The following opinion piece appeared on Friday on National Newswatch.

Interestingly, a paper in Telecom Policy by Mark Jamison and Peter Wang of the University of Florida came to my attention on Friday. The study found that there was a five-fold increase in consumers valuation of digital services during the coronavirus outbreak. This struck me as relevant to my opinion piece, below.

---

I was struck by a recent editorial in the Globe and Mail (“Two years ago, Ottawa aimed to lower the high price of wireless and internet. Not any more”). It seemed to get many of the background facts right, but somehow didn’t follow its own logic to reach its conclusion.

Let’s look at their own words:

In the span of just two years, Ottawa has completely reversed its thinking – from worrying about the impact of high prices on Canadians, to worrying about the impact that lower prices would have on big telco capital spending.

Gee. What could have happened in the past two years that might have led policy makers to rethink their priorities? What changed?

Let’s see if the Globe and Mail has the answer:

Capital investment in the latest and best networks is necessary. The pandemic made clear a good internet connection is vital to the modern economy.

It is also true that while 99 per cent of urban households are reached by a pipe carrying fast and unlimited internet, that’s only true of 46 per cent of rural households, according to the CRTC. The latter figure is rising but is still too low.

Prices came down, meeting the government’s targets and prices are still falling. But that pandemic accentuated the fact that too few households in rural Canada have access to fast unlimited internet. And government broadband funds just aren’t moving the needle fast enough as I recently remarked. The Rapid Response Stream simply isn’t rapid enough.

The need for capital investment in networks became more evident, for expanding service to unserved areas, as well as enhancing service in all areas.

As the Globe itself recognized, “a careful balance is necessary, when it comes to the wholesale rates charged to upstarts for network access.”

Increased investment from facilities-based carriers, and that includes major companies and smaller regional and local companies, means expanded coverage for rural Canadians, reducing the need for government subsidies for broadband builds and accelerating service delivery.

Are there still affordability challenges for some Canadians? Absolutely. There are many factors inhibiting broadband adoption in low-income households. But those problems don’t get solved by arbitrarily lowering prices. Studies have shown “the price of broadband service is not the primary factor that keeps many low-income households from subscribing.”

Lower wholesale rates won’t lead to increased adoption of broadband services among low income households, but such regulatory rate action clearly harms the business case for carriers to expand their service areas.

So, let’s recap. The Globe editorial noted that “In the span of just two years, Ottawa has completely reversed its thinking.”

What happened in the past two years?

The pandemic helped all of us gain a greater appreciation for the necessity of broadband and the urgency for increasing capital investment in telecommunications infrastructure. Ottawa looked at the facts and, “Acting in the public interest”, recognized the landscape had changed.

The CRTC reviewed its 2019 decision and found that it made material errors that were harming the business case for broadband investment. It needed to correct its error.

As Minister Bains said last August “Canada’s future depends on connectivity”.

Following up on my blog post from yesterday, there is another webinar taking place next week (June 9, 2:00 pm Eastern) that should be of interest to those concerned about dealing with robo-calls: Preparing for SHAKEN in Canada.

In non-COVID times, the middle of June is when Canada’s telecom industry would normally gather for The Canadian Telecom Summit – this year marks the 20th annual event. While the world is starting to see hopeful signs, Canada is not yet ready for in-person conferences, so it is helpful to see a variety of webinars helping to partially fill the void.

CRTC Decision 2021-123 requires all Canadian Telephone Service Providers (TSPs) to submit a SHAKEN Implementation Readiness Assessment Report by 31 August 2021 in preparation of the SHAKEN mandate for IP-based voice calls effective 30 November 2021.

This webinar will be a practical tutorial to help you prepare your SHAKEN readiness report.

In addition, this webinar will give you the latest information on new developments, emerging risks, and cross-border SHAKEN issues that will impact Canadian TSPs.

The webinar is sponsored by TransNexus and features the company founder, Jim Dalton. There is no charge to register.

Over the past 15 months of COVID induced isolation, I have gained a special appreciation of online webinars for keeping informed and in touch with colleagues in the the telecom sector.

In my view, the International Telecommunications Society (ITS) has provided a series of informative sessions that should be on your calendars.

Coming up next is Beyond Smart Cities, taking place next week, June 9 from 9:00 to 10:00 (Eastern).

Academics, practitioners and policymakers have long debated on the concept and practice of smart cities but only recently have started to investigate how smartisation can be pushed beyond the urban boundaries. New models have been proposed and put in practice to leverage the potential of digital technologies in a rural or suburban context. This webinar aims to shed further light on two of these – smart villages and smart territories – with academic experts and practitioners involved in the design of these initiatives.

Smart villages refer to local communities leveraging digital technologies to co-create innovative services in different domains, from smart mobility to smart tourism. They have multiplied over the past ten years in both developed and developing countries. The concept of smart territory is more recent and has been proposed as an alternative to both smart cities and smart villages to overcome the dichotomy rural/urban and push for the design of holistic smart policies that are not constrained by administrative boundaries.

