Governments at all levels, federal, provincial, regional and municipal have thrown billions of dollars at the challenge of extending the reach of broadband networks, but is there an overall strategy?

At the recent Rural & Remote Broadband Conference, Execulink CEO Ian Stevens observed that there doesn’t seem to be a strategy to tie together the myriad of funding programs.

In October, I observed that the ‘myriad of funding programs at all levels of government’ all seem designed to help offset the initial capital costs but there aren’t programs that look at the higher ongoing operating costs associated with rural and remote telecommunications services. As I noted then, there was a comment in the report of the Broadcasting and Telecommunications Legislative Review Panel [pdf] noting that indigenous communities said they are “looking for a more inclusive consultation process in the development of any fund to support broadband buildout with more constant, stable, and accessible funding.”

Constant, stable and accessible funding. I have often said that governments tend to build things well, but tend to do a lousy job at maintaining that infrastructure. Look at our sewer systems, road repairs, municipal housing projects all stand in testament to this. The cynic in me would attribute this to the ribbon cutting photo op for new infrastructure, but little political goodwill generated by ongoing maintenance.

Yet there are clearly higher operating costs incurred by telecommunications service providers in low population density markets, including: spectrum fees amortized across a smaller user base; installation and repair technicians have extended non-productive ‘windshield-time’, driving between customer locations; equipment endures harsher environmental conditions, located in remote, difficult to access locations, with less than optimal power reliability.

To offset these higher costs, there used to be a fund operated by the CRTC designed to allocate funds to companies offering telephone service in rural and remote areas. That fund began to be eliminated 4 years ago when the CRTC established its own Broadband Fund. In the introductory notes to Telecom Regulatory Policy 2016-496, the CRTC wrote that it will establish a mechanism to fund continuing access to fixed and mobile wireless broadband Internet access services, and fixed and mobile wireless voice services.

The terminology “continuing access” is important, because it parallels Section 46.5(1) of the Telecom Act:

46.5 (1) The Commission may require any telecommunications service provider to contribute, subject to any conditions that the Commission may set, to a fund to support continuing access by Canadians to basic telecommunications services.

In establishing its Broadband Fund, the CRTC refers to this section of the Act for its authority, but I wonder if the framers of this section of the Act intended for a continuing rural subsidy program to be shifted to a selective capital funding competition.

Was the CRTC following the best approach when it decided to develop its own capital subsidy system in place of ‘continuing’ support for high cost serving areas?

As I wrote a few weeks ago, there is a long history of the government using the communications sector as an alternate tax and wealth redistribution system. In the case of the Broadband Fund, telecommunications service providers are funding capital projects that would otherwise wait for a government funded program.

There is no question that we need more capital funding for rural broadband projects. As I noted a month ago, CRTC Chair Ian Scott told the ISP Summit that the Commission’s last call for broadband funding (in November 2019) drew “600 applications with a combined ask of more than $1.5 billion,” far outstripping the capacity of the Broadband Fund.

But, that doesn’t mean the CRTC Broadband Fund needs to be bigger. Indeed, should the CRTC be in the capital funding business at all? As I asked in November, “Is CRTC’s broadband fund fundamentally flawed?” “When other agencies and departments at federal provincial and regional levels of government are already in the business of awarding grants, did we need the CRTC to create yet another broadband capital funding program?”

At the very least, shouldn’t an overall broadband strategy take a look at how we will ‘support continuing access’?

The past month has been a busy season for on-line conferences and webinars. In October, I wrote “Finding advantages in learning online”, talking about the ease of joining online sessions for continuing education.

Another opportunity is coming up next week with the release of a new report, “Investing in Canada’s Digital Infrastructure: The Economic Impact of Wireless/Wireline Broadband and the Post-COVID Recovery”, being presented by Accenture and the Canadian Wireless Telecommunications Association.

The report is the subject of “The Digital-led Recovery: The Role of Telecommunications in Canada’s Economy & the Post-COVID World”, a one hour webinar to be held December 9, at 11:00 am Eastern time.

The session will look at the role telecommunications will play in the post-pandemic economy.

The event will be hosted by CWTA President & CEO, Robert Ghiz, who will join the Association’s SVP, Eric Smith, as well as Tejas Rao, Managing Director and Global 5G Lead at Accenture.

Registration is free.

The subject matter appears to complement a recent GSMA study discussing how 5G spectrum policy drives economic growth. Recall, that study found “5G will contribute US$150 billion in additional value add to the Canadian economy over the next 20 years”, a figure that seemed to be in-line with an earlier Accenture study that forecasted a GDP impact of $40B by 2026.

