Bell, Bell Aliant and TELUS wanted to get rid of those pesky service charges.
The way the system works right now, if you order phone service from the ILECs, you have to pay a service charge. If you test drive a competitor and want to go back, they have to charge what seems to be a punitive fee. It is in the tariffs, so they can’t waive them. Period.
Last summer, the companies applied to get rid of service charges by raising monthly bills for everyone. Today, the CRTC said no to that idea.
We did not feel it was appropriate to approve a rate increase for all residential customers to compensate for the elimination of connection charges. The government’s recent direction on forbearance removed the CRTC’s restrictions over promotions and winbacks. Telephone companies are free to apply at any time to reduce or eliminate their connection charges, and the Commission will deal with their requests expeditiously.
Given the flexibility soon to be enabled by forbearance and from the recent Price Cap decision, the telephone companies have other tools, less intrusive to consumers, to allow them to compete.
Is it possible to be better than perfect? When a teacher offers bonus marks, is it possible for a student to end up with better than 100% at the end of the year?
A number of recent studies have pointed to mobile penetration rates of “better” than 100% in many countries in Europe and around the world. The presumption is that Canadian mobile penetration is inadequate. How come we aren’t seeing more questions on what drives these supernormal penetration rates and the resultant impact on end user costs?
Do we really believe that there isn’t a single person in Finland without a cell phone? Do we really believe that people are on the phone so much that they need a second mobile phone to avoid having callers go to voice mail when their call waiting is already… well, um… waiting?
Maybe something else is going on? Maybe there are strange distortions in rate structures that create artificial incentives to inventory SIM cards? Cheap on-net calling. Foreigners holding pay-as-you-go SIMs to avoid roaming rates?
Whatever the cause, the corollary of multiple phones per user is that the average user is paying bills for more than one phone.
I have to ask if all these comparative international cost studies are looking at end-user costs. Are the reports actually studying cost per cell phone, not cost per user?
And if the average user has 1.2 or 1.4 handsets, then isn’t the average user is paying 1.2 to 1.4 times the average cost per handset? So, in order to compare average mobile costs for users in various jurisdictions, should we actually be multiplying by the average number of phones per user first?
What would happen if the international rankings were adjusted to account for multiple bills?
Maybe 100% penetration isn’t really a worthwhile objective.
My wife likes to go to estate auctions when we are at the cottage. She’ll come home with some interesting treasures, like a couple beautiful old phones. And often there will be a box of junk that was thrown in by the auctioneer in order to clear the table.
After all, the auctioneer has a responsibility to clear out the house. As a result, he’ll combine whatever isn’t selling into a lot that is more attractive. So, my wife ends up getting a collection of cut crystal shot glasses combined with some Tony the Tiger cereal bowls. Can you guess which she was actually bidding on?
Some would say that the AWS spectrum auction has proposed to combine lots the same way as estate auctioneers. Combining less attractive rural areas with more desirable urban territory.
I have mentioned in the past that I act as an advisor to Barrett Xplore Inc. (BXI). BXI has focussed on serving rural Canada:
Our vision is simple — more for rural Canada: more choice, competition, and availability of broadband access, applications, and accessories.
BXI’s submission in the AWS consultation has a novel suggestion to address the level of competition in rural markets.
Unlike many who suggest a set aside for new entrants or mandated roaming and access to incumbent infrastructure, BXI simply wants some of the regional spectrum blocks to be broken up into more manageable, bite-sized chunks. Barrett Xplore isn’t asking for a handout or help in lowering competition for the spectrum. Just let them bid for the parts they really want.
Barrett Xplore is a company that just wants the rural pieces. Without changes, most bidders will pick up unwanted rural territories when their target was the urban core.
The problem of urban-rural market segmentation can also be seen in the results of the 2.5 GHz MCS comparative selection process conducted in 2000 that awarded almost all of the Canadian licenses to Inukshuk Internet Inc. through a comparative licensing or “beauty contest” approach. Unfortunately the very large MCS license areas include both rural and urban markets. The lure of the large urban population and easier business case returns likely explains why the deployments, announced to date, focus on large urban areas.
