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.

I first started looking at the issue of setting boundaries on the internet around 15 years ago, in the early days of this blog. At the time, the concern was illegal content: child abuse and exploitation, hate, and death threats.

In the early days, there were many naysayers.

They said the internet can’t be tamed – there is just no technical means to do so. We were told regulating the internet would break it. “Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.”

Times have changed. Around the world, the discussion has transitioned from why we cannot tame the ‘World Wild Web’ into how should we regulate content and platforms.

Already, internet services providers around the world routinely block illegal and malicious content, such as child abuse images, viruses, spam, attacks.

Various countries are imposing a variety of rules on content, dating back perhaps 20 years to France / Yahoo, and Europe’s 2018 General Data Protection Regulation, ensuring that major platforms conform to national laws. And Canada is hardly the only country looking at ways to get global technology firms to share in the wealth to achieve internet related social objectives. FCC Commissioner Brendan Carr linked to his new opinion piece in Newsweek (Ending Big Tech’s Free Ride) saying, “Big Tech has enjoyed a free ride on our Internet infrastructure while sticking everyday Americans with billions of dollars in costs. It’s time to end this sweetheart deal and force Big Tech to pay its fair share.”

I won’t delve into the details of Canada’s Bill C-10, “An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts”, other than to say that just about everyone should agree that Canada’s Broadcast Act (1991) was overdue for an update. Thirty years ago, the very nature of broadcasting was very different from today. The term ‘convergence’ was being thrown around, but telephone companies were not yet seriously competing in the TV distribution business; at the time, few understood the disruptive potential for over-the-top video services. Netflix was still 7 years away from starting its DVD by mail service. Amazon wasn’t created until 3 years later.

Hence, the creation of the Broadcast and Telecom Legislative Review panel, its national consultations and the resultant January 2020 report [pdf, 2.4 MB], all of which lead up to the legislation being reviewed by Parliament’s Standing Committee on Canadian Heritage. It was not produced in a vacuum.

In “The crackdown on ‘Big Tech’ targets symptoms rather than the disease itself” in the Globe and Mail this past weekend, Sue Gardner writes “[Heritage Minister] Guilbeault and his team are on a mission to regulate Big Tech. It’s important work, it’s overdue and it needs to move forward.” She concludes “it’s possible the government is laying the groundwork for legislation designed to go to the heart of the problem: the business model.”

Relevant to this discussion, it is worth noting that while Parliament’s Heritage Committee reviews Bill C-10, the Senate is reviewing Bill S-203, “An Act to restrict young persons’ online access to sexually explicit material”.

Similar discussions of regulating “Big Tech” are occurring south of the border. There is an interesting session being held tomorrow afternoon, Wednesday May 26, from 12:30-1:30 (Eastern time), looking at Section 230 of the US Communications Decency Act, a section designed to promote a competitive online ecosystem that maximizes user control while guarding against illegal activities. “Proposals to reform Section 230 — and views about its impact — vary. Some believe the law is a key protector of online expression, while others believe it provides cover for suppression of free speech. And some seek to expand Big Tech’s responsibility to limit what can be said on social media.”

The session, to be moderated by Mark Jamison (Director of University of Florida’s Public Utility Research Center), will feature panelists:

• Alan M. Dershowitz, Felix Frankfurter Professor of Law, Emeritus, Harvard Law School
• Daniel Lyons, Visiting Fellow, AEI, and Professor of Law, Boston College
• Matt Perault, Director, Center on Science & Technology Policy, Duke University

I suspect some issues will arise that are relevant to policy and legislative matters being reviewed in Canada. And it is free of charge.

It’s no longer a question of whether the World Wild Web can be tamed. The key question is how.

Assuming you believe in evidence-based policy making, last week wasn’t very good for advocates of structural separation in telecommunications, and with good reason.

New reports from the UK communications industry regulator, Ofcom, provide further evidence of the short comings of structural separation for investment in broadband infrastructure.

