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?

As I noted back in February, I started writing this blog about 15½ years ago, in late February 2006, with a simple post: “It’s a start”.

Fifteen and a half years later, I’m celebrating blog post number 3000. Most of the posts track trends and issues in Canadian telecommunications, and there are occasional diversions into innovation and technology policy. Of course, once in a while, I have been known to get sidetracked with areas of personal interest, such as food.

Fifteen years of writing a blog; 3000 blog posts; more than 50,000 tweets; 25 years of consulting; 40 years working in telecommunications. Each of these milestones can be cause for celebration. And let’s face it, this is a period in time that could use virtually any reason to celebrate. Virtually.

After all, over the past 16 months of COVID-induced isolation, how many personal milestones have been missed by so many of us unable to see family members, friends or colleagues from work?

So, I am happy to mark this occasion with you virtually. In most of Canada, it is cause for a holiday weekend. Take tomorrow off and tell your boss you’re celebrating my 3000th blog post. I’d be interested in hearing their response.

In any case, thanks for stopping by. Be sure to have some cake and ice cream before you go.

Last week, Rob Carrick had an article in the Globe and Mail entitled “Inflation, as tracked in bagels, bacon and pints of beer”.

In it, he talks about different measures of inflation sent in by readers, and notes that the rate of inflation has been rising, from 1% year-over-year at the start of the year to a rate of 3.6% in May.

His article includes a link to a personal inflation rate calculator from Statistics Canada.

When you calculate your personal inflation rate, be grateful for the communications component. I found it interesting to see that communications show a negative inflation rate; prices are 7.2% lower year over year.

For more than a year now, each month I have been tracking a Cellular Consumer Price Index, released coincidentally with the monthly Consumer Price Index (CPI) from Statistics Canada. It shows cellular prices have dropped 17% between May 2020 and May 2021. Since January 2019, the Cell CPI is down nearly 28%.

That merits repeating: Statistics Canada data shows the Cellular Consumer Price Index is 28% lower than it was in January 2019.

Bacon isn’t a component of my personal monthly spending basket, but bagels, beer and communications services are.

Statistics Canada usually updates its baskets every two years to reflect changing spending patterns using Canadian household expenditure data. Last month, the agency announced “As a result of the unexpected and profound changes in consumption habits because of the pandemic, the basket weight update, planned for February 2021, was delayed. This delay has allowed the impact of COVID-19 on consumer spending behaviours to be better understood”.

The new weightings show a 15% drop in the communications weightings, from 3.55% in 2017 to 3.03% in 2020. Telephone services, which include cellular services, is responsible for all of that, falling more than 25% from 2.39% to 1.77%. Internet services have held steady, shifting marginally from 1.06% to 1.07%. At 4.86%, the “alcohol, tobacco and cannabis” category is now weighted more than 60% higher than communications in the price index weightings based on Canadian consumer spending.

The June 2021 CPI figures will be released July 28, and will use the latest weightings and 2020 reference period.

How did the CRTC find itself in the position of funding the person generating the kind of speech in this tweet?

You might be surprised to learn the CRTC ordered nearly $13,000 to be paid to the author of this clearly hurtful, if not outright hateful, tweet. [Update: As of July 29, Twitter suspended his account for violating its rules against hateful conduct.]

How did this happen? Two years ago, Bell Canada proposed using $125,000 remaining in its deferral account to defray the costs of interveners participating in CRTC regulatory proceedings to make regulations under the Accessible Canada Act. The CRTC agreed.

Two months ago, on May 13, the CRTC issued a series of decisions awarding funds to a number of groups:

• Telecom Order CRTC 2021-170: $4,180 to the Canadian Association of the Deaf
• Telecom Order CRTC 2021-171: $7,872.75 to Media Access Canada
• Telecom Order CRTC 2021-172: $4,747 to the Canadian National Society of the Deaf-Blind
• Telecom Order CRTC 2021-173: $5,170 to the CNIB Foundation
• Telecom Order CRTC 2021-174: $22,777.50 to Deaf Wireless Canada Consultative Committee
• Telecom Order CRTC 2021-175: $16,815.10 to the Community Media Advocacy Centre

Let’s focus on the last of those cost awards. Of the $16,815.10 awarded to CMAC in Telecom Order CRTC 2021-175, $12,875 went to pay its consultant, the author of the Tweet above, just one of dozens of examples of venom spewed on his Twitter account.

How could the CRTC have missed the context of ordering payment for his participation in a regulatory proceeding?

There is a clue in the third paragraph of each of the Telecom Orders listed above:

3. The Commission noted that Bell Canada did not submit, as part of its proposal, that it required the opportunity to respond to applications for a share of the available funds. In the circumstances, the Commission considered that such responses were unnecessary.

Keep in mind that deferral account funds were ear-marked for a public purpose, so one might ask if it was appropriate for the CRTC to use a standard of “what Bell asked for”. Indeed, the standard appears to have been “what Bell didn’t explicitly ask for”.

Unlike most cost award processes, the CRTC chose to short circuit the reply phase to the applications and as a result, it did not have the benefit of public input to help inform the process by which the Commission reached its conclusions. Paragraph 6 states: “CMAC submitted that it is a non-profit organization that represents the interests of people with disabilities who are Indigenous or racialized, or who identify as women, and that offers advocacy and support to these groups.” Would that submission hold up under further scrutiny?

With input, the CRTC might have reconsidered its determination in Paragraph 12 that “CMAC has demonstrated that it meets the first criterion by representing people with disabilities who are Indigenous or racialized, or who identify as women, and by elaborating on its membership and expertise.”

The cost awards in May used up about half of the funding set aside from the deferral account. The CRTC may want to reconsider its processes for any further distributions.