A report in the Globe and Mail has people speculating on the possibility of Xplornet taking over Freedom Mobile as part of the process to get the Rogers-Shaw transaction approved.

If the report is accurate, it might bring an interesting and fresh approach to Canada’s wireless marketplace and one that brings benefits to rural Canadians as well.

Let’s keep in mind that from the outset, Shaw has said that it was unwilling to continue to make the necessary investments in Freedom Mobile to keep the business current. Shaw acquired Freedom after the business failed under its previous ownership.

One might ask why any acquirer would expect a different result, if it plans to continue to operate a status quo business model? Simply operating as a low-price urban mobile provider has not proven to be sustainable. There is no reason to expect different results by applying the same approach as we have seen from the original incarnations of WIND Mobile, Mobilicity, or Public Mobile.

With Xplornet, one might envision how substantially enhanced spectrum holdings could benefit the company’s rural broadband business, unlocking hundreds of millions of dollars of value from spectrum assets that are currently being squandered by Freedom. In and of itself, that would improve the financials for the Freedom Mobile business, as well as Xplornet’s core fixed broadband business, enabling more rural customers to be transitioned off satellite-based services.

Noting that Xplornet has already deployed 5G already for fixed wireless, one would expect substantial improvement in the quality of service offered to rural broadband customers, as well as the ability to dramatically extend the reach of broadband, meeting and exceeding the national service objective.

Such a deal would also improves the position of Xplore Mobile operating in Manitoba, allowing the business to be integrated with Freedom’s operations in British Columbia, Alberta and Ontario.

In Star Trek II: The Wrath of Khan, then cadet James Kirk faced with an no-win scenario in a Star Fleet academy simulation. He found a way around the test by reprogramming the system, thus changing the conditions of the contest. In doing so, Kirk defeated the Kobayashi Maru scenario, and went on to fame as a Starfleet captain. Doing the same thing over and over again and expecting different results isn’t a sustainable approach.

The speculation of a deal with Xplornet changes the conditions of the fourth carrier marketplace. It is an interesting approach to disrupt the status quo.

It isn’t easy to get suspended from Twitter or Facebook.

More than a decade ago, I referred to it as “anti-social media”. I commented at the time that “Adherence to truth and reasoned thinking is clearly not a prerequisite for publishing on Twitter.”

You need to be pretty blatant in violating Twitter’s lenient terms of service.

Indeed, it is precisely the lax enforcement of terms of service standards that has led so many countries to be examining or enacting legislation to combat online hate. On March 30, Canada’s Heritage Minister, together with the Minister of Justice and Attorney General jointly announced the appointment of “a new expert advisory group on online safety as the next step in developing legislation to address harmful online content.”

“The Government of Canada is committed to a digital society that creates safe and respectful spaces online and protects Canadians’ freedom of expression.”

The Department of Canadian Heritage also has funded an Anti-Racism Action Program, funding projects aligned with one or more of 3 themes: Employment; Justice; and, Social participation. “The Anti-Racism Action Program will also prioritize projects that target online hate and promote digital literacy.”

So, given the Government’s commitment to a “safe and respectful spaces online”, and the Action Program’s priority of projects targeting online hate, I was surprised to see that the Anti-Racism Action Program was apparently funding a series of programs across the country organized in part by CMAC consultant Laith Marouf, whose @LaithMarouf account was suspended by Twitter for violating its rules against hateful conduct.

Although his notice from Twitter explicitly forbade evasion of the suspension by creating new accounts, he has been spreading his venomous messages under a new Twitter account, @Laith_Marouf.

Was sufficient due diligence performed when Heritage officials were reviewing this funding request? [If his name sounds familiar, recall that I wrote about him last summer.]

Should the Government of Canada be funding (directly or indirectly) purveyors of hate?

Should Canada’s imprimatur be attached to this series of programs?

“Should Canada approach internet regulation with a greater sense of humility? Do such policies sufficiently consider whether they are imposing or relaxing barriers to innovation and investment?”