Barrett Xplore’s proposal merits consideration. If there are bidders that want the cereal bowls, why would we make them pay for the crystal? And vice-versa.
Bragg Communications, better known as Eastlink, has been a leader in introducing competitive services in Atlantic Canada. They pushed hard in launching voice services over cable, not waiting for VoIP. In doing so, Eastlink quickly grabbed a third of the Halifax telephone market.
Bragg Communications has been competing hard against Bell Aliant and many would say they have been winning.
EastLink believes that its presence as a competitor in these markets has not only increased choice for Maritime residents and businesses, but it has also played a significant role in increasing quality of services and products to consumers. EastLink was the first company to offer bundled services, which provides special pricing opportunities for consumers.
Eastlink has accomplished all this without any handouts or subsidies. That is why it was particularly surprising to see Eastlink call for special new entrant incentives, such as a spectrum set-aside. The language in the Eastlink submission is couched in places, saying “measures should be implemented to enable new entrants to access spectrum.”
No one, or at least no reasonable person, would dispute that request.
Industry Canada should definitely enable new entrants to access spectrum. Any arguments? Is anyone really suggesting that the spectrum – or even any portion of the spectrum – should be set aside solely for incumbents?
Apparently, Economics and Technology Inc., in its appendix to one of the submissions, think so. ETI says that the TELUS / Bell / Rogers group have been arguing that “the creation of one or more new carriers with national market footprints is both unnecessary and inefficient.”
I think that is an incorrect statement of the national incumbents’ position.
In any case, the real question is whether the Department should intervene in the marketplace to constrain economic forces from an open bidding process. There is a difference between allowing the creation of a new carrier and artificially and uneconomically stimulating such market entry.
According to Eastlink, we shouldn’t worry about the resultant possibility of uneconomic entry:
The benefit to be gained by providing new entrants with the opportunity to access spectrum far outweighs the risks of potential uneconomic entry. Furthermore, uneconomic entry will eventually be corrected through market forces.
At least Eastlink recognizes the “potential” for uneconomic entry. But what does it mean that the impact will eventually be corrected? Eventually? After how many millions, tens of millions or billions of real shareholder dollars are lost?
Let’s move out of economics class here and look at the real world of investors. The potential for the government to stimulate uneconomic entry means financial houses face special risks in providing funding to Canadian carriers. Individual shareholders of corporations are people like me, my neighbours, pensioners. Mutual funds and institutional investors will look to other countries for growth opportunities. Individuals are just bound to get burned. The memories of the tech bubble are still too fresh to be happy about “eventual” corrections to uneconomic entry.
That set-aside also means that the federal government raises less than full value from the spectrum auction. I’m not sure that I’m willing to fund some new entrant or speculator with my tax dollars.
Eastlink was right when it said that new entrants should be able to access spectrum. The rules should ensure the auction allows for an open, competitive bidding process. Full stop.
Last November, the CRTC launched a major inquiry into the nature of wholesale services that incumbents will need to provide to competitors. Telecom Public Notice CRTC 2006-14 is a 2-year process that saw a flurry of filings last weekend – jamming many an email box with more data than most humans would want to consume – especially on a holiday weekend.
The late night, last-minute filings led to a few clerical errors. At least two companies sent out follow-up email messages along the lines of:
It has come to the attention of [name removed to protect the already embarrassed] that in its Abridged distribution of responses to interrogatories issued on 18 May 2007 to the interested parties to this proceeding (PN 2006-14) that a partially abridged copy of the Confidential version of the Attachment … was inadvertently included in the abridged distribution. Per [our] covering letter, this attachment was filed in confidence only with the CRTC with no abridgement to be provided.
A real challenge in a digital environment is the ease by which such mistakes can be made and the challenge in recovering private information once placed into the public domain.
