Telecom Public Notice 2006-14, Review of regulatory framework for wholesale services and definition of essential service, is one of the most important regulatory proceedings before the CRTC. It will set the stage for how competition in telecom services will evolve in an era of increasing retail forbearance.

The public notice was issued nearly a year ago and the paper process has unfolded over the course of this calendar year. (Of course, there is little actual paper these days. Virtually everything is available in electronic format on the CRTC’s website.)

Oral hearings open today in the national capital region and will continue over the coming weeks. You can listen to it live by webcast.

The opening statement from TELUS summarizes the purpose of this process, which will have taken almost two full years by the time a decision is released in mid 2008:

• To determine the extent to which regulation should mandate the provision of facilities, functions and services by some facilities-based telecommunications providers to other telecommunications service providers. In other words, to what extent and on what terms should facilities-based carriers be required by regulation to share piece parts of their networks with others.
• Two regulatory frameworks will need to be determined:

1. The regulatory framework for mandated facilities sharing to be implemented at the end of the transition period.
2. The regulatory framework for mandated facilities sharing to be implemented at the end of this proceeding and continue until the end of the transition period

In the view of MTS Allstream,

The Government’s goal is to create a competitive telecommunications market in Canada – a market that will deliver the greatest benefits to customers, produce the greatest level of innovation and provide the greatest incentive for investment.

TELUS seems to agree with that, and adds that the CRTC’s also has to consider a sufficient transition period to allow market participants to adapt business plans to the newly competitive market. Rogers suggests that 5 years is an appropriate duration for such a transition period.

There is contention over many issues, not the least of which is defining precisely what is meant by the terms “essential facilities” and “essential services.” Last week, the CRTC issued a letter describing 6 possible categories of facilities, in order to try to help bring a focus to the proceeding:

1. Essential: Would include functionalities that meet the criteria of the Commission’s definition of essential facility and would continue to be made available to competitors via mandatory unbundling and mandated pricing (such as basic subscriber listing information).
2. Conditional Essential: Would include functionalities that would meet the criteria of the Commission’s definition of essential facility, conditional on specific circumstances (such as unbundled local loops in exchanges where wire-line competitors are not yet present). These functionalities would be made available to competitors via mandatory unbundling and mandated pricing until the specific circumstances were no longer in effect.
3. Non-Essential services subject to phase out: Would include functionalities that would not meet the criteria of the Commission’s definition of essential facility, and mandatory unbundling would be phased out over a specified transition period. Provisions would be made to enable annual price increases during the transition period in order to provide incentives for investment in, and construction of, competing telecommunications network facilities. Provisions would also be made for a carrier, at the end of the transition period and at its discretion, to: i) continue to offer the service pursuant to a tariff; ii) file an application for forbearance; or iii) file an application to withdraw the service.
4. Conditional Mandated Non-Essential: Would include functionalities that would not meet the criteria of the Commission’s definition of essential facility, but would continue to be made available to competitors via mandatory unbundling and mandated pricing, conditional on specific circumstances (such as unbundled local loops in exchanges where local forbearance has been approved on the basis of mandated access to such loops). Mandatory unbundling and mandated pricing would continue until the specific circumstances were no longer in effect.
5. Public Good: Would include functionalities that would not meet the criteria of the Commission’s definition of essential facility, but there would be general agreement that the functionalities should continue to be made available to competitors via mandatory unbundling for reasons of public benefit (such as access to 9-1-1 call routing services).
6. Interconnection: Would include interconnection and certain services ancillary to interconnection that would continue to be made available via mandatory unbundling and mandated pricing on the same basis as essential facilities (such as direct connection).

Which services fit into each box? That is the essence of the next few weeks, serving to clarify the lengthy submissions. Of course, one of the challenges from such a major and lengthy proceeding is the cost for smaller competitors to participate fully. As such, it will be interesting to see the extent to which niche operators are able to preserve the core interconnection requirements for their businesses in the long term.

The debate over essential services is not just a Canadian issue. Just last week, Sprint Nextel raised the level of its fight over wholesale access to broadband lines.

Ultimately, this proceeding will play a critically important role in determining the profitability and direction of competitive communications investment in Canada. The determinations in this proceeding could impact whether certain types of competition are viable at all.

As such, the proceeding is important to all of us.

Technorati Tags:
essential services, CRTC

The New York Times has a story today about Google’s mobile phone strategy. According to the story, Google plans to distribute an operating system for mobile devices based on Linux. Google already offers some mobile versions of applications such as mobile search and map software.

Google is not expected to make its own phone, despite having built prototypes to test software and demonstrate the technology to manufacturers.

Google wants to extend its dominance of online advertising to the mobile Internet, a small market today, but one that is expected to grow rapidly. It hopes to persuade wireless carriers and mobile phone makers to offer phones based on its software, according to people briefed on the project.

The story suggests that smaller carriers may be most receptive to Google as a competitive differentiator, although Google’s push for open networks and net neutrality suggests that the company may be seeking an even bigger piece of the pie.

Technorati Tags:
Google, Gphone

Have recent missteps by Apple opened the door for a competitor in the cool-phone sweepstakes?

With a pun-intended headline, Apple getting a seedy image, The Chicago Sun-Times carried a story last week calling the iPhone “the Lindsay Lohan of technology.”

What did Apple do to deserve such a moniker? It rendered useless phones that had been hacked to release the AT&T; SIM lock and at the same time, it killed third-party applications that were developed for the device.

