Mobile content has been in the news a lot in the past few weeks. Mobile TV, mobile porn, broadband applications driving demand for new spectrum. Will 3G cut it? What is 4G? What does it take to get applications onto a mobile screen? Should net neutrality apply to mobile browsing?
One of the new sessions at The 2007 Canadian Telecom Summit will be looking at Mobile Content. Check out the full agenda for the event at www.telecomsummit.com. The 2007 Canadian Telecom Summit runs June 11-13 in Toronto. That panel will feature leaders from KPMG, RIM, TELUS, HP Canada and the Canadian Recording Industry Association.
The Canadian Telecom Summit presents more than 18 leaders delivering keynote addresses together with panel discussions covering a wide range of telecom issues.
Early Bird rates expire March 11, less than 2 weeks away. Register now and save.
In December, Cabinet issued a policy direction to the CRTC that had a number of extremely relevant components, in view of the consultation process for the AWS spectrum.
the Commission should
rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives, and
when relying on regulation, use measures that are efficient and proportionate to their purpose and that interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives;
the Commission, when relying on regulation, should use measures that satisfy the following criteria, namely, those that
specify the telecommunications policy objective that is advanced by those measures and demonstrate their compliance with this Order,
if they are of an economic nature, neither deter economically efficient competitive entry into the market nor promote economically inefficient entry,
Let’s focus on two of these: rely on market forces to the maximum extent feasible; neither deter economically efficient competitive entry into the market nor promote economically inefficient entry.
Is a spectrum set-aside for new entrants economically inefficient? To be consistent with its policy direction, should new entrants buy spectrum for its full value, competing openly against the existing carriers?
Any reduction in the amount paid for spectrum is lost revenue for the government. Should taxpayers subsidize competitive entry? If so, by how much?
If the new entrant can’t afford the full value of the spectrum, can they afford to build out the network? What is the impact of non-Canadian ownership restrictions on the auction? Should taxes subsidize spectrum speculators waiting for foreign investment restrictions to be lifted?
Mark Evans recently wrote that less regulation in telecom will mean less competition. It is an interesting viewpoint, but conversely, is it reasonable to believe that more regulation will lead to more competition?
From a consumer perspective, do we want to rely on a government-managed marketplace for communications services? Mark’s posting says
The fundamental problem, however, with deregulation in Canada is it comes after decades of micro-management by the CRTC…
Surely the answer can’t be continued regulation and government micro-management.
Would the marketplace for highspeed services be more competitive with someone else owning Inukshuk? Should someone other than Rogers have purchased Microcell? We would have had additional market participants, but where were the alternate bidders?
There was no government decree ordering Bell and Rogers to make these purchases. Microcell and Inukshuk were sold to the highest bidders. The shareholders and creditors would have insisted on that.
Any other potential buyers felt that they couldn’t afford to pay the same price. Why then, would the government prohibit the sale of these companies to the highest bidder?
If the government had intervened, then the alternate buyer would have ended paying less than market prices for the companies, distorting the economics of the marketplace.
You might have been able to enjoy lower prices, but at what cost to investors and shareholders? Under that scenario, the buyer of this subsidized asset would have a lower than normal cost base with which to compete against the incumbents.
Would consumers benefit from lower prices through such an expropriation of shareholder value? Or would the new owners benefit from higher profits because a government restriction on one set of companies creates extraordinary value for the buyer? What kind of climate are we creating for investment in infrastructure?
On the surface, it may be appealing to have government intervention to try to increase the level of competition, but what are the unintended consequences?
Did the CRTC go too far when it ordered ILECs to offer unbundled wholesale ethernet services?
That is what Bell, Bell Aliant and TELUS have charged in separate appeals. The TELUS application says:
First, that the Commission has exceeded its jurisdiction by ordering the construction of new facilities and the provision of New Services to competitors beyond those currently provided by the TELUS network. Second, in Order 2007-20 the Commission has erred in law by failing to apply the recent Policy Direction, which was issued by Order in Council of the Governor in Council and which the Commission is required by law to apply.
In addition, TELUS submits that there is a substantial doubt as to the correctness of Order 2007-20, as it fails to consider a basic principle which had been raised in the original proceeding.
Encouraging facilities-based competition was the basic principle that TELUS claims was ignored.
The effect of the Order will be to seriously erode the value of TELUS’ investments in advanced networks in both central and western Canada. The Order will discourage such investments by TELUS and by new entrants as well.
My posting earlier this morning spoke about unintended consequences of government action. Will mandated unbundling of ethernet lead to a US-style stagnation of investment in broadband facilities?
Imperial Oil has been having problems with premature ignition. Their gasoline seems to be setting fires at a couple of their refineries – Sarnia in December and Nanticoke last week. Add CN’s rail strike into the mix and you end up with shortages of gasoline throughout Ontario.
Line-ups at service centres, sold-out signs and rising prices have become familiar scenes. Truckers are calling for action. The Ontario Energy Minister has pledged to keep an eye on the prices.
Hopefully, he will resist the temptation to intervene.
As tough as it is on all of us at the pumps, the marketplace is working just fine on its own. Despite reduced supply, there is competition for fuel retailing and the stores are doing the right thing when demand outstrips supply. Higher prices helps cut down on demand and creates the right incentives to find and fund alternate sources, such as trucking in tankers from other areas. Government intervention and controls will only distort the proper working of the marketplace.
Is there a lesson to be applied to wireless telecommunications services – or other telecom services, for that matter?
Over the coming weeks, I’ll be taking a look at some of the issues associated with the consultation leading to the AWS spectrum auction. Among the most important issues being considered are incentives, such as a new entrant set-aside and mandated roaming, to stimulate the creation of a new wireless competitor.
Incentives are a form of subsidy for the new entrant. I won’t presume that such concessions are necessarily wrong, but we need to be clear about their implications.
As loyal readers are aware, I have never hesitated to critique the current mobile market participants. However, as attractive as it may seem to increase the level of competition, can government intervene in the workings of the marketplace without unintended consequences? I’ll have more thoughts later.
