Back in June 2009, the presidents of DAVE Wireless, Public Mobile and Globalive Communications were on a panel together at The Canadian Telecom Summit talking about how they planned to address an “underserved market” for mobile services.

Each company believed there was a sustainable business case for a carrier that focused on value-conscious mobile service clients, not needing the same levels of investment in the latest technologies, or the spectrum to support high throughput. In some cases, the initial networks were built without LTE, or used non-standard ranges of spectrum.

A variety of issues arose, but each of the carriers learned that value-conscious consumers still wanted to be able to access the latest devices, or bring their devices from their previous service provider. At least one service provider found that it was unable to get a hold of the hottest devices until its network was upgraded to LTE.

And that brings us to today, where most service providers are in the midst of massive levels of capital upgrades, some CEOs have termed it “generational levels of investment”, to implement 5G services.

What are the 5G apps that will capture our imaginations? From a consumer perspective, if I knew, I certainly wouldn’t share my ideas in a public forum.

But we know that 5G enables far higher density of connected devices, with far greater data speeds and throughput capacity, and significantly reduced latency. At the time mobile networks were being upgraded to LTE, we didn’t know which apps would be enabled. This next generation is no different.

For service providers that choose not to invest in 5G, there may be a small window of opportunity to simply go after a budget conscious consumer. The challenge will be in retaining the majority of customers who want to be able to access the newest apps and capabilities, and don’t understand why those don’t work on their legacy devices.

Some of those apps won’t be on their hand-held devices, but may be embedded in their car. Or, home appliances. Or, store shelves.

So, what will happen to service providers that are unable (or unwilling) to keep up with the investment required to upgrade networks to 5G? The transition to 5G can be a factor to drive consolidation in the marketplace, as service providers look at the need for more pervasive backhaul facilities to support the increased density of antennas. Recall, Brad Shaw told Canada’s Industry Committee in March that “it is clear that Shaw cannot build what Canada needs on our own.”

Reducing the number of competitors does not necessarily translate to a lessening in competitive intensity in the marketplace. For example, take a look at Manitoba and Saskatchewan, where Shaw currently operates as a cable TV provider, but not as a wireless service provider. Rogers offers mobile services in both provinces. What happens to the competitive intensity for consumer services in those two provinces when Rogers and Shaw combine forces?

The best way to encourage sustainable competition – not just in telecom but for the benefit of the economy at large – is by maintaining incentives to invest, enabling and encouraging the massive levels of investment necessary to upgrade networks to 5G.

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

One in six Canadians would want at least $2500 per month to give up access to their wireless services for an entire year.

That’s just one of the findings in a report [pdf, 805KB] released earlier today by PwC and the Canadian Wireless Telecommunications Association.

This report assesses the value that Canadians receive from their wireless services, through considering:

1. Trends in Canadian data consumption, and the cost of that consumption
2. Trends in average Canadian household wireless expenditure and wireless substituted expenditures (including landline, photo, video, audio, and printed materials)
3. The consumer surplus of wireless services for Canadians today

Finally, this report considers the additional value that Canadians should expect to receive from wireless services, as Canada begins to deploy and adopt 5G network technology.

According to the report, the value received from wireless services is due to a combination of innovations across hardware, software, and connectivity. “While device quality has improved and new applications have helped consumers in many aspects of their lives, wireless network providers have enabled these innovations by continuously investing in advanced wireless networks with faster speeds and lower latency, and offering this connectivity at decreasing prices per gigabyte (GB) of data used.”

• Between 2015 and 2019, Canadians nearly tripled their average data usage, growing at 27% compound annual growth rate (CAGR) from 1 GB per month to 2.6 GB per month. This trend is expected to accelerate thanks to widespread availability of unlimited data plans launched in 2019. (The report notes that “consumers who have transitioned to unlimited data plans use more than double the amount of data of a consumer on a legacy plan.”)
• Average Revenue per User (ARPU) remained relatively flat for wireless service providers in that period, increasing at just 1.9% CAGR from $64 to $69 between 2015 and 2019.
• The average cost per 1 GB of data in Canada has dropped from almost $28 to just $10 from 2015 to 2019. The report notes that consumers can now purchase plans with unlimited data for less than $3 per GB of high speed data.

The report concludes with a section that discusses how “Canadians benefit from some of the best quality wireless networks globally”, despite the fact “that Canadian wireless service providers face the highest costs to build networks among the peer countries, explained by three key factors: low population density, high spectrum costs and smaller scale Mobile Network Operators (MNOs).”

