As Canada heads into a snap election, I thought I would take a look at what I would want to see in a party platform. It was just 23 months ago that I wrote “A telecom platform”, in which I observed “many political parties are trying to curry favour among the electorate by bashing telecom service providers. Such positioning may be good politics, but not necessarily good policy.”

The NDP released its “Ready for Better” suite of commitments in advance of the election call. It may be replaced by an actual platform in the coming days. I found “Ready for Better” to be somewhat outdated and frankly disappointing, as though the ideas were recycled from earlier campaigns.

For example, the NDP says it will introduce a Telecom Consumers’ Bill of Rights. Should I suppose this means something different from combining the Wireless Code, the Internet Code, the Television Service Provider Code and combining them under a single complaint-handling agency? Maybe we could call it the Commission for Complaints for Telecom-television Services?

Many of the consumer focused commitments from the NDP have already been addressed in those codes. One of its commitments may sound consumer friendly if you say it fast enough, but on reflection doesn’t really help. For example, the party says it will abolish data caps for broadband internet.

Why?

Why remove consumer choice? I certainly understand the desire to have unlimited data as an option – I have that on my broadband connection. But not everyone necessarily wants that. Whatever the price is for an unlimited service, wouldn’t you expect the cost – and therefore the price – for a capacity constrained service to be lower? Why would you limit such choices?

What about “Expanding cell coverage and delivering reliable, affordable broadband internet to every community in Canada is vital to the economic future of rural Canada and remote communities. But it has been ignored by successive governments for far too long.” This simply isn’t true. Look at the billions of dollars that has been spent in the past two years by the federal government accelerating rural broadband investment under the UBF program and in a variety of provincial partnerships such as with quebec and Ontario. Further, the response from the federal government review of wholesale internet rates was premised on the view that “Canada’s future depends on connectivity”.

I’m disappointed, but unfortunately not surprised, to see such pandering in the NDP commitment document.

The Conservatives released their platform, “Canada’s Recovery Plan” [pdf, 3.9MB], a 164 page glossy magazine that included a half page on telecom policy promises. The Conservatives promise to allow “foreign telecommunications companies to provide services to Canadian customers”, which is interesting (and perhaps a little awkward) since foreign ownership in telecom was relaxed back in 2012 under (Conservative) Prime Minister Stephen Harper. The only restrictions are that foreign companies are currently prohibited from buying Bell, Rogers or TELUS.

The Conservatives also promise to accelerate broadband investment to connect all of Canada to high speed internet by 2025. Current government programs plan to have 98% by 2026 and cover the remaining by 2030. We don’t see details on how the Conservatives plan to crank up the dial, but they do say they will “Promote investment in communications facilities by local and regional communities.” I have written extensively on the poor track record of municipal broadband and most recently, we have seen O-Net, once the poster child for municipal advocates, put into receivership.

Community networks are hard, and as Conservatives know, governments have a really lousy track record running businesses. Where a business case is lacking for private sector investment, the far better model is to partner with the private sector for cost sharing. That reduces the burden on taxpayers, and leverages private sector funding and expertise.

I wish there could be a political party that possesses, and is willing to demonstrate, a deeper understanding of the economics of broadband expansion in Canada; a party that understands the difference between EBITDA margin and profit, and understands the relationship between capital intensity and EBITDA.

Am I asking too much?

Over the past parliamentary session, there has been much disappointment for followers of telecom issues at the Industry Committee. As I described in “A more evidenced based approach is warranted”, policy statements on telecom were released by each of the Conservative and NDP caucuses in advance of hearing from witnesses. So much for evidence-based policy making.

We should demand better from our elected representatives.

Just 23 months ago, I wrote “It is easy to call for measures that lower prices. It is more responsible to set out a policy platform that understands the balance between competition, affordability, consumer interests, investment and innovation.”

As we move into this pandemic election, I plan to look at how the various party platforms aim to ensure that all Canadians, those in urban and rural areas, will have access to affordable, high quality, innovative services. How will they balance the tensions between the various interests?

Seriously, am I asking too much?

It was pretty gratifying to read yesterday’s announcement of the launch of what is being called “Connecting Families 2.0”, effectively an upgraded version of the basic low-income broadband service launched in 2018 by telecommunications service providers across the country, expanding the program to low-income seniors and significantly increasing the speeds to provide a 50 Mbps down / 10 Mbps up for just $20 to qualifying households. The original program will continue to be an option, offering 10/1 service for just $10.

Connecting Families 2.0 is introducing significantly faster speeds and increasing the data usage amount. At 50/10 megabits per second (Mbps), the download and upload speeds will be five and ten times faster respectively than Connecting Families 1.0, with 200 GB of data usage for $20 a month. This new phase will also broaden eligibility from families receiving the maximum Canada Child Benefit (CCB) to include low-income seniors. The previous Internet plan offering under Connecting Families 1.0 will also remain available. Access Communications, Bell Canada, Cogeco, CSUR, Hay Communications, Mornington, Novus, Rogers, SaskTel, Tbaytel, TELUS, Vidéotron and Westman Communications are all participating in offering improved Internet quality, coverage and price to eligible Canadians.

