicle has lights and sirens, but the manufacturer has nothing to do with deciding when it is appropriate to activate them. The builders of the Alert Ready system can train users on how to use the system, but cannot develop the procedures for when the system should be activated.
From the beginning, I have called for reviews of the system, suggesting “Canada should have a multi-agency formal process to review each use of the National Public Alert System, to help develop best practices”. Tragically, in Nova Scotia, the agency charged with provincial policing had no awareness of the system, let alone an awareness of best practices, in a time of crisis and a truly urgent need for the public to receive notifications. No wireless alert was issued; no notification was sent to broadcasters for their retransmission.
On the second file, the development of a public safety broadband network, the government has again failed to provide leadership, squandering valuable spectrum and failing to deliver communications capabilities that every other sector of the economy takes for granted. For a decade, 20 MHz of valuable 700 MHz spectrum has been sitting unused, reserved for some mythical public safety broadband network to provide first responders with interoperable multi-media communications capabilities.
The general public has enjoyed these capabilities for years. We call it WhatsApp, or Facetime, or any number of competing apps. Need more security? The business community has a number of solutions, none of which require billions of dollars worth of spectrum and billions more to build out a network. Any other organization would be harshly criticised for not using spectrum. The public safety spectrum is idle and has been for more than 10 years. In March, “Public safety within the public network”, talking about a virtual network solution – an architecture that is used in the US with its FirstNet.
Last week, the FCC celebrated its first 10 years of wireless public alerts in the US. There is much we can learn from other jurisdictions for public alerts and for public safety networking. The first step requires recognizing we have a problem.
Le meglio è l’inimico del bene. Perfection is the enemy of the good. No system can be expected to be perfect, but surely some kind of solution is better than nothing.
The release of the Government’s proposed new Policy Direction late last month started a statutory consultation period, formally announced with the publication in the Canada Gazette. The consultation has generally proven to be a meaningful exercise, often with substantive changes reflected in the final version, as we saw in 2019, the last time Canada introduced a Policy Direction.
The proposed policy direction outlines key policy goals for Canada’s telecommunications networks, to be able to support the latest innovative applications, available to all Canadians regardless of where they live or work, and at affordable prices. These are consistent with the themes of quality, coverage and affordability, which have been the focus for the past 5 years.
The notice in the Canada Gazette includes a Regulatory Impact Analysis Statement, providing some good background information.
Other relevant documents for those participating in the consultation can be found at:
I can envision a few areas of the proposed Direction that may attract some fine tuning.
For example, I wonder if sections 10 and 11 might contain a level of technological specificity that could inhibit network evolution, contrary to the stated policy goals. Keep in mind that the Policy Direction becomes a legislative instrument that can remain in force for a long time (the proposed Direction will rescind a Policy Direction that has been in place for 16 years, since 2006).
In order to foster fixed Internet competition, the Commission must
a) maintain a regulatory framework mandating access to wholesale services for fixed Internet;
b) monitor the effectiveness of the framework; and
c) adjust the framework as necessary and in a timely manner, including by making proactive adjustments.
The Commission must mandate the provision of an aggregated wholesale high-speed access service until it determines that broad, sustainable and meaningful competition will persist if the service is no longer mandated.
The Commission must mandate the provision of wholesale high-speed access services with a variety of speeds, including low-cost options in all regions, and should not allow the discontinuance of such services if this would eliminate affordable options for consumers.
At the very least, shouldn’t we consider the appropriateness of Section 10’s lack of technology neutrality?
Perhaps the Policy Direction could achieve the same purpose by including sections 10 and 11 as subsections of Section 9, following 9a) with something along the lines of “mandate the provision of appropriate wholesale high-speed access services, with a variety of speeds, including low-cost options in all regions”; renumber b) and c) as c) and d); and, add a subsection 9e) along the lines of “not allow the discontinuance of such services if this would eliminate affordable options for consumers.”
The Governor in Council may, by order, issue to the Commission directions of general application on broad policy matters with respect to the Canadian telecommunications policy objectives.
…
(1) The Minister shall have an order proposed to be made under section 8 published in the Canada Gazette and laid before each House of Parliament, and a reasonable opportunity shall be given to interested persons to make representations to the Minister with respect to the proposed order.
The “reasonable opportunity” for “interested persons to make representations to the Minister” runs until July 19. Comments are to cite the title of the policy direction (“Order Issuing a Direction to the CRTC on a Renewed Approach to Telecommunications Policy”) and can be sent by email to telecomsubmission-soumissiontelecom@ised-isde.gc.ca.
Competition had been rejected by the CRTC previously. The benefits of a competitive marketplace for telecommunication had to be proved to be in the public interest. Competition didn’t arrive in Canadian telecom by government fiat; we had to demonstrate the benefits.
At the time, competitive telecom was relatively new in a very limited number of countries. I was recruited to return to Canada after spending a half dozen years in the US, following the 1984 break-up of AT&T. My job was to define the interconnection architecture and build the network capital investment plans to transform Canada’s telegram company into a competitive digital communications company. In the first couple weeks, I rewrote the company’s interconnect plan, so new entrants would interconnect as peers, not customers.
Presenting the new plan at a board meeting a few weeks later, I met Ted Rogers and CP’s Bill Stinson for the first time and the new interconnection plan was put through the wringer. My boss motioned for me to sit down, but the lawyers I had been working were sitting in the back of the room and they wanted me to keep going. Later, I was told that I was being tested. As we packed up, Ted came over and told me it was a really good presentation and he looked forward to hearing more the next month. My boss said. “If that was a good presentation, what do you consider to be a bad one?” As he walked back into the boardroom, Ted answered “Why, you know what a bad presentation looks like!”
