I wrote “The truth about structural separation” last May, describing the interaction between a Member of Parliament and TELUS COO Tony Geheran during a meeting of the Parliamentary Standing Committee on Industry, Science and Technology (INDU) that took place a year earlier.

Mr. Geheran said, “I haven’t seen [structural separation] work anywhere globally, to sustainable effect,” to which Calgary-Nose Hill MP Michelle Rempel Garner replied, “It’s in the UK, right?”

Mr. Geheran responded, “But if you look at the UK, they are wholesale moaning about the quality of their infrastructure, their lack of fibre coverage. across what is a very small geography. I know. I originated from there. And quite frankly, the Canadian networks are far superior in coverage and quality and performance through COVID has demonstrated that.”

Recently, that committee adopted a report, “Affordability and Accessibility of Telecommunications Services in Canada: Encouraging Competition to (Finally) Bridge the Digital Divide” [pdf, 3.4MB], that had been released by the Committee during the previous session of Parliament. I found it interesting that the Parliamentary Committee report did not recommend studying structural separation, despite a specific call for such a strong competitive safeguard from at least one of the witnesses. However, in its more recent report examining the Rogers – Shaw transaction [pdf, 3.1MB], that same committee suggested studying the matter further:

Recommendation 1: That the Government of Canada launch nationwide consultations to examine the implementation of structural separation in the telecommunications sector between businesses that build infrastructure and those that provide services in order to ensure a level playing field that fosters network development in both cities and rural areas.

As it turns out, the CRTC has already held nationwide consultations that examined proposals such as structural separation. In 2015, as part of its review of wholesale wireline services, the CRTC examined a CNOC proposal to implement an “Equivalence of Inputs” regime, a very basic form of structural separation, “such that any wholesale service offered by an incumbent carrier to a competitor be provided at the same price, quality, terms and conditions, and timescale, using the same systems and processes that incumbent carriers’ use in their wholesale operations to supply their own retail operations”. The Commission rejected the proposal, saying it “would represent an overly intrusive regulatory measure, which would neither be efficient nor proportionate to its purpose“.

As a regulatory measure, structural separation has rarely been used in wireline broadband markets, and only where there is a single dominant network operator. To my knowledge, it has never been used in the wireless industry.

Unlike some foreign markets, in Canada there is no single network with a dominant presence. For example, in the UK, BT agreed to separate its wholesale and retail operations into separate business units after the regulator concluded that it had a natural monopoly over phone and broadband infrastructure in the UK. In other words, if you wanted phone or broadband services, you had to use the BT network.

In contrast, Canada’s wireline and wireless broadband networks are provided by multiple national and regional wireline and wireless service providers. As discussed recently in “Truthiness and Canada’s Telecom Industry”, Canada has the least concentrated broadband market in the G7 plus Australia. Upon which network would separation be imposed?

Just as proponents of mandated wholesale MVNO access have been pushing for a wholesale model that has been tried and largely abandoned elsewhere, proponents of structural separation are pushing another form of regulatory intervention that has fallen out of favour.

As described in Federal Communications Law Journal [pdf, 2.9MB], “Concerns about the potential for such disruptions [in economic efficiencies]–combined with recognition that the more extreme forms of separation potentially are irreversible-have led most regulators to back away from mandatory separation, or to view it as a “last resort,” to be used only in cases of extreme and otherwise irremediable discrimination.” The authors indicate that separation “may discourage the introduction of new networks, thereby reducing economic welfare and harming consumers.” Further, “the available evidence fails to support the proposition that mandatory separation improves market performance, but this evidence does suggest that such a policy leads to reduced levels of innovation and investment.”

Reduced levels of innovation and investment would fail to deliver the Parliamentary Committee’s stated goal of “[fostering] network development in both cities and rural areas”.

Canada needs regulatory policies that create incentives for more investment and innovation, not less.

Structural separation isn’t a solution.

Canada’s future depends on connectivity.

Last week, the Government of Ontario announced new legislation “to help bring reliable high-speed internet to underserved and unserved communities sooner.”

The “Getting Ontario Connected Act, 2022” is said to help meet “[the Ontario] government’s commitment to connect every community with access to high-speed internet by the end of 2025.” The legislation “would remove barriers, duplication and delays, making it easier and faster to build high-speed internet infrastructure across the province.”

I note that the proposed Act is a supplement to the Supporting Broadband and Infrastructure Expansion Act, 2021 and the Building Broadband Faster Act, 2021, which were said “to reduce costs to broadband providers associated with attaching broadband wirelines to hydro utility poles, and … provide timely access to poles and to municipal rights of way to install broadband on municipal land.”

Why would 3 separate pieces of legislation over the past year be required for Ontario to accelerate broadband deployment?

The latest piece of legislation is supposed to help accelerate the work of Ontario One Call’s “locate service”, the “call-before-you-dig” service bureau that can be a significant roadblock for companies looking to plow fibre. But a year ago, Ontario was already looking at making it easier for companies to access poles owned by provincially regulated electric companies. At the same time, Ontario said that the legislation was setting a maximum of 10 days for owners of underground infrastructure to provide locations through the Ontario One Call system.