It was a year ago today that I wrote “A more evidenced based approach is warranted”, which included a video of an exchange between TELUS Chief Customer Officer Tony Geheran and then Conservative Industry Critic, Calgary-Nose Hill MP Michelle Rempel Garner at Parliament’s Industry Committee (INDU). Let me refresh your memory of the exchange.

Michelle Rempel Garner: “Mr. Geheran, I think I am saying your name right. You made a comment tonight. You said ‘if you have a policy that fundamentally undermines an investment strategy, you have to change policy’ and I think I agree with that. So I’d start with saying, do you think that structurally separating the builders of network from Internet Service Providers is a way to solve the policy tension that I just described?”

Tony Geheran: “No, I don’t. I haven’t seen that work anywhere globally, to sustainable effect.”

Michelle Rempel Garner: “It’s in the UK, right?”

Tony Geheran: “Yeah.”

Michelle Rempel Garner: “It’s like the primary model in the UK.”

Tony Geheran: “But if you look at the UK, they are wholesale moaning about the quality of their infrastructure, their lack of fibre coverage. across what is a very small geography. I know. I originated from there. And quite frankly, the Canadian networks are far superior in coverage and quality and performance through COVID has demonstrated that.”

Michelle Rempel Garner: “Well, that’s certainly not what we’re hearing in our offices from end users and that’s not the reality that we’re hearing in testimony tonight from you.”

Last week’s report from Ofcom confirmed Mr. Geheren’s view of the world. According to Ofcom, “the average download speed of UK residential broadband services increased by 25% since 2019, from 64 Mbit/s to 80.2 Mbit/s.” According to the CRTC, at year-end 2019, 18 months ago, the average download speed in Canada was already 176.9 Mbps, more than double the current speed in the UK.

In its Spring 2021 Connected Nations Update, Ofcom indicated that “Full fibre coverage continues to increase at pace, up to 21%” of UK homes by January 2021. According to the CRTC, 44.7% of Canadian homes had fibre to the home access, again more than double what is in the UK.

Those who promote “structural separation” won’t like seeing the evidence published by the regulators, but it is proof that Mr. Geheren was right, “the Canadian networks are far superior in coverage and quality and performance through COVID has demonstrated that.”

Last week also saw a new report on Australia’s state-owned National Broadband Network (NBN), saying that 5G “will take business away from a financially fragile [NBN] operation loaded up with debt. The state-owned telco owes A$19.5 billion to the national government, with revenue last year of A$3.5 billion.”

So, last week wasn’t very good for those who advocate structural separation, at least for those who believe policy should carefully examine the evidence.

Such evidence continues to confirm what most of us know: that structural separation is a losing regulatory model.

As the CRTC, the Competition Bureau and government policy have each determined, facilities-based competition is the sustainable regulatory model, promoting investment. Canada’s future depends on connectivity.

In statistical terms, we would use the terms “mutually exclusive” and “exhaustive” when trying to categorize a population into different subsets: setting clear boundaries, but covering the entire field.

Think of it in terms of defining answers for a multiple choice questionnaire, ensuring there isn’t any overlap (mutually exclusive), while making sure that every possible answer is covered (exhaustive). How many times have you looked at a poorly worded survey question and just sat there, wondering how you were supposed to choose just one answer? I’m certain that you must have seen questions for which the only possible correct answer for your circumstance was “none of the above”, but that wasn’t a choice.

What happens when legal questions look like that? When there is a question of who is in charge or, perhaps even worse, if no one is in charge?

TELUS has sought leave to appeal the CRTC’s recent Regulatory Policy – Review of Mobile Wireless Services decision, filing an application late Friday with the Federal Court of Appeal. TELUS says the CRTC had boundary issues in its recent Wireless Review, failing to exercise its authority in one case; overreaching its jurisdiction in another.

