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.”
We must defend Canadians from disinformation and propaganda, and we won’t be deterred by malevolent foreign governments. Vladimir Putin’s aim is to subvert the international order, undermine democracy, and create a world where authoritarianism flourishes. 1/5
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.
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”.
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?
Figure 1
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.
Figure 2
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.
Figure 3
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.
Figure 4
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.
Figure 5As 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.
It was completely predictable that Toronto would fail to deliver a timely solution to the appeals for broadband for its most vulnerable citizens. Indeed, I predicted it a year ago, right after Toronto City Council greenlighted a silly proposal for the city to build its own fibre-based ISP in what is already one of the most connected cities in Canada.
In presenting its plan for “Affordable Internet Connectivity for All”, the proponents for ConnectTO lined up representatives from ACORN Canada, a community union of low and moderate income people, who passionately argued “The programs need to be put in place now, not tomorrow. Now.”
The plan approved by Toronto’s City Council won’t do a thing now, tomorrow, next month or even this summer. It isn’t even clear that it will deliver on ACORN’s needs when it is launched sometime late this year or in 2022. Or ever for that matter.
It took the City until the end of September to issue an RFP; responses were due in mid-November. At the time it approved the plan, item 10 said: “City Council request the Chief Technology Officer to report back to the Executive Committee by end of 2021 to provide an update on digital equity, digital access and municipal broadband.” According to a news release from January 2021, the first target areas for ConnectTO were “expected to be live starting in late 2021.” The news release also called for “a report back to Council at the end of 2021” prior to “Phase 2 of the project plans to see the network launched city-wide starting in early 2022.”
I have been unable to find such a report. Here we are a year later, two years into the pandemic, and there is nothing to show for the people who needed immediate help.
City Council saw people hungry for internet connectivity. Rather than provide them with vouchers for an immediate solution, the City decided to look into building a city-owned and operated network, piloted in one neighbourhood. The city wants to build a new network, in an area that already has lots of available broadband connectivity.
Nearly four and a half years ago, in November 2017, Toronto’s CIO and GM of Economic Development and Culture wrote, “In Toronto nearly 100% of households have ‘access’ but this refers only to the necessary infrastructure being in place. In practice, access depends on affordability.”
Toronto didn’t then, and doesn’t now, have a problem with access to internet facilities. Toronto’s problem was (and still is) with adoption of service.
Toronto City Council didn’t ask the right questions of its CTO and those providing deputations. As such, ConnectTO wasn’t the right answer.
Toronto lost sight of the most important requirement for the solution.
“The programs need to be put in place now, not tomorrow. Now.”
For a while now, I have expressed concerns with Canada’s plans to regulate internet content. Over the past month, those concerns have not been assuaged.
I do not believe, and have never subscribed to the view, that the internet should be a lawless platform, immune from application of laws. “Taming the wild west” is a post of mine from March 2006. My concern has been in crafting and attempting to tailor new laws and creating new standards of acceptable behaviour for digital media. We have laws and a body of jurisprudence in their application to the analog world.
A recent editorial in the Sunday New York Times was entitled “Canada’s Trucker Protests Are a Test of Democracy” [February 13, 2022]. “We disagree with the protesters’ cause, but they have a right to be noisy and even disruptive. Protests are a necessary form of expression in a democratic society, particularly for those whose opinions do not command broad popular support.”
From their vantage point in New York, or from my suburban home in the Toronto area, I acknowledge that it is a lot easier to comment on the inconveniences and disruptions to everyday life in Ottawa from horns and street closures. As the Times writes, “The challenge for public officials is to maintain a balance between public health and safety and a functioning society, with the right to free expression.”
Where do we draw the line? I’m not sure about the line itself, but it seems to me we witnessed some examples of “free expression” that are pretty clearly on the wrong side of the line. Protests that disrupts border crossings, at a cost in the order of half a billion dollars a day in trade, crossed the line, in my view. Protests that close a major vaccine centre in Ottawa crossed the line, in my view. Defecating on the porch of a private residence crossed the line, in my view.