On first glance, the need for the most recent legislation should have been anticipated last year, had appropriate planning or industry consultations been undertaken prior to the drafting, or at the very least, in committee review of the bill.

With all of the activity underway across North America to extend broadband to underserved areas, it has been a challenge sometimes for service providers to find qualified construction companies and workers. As temperatures start to warm across the country, broadband construction season is beginning in Canada.

It is admirable that Ontario has been recognizing the need to clear the pathways for network operators to build facilities. Still, how many projects missed last year’s construction window because the 2021 legislation was inadequate?

How many more households could get access to better broadband more rapidly, and at lower cost, if more governments – at all levels – would recognize the importance of simplified access to publicly owned rights of way and passive infrastructure?

The following commentary appeared on Cartt.ca.

If you build it he will come.

Often misquoted as “If you build it, they will come”, the mantra from “Field of Dreams” has become a metaphor driving many business plans.

Unfortunately, reality shows that if you build it, whatever “it” may be, all you do is improve the chances for them, whoever “them” may be, to come.

The Field of Dreams business case philosophy has been a driving force behind many government broadband programs. Just get broadband built, people will sign up. Build broadband pipes into this community and knowledge-based workers will work from home. Build municipal fibre networks, and companies will relocate and expand. Employment will skyrocket.

Build it and they will come.

And if you subscribe to that view, what if we apply that philosophy to improve broadband adoption among low-income households.

We know that broadband adoption rates vary with income. Fewer low-income households have broadband connections than higher income households. According to Statistics Canada’s 2020 Canadian Internet Use Survey, 93.6% of Canadians have access to the internet at home. That sounds pretty good, but there is tremendous variability based on income: only 80.9% of Canadians in the lowest income quartile have home internet, compared to 99.6% in the highest income quartile.

Internet access cannot be considered a luxury. That’s why the overwhelming majority of low-income households have access to a wide range of heavily discounted broadband services, such as Rogers Connected for Success, TELUS Internet for Good, or nationally under ISED’s Connecting Families umbrella.

Unfortunately, we have learned that it isn’t enough to offer low-priced computers and $10 per month broadband. Indeed, as Georgetown University economist Scott Wallsten writes [pdf, 1.8MB], the FCC conducted studies associated with its Broadband Lifeline service testing “consumer responses to a range of issues, including preferences for speed, the effects of different levels and types of discounts”. Surprisingly, the FCC found “only about ten percent of the expected number of households signed up, even with the price of one plan set at $1.99 per month.” The research also found a significant avoidance of digital literacy training classes. “In one project, many participants were willing to forego an additional $10 per month savings or a free computer in order to avoid taking those classes.”

As we continue to make significant progress ensuring all Canadian households have access to broadband, we need to conduct more research to learn the non-price factors that are inhibiting people from connecting to the services at their doorsteps.

It isn’t enough to say that we built it; now we have to make sure everyone comes.

I have been pretty clear about concerns I have with Canada’s plans to regulate internet content. I generally don’t like the idea of a government agency telling me what is appropriate for me to see or read or hear.

I have suggested that we may be better off investing in digital skills training for kids from the youngest age, teaching critical thinking, and digital literacy, to better prepare the country for life in this information-rich era.

In response to Russia’s invasion of Ukraine, on February 28, the House of Commons unanimously passed a motion saying:

That, given the Russian Federation’s unprovoked and unjustified attack on Ukraine, the House:
…
(d) Call upon the Government of Canada, and all parties in the House of Commons, to support:
…
(iii) The issuing of an order of general application directing the CRTC to a new broadcasting policy that would remove state-controlled broadcasters that spread disinformation and propaganda from the CRTC’s list of non-Canadian programming services and stations authorized for distribution, effectively removing Russia Today (RT) from Canadian airwaves;

In a postscript to my March 1 blog post, I focused on the line from the Parliamentary motion (“An order of general application directing the CRTC to a new broadcasting policy”) as being somewhat different from what what was set out in the Order-in-Council direction sent to the CRTC.

In the Order in Council, Cabinet “requests that the Canadian Radio-television and Telecommunications Commission hold a hearing, which is to be initiated no later than one day after the effective date of this Order, to determine whether RT and RT France should be removed from the List of non-Canadian programming services and stations authorized for distribution and make a report as soon as feasible, but no later than two weeks after the effective date of this Order.”

In Broadcasting Notice of Consultation CRTC 2022-58, the CRTC set out a preliminary view:

8. In light of the concerns raised by the Government of Canada and the public with respect to the continued appropriateness of the distribution of RT and RT France (collectively RT) in Canada, the Commission is of the preliminary view that RT’s programming may not be consistent with the Commission’s broadcasting regulations, in particular, the abusive comment provisions such as those set out in section 5 of the Television Broadcasting Regulations, 1987:

   5 (1) A licensee shall not broadcast
   (b) any abusive comment or abusive pictorial representation that, when taken in context, tends to or is likely to expose an individual or a group or class of individuals to hatred or contempt on the basis of race, national or ethnic origin, colour, religion, sex, sexual orientation, age or mental or physical disability;

9. The Commission notes that similar provisions are also found in the Discretionary Services Regulations (section 3), and the Broadcasting Distribution Regulations (section 8(1)).
10. The Commission notes, as well, that the policy objectives set out in subsection 3(1) of the Act apply with respect to all programming broadcast in Canada, whether provided by Canadian or non-Canadian services. Notably, subparagraph 3(1)(d)(i) requires that the broadcasting system of Canada should serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada. The Commission is concerned that the programming broadcast on RT is antithetical to the policy objectives and does not serve the public interest.