As 5G networks are built across the country, and the readiness and adoption of new and innovative use cases continues to expand, Canadians are poised to receive increased value from their wireless services. This paper has demonstrated that consumers today receive significant consumer surplus as a result of 4G network innovations, many of which could not have been predicted 10-15 years ago. Similarly, consumers can expect 5G to do the same. Not only will consumers gain additional surplus from new technology innovations, they will also experience broad societal benefits such as job creation, access to healthcare and positive environmental change.

I saw a story on CNBC that talked about rising cell phone bills in the United States and that kicked off a morning of doing a little research. Citing government data, the story said that the Consumer Price Index of telephone services has increased 7% in the United States since January 2019.

I took a look at the comparable data and found that Canada’s telephone services index has actually fallen 23% in that period.

And that made me wonder about mobile services.

Well, it turns out that prices in the US have been rising modestly, up a little over 3% since January 2019, according to CPI data from the US Bureau of Labor Statistics.

It is an entirely different story in Canada, where the cellular services component of the CPI from Statistics Canada has fallen a little more than 30% in the same period.

It merits repeating. Over the past 32 months, the Wireless Services CPI rose 3% in the US versus going down 30% in Canada, according to current Consumer Price Index data from the official government statistics agencies.

It was just something that made me say “hmmm”.

More than 18 months into the COVID-19 pandemic, many of the early lock-down rules are easing as the overwhelming majority of those eligible are fully vaccinated.

Last week, I actually met with a colleague for a business lunch, my first in what seems like forever. It was the first time I was asked to produce my vaccine certification.

I think back to a seminar hosted by the International Telecommunications Society this past May, “Information Problems During the Pandemic” that featured Dr. Joshua Gans, Professor of Strategic Management, Rotman School of Management, University of Toronto. He advocated the use of significantly increased levels of testing, such as the rapid antigen tests available to businesses. “A pandemic is essentially an information problem, and if we solve the information problem, we can defeat the virus.”

So, why aren’t we doing more testing as part of solving the information problem?

It isn’t clear to me why such testing isn’t being carried out on a more widespread basis in schools, and indeed, why some areas (such as Ontario) are creating roadblocks for parents seeking to introduce student testing on their own. Contrast this with Quebec’s newly announced plan to expand testing to schools throughout the province.

I am interested in your experience with rapid testing.

Are you going into an office? What kind of testing is done at your workplace?

Do you test yourself regularly?

Are your kids going to school? Have they been tested and is there an official (or unofficial) testing regimen?

As we head into the Canadian Thanksgiving holiday weekend, I’d be interesting in hearing from you.

As I observed earlier this week, Globe and Mail columnist Rita Trichur recently wrote “Canada is the land where smart industrial policy goes to die.”

The same day, as if in response, there was an opinion piece in the Globe by Dan Breznitz and Daniel Trefler, “Canada needs a real innovation strategy – now”.

We do need a real innovation strategy. Desperately.

Too often, it feels like Canada’s “innovation policy” consists of throwing government funds at high profile companies to help pay for something that the company would do anyway, or giving money to a firm that is dying to help preserve some semblance of life-support for a hand full of jobs.

Dan Breznitz is a professor and the Munk Chair of Innovation Studies, in the University of Toronto’s Munk School of Global Affairs & Public Policy; Daniel Trefler is the Douglas and Ruth Grant Chair in Competitiveness and Prosperity at University of Toronto’s Rotman School of Management.

Why do we want innovation?

We want innovation because it is the driver of improved living standards. Furthermore, for rich countries such as Canada, it is the only way to create and sustain high-paying jobs. But high-paying jobs for whom? Which takes us to our second question.

What kind of society do we want? As Canadians we want a healthy society built on an economy that generates good jobs for all, rather than extremely high-paying jobs for the few. This is essential to remember since too often in Canada when we talk about innovation, we mean the Silicon Valley model, the ultimate inequality-generating machine. The end point for any discussion of Canadian innovation policy must be good jobs for all.

Four years ago, Dan Breznitz spoke at The 2017 Canadian Telecom Summit and his keynote address is worth watching.

I encourage you to read the opinion piece in the Globe.

With Canada on the cusp of a long-overdue policy statement on the use of Huawei equipment in Canada’s networks, the major carriers have already made alternate arrangements. We may need to consider how to deal with smaller rural players using Huawei equipment to provide broadband service in otherwise unserved areas. But far more fundamentally, Canada needs a strategy to deal with the potential loss of Huawei as a funder of industrial and academic research.

What would happen to the human and intellectual capital at Huawei’s Canadian labs and on so many university campuses? What should we do?

As Canada’s new government gets organized, hopefully it will recognize that we’re long overdue for some innovation on Canada’s innovation policy. Canada doesn’t need to be considered the land where smart industrial policy goes to die.