The FCC is taking steps to try to block telecom arbitrage schemes, announcing plans to change the inter-carrier compensation rules.

By way of background, the FCC notes

The access charge regime was originally designed to compensate carriers for the use of their networks by other carriers. It also helped ensure that people living in rural areas had access to affordable telephone service through a system of implicit subsidies.
…
Arbitrage schemes take advantage of relatively high access charges, particularly for the remaining terminating tandem switching and transport services that have not yet transitioned to bill-and-keep.

In 2019, the FCC adopted an Access Arbitrage Order, revising its Access Stimulation Rules to prohibit local exchange carriers (LECs) from charging interexchange carriers (IXCs) for services used to deliver calls to access-stimulating LECs. “The revised rules sought to end the ability of LECs to engage in arbitrage of the intercarrier compensation system by extracting artificially inflated tandem switching and transport charges from IXCs to subsidize “free” high volume calling services.”

The FCC found “This sort of arbitrage harms consumers, who ultimately bear the costs for these services, whether or not they use them.”

Since then, the FCC learned about new ways that some carriers are using to continue leveraging arbitrage “schemes.” I would call them scams.

The announcement last Friday was to introduce new rules to try to close these loopholes in the access rate regime.

In a separate notice, the FCC proposed a $116M fine [pdf, 157KB] against a company that the Commission says has been engaging in local rate arbitrage, with nearly 10 million robocalls to generate toll-free compensation.

With IP telephony, traffic can readily be generated anywhere in the world and target distortions in access fees in any country or any region.As the US closes arbitrage opportunities for companies engaged in pumping traffic to generate fraudulent telecom access fees, will such schemes move to other jurisdictions?

Has the CRTC acted adequately to protect Canadian networks and Canadian consumers from the impact of artificial traffic stimulation from foreign and domestic actors?

Do we understand the magnitude of the issue? Does the CRTC have sufficient tools to detect and prevent traffic pumping?

Is more proactive regulatory action and enforcement required?

What should be our national objective for broadband speeds?

Of course, faster is almost always better. Last Friday, in the United States, FCC Chair Rosenworcel announced that she will be proposing to increase the US national standard for minimum broadband speeds from 25 Mbps download / 3 Mbps upload to 100/20. The 25/3 standard was set in 2015. She is also proposing to set a long-term goal for broadband speed of 1 Gbps down and 500 Mbps up.

Canada’s 50 / 10 objective was set in 2016.

I thought it was interesting to see such a long term aspirational national objective, effectively setting today’s commonly available urban speeds as a national target. In addition, Chair Rosenworcel is looking beyond speed, proposing that the FCC consider “affordability, adoption, availability, and equitable access as part of its determination as to whether broadband is being deployed in a reasonable and timely fashion.”

The aspirational target does not specify a symmetric speed. Will that be addressed by some in the comments phase? The reality is that there are very few consumer applications for symmetric gigabit per second connections. Such connections are more commonly found in business.

It will be an interesting proceeding to follow. A year ago, the US government’s infrastructure stimulus package allocated $65B for broadband.

Changing the minimum broadband speed from 25/3 to 100/30 means that considerably more areas will be classified as deficient. What additional costs will be associated with the move to a 100/20 standard and where will the funding come from?

Will a more aggressive new minimum standard mean that some areas will be funded for upgrades to 100/20 service before other regions have even received service at today’s 25/3 service levels?

Fortunately, where I am sitting the weather hasn’t been a distraction this week. Nicer weather might have otherwise torn me away from time in front of my screens.

And thankfully, my rural fixed wireless connectivity remained intact, enabling me to participate in media interviews and share information on Twitter during the Rogers network outage last week.

Here is a partial listing of media appearances over the past week:

• Where Were You When The Lights Went Out? | National Newswatch
• Rogers outage leaves experts wondering what could have happened | CHCH-TV
• Albertans relieved Rogers is back online after facing challenges with national service outage | Global TV News Edmonton
• Rogers CEO blames outage on a “network systems failure” | CHCH-TV
• The Rogers network outage proves Ottawa’s case for fourth network | Globe and Mail
• Champagne orders telcos to produce clear resiliency plan in 60 days | Financial Post / IT World Canada
• Interac outage exacerbated by poor network design, says expert | Financial Post / IT World Canada

With a lot of misinformation circulating during the outage, I tried to be helpful and measured. For example, last Friday, as stories emerged about difficulties completing emergency calls, I provided advice that most phones in Canada should be able to reach 9-1-1 without a SIM card.

There were some wild statements circulating from people stepping way beyond their areas of expertise. I don’t intend to give them more attention by linking to the error filled statements and stories. Hopefully, before politicians weigh in at Friday’s meeting of the Parliamentary Industry Committee, at least some of them will learn about Canada’s existing foreign ownership regulations. And as I discussed in March, Canada’s communications sector is less concentrated than our peers in the G7 and Australia.

During the week ending July 3, Cisco’s Thousand Eyes identified 283 network outages worldwide, 148 of them in the US. The following week, the Rogers outage didn’t even rank as the worst. KDDI, Japan’s number 2 carrier, had 40 million customers without service for 3 days.

Unfortunately, the oratory at the Parliamentary committee meetings tends to create heat without casting much illumination, with Parliamentarians asking questions they don’t understand and ignoring answers from subject matter experts, unless the response fits the predetermined narrative.

While the committee sorts through its study, Minister Champagne has already asked Canada’s major facilities-based providers to develop a mutual assistance framework during network outages, including providing emergency roaming, and establishing a communications protocol to improve information distributed to the public during service interruptions. The protocol is expected to be similar to recent Network Resilience notice of proposed rule-making issued last week by the FCC in the United States.

