The next lunch-time virtual learning event from the 5G Canada Council will be on October 26, from noon to 1:00pm (Eastern Time), entitled “Industry 4.0: The Importance of 5G in Keeping Canada Competitive”.

The fourth industrial revolution, or Industry 4.0, challenges enterprises to accelerate the digitization of their operations and integrate them into the wider digital ecosystem. This digitization will allow organizations to collect and analyse data in new ways that will result in greater efficiencies, better products and services, and understanding and meeting the needs of end-customers. To accomplish this transformation, enterprises will require not only more digital bandwidth, but also networks that enable mission critical, low-latency communications, seamless mobility, and integration of public and private networks.

Join panelists Jason Elliott, Head of Portfolio & Partnership Marketing at Nokia, and Samuel O’Halloran, Director, at Strategy&, part of the PwC network, as they discuss the importance of 5G in the transition to Industry 4.0 and keeping Canada competitive with its international peers.

Book your virtual place today.

Can changes to spectrum policy help Canada become more effective in bridging the digital divide?

I read some interesting articles recently that suggest we can do better. “Suggest” may be too delicate.

Writing in the Globe and Mail, Senior Business Writer and Columnist Rita Trichur looked at the election platforms of the major parties and came away disappointed. “Although the Liberals and the Conservatives are vowing to stop spectrum speculation, their proposed solutions are, in a word, weak.”

Her article noted that the Liberal platform said that if wireless deployment milestones aren’t met by spectrum holders, the government would “mandate the resale of spectrum rights and reallocate that capacity to smaller, regional providers.” As Ms. Trichur observed, this may sound nice in theory, “but let’s not forget that smaller regional providers may not have the financial wherewithal to pick up that slack. In fact, Western Canadian cable company Shaw Communications Inc. is selling itself to Rogers Communications Inc. precisely because it determined that 5G investments would be too costly to handle on its own.”

This is a point that merits repeating. Many of the spectrum licenses were awarded on a Tier 2 basis covering an entire province in a single license, or in the case of a handful of provinces, 2-3 licenses to cover the entire province. The deployment milestones in those licenses are generally based on a percentage of the total population within the license area and can be satisfied simply by serving the major urban centre at the heart of the licenses. The major carriers have generally deployed networks in both urban and rural areas. In the latest Communications Monitoring Report, the CRTC observed that 99.7% of Canadians had access to mobile service by the end of 2019 (two years ago). Twenty-four out of twenty-five Canadians (96%) had access to LTE.

We have seen 5G deployment announcements from the major carriers showing hundreds of communities, large and small. The issue with spectrum under-utilization has generally not been from the major carriers; the problem has been with companies that have speculated and squatted on spectrum set-asides.

That takes us to another article I read, focusing on improving spectrum policy to help with bridging the rural divide. TELUS writes, “Recent government policies have made the digital divide in Canada worse, not better. Across Canada, but particularly in rural areas, better policies are needed.”

The TELUS article links to a series of reports:

• Spectrum policy is disadvantaging rural Canadians. Unlocking available and unused spectrum could immediately boost hundreds of thousands of homes to 50/10 Mbps.
  Cracking the rural broadband challenge: How to undertake a nation-building exercise, leveraging a core set of business principles, to extend connectivity to rural, remote and Indigenous communities across Canada. [pdf, 5.9MB]
• A report on rural connectivity concludes that spectrum set asides hurt rural Canadians by diverting it away from carriers wanting to deploy it and allowing the spectrum to lay unused.
  The Government’s Spectrum Policy Will Reduce the Quality of Wireless Services for Rural Canadians [pdf, 1.5MB]
• A GSMA Intelligence report that concludes that, where 5G spectrum is held back from the market unnecessarily (e.g. through set-asides), then 5G services are likely to suffer and operators may overpay for spectrum, risking network investment and harming consumers.
  5G and economic growth: An assessment of GDP impacts in Canada [pdf, 3.3MB]

TELUS says “In particular, poor spectrum policy has allowed this crucial element needed for rural connectivity to remain unused, leaving some Canadians without suitable Internet.”

The new government brings with it an opportunity for a fresh look at spectrum policy, perhaps as part of the development of an accelerated connectivity strategy.

Ms. Trichur wrote, “Canada is the land where smart industrial policy goes to die.”

It doesn’t have to be that way.

I’d like to greet the new government with optimism.

Maybe, just maybe, things will get better, smarter, more effective, even if it is just a little bit better, a little bit smarter, a little bit more effective, every day.

India has among the world’s lowest prices for mobile services. But India is learning that there is a cost to winning the race to the bottom.

