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Over the past two days, Rosh Hashana services have given me an opportunity to reflect on a variety of issues and, as might be expected, my mind turned to telecommunications.

Conservative leader Erin O’Toole released a policy statement on telecom on Tuesday, the first day of Rosh Hashana, saying

Canada’s Conservatives will let companies from Europe or the United States come to Canada and compete for your business. That will mean more choice and lower prices. Only Canada’s Conservatives have a plan to make cell phone and internet service more affordable for you.

Due to the holiday, I regret that it has taken a couple days to respond.

As I wrote a couple weeks ago when the platform was first released, this promise is “interesting (and perhaps a little awkward) since foreign ownership in telecom was relaxed back in 2012 under (Conservative) Prime Minister Stephen Harper”.

The Conservative backgrounder [pdf, 245KB] appears to be relying on Section 16(3) of the Telecom Act for its statement, “Currently, foreign ownership of a Canadian telecommunications company is limited to up to 20 per cent of a company’s voting shares and no more than 33.3 per cent of the voting shares of a holding company, and an effective total limit of 46.7 per cent as long as the foreign entity does not have control.”

Apparently, they read that section of the Act without reading S.16(2)(c) and S.16(6) which effectively combine to allow any company other than Rogers, Bell or TELUS to be foreign owned. So it simply isn’t true that “Canada currently bans foreign companies from competing here”, as Conservative leader Erin O’Toole said during the press conference.

The Conservative backgrounder starts off saying “A Conservative government will begin the process of allowing international telecommunications companies to provide services to Canadian customers, provided that the same treatment is reciprocated for Canadian companies in that company’s country.” A reciprocity test does not currently appear in the Telecom Act, so such a restriction would actually serve to limit the number of foreign competitors, not increase the pool.

Companies from Europe and the United States (and, for that matter, from the rest of the world) have been allowed into Canada for nearly a decade.

With new-entrant set-aside rules, these foreign competitors even had the opportunity to pick up spectrum at a substantial discount.

I have to ask, “Where are they?”

If consumer prices are really that much higher than costs, wouldn’t that have created even more of an incentive for others to enter the market?

It is good to see the Conservative platform examining the cost of spectrum, which has been identified as a significant contributor to higher carrier costs. Canadian spectrum costs have been called a hidden tax, contributing an extra 12% to our wireless bills. It appears to be a recognition that spectrum policy needs to be reviewed. It remains unclear how a promise like “A Conservative government will make investments in rural broadband and lowering prices a necessary criteria of winning spectrum auctions” would be significantly different from the current government’s tension balancing price, coverage and quality.

In the welcome letter to CRTC Chair Ian Scott four years ago, the Ministers wrote “All Canadians and Canadian businesses deserve high quality telecommunications services at affordable prices.”

They do. As I have noted many times, there is a difference between “affordable prices” and “rock-bottom prices”. And there are costs associated with expanded coverage and advanced technologies. Mr. O’Toole said at Tuesday’s media event “Canada’s Conservative will always put the interests of Canadian consumers first.”

It is important to recognize that the interests of consumers are multi-dimensional and extend beyond just price.

So, how did we get here?

A number of years ago, in “Digging ditches and digital policy”, I cited a paper from the Institute for Research in Public Policy that said “Like other countries, Canada is once again engaging actively and more openly in industrial policy. In fact, it has a profusion of industrial policies, what it lacks is a strategy.”

No clear strategy. No clear objectives. No scorecard for measuring progress.

What are we trying to accomplish? How do we measure success? As I have said many times [here and here], I would like to see us start with clear objectives: “Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives.”

How do we celebrate success in digital policy, if we aren’t clear about what we are trying to do?

How do we move forward?

After the heat of the election battle has cooled down, we’ll want to watch for a clear strategy, recognizing the balance and inter-relationships between competing objectives for universal access to high quality telecommunications services at affordable prices.

It’s one thing to look at how we got to where we are; it’s something quite different to agree on where we want to go from here.

Only then can we figure out the best way to get there.

Price isn’t the only factor driving many consumer purchasing decisions, and telecom services are no different.

We know that quality and coverage are important factors as well. People are willing to pay more for faster speeds, greater reliability, and a host of other factors [see “Competition brings out the best”]. That isn’t to say price isn’t important. All else being equal, who doesn’t want to save money?

The thing is, all else is rarely equal.

Whether shopping for shoes, groceries, cars, clothes, telecom services or whatever, quite frequently, all else isn’t equal. As consumers, often there are other factors at play.

We might deal with the same car dealer years after our last purchase, or stick with the same brand of car. We find stores that we like – for a variety of reasons – and continue to deal with them, even if the price isn’t always the lowest. Maybe we have found the store employees are friendlier; or, the grocery store’s produce is fresher; or, the meat seems better.

The lowest price isn’t always the deciding factor.

We often speak of the regulatory and policy tension in balancing quality, coverage and price for telecommunications services [see, for example “Value, affordability and investment”].

