California-based market intelligence firm, iSuppli, has issued a report that may suggest the realities of Canadian winters could stand in the way of telco upgrades to fibre to the home (FTTH) architectures.
FTTH now is a competitive threat to MSOs in a few regions where the cost of deployment is not prohibitive. These regions include Japan, where fiber can be aerial fed from the central office, i.e. using telephone lines or in this case fiber lines strung from telephone poles. Other regions include Verizon’s territories in the United States, which are more than 60 percent aerial fed—and in Paris, where the existing sewer systems provide a low-cost conduit for running fiber to buildings. For most other regions, the cost of deployment is very high.
FTTH deployments in these regions can be between 12 to 15 times the cost of deploying broadband over a telco’s copper plant. The cost factor will slow down the widespread, global deployment of FTTH—but will not stop it.
To what extent do our winter ice storms and consumer resistance to unsightly overhead wires contribute to Canada’s phone companies lagging Verizon and NTT in FTTH?
When will telcos here take the leap to all fibre access?
The CRTC has released its annual report [ pdf] on the state of Canadian telecommunications.
In 2000, the government requested that the Commission report annually over a five-year period on the status of competition in the Canadian telecommunications industry. The CRTC decided to continue the annual report beyond the first 5 years in order to allow interested parties to stay informed about the state of the Canadian telecommunications industry.
Some of the quick highlights:
Total telecommunications revenues increased by 4.5%, rising to $36.1 billion in 2006. Almost half of industry revenues now comes from cellular and internet services.
Competitors captured 38% of total revenues, an increase of 3% from the previous year. Overall, the revenues of competitors increased by 12% to $13.7 billion, mainly due to the cable companies recording a 17% growth in revenues.
The cellular telephone market remained the largest and fastest growing sector in the industry. Revenues grew by 15% to $12.7 billion in 2006. Cellular telephone revenues accounted for 35% of the total telecommunications revenues, up from 23% in 2005. Cellular telephones are now in more than two thirds of Canadian households.
60% of all households now have high-speed Internet access, up from 51% in 2005. Canada remained number one in the G8 with respect to broadband adoption.
Capital expenditures rose by nearly 25% to $6.9 billion.
What does all this mean? The industry appears strong and is investing in the future. Consumers are continuing to sign up for mobile and broadband services and they are buying value added applications as well.
I’m sure I will be writing more as I go through the report.
The article was based on a superficial assessment of the wireless market in Canada, ignoring facts that didn’t agree with its agenda. I had to wonder about the lack of depth in researching its position.
Take for example the paragraph bemoaning Canadian cell-phone penetration:
About 58 per cent of Canadians now have cellphones; in the U.S. the figure is 77 per cent and Britain, the Czech Republic, and several other European countries have more than one such device per person.
Let me be perfectly clear. “More than one such device per person” makes no rational sense. It is a statistic driven by customers arbitraging aberrant pricing plans. Canada should not strive to have disfunctional European pricing models that lead to supra-normal penetration rates. The Gazette apparently thinks that it is good to have multiple phones so that when you call someone on the Bell network, you use a Bell phone; have another phone for your Rogers-based friends and a third for TELUS calls. That is one of the phenomena that drives European penetration in excess of 100%. People holding onto foreign country pre-paid SIM cards is another contributor.
Europeans typically receive no subsidy for their phones. Would the Gazette also want each of us to pay upwards of $150 more for our phones as well?
As the old commercial use to say, “you can pay me now, or pay me later.” Canadians like to pay later. We also like to be able to call local numbers for free from our home phones. Europeans get gouged.
With multiple phones per person, Europeans are also paying multiple bills per user – paying more for the privilege of claiming superior penetration rates over those of us in the colonies.
Here is another juicy paragraph from the Gazette editorial:
As the well-informed University of Ottawa professor Michael Geist explains on the opposite page, lack of competition in the mobile-data business means prices are high, which is keeping Canadians off the newer sections of the information superhighway. Hardly anybody in Canada would be able to afford the mobile Internet service provided by the iPhone, and certain other handheld devices – because all of Canada’s service providers keep their mobile data rates sky-high.
As I have written before, blaming high data plan pricing for the delay in iPhone’s launch is just not credible. The iPhone hasn’t been launched in Germany or any country other than the US. Other countries are said to have better suited data prices; their markets are bigger. But no iPhone. Why is that?
Could it be that Apple is rolling out the product on their own schedule?
Canadians continue to buy the latest versions of Blackberry. Carriers have introduced special plans for Mobile TV that don’t charge by the bit. Canadians are continuing to buy wireless services for the first time increasing our penetration rates, and add new enhanced multi-media features which speaks louder to affordable prices than repeated rantings from opinion pieces in papers.
Rogers’ launched its Vision service in April, beating any of the US carriers to market with truly advanced high speed mobile internet. Barrett Xplore has made broadband internet universally available to every household and business in Canada, coast-to-coast, sea-to-sea-to-frozen tundra.
It seems to me that The Gazette should get better informed before calling Canada’s wireless policy clueless.
