In its recent rejection of a Cabinet appeal of the CRTC’s Review of Wireless Services, Canada has maintained consistency in its approach to telecom policy, balancing the often competing objectives of extending the reach of networks, delivering world-leading service quality, and affordable prices.

We read “the Governor in Council considers that the Commission’s decision appropriately balances investment incentives to build and upgrade networks, and sustainable competition and the availability of affordable mobile wireless prices for consumers”.

It hasn’t always been that way. Over the past ten years, I have referred to Canada’s telecom policy environment as being like “Calvinball” at least a dozen times. “The only permanent rule in Calvinball is that you can’t play it the same way twice.”

That is hardly the way to provide policy leadership for an economic segment at the core of the digital economy.

In a dissenting opinion a few years ago, former CRTC Commissioner Candace Molnar wrote “Citizens and regulated entities alike deserve a Commission that is fair, predictable, and transparent.”

In upholding the CRTC’s decision, the determination was consistent with an Order in Council from August 2020, which declared, “Canada’s Future Depends On Connectivity”.

At that time, Cabinet said:

On the basis of its review, the Governor in Council considers that the rates do not, in all instances, appropriately balance the policy objectives of the wholesale services framework and is concerned that these rates may undermine investment in high-quality networks, particularly in rural and remote areas. Retroactive payments to affected wholesale clients are appropriate in principle and can foster cooperation in regulatory proceedings. However, these payments, which reflect the rates, must be balanced so as not to stifle network investments. Incentives for ongoing investment, particularly to foster enhanced connectivity for those who are unserved or underserved, are a critical objective of the overall policies governing telecommunications, including these wholesale rates.

Recall that CRTC Chair Ian Scott’s welcome letter, the Ministers of Heritage and of Innovation, Science and Economic Development said “The Government’s objectives are to improve the quality, coverage, and price of services.” At the time, I wrote “It is a delicate balance. Quality and coverage require significant levels of capital investment, especially in a country like Canada.”

Consistency in policy and regulation is critical for the investment community. “Citizens and regulated entities alike deserve a Commission that is fair, predictable, and transparent.”

Canadian telecom policy appears to be clear. Canada’s future depends on connectivity.

At next week’s April Open Meeting, the FCC plans to “consider a Further Notice of Proposed Rulemaking seeking comment on proposals to strengthen the effectiveness of Wireless Emergency Alerts (WEA), including through public reporting on the reliability, speed, and accuracy of these alerts.”

The FCC’s proceeding [pdf, 560 KB] would:

1. Seek comment on how WEA’s reliability, speed, and accuracy should be defined, and whether these are the most pertinent measures of WEA’s performance.
2. Seek comment on how participating wireless providersshould measure performance of WEA for the purpose of generating WEA performance reports.
3. Seek comment on when and how WEA performance reports should be provided to the Commission.
4. Ask questions about whether WEA performance reports should include information collected at the consumer’s device, including information about the actual time and location of alert receipt, and whether consumer devices should automatically report this information to participating wireless providers.
5. Seek comment on ways to further improve WEA’s reliability and speed based on findings from the 2021 nationwide WEA test.

Since its launch in the US in 2012, Wireless Emergency Alerts have been used more than 61,000 times, with the voluntary participation of US wireless service providers, to warn the public about dangerous weather, missing children, and “other critical situations”, through alerts delivered on compatible cell phones and other mobile devices.

The system has been credited with 120 successful child recoveries in the US – one for every 12 Amber Alerts issued. While the FCC acknowledges that WEA has been proven to save lives, it is proposing to launch this review in order to improve the system’s effectiveness.

Among the identified problems, “WEAs are not always received by people for whom they are intended. WEAs may be delivered too slowly to be effective in certain important use cases, and WEAs may be delivered outside of the targeted area, resulting in consumers receiving a message that is not relevant to that geographic area.”

Since its inception, I have been suggesting that Canada needs to review our own version, the National Public Alert System.