It has become popular to use the term “affordability” to refer to the service offerings of the wholesale-based service provider community. That is misleading and wrong. Doing so is hijacking the term “affordability”.

As I have discussed before, the households that truly need the greatest assistance with finding affordable telecom services have access to programs such as Connecting Families [newly improved with version 2.0, see “Is there a better approach to affordable telecom service?”], Rogers’ Connected for Success, or TELUS’ Internet for Good.

The marginally lower priced offerings from wholesale-based service providers simply don’t offer such affordable options for those most vulnerable Canadian households. Indeed, it is doubtful the reseller community could compete with these truly affordable services, even if the CRTC’s flawed 2019 wholesale internet rates decision is restored.

As I suggested recently, there may be a better approach to affordable telecom service.

It is disappointing to see a singular focus on price as the sole defining factor in determining the public interest.

The CRTC, and the federal cabinet, recognized the need to “appropriately balance the objectives of the wholesale services framework”, and acknowledged that the 2019 rates would “undermine investment in high-quality networks”.

The CRTC, and Cabinet recognized that quality, coverage and price work together as public interest considerations. Expanding service to unserved or underserved areas needs private sector investment.

These factors impacting consumers, and the tension between them, show the complex nature of the public interest.

Politicians need to consider the multi-dimensional considerations associated with consumer interests. Consumers have demonstrated that purchase decisions are more sophisticated than simply looking at price.

As Canada heads into a snap election, I thought I would take a look at what I would want to see in a party platform. It was just 23 months ago that I wrote “A telecom platform”, in which I observed “many political parties are trying to curry favour among the electorate by bashing telecom service providers. Such positioning may be good politics, but not necessarily good policy.”

The NDP released its “Ready for Better” suite of commitments in advance of the election call. It may be replaced by an actual platform in the coming days. I found “Ready for Better” to be somewhat outdated and frankly disappointing, as though the ideas were recycled from earlier campaigns.

For example, the NDP says it will introduce a Telecom Consumers’ Bill of Rights. Should I suppose this means something different from combining the Wireless Code, the Internet Code, the Television Service Provider Code and combining them under a single complaint-handling agency? Maybe we could call it the Commission for Complaints for Telecom-television Services?

Many of the consumer focused commitments from the NDP have already been addressed in those codes. One of its commitments may sound consumer friendly if you say it fast enough, but on reflection doesn’t really help. For example, the party says it will abolish data caps for broadband internet.

Why?

Why remove consumer choice? I certainly understand the desire to have unlimited data as an option – I have that on my broadband connection. But not everyone necessarily wants that. Whatever the price is for an unlimited service, wouldn’t you expect the cost – and therefore the price – for a capacity constrained service to be lower? Why would you limit such choices?

What about “Expanding cell coverage and delivering reliable, affordable broadband internet to every community in Canada is vital to the economic future of rural Canada and remote communities. But it has been ignored by successive governments for far too long.” This simply isn’t true. Look at the billions of dollars that has been spent in the past two years by the federal government accelerating rural broadband investment under the UBF program and in a variety of provincial partnerships such as with quebec and Ontario. Further, the response from the federal government review of wholesale internet rates was premised on the view that “Canada’s future depends on connectivity”.

I’m disappointed, but unfortunately not surprised, to see such pandering in the NDP commitment document.

The Conservatives released their platform, “Canada’s Recovery Plan” [pdf, 3.9MB], a 164 page glossy magazine that included a half page on telecom policy promises. The Conservatives promise to allow “foreign telecommunications companies to provide services to Canadian customers”, which is interesting (and perhaps a little awkward) since foreign ownership in telecom was relaxed back in 2012 under (Conservative) Prime Minister Stephen Harper. The only restrictions are that foreign companies are currently prohibited from buying Bell, Rogers or TELUS.

The Conservatives also promise to accelerate broadband investment to connect all of Canada to high speed internet by 2025. Current government programs plan to have 98% by 2026 and cover the remaining by 2030. We don’t see details on how the Conservatives plan to crank up the dial, but they do say they will “Promote investment in communications facilities by local and regional communities.” I have written extensively on the poor track record of municipal broadband and most recently, we have seen O-Net, once the poster child for municipal advocates, put into receivership.

Community networks are hard, and as Conservatives know, governments have a really lousy track record running businesses. Where a business case is lacking for private sector investment, the far better model is to partner with the private sector for cost sharing. That reduces the burden on taxpayers, and leverages private sector funding and expertise.

I wish there could be a political party that possesses, and is willing to demonstrate, a deeper understanding of the economics of broadband expansion in Canada; a party that understands the difference between EBITDA margin and profit, and understands the relationship between capital intensity and EBITDA.

Am I asking too much?

Over the past parliamentary session, there has been much disappointment for followers of telecom issues at the Industry Committee. As I described in “A more evidenced based approach is warranted”, policy statements on telecom were released by each of the Conservative and NDP caucuses in advance of hearing from witnesses. So much for evidence-based policy making.

We should demand better from our elected representatives.

