Canadian government policy for auctioning radio airwaves may be costing you $100 per year on your mobile phone bill.

That’s what Robert Crandall (a noted economist from the Technology Policy Institute in Washington) wrote in Policy Options last week. In “How Canada’s wireless spectrum policy drives up mobile rates”, Crandall says

Canada’s three national carriers have had to charge their subscribers an average of $74 per year – equal to 9.4 per cent of the average bill – just to cover the cost of acquiring these spectrum rights, which are long-term investments that must earn a return for their shareholders. The prices paid in July’s auction could add another 3.1 percentage points to the average bill, or $25 per subscriber per year, raising the total cost per subscriber to almost $100 per year.

In his article, Crandall calculates that Canada’s spectrum policies have driven national wireless service providers to end up paying “more than 15 times the prices paid by carriers in Germany, France or the United Kingdom” for the airwaves that carry our mobile calls and data. In 2020, he says this was effectively “a hidden tax on Canada’s mobile users of $1.76 billion”.

Crandall’s article reinforces the view from PwC that I discussed last week in “Looking at cost and quality of networks”. As I wrote,

The cost of wireless spectrum was found to be the main regulatory cost driver. When PwC reviewed the mid-band 5G spectrum auctions, it found that Canada’s national mobile operators paid $2.62 per MHz/pop nearly three times what was paid by US mobile operators ($0.94 MHz/pop). Even including the regional operators that benefited from set-aside spectrum discounts, Canada’s average of $1.81 per MHz/pop ranked highest in the world for 5G mid-band spectrum, ten to twenty times higher than European peers Germany ($0.19), France ($0.16), and the UK ($0.09).

Are government policies working at cross-purposes, seeking to lower consumer prices, while increasing costs for service providers? That’s a $100 per year question.

A new report from PwC was released earlier today, “Understanding the cost and quality of networks across the G20” [pdf, 4.2 MB]. The report examines the factors impacting network costs and quality for Canada compared to the rest of the G20, by building a “network build cost index” and a “network quality index”, which assesses network speeds, 4G availability, and consumer video experience.

Today’s report builds on PwC’s 2019 report, “The importance of a healthy telecommunications industry to Canada’s high-tech success” [pdf, 2.3 MB], that found Canadian Mobile Network Operators (MNOs) have:

• 2 times higher capital expenditure (CapEx) per wireless subscriber;
• 3 times higher spectrum costs; and
• 80% smaller scale, resulting in lower purchasing power.

In the new study, PwC found Canada ranks highest in the G20 on the network quality index, leading in terms of network speed, and being among the top countries for 4G availability and video experience. “This means that Canada has both the highest costs in the G20 to build wireless networks, while maintaining leading quality networks.”

The report notes that Canada is the second least densely populated country in the G20, behind only Australia. However, in contrast to Australia, “Canada has many more small towns dispersed across the country, which in part contributes to 50% more cell towers per capita, and 33% higher capital expenditure.”

The cost of wireless spectrum was found to be the main regulatory cost driver. When PwC reviewed the mid-band 5G spectrum auctions, it found that Canada’s national mobile operators paid $2.62 per MHz/pop nearly three times what was paid by US mobile operators ($0.94 MHz/pop). Even including the regional operators that benefited from set-aside spectrum discounts, Canada’s average of $1.81 per MHz/pop ranked highest in the world for 5G mid-band spectrum, ten to twenty times higher than European peers Germany ($0.19), France ($0.16), and the UK ($0.09).

The PwC report also considers secondary cost factors, such as: wages – Canada’s average is 5th highest in the G20; the impact of weather – limiting construction season and increasing maintenance costs; and, offsets from Canada’s favourable corporate tax rates and lower electricity prices.

Using Opensignal data, PwC’s report found that “Canadians benefit from the fastest networks in the G20 at 59.6 Megabits per second (mbps), slightly faster than South Korea, which is a significantly smaller geography country, and more than seven times faster than India (the slowest).” Canada was in the top 5 for 4G availability, with a connection rate of 93.5%, slightly behind Australia (94.0%), India (94.5%), the US (96.1%) and Japan (highest at 98.5%). With a score of 74.8, Canada ranked third in the G20 for video experience, slightly behind Australia (75.6) and Japan (77.6).

The report’s conclusion? PwC found that costs of building networks in Canada were impacted by its population density characteristics, geography, climate, spectrum policy and regulations, and scale. Still, despite mobile operators having significantly higher cost structures to build networks in Canada compared to other G20 countries, the quality of Canadian mobile networks are atop the G20 and among the best in the world.

As PwC notes, “It’s an achievement worth celebrating, but one that should be recognized in the context of what it takes to build and maintain wireless networks in Canada—especially as 5G networks are rolled out across the country.”

Is using regulation to fight fake news a lesser or a greater evil?

Misinformation and disinformation, sometimes called “fake news”, is recognized to be a global problem, but how do we (or even, how should we) deal with it?

Is it the role of governments to deal with it? Should we expect regulatory authorities to restrict the creation of false information online? Should governments limit or ban access to such content?

The International Telecommunications Society is hosting a global webinar on Thursday, October 21, at 8:00 am (Eastern Time) to examine these issues.

While advocates contend that regulation is an effective way to deter individuals from spreading falsehoods, critics argue that regulating fake news will create a chilling effect in society. Is using regulation to fight fake news a lesser or a greater evil?

In this presentation, we will explore this question from a social science perspective by examining and comparing public opinion on regulating fake news in three Asian countries of different social and political backgrounds. First is Japan, a democratic country and is one of the few in the region that the government is taking a non-regulatory approach towards fake news. Second is South Korea, also a democratic country, but the government has been calling for new laws to restrict fake news. Third is Thailand, a semi-democratic country, in which strict laws against fake news have already been implemented.

It is very topical for Canadians, as the government considers reintroducing controversial legislation regulating internet content.

Registration is free.

Twenty years ago, when Michael Sone and I hosted our first conference, we never would have thought that The Canadian Telecom Summit would become the event that continues to be the place where leading stakeholders from Canada’s telecommunications industry continue to gather to discuss issues, share ideas and schmooze.

Last year, it was an online event and next month (November 15 – 17), this year’s event will be held in a hybrid format, with the ability to participate online or in person.

Now in its 20th year, The Canadian Telecom Summit is Canada’s leading ICT event, attracting the most influential people who shape the future direction of communications and information technology in Canada.

For 3 full days, The Canadian Telecom Summit delivers thought-provoking presentations from the thought leaders of the industry. This is your chance to hear from and talk with them in both a structured atmosphere of frank discussion and high-octane idea exchange and networking in a more relaxed social setting of genial conversation.

The theme for the 2021 conference is New Era of Intelligent Connection: Embracing 5G Cloud and Edge for a Connected Everything Digital World. Keynote speakers include PK Peledeau of Quebecor, Robert Ghiz of CWTA, Claire Gillies of Bell, Zainul Mawji of TELUS, Philippe Jetté of Cogeco, among dozens of industry leaders participating as speakers and panelists in the event.

The Canadian Telecom Summit is just one month away.

Have you registered yet?

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.”