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”.

In an article last week in the Globe and Mail (“Opinion: Our shared reality – and the knowledge that undergirds it – is being assaulted”), Andrew Coyne writes about the disease of disinformation, “a class war of a particular kind, in which the dividing line is not money or birth but knowledge.”

In recent weeks, I have again raised a topic that has been a recurring theme on this blog, the need for increased investment in digital literacy. In “Testing democratic freedoms”, I asked:

Shouldn’t more effort be focused on teaching critical thinking, teaching school kids how to process information online, including checking and verifying “news” and “facts” being shared on social media? That has been the approach in Finland, as described in articles over the past year or so in The Telegraph and The Guardian. “With democracies around the world threatened by the seemingly unstoppable onslaught of false information, Finland – recently rated Europe’s most resistant nation to fake news – takes the fight seriously enough to teach it in primary school.”

Governments at all levels have been quick to allocate funds to invest in building broadband networks, but not investing sufficiently in skills development for people who have never before been online.

As I described last week in “ConnectTO’s failed sense of urgency”, even when there are already existing broadband networks, some municipal governments are throwing more money at building community-owned networks, rather than understanding the issues that are inhibiting take-up of existing services. I understand the political appeal of constructing new fibre networks. At the end of the day, constructing urban broadband facilities these days is a pretty easy political win. Spend money and you can show how many households have access to your newly constructed network. There are photo ops at the announcement for the project. Another media event when construction starts. Banners on construction trucks let people know their tax dollars are being spent on the digital economy. And then a final ceremonial ribbon cutting caps the project upon completion. All told, throwing money at building broadband has a demonstrably strong political return on investment.

Unfortunately, not enough is done to measure the effectiveness at achieving the goal – which should look at timeliness and cost efficiencies in addition to incremental connections.

In reality, there are already very low priced options for broadband services available to all residents of Toronto Community Housing, but not every resident has taken up the offer. Some residents report that there is no need for the internet. Some express a distrust of government. I understand that similar issues are coming up across the country with respect to the take-up of special broadband programs for low income and other targeted households.

There are a number of factors that inhibit urban broadband adoption, but it is rarely a case that local governments need to invest in building facilities. Addressing digital literacy is a much tougher problem to deal with, and effectively tackling the disease of disinformation has a much more challenging political return on investment.

Investing in digital literacy, and teaching critical thinking skills, are the key actions required to address the knowledge-based disease of disinformation.

Which level of government, and which political party will show the leadership to invest in the long game?

On Tuesday evening, a Twitter thread by Heritage Minister Pablo Rodriguez requesting a rushed CRTC review of Russia Today (RT) caught my eye:

That’s right. Two weeks.

The Heritage Minister, the Minister responsible for the CRTC, is asking the independent, quasi-judicial regulator to collect evidence and render a decision in two weeks on whether RT should be continue to be permitted as a broadcasting service option for Canadians.

Two weeks.

The Commission regularly takes two weeks just to have a decision translated. Please tell me how the CRTC can prepare a public notice, translate that notice, collect evidence and comments, provide the licensee an opportunity to reply, consider the evidence, reach a decision, and document it within two weeks.

Why rush? Virtually every broadcast distributor has already taken RT off the air. Cartt.ca reports that Bell, Rogers, Shaw, TELUS, Access and VMedia have already removed RT from their channel lineups, so there does not appear to be any real urgency.

Forcing the CRTC to cast aside any modicum of due process smacks of a pre-ordained determination. That strikes me as precisely the wrong message as this government seeks to give the CRTC greater powers over the kind of content we can access on the internet. The concerns I have expressed in the past deal precisely with political interference in such reviews.

The Minister began his thread saying, “Vladimir Putin’s aim is to subvert the international order, undermine democracy, and create a world where authoritarianism flourishes.”

Let’s ensure Canada isn’t guilty of subverting our independent broadcast regulator, and permit it to follow due process.

That’s how I was taught our democracy works.

---

[Postscript, March 2] 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;

“An order of general application directing the CRTC to a new broadcasting policy” seems to be somewhat different from what the Minister tweeted. Parliament did not set a two-week deadline for the CRTC’s process.