Both smart villages and smart territories are seen as a driver of economic growth, social cohesion and sustainable development of rural areas, but their development remains geographically limited and many operational aspects have yet to be finalised. This webinar aims to explore the current state of art on smart villages and territories in order to understand how public and private actors in the ICT industry can sustain these initiatives and help to maximise their potential for rural development.

In particular the webinar aims to clarify:

• how sectorial regulations and other ICT policies can favour the creation of smart villages and territories;
• how telecom providers and infrastructures can sustain the development of these initiatives; and
• how the diffusion of smart villages and territories is affected by and can help to fix the rural digital divide.

Registration is free.

Bell Canada is crediting regulatory certainty and a positive investment climate in announcing an accelerated capital investment program. In February 2021, Bell had announced plans for $1B to $1.2B in additional network funding to help drive Canada’s recovery from the COVID crisis.

According to the press release, with last week’s CRTC decision and “ongoing government policy support for facilities-based competition and investment, Bell has now increased the amount of accelerated funding to $1.5 billion to $1.7 billion.”

The CRTC reinforced its long-standing support for facilities-based competition in the opening paragraphs of the decision:

The Commission’s general approach towards wholesale service regulation has been to promote facilities-based competition wherever possible. Facilities-based competition, in which competitors primarily use their own telecommunications facilities and networks to compete instead of leasing them from other carriers, is typically regarded as the most sustainable form of competition.

Its accompanying press release talked about the plan to migrate to a disaggregated wholesale interconnection model to “increase competition and investments”. These were important signals to the capital markets and companies that invest in facilities.

Last summer, in “The economics of broadband expansion” I described how wholesale rates impact the business case for rural broadband expansion. The announcement from Bell is the first evidence of the spin-off consumer benefits to emerge from the decision.

The consumer interest is much more than just price. As I wrote last week, we know that consumers value network quality and will switch service providers in order to get a better network experience.

It is why regulators have to balance a variety of public interest issues in its deliberations, such as investment in broadband; expanding access to unserved areas; upgrades to existing areas with faster speeds and newer technologies and capabilities. In “Acting in the public interest” I talk about the tension in balancing quality, coverage and price, the priorities described a number of times by former ISED Minister Navdeep Bains.

In a six-part Twitter thread, I pointed out the importance of looking at complex regulatory and policy issues from a more holistic vantage point.

“Canada’s future depends on connectivity”. Connectivity requires investment to expand coverage and improve quality. Billions of dollars of investment.

From Bell’s announcement: “Now, with greater regulatory stability fostering an improved investment climate, Bell is proud to take our plan even further by growing our investment to advance how Canadians in communities large and small connect with each other and the world.”

Satisfying the consumer interest is a broader issue than simply lowering prices. The CRTC’s affirmation of its support for facilities-based competition supports the investment necessary for improving quality and coverage as well.

A new report from Opensignal indicates that Canada’s mobile customers put a value on quality, and will migrate between service providers based on their mobile network experience.

The report, “Mobile experience explains why urban and rural Canadian users change mobile operators”, found that on average, users who changed their mobile carrier – termed “Leavers” – had a worse mobile experience before they switched, than they typically experienced on their original network.

Opensignal found that users who switched operators had a below average mobile network experience. As might be expected, the data suggests that those users who experienced pain with their former mobile service were more likely to change their mobile service provider. On the former network, mobile users who switched were found to have spent less time on either a 3G or 4G mobile connection, and they experienced lower 4G Availability. “Canada has some of the fastest 4G download speeds globally, which benefits both urban and rural users, but these fast speeds are meaningless when users spend time either without a mobile signal or without at least being able to connect to 4G.”

The report shows that mobile users are willing to switch to get a better mobile experience, indicating they value quality. It confirms the value of investment in infrastructure, upgrading to faster speeds, extending network coverage and reach, and improving network experience. Opensignal found “mobile experience matters to subscribers and that it is a critical driver of churn in Canada.”

In an interview at the Canadian Club last week, CRTC Chair Ian Scott explained why he supports facilities-based competition as the most sustainable model for Canada. “We’re focused, as best as we can, on eliminating obstacles to the rapid deployment of the latest technology whether it be in the broadband space or in the wireless space.” While acknowledging services-based competition as a means to enter the market to discipline pricing, he said that such a business model becomes fragile as prices approach competitive levels. “So, in general, I would say facilities-based competition is more robust and sustained.”

Opensignal found that the mobile experience of Canadian customers (both urban and rural) who switch is, on average, significantly higher than in many other countries globally. It also observed that some Canadian users will have a worse mobile experience than others.

Our data shows that Canada’s Leavers had a worse mobile experience before they switched to another carrier, compared to the typical experience of users on their original network. This shows that mobile experience matters to subscribers and that it is a critical driver of churn in Canada.

If customers will switch service providers to get a better quality mobile experience, it confirms the need for continued network investment, consistent with Canadian policy favouring facilities-based competition.

Canada’s future depends on connectivity.