Just 23 months ago, I wrote “It is easy to call for measures that lower prices. It is more responsible to set out a policy platform that understands the balance between competition, affordability, consumer interests, investment and innovation.”

As we move into this pandemic election, I plan to look at how the various party platforms aim to ensure that all Canadians, those in urban and rural areas, will have access to affordable, high quality, innovative services. How will they balance the tensions between the various interests?

Seriously, am I asking too much?

Fibre optic connections aren’t always the best solution for broadband.

About a dozen years ago, I wrote “High fibre not for everyone”. In that piece, I observed that there are some who believe that fibre is a mandatory requirement for universal broadband, rather than simply being one of the possible solutions to deliver the requirements of connectivity. In doing so, they restrict the degrees of freedom for solutions that could be innovative, more cost effective, and delivered sooner.

In the past week, we have seen significant announcements for non-fibre based connectivity. It is commendable for government agencies to recognize that fibre to the home is not the optimal solution in every instance.

The Government of Ontario announced a significant partnership with Telesat Lightspeed to provide capacity at substantially reduced rates to Canadian Internet service providers (including Indigenous owned and operated ISPs), as well as mobile network operators to expand high-speed Internet and LTE/5G networks to Ontario’s unserved and underserved communities. “Telesat Lightspeed is the only LEO network capable of delivering multiple Gbps of broadband capacity into a community, giving telecom operators the ability to offer a wide range of affordable, high-speed broadband plans and unlimited data to consumers and businesses as well as next-generation 5G wireless services.”

The CRTC’s Broadband Fund released $20.5M to TELUS, Bell, Rogers and ATG Arrow, to introduce or improve Internet access services and mobile wireless services for 46 communities in five provinces. A number of these projects will supplement fibre to the home with fixed wireless and mobile wireless solutions.

A year and a half ago, in “Minding the gap” I wrote about mobile and fixed wireless as being an important part of the solution space for universal broadband connectivity. I commented at the time about the importance of spectrum policy to ensure that operators can make such technologies viable, from an economic perspective as well as in time to be a meaningful way to offer services to rural and remote homes and businesses, including farms.

To those who maintain a certain orthodoxy about fibre as a “requirement” for broadband, recall that in its 2016 broadband policy, the CRTC itself said “In some underserved areas, achieving the objective will likely need to be accomplished in incremental steps due to many factors, such as geography, the cost of transport capacity, the distance to points of presence, and the technology used.”

Nearly a year and a half into the pandemic, the urgency to advance broadband connectivity has become a priority for every level of government. While some may criticize an incremental approach to funding broadband projects, I am reminded of writing a couple years ago that it takes a special kind of arrogance to tell someone without broadband that a significant improvement in speed just isn’t good enough.

“Isn’t some broadband better than nothing?”

Immediacy needs to take precedence over perfection in delivering broadband connectivity.

I have frequently written about the regulatory policy tension in balancing quality, coverage and price for telecommunications services. These were key attributes at the foundation of the Canadian government’s policy statements over the past 5 or so years.

There has been an explicit recognition in Canadian policy that the public interest is multi-dimensional, seeking lower prices, while continuing to provide incentives for investment in new technologies and expanded coverage.

A recent blog post by CWTA uses a similar trilogy of terms: value; affordability; and, investment. “Canada’s wireless industry delivering greater value, affordability and investment” criticizes the level of attention “given to one-dimensional and misleading price comparison studies that paint an inaccurate picture of telecom prices and affordability in Canada” and concludes with:

Canada’s economic well-being, safety and quality of life depend on high-quality digital infrastructure. Making world-class telecommunications services available to all Canadians at affordable prices remains the focus of our industry.

No one is saying that Canada has the lowest prices in the world, but contrary to what some would have us believe, Canadian telecom prices are not the most expensive in the world and Canada is not an outlier when it comes to prices. Comparing prices to other countries without factoring in differences in average income levels, quality of service, and cost structures produces misleading results. And as I have written recently, price and affordability are not the same.

As someone who pays bills each month, I too would like lower prices, just as I do for housing, gas, water, electricity, milk, chicken, eggs and everything else. But I also want fast mobile broadband when I am in the suburbs and rural parts of the country. That takes a balance of the various factors that make up the public interest, not just looking at price.

In May, I wrote about an Opensignal report indicating “that Canada’s mobile customers put a value on quality, and will migrate between service providers based on their mobile network experience.”

I had a multi-part Twitter thread on that theme:

Prices are declining, consumers get more data included in plans and at far faster speeds. Aided by regulatory certainty, investments are being accelerated by carriers, expanding the reach and coverage of wireline and wireless networks, both fixed and mobile. Advanced technologies, such as 5G and fibre to the home are not just for Canadians in urban centres, but also in rural and remote regions. More Canadians are signing up for mobile and fixed services every month, evidence of people are finding plans that suit their budgets.

As I wrote last week, we need to do more work to understand and develop solutions for the factors that are inhibiting adoption by those Canadians who have access but have not yet subscribed. That is a different challenge from the industry focus on delivering greater value, affordability and investment.