Last week, Reuters reported that India’s federal cabinet approved a relief package for its telecoms sector, including a four-year moratorium on spectrum fees.

India’s telecoms sector ran into trouble in late 2016 with the entry of billionaire Mukesh Ambani’s Reliance Jio, sparking a price war that has forced some rivals out of the market and turned profits into losses.

Despite relief going forward, Indian carriers have billions of dollars in outstanding adjusted gross revenue payments owed to the government. Vodafone Idea owes roughly $7 billion in telecoms dues, according to Reuters’ examination of regulatory filings. Bharti Airtel owes the government $3.5 billion.

Price wars have produced great deals for consumers in the short term but service providers have been left unable to invest. A recent story in India Today says “India ranks 122nd globally in terms of mobile network speeds” according to data from Ookla, the company behind Speedtest.net.

Two years ago, I looked at a similar situation in Israel when I wrote “Low prices, at a high cost”. Following aggressive government intervention, prices in Israel fell, but so did the quality of the networks. “The massive reductions to revenues caused major reductions in capital expenditures, network roll-out and expansion, market capitalizations of the participants and even the number of employees.” As I said at the time, “The short term consumer benefits from policies driving low mobile prices may lead to higher and broader economic costs in the long run.”

A colleague of mine likes to say that a healthy telecom sector is one that generates sustainable competition, competition that is not just competing on price but also fostering investment in digital infrastructure to provide consumers with increasing quality of services.

As we have discussed so often before, it is a matter of balance. Two weeks ago, I wrote “there is a difference between “affordable prices” and “rock-bottom prices”.” There is a need to be able to cover the costs associated with expanding coverage and investment in advanced technologies.

India is another example of what happens when regulators and policy makers ignore the delicate balance between the competing objectives for: universal access; investment in high quality telecommunications services; and, at affordable prices.

No one wins a race to the bottom.

As a new government is formed in Canada, there will be an opportunity for a renewed focus on developing a cohesive digital strategy to guide the economic recovery.

Yesterday’s election results are not yet finalized, but we already know that there will be new faces in Cabinet in a number of portfolios impacting communications and connectivity.

A couple weeks ago, I wrote about the need “for a clear strategy, recognizing the balance and inter-relationships between competing objectives for universal access to high quality telecommunications services at affordable prices” (see: “How did we get here? How do we move forward?”).

A recent article on Politico by Vodafone Group CEO Nick Read, “How the EU can speed up its digital transition”, caught my eye. In it, he speaks optimistically of the need for changes in telecom policy and regulations, as some countries recognize that there are opportunities to learn from approaches being applied in other jurisdictions.

European policymakers profess to the importance of the digital transition. As evidenced during the pandemic, modern connectivity and digital services play a critical role in our economic recovery and to help future-proof our society. Yet, Europe is falling behind other pioneering nations in everything from high capacity networks, 5G industrial applications, IoT and cloud to artificial intelligence. A large and growing investment gap has emerged, not least in digital infrastructure and 5G.

The Vodafone CEO mentioned a few examples from a variety of countries, such as recent reforms in Germany that are expected to reduce the time to deploy mobile base stations by up to 4 months.

To attract private investment, Spain introduced interesting policy reforms, such as in the structure of its July auction for 700MHz spectrum, that concluded after just 2 days. Vodafone, Telefónica and Orange all secured frequencies. Read noted that “the government did not use the auction to artificially meddle with the market structure or extract value from the industry.” The spectrum licenses are for 40 years, double the normal length, as long as the carriers meet their licence obligations. “Long-term spectrum licences at reasonable prices will help us move forward with the deployment of 5G services that will revolutionise industry, public services and healthcare.”

Most striking in the Politico article is the call for government and the private sector to develop a new collaborative approach. The digital transition is seen as being an important foundation for a greener economy. “As evidenced during the pandemic, modern connectivity and digital services play a critical role in our economic recovery and to help future-proof our society.”

Whether it is the NDP’s “Ready for Better”, the Conservative’s “Canada’s Recovery Plan”, or the Liberal’s “Forward. For Everyone”, I remain optimistic that the new government will bring a fresh opportunity to leverage the capabilities of Canada’s communications sector, to build Canada’s digitally powered future.

There is much work to be done, but it’s a new day dawning.

Retail price regulation means government approval is required for changes in rates, whether prices are going up or down. The same approval process is required if the terms or service characteristics, such as speeds and data allowances, are changing. These are known as tariffs. In most of Canada, for most consumer telecommunications services, tariffs, and the associated regulatory approval process, are no longer required. Such isn’t the case in many rural and remote serving areas.