Over the course of the next 18 months, we assembled volumes of evidence, and answered thousands of interrogatories. My personal briefing book was a 4 inch binder with 33 tabs. [As an aside, I ran across it recently and would be happy to donate it to a resource library, if anyone is interested.] We carried 2 shelves of back-up binders into the hearing room. And that was just for the network panel.
For the oral hearing phase, I was part of the opening panel, on the witness stand for the first week testifying about the interconnection architecture. The strategy was to put the network panel up first, based on a thought that it would be boring and chase the story off the news so that we could get down to the serious policy issues over the following 10 weeks. Personally, I thought we were more exciting than the economists!
It was a different era. Sworn testimony – I was affirmed. Full cross examination, without the ability to consult with our lawyers once on the stand. The Minto Suites was home to many of the out-of-town teams. Long days at the hearing on the Quebec side of the river would transition to long evenings, usually starting off with the sauteed mushrooms and refreshments at the hotel’s street level bar/restaurant.
Someday, I really should pull together more stories from those days.
A memorable moment from the hearing came when I finished testifying. I was chatting with our corporate head of law and the legal chief at Bell came over and complimented our panel. I was shocked. A couple days earlier, he was doing his best to trip us up and here he was telling our lawyer what a good job we had done. During the following week, SaskTel’s outside counsel, the late Willie Grieve, caught up with me at our hotel and asked if I could help him understand how our proposal worked. We were developing a model of “co-opetition”.
Those personal interactions indelibly reshaped my understanding of the regulatory process. Inside the hearing room, we could (and we would) vigorously advocate our positions, while still maintaining courteous, professional and even friendly relationships with the other team. It is like the way opposing teams line up to shake hands at the end of a hockey playoff series, demonstrating respect for their industry colleagues.
Those professional relationships were important as we moved into implementation. Every so often, an issue needed an escalation to avoid (or mitigate) a service affecting incident. It helped to have a relationship with my counterpart on “the opposing team.” Sometimes, it is helpful to resolve issues without resorting to the regulator.
Scratch that. It is almost always preferable to resolve issues without resorting to a regulatory filing. I think there is a lesson in there for many of today’s industry participants.
Last week, I contacted the members of my small but high energy team of bright young engineers who had all been recruited from Nortel and Bell Labs to join what was then called CNCP. All of them were under 30, reporting to me when I still had a full head of dark hair at the age of 32. It was a memorable time together, working ridiculously long hours, creating bonds that keep us connected 30 years later. I am proud of what we accomplished and the leadership roles in the global telecom sector that each member of our team assumed after we moved on from Unitel.
There were notable industry leaders who had emerged from among the CRTC staff involved in that proceeding. But that is another story for another time.
As I have mentioned before, I will sometimes be driving on a highway here in Canada, video-chatting with my daughter who is on a high-speed commuter train halfway around the world, without either of us having to think about the cost. I don’t ever take that for granted. The miracle of connectedness is possible thanks to more than a century of investment and innovation by some people with whom I am honoured to have worked.
Ubiquitous affordable communications haven’t always been the norm.
During the regional CRTC hearings in 1991, we divided up the various provincial and territorial capitals in order to have a company representative sit with our lawyer, to listen as members of the public delivered comments to a mini-panel of Commissioners. I attended the Vancouver and Whitehorse hearings on the company’s behalf. As an aside, let me note that the weather in Vancouver in February is a little milder than Whitehorse, but I am not sure have seen any place prettier than the Yukon in Winter. There wasn’t a lot of air connectivity to Whitehorse so we ended up spending a few days there for a half-day hearing. After settling into my hotel room, I remember walking into the lobby where our lawyer was chatting with a CRTC Commissioner before we all set out for adventure during the few hours of daylight. I opened the conversation saying “did you see the long distance phone rates listed in the front pages of the Whitehorse phone book?” Surprisingly, neither of them knew that it cost around $3 per minute to call Toronto. In 1991, that would have taken an hour’s work at minimum wage to pay for a two minute call.
We changed that for most Canadians.
Thirty years ago this coming Sunday, Canada created the regulatory framework that enables today’s competitive environment for communications connectivity.
I’ll be thinking of my colleagues and friends among those who were involved, from all sides of the proceeding, applicants, respondents, intervenors and the Commission. I invite you to add your reflections in the comments section.
Congratulations on the past 30 years. As Ted Rogers would say, “the best is yet to come.”
A post on the Canadian Wireless Telecommunications Association blog reminded me to take a look at the latest quarterly update to the CRTC’s Communications Market Report.
The joint CRTC – Statistics data is showing that Canadian consumers are continuing to get more value from their internet and mobile services.
CRTC and Statistics Canada data shows an additional 500,000 households connected to high-speed internet in 2021 for a total of 12.1M, representing an increase of 4.2% over 2020’s subscriber total of 11.6M.
At year-end 2020, 3.3M (28%) of subscriptions were for speeds of 300Mbps or more; such connections increased to 3.9M (32%) over the course of 2021. Downloaded data traffic nearly doubled between year end 2019 and 2021, increasing from an average of 228.4GB in fourth quarter 2019 to 404.8GB by year end 2021.
On the wireless side, the latest report shows dramatic price reductions across-the-board, while average usage climbed 40% to 5.3 GB in 2021 over 2020 (3.8 GB).
The Canadian Wireless Telecommunications Association blog summarized the CRTC pricing data in this graphic:
As prices went down, CRTC and Statistics Canada report that average usage increased:
CRTC data shows that there were 1.2M more mobile subscriptions at the end of 2021 (33.4M) than there were in the first quarter of 2021 (32.2M).
As prices continue to rise in the rest of the economy, Canadians are paying less, while getting more for their communications services.
