Price cap preview

April 30, 2007
CRTCThe CRTC is going to issue its decision on the 3rd Price Cap period, today at 4pm. There is a ‘lock-up’ being offered to allow people to get an advance look at the Decision. I am not joining the lock-up so you’ll have to wait until later this evening to catch my initial impressions.

Price caps have been in place for the past 10 years and allow incumbents limited pricing flexibility within a ‘basket’ of products. The ceiling or ‘cap’ in changes to the price of the services basket is adjusted each year by a factor of inflation less productivity gains and other adjustments. In the case of many services, the cap should have led to price declines because productivity exceeded inflation.

Over the past 10 years, rather than having prices drop, the CRTC had ordered incumbents to put the excess revenues into a fund known as the deferral account. It is expected that the CRTC will make the deferral account a historical artifact with today’s Price Cap decision.

We’re also going to watch for rulings on rate de-averaging and the duration (eg. 3 years, 5 years?) of this next price cap regime, among other issues.

Watch this space later today for updates.

Update: [April 30, 4:25 pm]
The Decision is out. Highlights:

  • basic residential rates in urban areas are capped at existing levels (a price ceiling);
  • basic residential service rates in rural areas are permitted to increase by up to 5% annually;
  • local optional service and bundled service rates are no longer subject to pricing constraints;
  • telcos are able to de-average rates local residential and optional local services;
  • business and other capped service rate increases are limited to the rate of inflation overall and a maximum increase of 10% per year for individual rates;
  • pay telephone service rates are permitted to increase to $0.50 per cash call, and $1.00 per non-cash call; and
  • rates for public safety and social services (e.g. 9-1-1 service, Message Relay Service) remain frozen.

The Commission’s policy is to move rates closer to costs. The new regime allows telephone companies to raise basic local prices in rural areas by the lesser of the annual rate of inflation or 5 per cent.

Once again on a major decision, Commissioner Langford has dissented from the majority. In his opinion, there are consumers left vulnerable by the new regime. He offers an alternative, which was rejected by his colleagues.

In its quest for administrative efficiency, the majority appears to have abandoned its responsibilities to balance the interests of all stakeholders: customers, competitors and incumbent telephone companies.

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Local competition down east

April 29, 2007

Bell Aliant

Lest you think that local phone competition is only found in Canada’s biggest cities, it is interesting to check out the number of applications for forbearance that have been filed by Bell Aliant.

In Nova Scotia: Amherst, Windsor, Lunenburg, New Glasgow, Antigonish, Sydney, Barrington, Digby, Yarmouth. In PEI: O’Leary, Summerside, Georgetown. In New Brunswick, Sackville complements more expected communities like Moncton, Saint John and Fredericton. The larger cities in NS and PEI, Halifax and Charlottetown, have also been the subject of applications.

How will forbearance impact consumers? What changes are in store for customers who don’t want to switch? Are the phone companies and their competitors as ready as consumers?

All of these questions will be subjects of discussion at The 2007 Canadian Telecom Summit, June 11-13.

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How networkers network

April 28, 2007
Nokia Siemens NetworksThe 2007 Canadian Telecom Summit has added another reception to its schedule, increasing the opportunities to network with the leaders of the industry. To celebrate the launch of newly merged Nokia Siemens Networks, the company is hosting a reception at the end of the day on Tuesday June 12.

The reception will provide an opportunity for conference delegates to meet Simon Beresford-Wylie, the CEO of the global organization.

The Canadian Telecom Summit is Canada’s pre-eminent gathering of the telecommunications industry. Attracting the senior-most professionals from around the globe, the event provides a forum for stakeholders to exchange views, share ideas, challenge assumptions and plan for the future.

Registrations are running well ahead of the pace of previous years. At the The Canadian Telecom Summit, plan to make the most of your time. Meeting space is available in a number of board rooms that can be booked by the hour in the PwC Business Centre. More informal meetings can be over a coffee or espresso at the Solace Systems cafe.

How do you meet? Special interest breakout sessions on Monday June 11 cover a range of topics. Three days of breakfasts, coffee breaks, lunches. Receptions on Monday and Tuesday evening. 21 Keynote speakers; panels with 50 industry leaders.

On June 11-13, 2007, the industry will be at The Canadian Telecom Summit. Will you be there too?