Some service providers have even more options available, such as Rogers portfolio of Connected for Success services, with 25 Mbps for $10; 50 Mbps for $15; 75 Mbps for $25 and 150 Mbps for $35, all of which offer unlimited usage. Rogers Connected for Success was launched in 2016, as was TELUS Internet for Good, and have been models for the national roll-out by service providers.

As long time readers know, I take a certain amount of pride in talking about Connecting Families and its kin.

Still, I wonder if there is another approach that we should be exploring to ensure affordable mobile services for Canada’s most vulnerable populations? Can the government do a better job on the issue of telecom service affordability?

While the US has specific programs such as Lifeline and the Emergency Broadband Benefit that provide targeted subsidies for communications services from common funds, Canadian programs are currently funded completely by participating service providers and on a completely voluntary basis. The FCC’s Emergency Broadband Benefit, rolled out during the early days of the pandemic, is being replaced by a permanent program known as the Affordable Connectivity Benefit funded by the US Government’s infrastructure bill.

Contrast the direct government subsidy in the US with Canada’s Connecting Families, which coordinates the offer of “low-cost Internet service packages from Internet service providers that voluntarily participated without government subsidy.”

And what about mobile services?

In its recent Review of mobile wireless services, the CRTC set specific characteristics for a “low-cost” mobile plan, but the Commission did not tie it to a means test (such as limiting the plans to members of lower income households), and it did not attach a funding mechanism, whether from industry revenues or the federal treasury. While the CRTC said “an important issue raised in this proceeding is whether lower-income households and other Canadians, seniors notably, are being priced out of the market”, it did not restrict its low-cost plan to these groups.

Specifically, these plans are expected to

• be offered at a monthly rate not exceeding $35;
• allow customers to bring their own device; and
• include
  • unlimited Canada-wide incoming and outgoing calls and SMS messages,
  • the ability to send and receive MMS messages, and
  • a minimum of 3 GB of data per month.

This approach may create aggressively priced options based on the marketplace in the spring of 2021, but how will these specifications be viewed in 2 years time?

Do we actually know if the particulars of this low cost plan actually addresses the question of “whether lower-income households and other Canadians, seniors notably, are being priced out of the market”?

Doesn’t it seem somewhat patronizing for a central body to arbitrarily determine that this single set of characteristics will suit the needs of everyone in the market for a low-cost plan? How does this plan help a low-income Canadian who needs more than 3 GB of data per month?

Should Canada consider creating programs that provides a portable voucher to targeted groups to enable the consumer to get a discount off of whatever plan they might choose?

Are there structural problems between agencies and departments (ISED, CRTC, Social Services, Finance, Federal-Provincial, etc.) that inhibit the development of a more holistic approach? Can the validation systems created for Connecting Families be repurposed or reused for a directed funding program?

Is there a better approach to affordable telecom service for vulnerable Canadians?

Fibre optic connections aren’t always the best solution for broadband.

About a dozen years ago, I wrote “High fibre not for everyone”. In that piece, I observed that there are some who believe that fibre is a mandatory requirement for universal broadband, rather than simply being one of the possible solutions to deliver the requirements of connectivity. In doing so, they restrict the degrees of freedom for solutions that could be innovative, more cost effective, and delivered sooner.

In the past week, we have seen significant announcements for non-fibre based connectivity. It is commendable for government agencies to recognize that fibre to the home is not the optimal solution in every instance.

The Government of Ontario announced a significant partnership with Telesat Lightspeed to provide capacity at substantially reduced rates to Canadian Internet service providers (including Indigenous owned and operated ISPs), as well as mobile network operators to expand high-speed Internet and LTE/5G networks to Ontario’s unserved and underserved communities. “Telesat Lightspeed is the only LEO network capable of delivering multiple Gbps of broadband capacity into a community, giving telecom operators the ability to offer a wide range of affordable, high-speed broadband plans and unlimited data to consumers and businesses as well as next-generation 5G wireless services.”

The CRTC’s Broadband Fund released $20.5M to TELUS, Bell, Rogers and ATG Arrow, to introduce or improve Internet access services and mobile wireless services for 46 communities in five provinces. A number of these projects will supplement fibre to the home with fixed wireless and mobile wireless solutions.

A year and a half ago, in “Minding the gap” I wrote about mobile and fixed wireless as being an important part of the solution space for universal broadband connectivity. I commented at the time about the importance of spectrum policy to ensure that operators can make such technologies viable, from an economic perspective as well as in time to be a meaningful way to offer services to rural and remote homes and businesses, including farms.

To those who maintain a certain orthodoxy about fibre as a “requirement” for broadband, recall that in its 2016 broadband policy, the CRTC itself said “In some underserved areas, achieving the objective will likely need to be accomplished in incremental steps due to many factors, such as geography, the cost of transport capacity, the distance to points of presence, and the technology used.”