I might suggest the right approach would be for the government to order the removal of RT as a sanction, and allow the general policy of removing “state-controlled broadcasters that spread disinformation and propaganda” to work through the Commission’s processes.

---

[Further update] The Order in Council has been issued.

As some will recall, prior to becoming a talk show host, Stephen Colbert starred as a right-wing pundit on a satirical news show entitled The Colbert Report. Colbert, the pundit, was billed as America’s most fearless purveyor of “truthiness”. What is truthiness? It’s “the belief or assertion that a particular statement is true based on the intuition or perceptions without regard to evidence, logic, intellectual examination, or facts”.

I was reminded of truthiness when I watched CRTC Chair Ian Scott’s appearance before the February 8 meeting of the House of Commons Standing Committee on Industry and Technology (INDU).

Giving elected officials the chance to ask questions of regulators is an important part of our democratic process. It can be very informative when used wisely. Unfortunately, the opportunity is wasted if Committee members are unprepared or do not have a solid understanding of the industries they are overseeing.

There was a lot of truthiness on display at INDU as Committee members repeated inaccuracies about wholesale internet access rates, the state of competition in the wireless industry, the reasons for the lack of foreign entry, and the role of MVNOs in the wireless market. Some of these topics were discussed in my post last year (“Mythbusting Canadian Telecom”), but these misunderstandings refuse to go away and deserve revisiting.

Myth #1: The CRTC raised wholesale internet access rates
Few regulatory files have been as misunderstood as the setting of wholesale rates for internet service providers (ISPs) dependent on using facilities of carriers that have invested billions in building Canada’s digital infrastructure. These reseller ISPs operate using connections built by wireline carriers, paying wholesale rates that are set by the CRTC.

For as long as I have been around, these rates have been in dispute. Indeed, the interconnection architectures have been subjects of multiple regulatory battles as independent service providers seek alternate ways to arbitrage the connections provided by the facilities-based service providers [see, for example, the CRTC’s wholesale services framework set in July 2015].

The latest rates dispute actually began in May 2015, when the CRTC began a “Review of costing inputs and application process for wholesale high-speed access services.” In early 2016, the CRTC resolved that consultation and made a determination on processes to set the wholesale rates. In October 2016, the CRTC established substantially lower wholesale rates that it designated as “interim” while it undertook a more extensive review. These interim rates reduced the transport component by up to 89%, and the access component rates by up to 39%. Notably, at the time, CNOC issued a statement saying “The CRTC’s actions will immediately benefit both Canadian consumers and businesses and we are hopeful that the final outcome of this matter will have the same result.”

In 2019, the CRTC issued its “final” determination, setting rates that lowered the rates even more, rates that the Commission later acknowledged were based on mistakes. Those 2019 wholesale rates were never given effect; the 2019 decision was immediately made the subject of multiple channels of appeal and the rates were stayed. In May 2021, the CRTC finalized the rates and issued a wholesale broadband service background paper describing the process.

As the CRTC Chair told INDU, “When we analyzed the evidence, we found errors and could no longer justify the associated rates. Ultimately, we chose to reaffirm and make final the interim rates that we set in 2016, with some adjustments.”

Most importantly, as INDU was told, “the 2019 rates were never in effect in the marketplace.”

The CRTC did not raise wholesale internet access rates. It lowered them.

Myth #2: Canada has a lack of competition compared to other countries
Many have heard it said that the Canadian wireless market is less competitive and more concentrated than in other countries. But how many making such statements have bothered to look at the state of competition in other markets?

I decided to do just that.

[Note: The data in Figures 1 through 4 is from Telegeography (September 2021). The source data for Figure 5 is The Economist Intelligence Unit – The Inclusive Internet Index – 2021]

One way to look at competition is by the number of mobile wireless carriers in each market. If you listen to some commentators, you might assume that Canada has fewer carriers than most other countries.

In fact, the opposite is true.

As shown in Figure 1, Canada has more mobile service providers with a 5% market share than any other country in the G7 plus Australia.

Some may respond by saying that despite having five carriers that surpass the 5% threshold, Canada’s three national carriers dominate the market.

Sure, the national carriers are bigger than the regional providers, but does that make Canada an outlier compared to its peers?