Over the past nine months, the response to the pandemic has served as a catalyst for a digital transition, driving policy makers to examine ways to accelerate targets for universal connectivity. It’s worth considering another aspect to our forced transition to a work-from-home economy. In an interview last week in the Times of Israel, Aharon Aharon, the outgoing chief of Israel’s Innovation Authority, expresses some concerns about the potential impact on Israel’s renowned tech ecosystem. “Once employers get used to working with workers remotely, there are no limits on where they could be, he said. On the flip side, Israeli workers may prefer working in Israel for an international company with higher salaries and better conditions than those offered by a fledgling local startup.”

Those comments could be equally applicable to other geographies, and follow a recent survey that found that working from home raises productivity but may be negatively impacting the culture of startups.

As we look ahead to a new year, we need to consider how national policies can create advantages to benefit domestic technology companies, technology workers, and the economy as a whole.

It has to start with ensuring world class digital infrastructure and digital literacy.

What are the next steps?

Earlier this month, I wrote that Rewheel a consultancy based in Finland, had “released another misleading and problematic report” [see: Comparing prime rib with ground meat • November 5, 2020]. It turns out I wasn’t the only one concerned with the quality of the international price comparisons produced by the Finnish company.

Today, a group of 24 leading telecommunications academics, telecom policy experts and economists released a scathing review of Rewheel’s methodology, saying “the Digital Fuel Monitor by Rewheel/research is a prime example of misinformation on the Internet”.

As I have written before, a number of parties around the world have responded to Rewheel’s simplistic analysis in various regulatory fora through the years, warning that the examination of the state of competitiveness in a country is more complex than simply making up some averages and comparing them internationally, as has been Rewheel’s approach. As I wrote a few weeks ago, the International Center for Law and Economics referred to a previous Rewheel study as a “careless mish-mash of data points from which no reliable conclusions can be drawn.”

Today’s multi-author report [pdf] assesses Rewheel’s latest ranking method in detail and details the many ways it falls short.

The authors detail the factual errors and logical inconsistencies in Rewheel’s report, and once again conclude Rewheel’s approach is fundamentally flawed.

The strong consensus among the group of experts is to issue a warning about these unscientific studies, that mislead consumers, politicians, competition authorities, and policy makers. (In 2019, Canada’s Department of Innovation, Science and Economic Development (ISED) paid more than $30,000 to Rewheel.)

Given the many theoretical and practical flaws and errors contained in the Rewheel study, we find it of no value when comparing prices internationally or establishing the level of competition in a country. A warning label informing readers about the lack of intellectual rigor and the misleading and incorrect nature of the Rewheel study’s results is appropriate and recommended.

According to the authors, “The Rewheel story is easy to understand. It is also completely wrong.” Further, “Rewheel’s rankings are of no value in comparing prices and assessing the level of competition in wireless markets.”

“Rewheel’s assumptions are unsupported and create distorted rankings.” Rewheel has developed a following, with sensationalist headlines generated from its ‘freemium’ business model reports, enticing various bodies to invest tens of thousands of dollars in its complete reports.

As with much of the information on the Internet, Rewheel follows the freemium model. That is, it publishes attention grabbing headlines and some colorful charts for free, but anyone seeking to understand more about the derivation of the data must pay Rewheel’s fees for the full content.

Like much misinformation circulating on the internet, it is tough to eradicate it. The authors suggest that perhaps it is time for social media outlets to apply one of their warning labels to those retweeting Rewheel’s flawed reports.

Regardless, it is time for Canada’s policy makers and regulatory authorities to relegate Rewheel’s reports to the level of obscurity they so richly deserve.

It appears the Digital Fuel Monitor has once again been shown to be running on empty.

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The issue of communications industry cross subsidies has come to the fore with the Government’s introduction of Bill C-10, “An Act to amend the Broadcasting Act and to make consequential amendments to other Acts”, legislation that authorizes Canada’s communications regulator, the CRTC, to impose a wide range of regulations and fees on internet content.

Canada has come a long way from its original approach to internet content, as set out in May 1999. At the time, in “Regulation of the Internet in Canada”, I wrote “The CRTC has become one of the world’s first regulators to clearly enunciate a “hands off” policy toward the Internet – allowing market forces to drive development of content and increase levels of accessibility for users.”

A few years ago, I wrote “Regulating the internet: what happened?”, observing “The past 5 years have seen Canada apply an increasingly heavy regulatory hand. A search for “Regulating internet” on my blog turns up a number of posts expressing concern about government intervention.” Citing an earlier post, I noted: “Will Canadians see greener Internet pastures in the USA?”, observing Orwellian euphemisms of “openness” and “choice” to characterize greater government control. Canada’s current approach to internet regulation contrasts diametrically with our neighbours to the south.”

Much of the focus on Bill C-10 has been on the proposal to impose fees on global internet technology companies in order to contribute to Canadian content development.