Those were questions I asked a year and a half ago in “Cross subsidies in a competitive marketplace”, when the previous government looked at the first iteration of its new media legislation.

Currently, Parliament has two pieces of digital economy legislation before it:

1. Bill C-11 is “An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts”, otherwise known as the “Online Streaming Act” [First Reading].
2. Bill C-18 is “An Act respecting online communications platforms that make news content available to persons in Canada”, otherwise known as the “Online News Act” [First Reading].

In reading the Acts, we find legal linguistic gymnastics, attempting to define what groups pay into various funds and what kind of groups are able to benefit from these pools. For example, The Online Streaming Act summary starts off with

This enactment amends the Broadcasting Act to, among other things,
(a) add online undertakings — undertakings for the transmission or retransmission of programs over the Internet — as a distinct class of broadcasting undertakings;
(b) specify that the Act does not apply in respect of programs uploaded to an online undertaking that provides a social media service by a user of the service, unless the programs are prescribed by regulation;
…

Got that? Streaming includes certain things, but excludes other things, unless those other things are included.

The term “social media service” appears 8 times in the body of the legislation, but I found it interesting that the term is not defined.

Both Acts refer to a sense of fairness in contributing to Canadian in a digital economy. In the Online News Act, the Summary opens with “This enactment regulates digital news intermediaries to enhance fairness in the Canadian digital news marketplace and contribute to its sustainability.”

Why is the government regulating certain internet services, news agencies, and distributors?

It’s all about money. And it’s the wrong approach.

Through the weekend, writing in the Globe and Mail about Bills C-11 and C-18, Andrew Coyne said, “This elaborate sham is intended to apply a veneer of due process to what is in fact nothing more than a crude revenue grab.”

For decades, successive Canadian governments have funded certain social objectives “off the books”, without touching the federal treasury. Canadian content production is funded by broadcast distribution companies; local phone service was subsidized by long distance calling; residential phone service was subsidized by business; rural phone service subsidized by urban.

As I wrote a year and a half ago,

The government has long used the communications sector as an alternate tax and wealth redistribution system, with fees from urban phone subscribers subsidizing rural, business subsidizing residential, broadcasting subsidizing content production. In a monopoly era, there was little harm and great political benefit. Social objectives could be attained without impact on the government budget. Politicians could take credit for achieving goals with others footing the bill. Inflated communications bills could be blamed on the industry.

As monopolies were replaced by competitive markets, artificially inflated prices got arbitraged, leading to a collapse in the funding of these programs. In 2014, I wrote “The future of communications cross-subsidies”, expressing concern about the unsustainability of the system.

As end users transfer from legacy, subsidy-paying services to applications and service providers that are outside the system, the burden increases for those who remain. As the burden gets spread across a shrinking base of users remaining, the taxation rate can increase, creating even greater opportunities for arbitrage, unless there are changes to the funds being drawn.

There are some who question whether the Canadian creative community or news agencies should receive government funding. I’m not going to wade into that area of policy. [See the piece by Howard Law on Cartt.ca for an interesting perspective.]

My focus is on the questions at the top of this article. Should Canada approach internet regulation with a greater sense of humility? Do we really need to create such a regulatory system to handle the issue of funding certain social objectives?

Is it overly simplistic to ask why the government isn’t simply adding these programs to the budget, and funding them out of general revenues? If there is a view that global technology companies are extracting profits from Canadians and are not being taxed sufficiently, isn’t that more of a general taxation issue?

Are we casting an overly broad regulatory net because we are perpetuating an off-the-books cross-subsidy system?

Does the legislation, and the cross-subsidy system itself, appropriately consider the potential impact on innovation and investment?

I have no problem with taxing companies if they should be taxed; and governments should fund social programs if they merit funding. But why make one dependent on the other? Isn’t it unnecessarily complex?

Can this legislative activity lead to artificial distortions in the marketplace, and government interference in places and activities government simply doesn’t belong?

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?