The facts show otherwise.

Figures 2, 3 and 4 illustrate that Canada’s wireless market is less concentrated than peer countries (other than France) when you look at the market share of the leading carrier, the share of the top two carriers, and the top three carriers.

Another commonly accepted measure of market concentration is the Herfindahl-Hirschman Index (HHI). HHI is calculated by squaring the market share of each competing firm and then summing the result.

An HHI of 10,000 would indicate one company in a market with 100% market share, while a market of thousands of firms, each with less than 1% market share would have an HHI of close to zero. In other words, the lower the HHI, the less concentrated a market is.

As Figure 5 illustrates, of the G7 countries plus Australia, Canada has the lowest HHI for fixed broadband markets and is in a virtual tie with France for lowest wireless market HHI.

Despite these facts, critics of Canada’s wireless industry continue to argue that a lack of competition is the cause of whatever aspect of the market they are rallying against.

Since it isn’t the competitive intensity, perhaps more attention should be paid to other factors that distinguish Canada from other countries.

For example, readers of this page know that I have frequently discussed the high quality and expansive coverage of Canada’s digital infrastructure, despite substantially higher costs associated with spectrum and building networks to serve Canada’s widely-dispersed and smaller population.

Myth #3: More MVNOs would reduce prices in Canada
At INDU, one MP suggested that the CRTC said “no” to Mobile Virtual Network Operators (MVNOs).

No, the CRTC did no such thing.

The Commission refused to mandate MVNOs, but that is the same as virtually every regulatory body around the world. And similar to most jurisdictions, MVNOs are indeed permitted in Canada.

And MVNOs actually exist in the Canadian market. But, implicit in the MP’s questioning was the idea that having more MVNOs would result in lower consumer prices. It’s an appealing argument, until you look at the facts and understand that the objective of MVNOs is not to lower prices, it is to make a profit.

Outside of China, the countries with the largest MVNO market are the US, Germany, and Japan. It is estimated that Japan has about 170 MNVOs. If there were a relationship between the number of MVNOs and lower prices, one would assume that these three countries would also have the lowest wireless prices. They do not. As shown by ISED’s most recent international price comparison report, wireless prices in these countries are similar to, and in some cases higher than, prices in Canada.

So why do these countries have so many MVNOs?

Mobile carriers in these countries decided that part of their business strategy would be to use resellers and other brands to acquire customers for their network services. In some cases, they use a sub-brand that they own; in other cases, they enter into a commercial arrangement with an independent brand. For the independent brand, the motivation is not to lower prices; like all businesses, their objective is to make a profit. Some were successful by targeting specific demographics or brand-aware groups, while many were unsuccessful and have gone out of business. But the bottom line remains: the number of MVNOs does not correlate to lower prices.

Myth #4: Foreign companies are not allowed to offer wireless services in Canada
I continue to be surprised at the persistence of this myth. But even more surprising was to hear a Conservative MP raise the issue at INDU, when almost ten years ago the Conservative-led government removed nearly all restrictions on foreign companies operating in the Canadian wireless market. The only remaining restriction is a foreign-owned company cannot gain entry by acquiring any of the three national carriers.

What is stopping them from launching a competing wireless business in Canada? I can only speculate, but I think it is reasonable to assume that they have looked at the amount of investment required to acquire spectrum and build out a network, the relatively small population of Canada, and, as discussed in Myth 1 above, the number of carriers already in the market, and concluded the business case simply does not work.

It is economics, not regulations, that drives their decision-making.

Why do I continue to address these myths?
I try to tackle these myths for the same reason I write this blog.

You cannot properly oversee a market that you do not understand. Canada and Canadians will not benefit from policies based upon the “truthiness” of feelings and perceptions.

Balancing the policy objectives of quality, network coverage, and affordability requires a deep understanding of the Canadian telecom market, how it compares to other countries, as well as looking at the positive and negative impacts of policy decisions made in other countries to try to avoid unintended consequences.

We can, and must, do better to ensure that the digital networks that helped maintain economic and social activity during the COVID-19 pandemic can propel Canada into a future of economic and social prosperity.

Canada’s future depends on continued investment in connectivity.