Nearly a year and a half into the pandemic, the urgency to advance broadband connectivity has become a priority for every level of government. While some may criticize an incremental approach to funding broadband projects, I am reminded of writing a couple years ago that it takes a special kind of arrogance to tell someone without broadband that a significant improvement in speed just isn’t good enough.

“Isn’t some broadband better than nothing?”

Immediacy needs to take precedence over perfection in delivering broadband connectivity.

Consumer Reports released a survey [pdf, 600KB] earlier this week that seems to confirm something that I have been saying for a while – that the price of broadband isn’t what is keeping most Americans from subscribing. Consumer Reports found the median price paid for broadband in the US is US$70 (about C$88).

When asking Americans who don’t have broadband why they don’t subscribe, just 32% said it costs too much, less than a third of respondents. A quarter said it wasn’t available and one in six said “they just don’t want it.”

There is no question that Canada, as a country, needs to do more to address the issue of broadband affordability for low income households. The United States has a number of programs that provide a direct benefit to help cover the cost of broadband service for disadvantaged Americans, including the FCC’s US$50/month Emergency Broadband Benefit. The bipartisan infrastructure bill includes an additional US$14B for broadband affordability vouchers.

No such program exists in Canada. Across Canada, special pricing for broadband services targeted at low-income households is completely funded by the service providers themselves, without government funding.

But, as Consumer Reports has found, and as I described in “The broadband divide’s little secret”, we need to look beyond price if we want to achieve universal adoption of broadband.

We need to understand the factors that lead some people to say “they just don’t want it” and overcome these issues.

At the end of the day, it comes back to this point: building universal broadband connections is a relatively easy job; it just needs money. Driving universal broadband adoption is a lot harder. Building better broadband just isn’t enough.

We need policy makers to start turning their minds to the harder task at hand.

Is Canada’s approach to spectrum policy driving up the costs of wireless services?

In the wake of the record breaking $8.9B raised in Canada’s 3.5 GHz spectrum auction, The Globe and Mail is reporting that some observers blame a scarcity of 5G airwaves, coupled with an exceptionally large proportion set-aside for new entrants, for driving up bidding by the major carriers.

At $0.918/MHz-pop, the set-aside spectrum sold for an enormous 71% discount, compared to the $3.188/MHz-pop paid by the incumbents ($3.38 Rogers, $3.35 TELUS, and $3.05 Bell). The biggest beneficiary of the set-aside was Videotron, spending $830M to acquire spectrum in Canada’s 5 most populous provinces. According to a Videotron presentation, Videotron “acquired 40% of all the available set-asides in the country and 69% of the available set-asides in Québec.” Applying incumbent prices, Videotron would have paid $2.05B more.

Following the auction, the Canadian Press reported “TELUS CEO Darren Entwistle says ‘burdensome’ regulations hampering access, cost of spectrum”.

“5G spectrum auctions around the world confirm that international carriers pay much less for this resource than their Canadian counterparts,” Darren Entwistle told analysts on a call Friday.

“Canada’s position as a global network leader is being undermined by burdensome regulations governing access to spectrum and its cost.”

An article by Alexandra Posadzki in the Globe and Mail indicated that TELUS wasn’t alone in questioning Canada’s spectrum policy and auction rules. “Bell, TELUS blame Ottawa’s auction rules for driving up prices of 5G airwaves”

Over the past few years, I have written frequently on the issue of spectrum policy. Here are 5 of the more recent ones:

• The cost of spectrum policy • September 17, 2019
• Spectrum policy and auctions • December 11, 2019
• Spectrum policy in the race for 5G • January 6, 2020
• Paying for spectrum policy • January 20, 2020
• 5G spectrum policy drives economic growth • November 12, 2020

Recently, GSMA has warned Canada “there are clear trade-offs that the government needs to recognise when formulating spectrum policy – in particular, the likely impact this could have on network operators’ ability to invest and on the consumer experience and the economy more broadly.”

As I have written before, a GSMA study recommended:

1. Maximising revenues from spectrum awards should no longer be a measure of success
2. Auctions can deliver inefficient outcomes when poorly designed
3. Artificially limiting the supply of spectrum, including through set-asides, risks slowing services and inflating prices
4. Spectrum should be released to the market as soon as there is a business case for operators to use it
5. Policymakers should work with stakeholders to enable timely, fair and effective spectrum licensing to the benefit of society

Point 3: “Artificially limiting the supply of spectrum, including through set-asides, risks slowing services and inflating prices.”

TELUS CEO Darren Entwistle is quoted saying, “If we are going to accelerate the government’s innovation and affordability agendas, and if we are going to transition successfully into a 5G world, we need a responsible, forward-looking and predictable regulatory policy that ensures expeditious, fair and economical access to this national asset.”

With $8.9B raised, should Canadian policy makers consider the 3500 MHz auction to have been a success?

How can Canada’s policymakers enable more timely, fair and effective spectrum licensing to benefit all stakeholders, including consumers?