Still, one would think that no regulator would stand in the way of prices going down, right? You would be wrong.

Let’s take a look at the far north, where most rates charged by Northwestel are subject to tariffs regulated by the CRTC, unlike just about everywhere else in Canada. That means that any change in price (or terms) needs the approval of the Commission, even when prices are going down, or service characteristics are improving to the benefit of consumers.

Given the geography, it isn’t surprising that Northwestel’s prices for broadband services are among the highest in the country; average available broadband speeds are among the lowest. The latest Communications Monitoring Report (CMR) shows that only 60% of residents in the Yukon and Northwest Territories have access to 50/10 service. Unlimited service was not yet available at the end of 2019 when data for the 2020 CMR was collected; an unlimited option was added in December 2020.

One might think that proposed improvements in service quality and prices would be fast-tracked by the regulator. Again, you would be wrong.

Over the past year and a half, when most of the country has been so dependent on broadband to work from home and stay connected, we have seen some lengthy regulatory delays blocking implementation of proposed rate reductions, internet speeds improvements, and launches of unlimited service. Some might consider these delays to be excessive.

For example, let’s take a look at Northwestel Tariff Notice 1099 [zip, 288KB], filed 11 months ago on October 21, 2020, with a proposed service date of November 2, 2020. From the cover letter:

On 12 August 2020 , Northwestel was pleased to be awarded $62M in broadband funding to expand broadband in our serving territory. As part of each of these winning bids for broadband funding, we committed to introduce unlimited Internet service packages not only where we received funding, but also within our cable and FTTP-served footprints as soon as possible. Consistent with this commitment, we are pleased to file today new proposed packages including unlimited Internet service packages for residential and business customers.

The CRTC itself had awarded the funding in a series of decisions on August 12, 2020, which included a condition requiring Northwestel to offer an unlimited service option. Still, the Commission didn’t approve the tariff application in the standard 15 day period, delaying interim approval until December 1, 2020. The process has continued to drag on over the past 8 months with costing submissions and responses to various interrogatories lasting until last month. Final approval is still outstanding.

In April, Northwestel filed a related application (TN 1121 [zip, 237KB]) to extend its “Try-it-and-Save” promotion for another year, and to also include the unlimited option to the promotion. On April 27, the CRTC told Northwestel that the promotion would not receive the customary 15 day interim approval, “[h]owever, the Commission intends to dispose of this application, along with any associated subsequent revisions, within 45 business days of receipt of the filing.”

The Commission has not asked Northwestel for any further information. A couple weeks ago, the CRTC approved a modified version of the promotion, only granting 6 months, while denying the request to add unlimited Internet packages to the promotion. Why? “[T]he Commission considers that including Northwestel’s unlimited Internet services at this time would potentially add complexity to the administration of the promotion and confusion to customers, given that this service has been approved on an interim basis only.”

Hold on. The only reason the unlimited service just has interim approval is because the CRTC itself hasn’t gotten around to providing final approval.

One might have thought that the CRTC would have seized the opportunity to finalize the 2020 tariff approval in time to allow people in the North to try out unlimited broadband as the school year is getting underway. But once again, you would be wrong.

There are more examples. Tariff Notice 1122 [zip, 252KB] filed April 21, 2021 seeks to reduce the price of unlimited packages by $10 for residential customers. Tariff Notice 1137 [zip, 793KB] was filed August 19 seeking to increase speeds and usage for certain cable and fibre-to-the-premises residential and business packages; two weeks ago, the CRTC told Northwestel that it will not get 15 day interim approval and “the Commission intends to make its decision regarding the application and any subsequent revisions within 45 business days of receipt of the filing.”

In a media release two weeks ago, Curtis Shaw, Northwestel President, said “We know Northern customers want to see continuous improvements in the value of their Internet service, and that’s why Northwestel has laid out its plans to improve speeds and lower rates on our most popular Internet plans”.

Nearly half a year after Northwestel asked to lower rates, the CRTC hasn’t moved on the file. What can possibly be holding up interim approval for lower broadband rates, especially at this time?

When there is so much chatter about access to affordable service, and when there is universal agreement on the need to improve access to affordable high speed services in the north, wouldn’t we want to see interim approvals and speedier processes when consumers benefit from proposed tariff filings?

Unfortunately, that isn’t happening.

Those of us who have been around for a few years understand that the machinations of government regulatory bodies have trouble keeping up with the needs of the consumer marketplace. It is an important lesson for those calling for retail rate regulation for communications services in other areas of the country.