A few weeks ago, I wrote, “It seems to me that how Canada deals with the Ottawa protest can be a barometer for how Canadians might view government intervention in online content.”
It seems to me that how Canada deals with the Ottawa protest can be a barometer for how Canadians might view government intervention in online content.
Support for "Freedom of Expression" and "Freedom of Peaceful Assembly" is easy & cheap when you agree with what is being said.
Support for “Freedom of Expression” and “Freedom of Peaceful Assembly” is indeed easy when you agree with what is being said. How do we deal with controversial points of view? If the way our municipal, provincial, and federal governments dealt with the protests are indeed a barometer for trusting government to deal appropriately with online content, would most Canadians say that we passed the test?
There is already legislation on the books to deal with the most troublesome content on the internet. As, such, we need to be very careful in new definitions of what constitutes online harms. Similar to questions being raised about Canada’s declaration of invoking the Emergencies Act, could other laws, if actually enforced, do the job?
I have quoted Aaron Sorkin’s The American Presidentbefore, but it is such a great line, I’ll repeat it again: “You want free speech? Let’s see you acknowledge a man whose words make your blood boil, who’s standing center stage and advocating at the top of his lungs that which you would spend a lifetime opposing at the top of yours.”
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.”
Finland’s approach isn’t a quick fix. Investing in digital literacy in kindergarten and primary schools means playing the long game. But, aren’t critical thinking, and digital literacy, among the most needed skills to better prepare the country for life in the digital information age?
Perhaps, it is another way to develop a generation of better informed infomediaries.
Early in my career, I had a boss at AT&T Bell Labs who taught the importance of getting involved in our local communities.
He said that all of our neighbours were potential customers of AT&T and he wanted them to see that it was a good employer, and that its employees gave back to the community. Not only was community involvement the right thing to do, but he felt that it was ultimately good for the business for us to take time to get involved in activities outside of work. What we did outside of AT&T would reflect on what kind of company we worked for.
The reflection in that mirror works both ways.
I also learned a lot about the importance of diversity and inclusion in that job. We had programs to go into inner city schools to stimulate interest in math and science, to try to increase the number of young kids who might pursue those disciplines in high school and in university. The objective was to have a pool of candidate employees that were a better reflection of the markets we served. We were playing the long game.
In those days, I worked alongside doctoral physicists, graduates from music programs, geography majors, as well as the usual academic disciplines of computer science and electrical engineering. When we were building conference calling services, we ideally wanted the interface to make sense for our customers, not just the computer science people who built it.
I told you that story in order to provide background for the rest of this blog post.
Last week, I read “Women in science, engineering ‘essential'” in The Kingston Whig Standard. In the article, Heidi Ploeg, Queen’s University’s Chair for Women in Engineering, said “Engineers work on solving problems. If we don’t have a diverse set of people working on the problems, we aren’t going to ask the right questions or solve the right problems, and we’re not going to come up with the best answers.”
I agree.
And fortunately, there is a program and bursary to help enable the pursuit of training, professional development, or academic programs for women in the telecommunications field. The Women of STAC Bursary Fund awards up to $5500 to support women in telecommunications. In addition to monetary support, the bursary recipients receive an invitation to participate at the annual STAC Conference, taking place this year from March 28-30, in which they can gain valuable learning opportunities through various sessions as well as network with STAC members.
Under the STAC umbrella, there is a Women of STAC Mentorship Program, with a “goal of offering guidance, support, and personal & professional development to women in the telecommunications industry”.
Last year, I wrote about STAC, Canada’s Structure, Tower and Antenna Council. STAC represents the people who are actually building Canada’s advanced digital networks.
I hope you will join me in encouraging women to apply for the Women of STAC Bursary Fund. “If we don’t have a diverse set of people working on the problems, we aren’t going to ask the right questions or solve the right problems.”
I also hope you will take a look at participating in this year’s virtual conference in late March.