To what extent do we need a formal process to review each use of the National Public Alert System, to help develop best practices?

Should this be shared committee with public safety and communications professionals among others?#CRTC #CDNpoli

— Mark Goldberg (@Mark_Goldberg) February 15, 2019

As I have said repeatedly, shouldn’t we continually be examining how the NPAS system is being deployed, to ensure that it will always be used in the best possible manner?

We frequently hear the term affordability used interchangeably with lower prices. That’s a mistake.

Certainly, there is a relationship between the terms. Lower prices make items more affordable, but stable prices with rising incomes can have the same effect. As I have previously written, mobile services prices have been coming down over the past few years, more than 25% in two years. So mobile services are certainly more affordable than before.

There is some interesting monthly household spending data on the Statistics Canada “Telecommunications: Connecting Canadians” portal. Mobile phone service is different from wireline services, like TV and home phones. Mobile phones are a personal service. We can expect a household with two adults to have two mobile phone subscriptions. It would be unusual for that same household to have more than one TV subscription. As it turns out, there is considerable variability in household size based on income.

The first three rows of data can be found on the portal itself.

The bottom row is from my calculations, based on Statistics Canada household size data, to derive average monthly spending for cell and pager per household member:

Monthly spending on cell phone services as a percent of total expenditures after tax, by income quintile, 2019

	All quintiles	Lowest quintile	Second quintile	Third quintile	Fourth quintile	Highest quintile
Monthly expenditure after tax	6,379.75	3,069.33	4,288.92	5,822.17	7,674.33	11,024.08
Monthly cell phone and pager services	$111.92	$56.08	$79.92	$109.67	$140.50	$173.42
Percentage of expenditure on cell service	1.8%	1.8%	1.9%	1.9%	1.8%	1.6%
Average size of household	2.48	1.49	2.11	2.49	2.95	3.34
Monthly cell and pager per household member	$45.12	$37.63	$37.88	$44.04	$47.63	$51.92

I thought it was interesting to see relatively little variation between the income quintiles in cell service spending as a percentage of total household after tax expenditures. As my calculations indicate, most of the variation in actual spending per household is explained by the difference in size of households; on average, with 1.49 members, lower income households are less than half the size of high income households (3.34 members).

What leads to the remaining difference? There is most likely a variability in adoption rates, and in spending per subscription. Interestingly, lower income households have typically been more likely to be “mobile only”, but we might want to take a further look at per capita mobile adoption rates by income. As the price of smartphones continues to climb above the $2000, we may need to re-examine the CRTC’s 24-month limit on device amortization as an inhibitor for low income Canadians.

In other jurisdictions, there are targeted subsidies, funded by the government, to encourage adoption of mobile and fixed broadband services. For example, in the US, the FCC’s Lifeline Support for Affordable Communications “provides up to a $9.25 monthly discount on service for eligible low-income subscribers and up to $34.25 per month for those on Tribal lands.”

In Canada, affordable broadband programs, such as the recently enhanced Connecting Families, have been completely funded by participating service providers. Last week, Connecting Families 2.0 was launched, significantly enhancing the original $10 residential broadband program with additional options and increased eligibility. These programs target residential fixed broadband service.

A number of service providers have an even wider array of options for targeted disadvantaged communities.

Mobility for Good from TELUS was first launched in 2017 as a youth focused program in BC. Mobility for Good has now grown to support youth nationally. TELUS extended the program to seniors in 2020, and to at risk Indigenous women in 2021. The program offers a free refurbished smartphone and mobile plan for youth leaving foster care, and for Indigenous women at risk or surviving violence. In addition, Mobility for Good offers low-income seniors subsidized plans and the option to buy a discounted device.

The CRTC’s Review of mobile wireless services last April established certain retail price regulations, establishing what the Commission calls “low-cost and occasional-use plans”, not tied to income qualification. As such, the plans, with specific characteristics, are not necessarily geared to meet the requirements of low-income users or help increase subscriptions among user groups with lower rates of adoption. It is not known whether these plans are actually filling a significant market void.