A couple of weeks ago, in “Channels of appeal”, I described the three ways a CRTC decision can be challenged in the context of a Cabinet appeal filed by DOT Mobile. I found Friday’s TELUS filing with the Court to be interesting, and perhaps somewhat unique to Canada, because regulatory authority for wireless services is divided between two different agencies: ISED and the CRTC. In most countries, there is a single regulator, such as the FCC in the US, or Ofcom in the UK.

Indeed, 15 years ago, in Recommendation 5-10, the Telecom Policy Review Panel said “The authority to regulate Canada’s radio spectrum and to license its use should be transferred from Industry Canada to the CRTC.” Had the government unified the bifurcated authorities over wireless communications, we may not have the problems that TELUS raises in its appeal documents, where the issues appear to arise from the boundaries between CRTC and ISED.

For any given telecommunications issue, there should be clarity: does authority rest in the hands of ISED or the CRTC?

According to TELUS, there are two problematic sections of the CRTC’s new Mobile Regulatory Policy with errors in law or jurisdiction: an issue of access to local infrastructure; and, the issue of mandated seamless roaming.

In the first instance, TELUS says the CRTC is failing to exercise its authority (under Section 43 of the Telecommunications Act) to enable carriers to build wireless infrastructure for 5G networks, when it said [at Paragraph 451] “the Commission notes that it does not have general jurisdiction over tower siting, and that ISED already has well-established rules in this regard, including a municipal consultation process.” According to TELUS, ISED doesn’t actually have the same power, “and declining jurisdiction over access for their deployment, the CRTC has created a lacuna in the federal regulatory scheme”.

The CRTC recognized the difficult jurisdictional question over the issue and the decision contains 10 paragraphs in its decision discussing the Commission’s determination [paragraphs 477-486]. TELUS argues there is a difference between the CRTC’s power to order access, as contrasted with the Minister’s power to approve such access.

The CRTC incorrectly concluded that it did not need to exercise jurisdiction given the power of the Minister of Innovation, Science and Industry (the “Minister”) under the Radiocommunication Act to approve sites for the placement of radio apparatus. The Radiocommunication Act does not provide access to such sites.

While in the first instance (the access issue), TELUS says the CRTC isn’t exercising powers that it has, in the second case, TELUS says the CRTC was acting beyond its authority when it ordered the major carriers to provide seamless roaming.

TELUS and other wireless carriers have spent billions of dollars licensing wireless spectrum from the Minister under the specific conditions of licence set by the Minister. Jurisdiction to amend the Minister’s condition of licence is reserved exclusively to the Minister in the [Radiocommunications Act]. The CRTC cannot simply reach a different policy conclusion and issue a conflicting condition.

In successive spectrum consultations, the Minister has rejected mandated seamless roaming and TELUS says that it has spent $4.5 B acquiring “licences [that] contained specific
conditions that seamless roaming would not be required.” The appeal documents say that the CRTC has reached into an area that is exclusively within the powers of the Minister and has created an “operational conflict”: “if a regional wireless carrier claims entitlement to seamless roaming, a judge or other decision maker cannot give effect to both the Conditions of Licence the Minister granted to TELUS under the Radiocommunication Act and the CRTC Decision.”

The appeal documents make for an interesting read, with citations dating back to the Constitution Act of 1867 and the Railway Act of 1899.

Failing to exercise powers that it has, while exerting authority over another area where it lacks jurisdiction.

This will be an interesting proceeding to follow, perhaps helping to create improved clarity in jurisdictional issues impacting the regulation of wireless services in Canada.

At least for these two telecommunications issues, hopefully the court will clarify the answer to the question, “does authority rest in the hands of ISED or the CRTC?”

Would we be in the same position if successive governments had adopted more of the recommendations of the 2006 report from the Telecom Policy Review Panel?

Clear, mutually exclusive, and exhaustive. For any given telecommunications issue, shouldn’t we be able to tell who is in charge?