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No hands out for wireless hand-outs

January 25, 2017

One of the more surprising comments at Monday’s CWTA forum was heard at the very end of the day.

Luc Lavoie, Executive Vice President, Corporate Affairs at Quebecor was engaged in a lively discussion with Lawson Hunter of Bell when Luc said that Quebecor isn’t interested in a subsidy. Combine that comment with the speech delivered a week earlier by Quebecor chief executive Pierre Karl Peladeau, we can see that there is at least one new bidder that wants to move quickly to compete without handouts. With family in Montreal next year, I am looking forward to seeing Videotron make some aggressive offers for their quadruple play bundled services.

CARTT warns to watch out for ‘spectrum grabbers.’ Greg O’Brien cites a comment from earlier in the day by Vince Valentini of TD Newcrest:

Jim Shaw said ‘we’ll be there with our hand out if government is going to give something away for free’

I am in favour of a fully competitive market. What consumer isn’t? But we need the entry of new competitors to be fair – without government intervention and manipulation. As I asked last week, how do we guard against speculators that might use the subsidy to inventory spectrum, waiting to flip the licenses when foreign investment restrictions are lifted.

Terence Corcoran of the Financial Post will be moderating a session looking at competition in wireless services at The 2007 Canadian Telecom Summit on June 13. Panel participants include Robert Depatie of Videotron, Dave Dobbin of Toronto Hydro Telecom and John Watson of TELUS.

I have just learned about a report on The Canadian Wireless Industry – Analysis, Positioning and Capabilities: 2006-09, released by Industry Canada. I’ll review it in the coming days.

Canada continues to lead G7 in broadband

January 25, 2017

In October, we last looked at the OECD broadband statistics. The latest stats are out and I would have thought that Canadians should break out the champagne. It is interesting that I read the results so differently from the way Michael Geist at University of Ottawa interprets the same numbers.

The OECD itself states that “Canada continues to lead the G7 group of industrialized countries in broadband penetration.” While he acknowledges this triumph, somehow, Professor Geist sees a disturbing trend:

Needless to say, this is a pretty abysmal showing. Far from being an Internet leader, Canada is rapidly becoming a second tier country in terms of broadband penetration with limited broadband competition, hundreds of thousands of people with no hope of any broadband access

Abysmal? As in hopelessly bad?

How do we go from leading the G7 to ‘becoming a second tier country’? Do you think that we have a little bit of over-reaction? Maybe I’m just a ‘glass is half full’ kind of guy. Of course, in this case, I think the glass is more than half full.

Professor Geist expresses concern that Canada is near the bottom (second last, in fact) in terms of growth rates for broadband penetration. In reality, a declining rate of growth is a normal behaviour in a market approaching saturation. Look at who is dead last in growth rate: Iceland – a country ranked 3rd in overall broadband. South Korea is next to Canada at the bottom of growth and near the top on penetration per 100 inhabitants. You can find the tables on Michael Geist‘s blog. Don’t run out to get sack-cloth and ashes too quickly.

There is a fundamental problem with the OECD stats in any case. Unfortunately, the OECD measures broadband in terms of penetration per 100 inhabitants. A better indicator would likely be measurements per 100 households, which would normalize against differences in household size. After all, broadband connectivity is a family purchase, not that of individual members. A quick look using household numbers I found would see some significant shifts in OECD rankings. Differences in average household size will yield measurable changes in ranking countries that have populations with household access to broadband.

I’d like to hear if someone has looked at those stats.

Let’s address the comment [and often heard lament] that there are ‘hundreds of thousands of people in Canada with no hope of any broadband access.’ Where are they?

Thanks to companies like Barrett Xplore, there are no households in Canada beyond the reach of broadband service. Let’s explode that myth once and for all. Canadians have universal access to broadband internet.

John Maduri of Barrett Xplore will be speaking on June 11 on a panel looking at wireless options for broadband at The 2007 Canadian Telecom Summit.

Update: [April 26, 10:25 am]
I found some additional household size data – although it is from mixed years. When I plug that table into the OECD stats for broadband per 100 inhabitants, it yields some interesting information. South Korea’s numbers appear to make no sense – with 4.4 persons per household, South Korea appears to have 128% penetration of broadband – more than one broadband connection per home. Canada moves from number 9 to number 8, Australia jumps into 4th place, Denmark falls to 5th (from first) and Sweden drops out of the top 10 and falls behind the US.

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