In some ways, this is reminiscent of a discussion in “The future of communications cross-subsidies” from 6 years ago. The government has long used the communications sector as an alternate tax and wealth redistribution system, with fees from urban phone subscribers subsidizing rural, business subsidizing residential, broadcasting subsidizing content production. In a monopoly era, there was little harm and great political benefit. Social objectives could be attained without impact on the government budget. Politicians could take credit for achieving goals with others footing the bill. Inflated communications bills could be blamed on the industry.

But with competition, especially internet-based competition, an increasing amount of revenue leaks out of the cross-subsidy system. For a given level of subsidy, an ever increasing percentage of revenues was required for those portions that remained in the system, accentuating the cost advantages for industry participants operating outside of the “system”.

In such circumstances, it seems to me there are two ways to level the playing field: try to capture more players inside the cross-subsidy system; or, move responsibility for funding government objectives to the general tax base. In choosing the former, Bill C-10 continues along the path of increasing regulation of the internet.

The United States has followed a different path. As Canada’s neighbours to the south prepare to transition to a new administration, it is again worth examining what FCC Chair Ajit Pai told The 2017 Canadian Telecom Summit:

In short, America’s approach to broadband policy will be practical, not ideological. We’ll embrace what works, and dispense with what doesn’t. That means removing barriers to innovation and investment, instead of creating new ones. That means taking targeted action to address real problems in the marketplace, instead of imposing broad preemptive regulations. And that means respecting principles of economics, physics and law, and acting with humility as we regulate one of the most dynamic marketplaces history has ever known. This vision will unleash the massive investments that the digital world demands.

Should Canada approach internet regulation with a greater sense of humility?

Do such policies sufficiently consider whether they are imposing or relaxing barriers to innovation and investment?

The theme of this year’s Canadian Telecom Summit was developed a year ago, long before anyone had heard about a strange new virus. “Transforming our Digital Lives: Managing Disruption in an Intelligent Connected World” turned out to be more appropriate than we ever could have imagined.

The world has transformed, with the virus induced lockdowns serving as a catalyst for everyone to try to maintain a semblance of normality through digital connectivity. And of course, that meant that we also had to transform the conference into a digital online format, leveraging the intelligence of our connected world.

As the first virtual Canadian Telecom Summit wraps up, let me share a few initial reflections.

Each year since his appointment as Minister of Innovation, Science and Industry, the Honourable Navdeep Bains has delivered an address to the Canadian Telecom Summit. This year’s address can be viewed in the embedded video.

It is always a challenge for conference organizers to confirm the participation of so many leading industry stakeholders. In some ways, the virtual format may have made it a little easier, enabling digital participation for many of the speakers over the three day event. Over the past three days, speakers and delegates participated from around the world, joining the conference from their homes and offices using their broadband connections.

As a telecommunications event taking place in the year of the COVID-19 pandemic, it was somewhat appropriate for The Canadian Telecom Summit to use the same technology upon which so many of us have relied to stay in touch with family, friends, schools and workplaces for the past 8 months. Still, I’m looking forward to the return to face-to-face meetings, with the frank, off-the-record discussions and unscheduled meetings over coffee or cocktails.

Looking at the participants at this year’s event, no one has a better understanding of the importance of universal connectivity; no group of people have done more, invested more, worked harder to introduce solutions to make telecommunications accessible to as many Canadians as possible.

Years before anyone thought kids might be learning from home, Canada’s communications sector developed programs to get connected computers into the homes of low income families with school-aged children. And as the pandemic was declared earlier this year, the industry took action on its own.

In his address to The 2020 Canadian Telecom Summit, CRTC Chair Ian Scott said, “No one asked you to do so. Government certainly didn’t tell you to do so. You did so with the knowledge that what you were doing was the right thing to do.”

He listed some of the actions of the industry participants:

• You kept retail locations open for appointment-only visits for customers who needed in-person support.
• You put a halt to service suspensions and disconnections for customers who paid late or who weren’t able to pay their bills at all.
• You worked with customers to make payment arrangements that made sense for them.
• You waived fees for data overages or removed data caps, and removed late-payment penalties.
• You offered free channel previews and waived fees for educational content that was normally subscription based.
• You donated devices and service plans to schools, students from low-income families, hospital workers and patients, and at-risk populations such as women in shelters.
• Broadcasters created new content for distribution and gave away free airtime to local businesses that were struggling to survive.

“Those actions speak loud at a time when our digital lives have been transformed. Canadians depend on the services you provide to manage their way through this great disruption and to stay connected with their friends and families, their co-workers and their civic institutions.”

In his remarks, Minister Bains referred to these industry actions as well. He closed his address saying, “I want to close by saying that these have not been easy times, but they have shown just what Canadians and our industries are made of. At no time have I been more proud of being the Minister of Industry. Thank you for your partnership.”

Fitting words to close this year’s event.