Let me again point out the OpEd by FCC Commissioner Robert McDowell has an Opinion piece in the Wall Street Journal on July 24, called Broadband Baloney. He refutes the tendency for people to want government intervention in communications markets that are working pretty well on their own:
Looming over the horizon are heavy-handed government mandates setting arbitrary standards, speeds and build-out requirements that could favor some technologies over others, raise prices and degrade service. This would be a mistaken road to take — although it would hardly be the first time in history that alarmists have ignored cold, hard facts in pursuit of bad policy.
As I wrote on Tuesday, his piece concludes:
When it comes to broadband policy, let’s put aside flawed studies and rankings, and reject the road of regulatory stagnation. In the next few years, we will witness a tremendous explosion of entrepreneurial brilliance in the broadband market, if the government doesn’t micromanage. Belief in entrepreneurs and a light regulatory touch is the right broadband policy for America.
The NY Times is reporting that FCC chairman Kevin Martin said that he circulated a draft proposal that would require the winning bidders in the upcoming AWS spectrum auction to be receptive “to all kinds of devices and applications” provided by independent consumer electronics makers and third-party software providers.
His proposal would set aside a third of the new spectrum for bidders who agree to operate wireless services in a more open fashion.
A variety of companies have proposed set-asides for spectrum in the upcoming Canadian auction. Those proposals would simply open up additional spectrum for new entrants but none have suggested that they would commit to the kinds of consumer benefits being proposed by Martin. Their proposals implicitly suggest that consumers will benefit from additional industry participants, but none have said that open access should be a precondition for bidding on a reserved block.
Of course, there are lots of questions that come to mind. Among them:
If a company promises to provide open access, what enforcement mechanisms will ensure that the commitments are fulfilled? Would there be substantial penalty fees?
Who will interpret the definitions of open access?
Under an open access rule, can carriers lock consumers into multi-year contracts in order to recover handset subsidies? If consumers aren’t receptive to paying full price for devices, are contract termination fees consistent with the open consumer access commitments?
Martin is proposing a novel approach that might add teeth to the ‘trust us’ types of competitive benefits that were submitted to Industry Canada from the potential new entrants.
Is open access a sufficient consumer dividend – a quid pro quo – for the free market distortions that could be created by a spectrum set-aside?
Some people who represent various disabled communities may be cheering a CRTC decision that maintains a 50% discount for hearing impaired and speech impaired teletypewriter phone users. It is a hollow victory for the hearing and speech impaired. Further, it is disappointing that the CRTC missed an opportunity to take a stand on system access fees.
I suspect that their stakeholders can find a better deal. After all, basic rates remain in the order of 40-50 cents per minute (rounded up to the next minute). Yep, these are still mileage sensitive relics from days of old. For the purposes of pure nostalgia (and to educate our kids about the good old days) here is the ‘inside Canada’, inter-provincial rate table for Manitoba based customers:
Rate Distance (Miles)
Rate Per Minute or Fraction
0 – 8
$0.13
9 – 20
0.13
21 – 36
0.29
37 – 56
0.35
57 – 80
0.40
81 – 110
0.42
111 – 144
0.43
145 – 180
0.44
181 – 228
0.45
229 – 290
0.46
291 – 400
0.47
401 – 680
0.48
681 – 1200
0.49
1201 – 1675
0.50
Over 1675
0.51
So the CRTC says that the hearing impaired can get 50% discounts off rates that are 10 times higher than market prices.
Try dial-around on YAK or Telehop and pay 4 cents to most places on the planet that Canadians call. Telehop will give you 15 minutes for a quarter for those countries. But we will allow the hearing and speech impaired access to rates that are only 5 times higher than what people should be paying.
Bell and TELUS supported the 50% discount but wanted the program extended to all competitors:
Bell Canada indicated that it would not be opposed to retaining the 50 percent discount for TTY users. Bell Canada submitted that, to be made compliant with the principles of symmetry and competitive neutrality, the 50 percent discount must apply to any telecommunications service provider offering or providing toll services within the company’s operating territory. TCC also supported this view.
The CRTC rejected imposing the obligation on the competitive industry, hopefully recognizing that market prices are already well below the manufacturer’s suggested retail price.
Ho-hum. Would it have been a political hand grenade for the CRTC to have said ‘go shopping’?
50% off. What a deal!
The CRTC failed to address a substantive concern raised by PIAC and endorsed by YAK: will consumers be protected from the phone companies introducing mandatory system access fees. Until now, basic rate subscribers could avoid the cash grab from these official-sounding fees by refusing to accept a toll plan.
the Commission is of the view that there is a variety of cost-efficient alternatives available to consumers who do not wish to subscribe to a toll plan, including various dial-around services, prepaid calling cards, and toll plans of competitive long distance service providers. In many cases, these toll services are offered at lower rates than are available under the ILECs’ toll plans and some do not have subscription or network access charges.
So, when the phone companies add on a universal $4.95, or $7.95 or $10.95 toll network access fee, how do customers avoid the rip-off? Will the Commissioner for Complaints for Telecommunications Services be empowered to deal with system access fees?