And the CRTC issued a statement identifying that it sent Rogers a letter, requiring answers to detailed questions by July 22.

More news to follow in the coming weeks.

The following article appeared first on National Newswatch yesterday.

On November 9, 1965, a relay tripped on a transmission line at the hydro-electric plant in Queenston Ontario, near Niagara Falls, setting in motion a 13-hour power blackout that disrupted electric service for more than 30,000,000 people in Ontario, Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. Excess power from that first line migrated to other power lines, that quickly became overloaded, causing their own relays to trip. In a matter of just 10 minutes, the blackout propagated across more than 200,000 square kilometres.

Most telephones (land lines at the time) kept working thanks to emergency generators that were a standard part of central offices.

Following the incident, new monitoring equipment, procedures and systems were introduced, but that didn’t prevent another large scale power grid failure 38 years later, in August, 2003, knocking out service for 55,000,000 in Ontario and 8 US states.

The root cause of the 2003 blackout was determined to be a bug in the alarm system software at FirstEnergy in Akron, Ohio. As a result, operators were unaware of the need to redistribute the power away from overloaded transmission lines. As a result, what should have been at most a manageable local blackout led to another collapse of much of the Northeast electric grid.

I told you those stories to help put last Friday’s Rogers outage into perspective.

We need to be realistic about what happened, and how we can mitigate the consequences of similar network failures. Friday’s network event was unprecedented. I told CHCH-TV News that in over 40 years of my involvement in North American telecom networks, I cannot recall an outage as broad in scale (nation-wide) and scope (spanning mobile and fixed networks, voice and data).

Still, most Canadians did not lose their communications services.

That’s worth repeating. Rogers does not operate a monopoly for any of its services. That should have been self-evident to the people who were tweeting about these so-called “CRTC monopolies” (or, my favourite from a so-called expert on a Twitter Space, “ogilopolies”). We didn’t experience a total communications blackout at any point while Rogers was restoring service.

As was noted on my Twitter stream, access to 9-1-1 services should have kept running. Wireless devices supported by Canadian telephone companies will automatically scan for a different network to complete a 9-1-1 call, if the native network is not available. If that did not work, the device suppliers and telecom carriers need to investigate why.

Some major customer network managers may need to re-examine their communications architectures to ensure sufficient carrier diversity. Some found poetic justice in the CRTC’s tweet that its phone lines were “affected by the Rogers network outage.”

Consumers may decide to re-evaluate the value proposition of bundling, perhaps choosing to pay a little more in order to separate their home connectivity from their mobile service provider.

But, let’s be clear about the overall state of Canada’s telecom competition policy.

If anything, last week’s network failure should serve to reaffirm Canada’s telecom policy promoting facilities-based competition. Customers served by alternate facilities-based providers kept operating. A review of the world’s LTE deployments shows that there are 10 LTE networks operating in Canada compared to 9 in the US, 3 or 4 in most European countries (Russia has 9; Sweden has 6; Denmark has 5).

Wholesale based service providers did not add any measure of network survivability. While one wholesale provider boasted on Friday that its services were 50% down, in reality, half of its customers were 100% out of service. The other half were running on a different facilities-based provider.

Canadians benefit from having robust competition among facilities-based carriers, and policies that encourage investment in diverse infrastructures.

As I observed on Friday, some used the network outage to advocate for structural separation, or for a government-run telecom access network. I couldn’t imagine how anyone would think that the people responsible for Canada’s airport fiascos, passport backlogs, or development of government payroll systems, or delivery of clean drinking water, could be entrusted with our telecommunications infrastructure.

If that hypothetical government network was down, I suggested that a week later, we might see a cabinet-level task force struck to discuss it. How is the government addressing the backlog in processing passports? By buying more chairs for people waiting in line. Seriously.

In mid-August 1966, the New York Times reported a mini-baby boom attributed to that cold blacked-out night, nine months earlier. That turned out to be a false urban legend.

That fake baby boom is another important lesson to apply in the wake of last week’s network event. Much misinformation will continue to circulate while technology professionals determine the root causes of the network outage and develop processes to try to avoid similar events in the future.

As I tweeted at the time, in the fullness of time, we will understand what caused the networks to fail. Industry-wide, carriers will undertake measures to avoid similar events and mitigate the impacts when future outages inevitably occur.

A recent article in “The Connexion” highlights the cost of deep discount mobile service prices. “Internet in rural France: New study shows how bad it really can be” cites a study showing that mobile speeds can be 66% lower in rural areas than in urban areas. Recall that a recent Opensignal study found that Canadian rural speeds were just 10-20% lower than urban speeds. Studies have also found that mobile customers in rural Canada experienced faster connection speeds than the average speeds received in any of the rest of the G7 or Australia.

It is also important to recognize that the French study considered communities of less than 10,000 to be rural; that is a full order of magnitude greater than Statistics Canada’s definition of rural as “the population outside settlements with 1,000 or more population”.

A couple of years ago, “When low prices constrain investment” talked about issues arising in Finland. That article referenced the situation in Israel that I discussed in “Low prices, high cost”.

Consumers want low prices. Of course we do, especially as we face rapidly rising prices for so many essentials.

But, consumers also want quality phone service wherever we are, including rural Canada. Remember the Quality, Coverage and Affordable Prices balance that has been at the heart of Canadian telecom policy for the past few years? The most recent Statistics Canada Consumer Price Index data showed that overall prices increased by 7.7% year over year while mobile services dropped 5.2% over the same period.

Once again, in rural France we see evidence of the high cost of a singular focus on low prices.

Service providers invest billions of dollars in capital to provide the coverage and quality of service that Canadians often take for granted.

The consumer interest is multi-dimensional, needing a balance of quality, coverage, and affordable prices.

Balance.