In its submission, Rogers said that in pulling RT from its channel lineup, “we relied on the fact that RT is owned by a state against which Canada has placed sanctions and related measures.”

Notably, Rogers did not make any comment about the nature of the programming content, whether it is truthful or propaganda, news or commentary. The approach set out by Rogers avoids the need to make a judgment call on whether RT crossed the line in violating Section 5 of the Broadcasting regulations. The test is simple: is the programming service owned or controlled by a state or individual that is subject to Canadian government sanctions.

In our view, it would be appropriate for the Commission to also consider removing from the List of non-Canadian programming services authorized for distribution (the List) any programming service that is either owned or controlled by a state that is subject to Canadian sanctions or by any specific individual or entity identified in Schedule 1 to the Special Economic Measures (Russia) Regulations. This could include, for example, Channel One Russia and RTR Planeta.

I have expressed concerns about government agencies adjudicating whether “programming broadcast… is antithetical to the policy objectives and does not serve the public interest.” The submission by Ethnic Channels Group says “The potential for government control of content is and should be concerning to Canadians – and we know the CRTC itself is well-aware of its responsibilities regarding the freedom of expression and access to content.”

In my view, a part of safeguarding, enriching and strengthening the cultural, political, social and economic fabric of Canada involves vigorous disagreement, dissent, debate. We have a right to be wrong. Our cultural, political, social and economic fabric includes certain freedoms set out in the Charter, including a fundamental “freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication”.

That creates a significant challenge for the CRTC. How would the Commission assess whether “programming broadcast on RT is antithetical to the policy objectives and does not serve the public interest”, and conduct that assessment in such a short time period? The government is still considering whether to introduce a bill to give such a responsibility for adjudicating such content online. Should the CRTC be pronouncing whether content is “antithetical to the policy objectives” under such a tight timetable?

Using the test set out by Rogers, the CRTC can side-step that challenge completely. We delist all programming services owned or controlled by a state or individual subject to Canadian government sanctions. It is an elegant and nuanced means for the CRTC to resolve Russia Today challenge from Cabinet, and be responsive to the original resolution passed in the House of Commons.

A couple weeks ago, the CRTC released its long awaited policy for an annual digital media survey.

The survey is considered by many to be a first step in the process to get foreign-owned technology firms to “contribute” to what is being called the “Canadian broadcasting system.”

The data-collection policy review began nearly 3 years ago. The CRTC process was amended to capture the activities of non-Canadian digital media broadcast undertakings” (DMBUs) “given the dominance, in terms of revenues and subscribers, of non-Canadian DMBUs relative to those operated by [Canadian] licensees”.

The initial information filing, covering the broadcast year 2020-21, is due June 30 [broadcast years are considered to run from September through August]. Subsequent annual information filings, beginning with the 2021-22 broadcast year, will be due November 30.

Respondents are to include both foreign and domestic DMBUs that provide services in Canada and either have have audio streaming revenues (from Canadians) over $25M, or audiovisual revenues over $50M. Perhaps anticipating the concerns expressed by Netflix in 2014, the CRTC is “exercising its discretion” to vary its normal procedures to “grant full confidentiality against any disclosure of data at the level of individual DMBUs.”

Will that be sufficient to get foreign-owned streaming companies to disclose market sensitive data to the CRTC? Will these firms acknowledge the CRTC’s authority over “digital media broadcasting” under the Broadcast Act?

In its submitted comments on the expanded scope of the survey, Netflix said that the company “does not take a position on the issue of the Commission’s current statutory authority.” The Motion Picture Association, representing such studios (and streamers) as Universal, Paramount, Disney, Sony, Warner Brothers and Netflix, said that data collection should be done only with “explicit statutory authority”.

Acknowledging that “the CRTC’s authority over certain exempt services operating in Canada is not always recognized by those services”, in its 2019 submission to the Broadcasting and Telecommunications Legislative Review Panel [pdf, 621KB], the Commission itself said “the CRTC must have the explicit authority to collect information from all services that operate in Canada’s broadcasting system”.

The Policy devotes 20 paragraphs, nearly 15% of the 148 paragraph decision, to the subject of the CRTC’s “authority to implement the survey requirement.”

The proposed Online Streaming Act adds the term “online undertaking” to the definition of “broadcasting undertaking” in the Broadcasting Act. 

Will foreign streaming companies file survey responses in June in advance of the “explicit statutory authority” being proposed in Bill C-11?

As I wrote in 2014, “Nobody wins in challenge of CRTC authority”.