Last week, it also happened that Verizon released its line-up of new devices for Christmas, including two touch screen devices from LG, the Venus and Voyager. The Voyager appears to have incorporated some of the iPhone “look” but it adds a supplementary QWERTY keyboard and it accepts micro-SD supplementary storage.

The Wall Street Journal wrote about the trendiness of handsets – making a fashion statement with your cell-phone. Apple iPhone pricing is creating a discontinuity, possibly allowing carriers south of the border to decrease their up-front subsidies if the demand is sufficient for the device itself.

Alternatively, the price of the iPhone, coupled with Apple’s arrogance and disdain for open third party applications may open a crack in the market for alternate providers of cool devices. I’m not talking about a device that has to settle for “just as good as a Xerox” status. I’m looking for one that looks at the shortcomings of the iPhone and blows right past.

Don’t get me wrong – the window of opportunity hasn’t been opened wide, but it seems to me that there is a sliver, a space in the market for other participants to elbow aside Apple’s impersonations of one of these Hollywood starlets with more money than common sense.

Much has been made of Apple’s success in selling 1 million units in its first 74 days. It was a remarkable product launch. Still, some perspective is required. For example, Nokia sells more than a million phones every day. There will be about a billion phones sold in the world this year – Apple hopes to achieve about 1% share. Isn’t it possible that some other device manufacturer can afford to assign some R&D; and industrial design to achieve the elusive cool factor?

We’re coming into the season that should be most determinant in bonus payments in the wireless industry. Historically, the Canadian wireless market sees about 40% of the year’s net additions in the 4th quarter.

What kinds of devices are going to find their way onto Santa’s gift lists?

Technorati Tags:
Apple, Verizon, LG, iPhone, Voyager

Last July, I wrote about a USB-key hardware firewall / virus protection that I was introduced to by my friend Jeff at Gentek, around the corner from me in Concord, Ontario.

It took me a couple months to get a chance to try it, but I have finally installed it on one of the computers that powers MHG&A;.

Talk about ease of installation! Plug in the USB Yoggie, slip in the CD and minutes later, your PC has hardware protection.

My computer is running noticeably faster; the previous software-based protection tools were having me look at new equipment.

The pro version is designed for easy and remote administration by corporate IT departments. Unplug it, and the computer is locked down from network access.

It makes me wonder if there is a market for this device for parents looking to help manage their kids network access. Issues to be discussed with Jeff and Yoggie over the coming months.

The first round of comments have come in for the CRTC’s consultation on registering all telemarketers.

All of the major telephone companies have submitted a unified proposal that can’t be ignored. They want your kids to register and pay fees before calling to sell Uncle Bill a chocolate bar. They want your church auxiliary to register and pay a fee before calling members up to come to bingo night. They want political candidates to register and pay a fee before their campaigns.

Here is what the telcos said:

36. … The Companies submit that it would be preferable to establish distinct rules that require ALL telemarketers and clients of telemarketers to register with the National DNCL operator for the purposes of providing their contact information. This rule would be in addition to the rules established in Decision 2007-48 that compel non-exempt telemarketers to subscribe to the National DNCL. The Companies accordingly propose the following two new rules:

• A telemarketer shall not initiate a telemarketing telecommunication on its own behalf unless it has registered with the DNCL operator and has paid all applicable fees charged by the DNCL operator and the CRTC UTR complaints investigator delegate, as appropriate.
• A telemarketer shall not initiate a telemarketing telecommunication on behalf of a client unless that client has registered with the DNCL operator and has paid all applicable fees charged by the DNCL operator and the CRTC UTR complaints investigator delegate, as appropriate.

37. These rules would logically lead to two new potential types of violations: the failure to register with the DNCL operator and the failure to pay all applicable fees charged by the DNCL operator (including those assessed by the investigator-delegate). In each case, these violations would likely come to light in the course of an investigation of a UTR complaint and should be identified by the investigator-delegate to the Commission along with the results of its investigation of the complaint in question.

The CRTC has defined telemarketing telecommunications as: unsolicited telecommunications made for the purpose of selling or promoting a product or service or for the solicitation of money or money’s worth.

Your car dealer calling to remind you it’s time for an oil change? Telemarketing. The dry cleaner calling to ask if you want them to fix the cuff on that pair of pants you dropped off? Telemarketing. Dentist calls to remind you to come in for your appointment tomorrow? Yep.

The definition is broad enough to include too many calls from groups that are supposed to be exempted.

Parliament specifically exempted telemarketing calls made under certain circumstances. Such as an existing business relationship. Such as from a registered charity. Newspapers. Political parties.

These exemptions get thrown out under the proposed registration process. It sounds like another private copying collective. We’ll see collectors go through the yellow pages in order to collect registration fees. At risk of being hauled before a tribunal for “failure to pay all applicable fees charged by the DNCL operator”.

The kind of discretion that the investigator would have according to the telcos plan scares the closet civil libertarian in me. The investigator has an incentive to register as many groups as possible; to collect as many registration fees as possible.

It scares me to have investigators with the discretion to decide which church groups they will pursue, which clubs, which schools, which political parties merit further examination and harassment for failing to register before making a call.

It is disturbing to think that leading executives from all of the phone companies – most of them lawyers – were unanimous in proposing this kind of bureaucracy and these kinds of restrictions on free speech. Just read the signature page on their submission.

Their proposal should scare you too.