Lower prices are not enough.

As I wrote last year, “Unfortunately, after introducing Connected for Success, Internet for Good, Connecting Families and other targeted programs, we have learned that getting people online isn’t just a matter of price.”

There are a number of questions and issues that come to mind from all of this. There is a need to look beyond price. In addition, we know that seeking lower pricing is not the same as affordability. The consumer interest needs to balance value, affordability and investment, a corollary to the mantra of “Canada’s future depends on connectivity”.

Should the government be directly funding programs to encourage adoption of mobile and residential broadband, akin to Lifeline Support in the US?

That can be the subject of future posts. Your comments are encouraged.

How do you measure the competitiveness of a market?

Is pricing the best measure of rivalry?

An article in the Globe and Mail last week looked at a potential buyer of some of the assets expected to divested as part of the Rogers / Shaw transaction. In “Xplornet eyes Freedom, but experts skeptical deal will lead to greater competition”, we read “Consumer advocates and researchers say BCE’s wireless divestitures did little to stimulate competition in Manitoba’s mobile market.” Reading further, we only see academics questioning whether lower prices would emerge.

Is price a sufficient sufficient measure of market competitiveness?

A recent report from the OECD appears to agree. In “Methodologies to Measure Market Competition” [pdf, 1.85GB], we read “There is not a unique indicator of competition that can unequivocally detect changes in competition intensity”, and cautions that measurements like market concentration can be imperfect indicators. “The purpose here is not to create a comprehensive checklist, but instead to discuss enough measures to enable a discussion on the key issues for competition authorities to consider when using such measures to measure the intensity of competition.”

As I have written before, “You just cannot compare prices without consideration of the quality of the products or services. And you cannot draw conclusions on level of competitiveness in a market based solely on prices.”

Nationwide, Canada is home to some of the world’s best mobile networks, with all industry participants continually making substantial investments in spectrum and new technology, in urban and rural communities. According to OpenSignal, rural mobile users in Canada experience download speeds surpassing those for users in most countries around the world. That 2020 OpenSignal report continued, saying “rural Canadian users have far better download speeds than users in five of the seven G7 countries in the world.”

As Dr. Christian Dippon of NERA has said in the past “Quite simply, a market cannot both be noncompetitive and offer some of the best mobile wireless services in the world.”

The timing is running out for the Cabinet appeals of Telecom Decision CRTC 2021-130: Review of wireless services that was released April 15, 2021. Some people refer to this as the “MVNO decision”.

According to Section 12(1) of the Telecom Act:

Within one year after a decision by the Commission, the Governor in Council may, on petition in writing presented to the Governor in Council within ninety days after the decision, or on the Governor in Council’s own motion, by order, vary or rescind the decision or refer it back to the Commission for reconsideration of all or a portion of it.

So, time is ticking. If Cabinet is going to vary or rescind the decision, or send it back to the CRTC for another look, it has to do so by April 15, 2022. For those keeping score of Cabinet appeals, the anniversary date for Telecom Decision CRTC 2021-181 is 6 weeks later, May 27, 2022.

On April 4, the mid-year report for CCTS (the Commission for Complaints for Telecom-television Services) indicated that complaints are down 26% over the past year. Mobile price reductions beat the government’s objective. A recent CRTC press release indicated that 53.4% of rural Canadians had access to the 50/10/unlimited broadband objective in 2020, up 7.8 percentage points (or a substantial 17%) from 2019’s 45.6%. The current regulatory framework is succeeding in delivering better service, at lower prices, with enhanced technologies and services available to even more rural and remote areas.

Will the government maintain its policies to encourage investment in communications infrastructure through facilities-based competition?

For nearly two years, Canadian government policy has said “Canada’s Future Depends On Connectivity”. Will Cabinet choose to stay the course?