Search Results for: incentives to invest

I am going to use this post to provide references and links to stories in respect of the announced changes that are coming for Canada’s wireless sector.

• Government Press Release and Backgrounder
• Globe and Mail article by Eric Atkins
• National Post article by Christine Dobby
• Global News article by Jamie Sturgeon
• Yahoo Dashboard article by Carmi Levy
• Canadian Press article by LuAnn LaSalle
• Mobile Syrup article by Daniel Bader
• Business in Vancouver article by Nelson Bennett
• BNN-TV story and interview of Anthony Lacavera by Howard Green

It is interesting that the government waited until after the bids were submitted for Mobilicity’s assets. Would the number of bidders have changed had there been knowledge of the new framework? Indeed, are there bidders for those assets who had advance notice of such changes?

What do these changes do to the incentives for investment?

We have frequently written about the continual flux in the fundamental regulatory framework for the sector – a Calvinball approach to the market. What is the impact on the investment climate for digital infrastructure? Will the proposed legislative changes, with the government opening the Telecom Act and RadioCommunications Act, be the final word?

Doubtfully.

At what point do we look holistically at the communications sector – including both broadcast and telecom – and bring all of the legislation into the 21st century. That would mean looking at appropriate changes to the Broadcast Act, or rolling all of them together into an integrated Communications Act. As I suggested in August, perhaps it is time for a fresh look at a Telecom Policy Review.

That sounds like a discussion for The 2014 Canadian Telecom Summit, taking place June 16-18 in Toronto. I would be remiss if I didn’t invite you to register early!

The Usage Based Billing debacle just won’t go away.

When the CRTC set new wholesale internet access rates nearly two years ago, problems with it led to a successful application by CNOC to “review and vary” that decision (I had written up the problem in a blog post in January 2012); the resolution of the CNOC review and vary triggered a challenge by TELUS that led to a decision by the CRTC to deny the TELUS application but the Commission varied, “on its own motion, the rate for this service.”

Are you following?

Our tale actually goes back to December 2008, when the CRTC approved an application by Cybersurf to get wholesale access to the same speeds of services offered by incumbents.

The federal cabinet expressed concern about the potential impact on incentives for incumbent investment, and at the deadline (one year less a day), Order-in-Council 2009-2007 sent the speed matching decision back to the CRTC for reconsideration.

That led to an August 2010 determination on the “Wholesale high-speed access services proceeding“. In the meantime, in May 2010, the CRTC had approved a usage based billing wholesale access service.

The public outcry that arose from these 2010 decisions, as well as a January 2011 rate setting decision, led the CRTC to launch a proceeding to review them on “its own initiative” in February 2011. Recall that the CRTC chose to review those decisions before cabinet had a chance to force such a review.

That review begat “Billing practices for wholesale residential high-speed access services“, the determination released two years ago, on November 15, 2011.

That triggered the CNOC challenge which led to a decision earlier this year, which in turn generated the TELUS appeal that led to today’s acknowledgement by the CRTC of at least 3 calculation errors.

Five years, multiple challenges to the CRTC and cabinet and at this late stage, the CRTC finds a typo in the decision and three calculation errors that partially offset each other but still result in a 7% change to the TELUS rates. It is unclear as to whether similar errors were made on rates for other carriers.

The wholesale internet file is not one of Canada’s prouder regulatory moments.

On July 15, James Moore was named Industry Minister, charged with fostering “a growing, competitive and knowledge-based Canadian economy.”

He is 65 days into the new job, two-thirds of the way into his first 100 days. How is it working out so far?

Three and a half years ago, Minister Moore’s predecessor’s predecessor launched a consultation to develop a strategy to guide the development of a digital economy strategy. Together with then Industry Minister Tony Clement, and Minister of Human Resources and Skills Development Diane Finley, the current Industry Minister was part of the original announcement in his role as Minister of Canadian Heritage and Official Languages. He said at that time:

Our government is committed to ensuring that creators, inventors and entrepreneurs have the incentives to innovate, the confidence to take risks and the tools to succeed. We recognize the important role the digital media and content sector plays in the digital economy, and we intend to develop a long-term plan that will stand the test of time.

Three departments launched the digital economy consultation; with our third Industry Minister, we are still waiting for the outcome of that consultation. The consultation was to explore 5 themes:

• Capacity to Innovate Using Digital Technologies;
• Building a World-Class Digital Infrastructure;
• Growing the Information and Communications Technology Industry;
• Digital Media: Creating Canada’s Digital Content Advantage; and
• Building Digital Skills for Tomorrow.

Where is the “long term plan that will stand the test of time”?

In his first two months, it is evident to all that there is a new leadership in place. How will this translate into advancing the department’s mission, “to foster a growing, competitive and knowledge-based Canadian economy”?

There was an interesting address earlier today by Jason Furman, Chair of the White House Council of Economic Advisors [pdf]. His observations on the telecommunications sector were informed by a depth of economic analysis that looked beyond international consumer price comparisons and recognized the flow of capital investment by the US industry. I commend reading the speech in its entirety.

Among the highlights was reading about concerns first documented in a White House report released in June, “Four Years of Broadband Growth” [pdf]: uneven adoption of broadband by education and income; uneven adoption in rural areas; and, affordability challenges.

Reading the depth of research that clearly informed Furman’s speech, reviewing the White House report with its analysis, it became clear that there is a policy gap in Canada caused by our missing digital economy strategy.

In the next 5 weeks, by October 23 – the 100 day milestone in office – will Canada finally see a comprehensive national digital strategy?

Canada’s wireless policy has been generating a lot of chatter in the past few weeks. Some articles suggest that we are seeing a failure in achieving the policy objectives of the government. I was on BNN-TV last week providing some of my viewpoints.

If we are failing at achieving the objectives, the first question that needs to be asked, of course, is “What exactly was the objective?” In the absence of an overall national digital strategy, it has sometimes been difficult to determine what the government would like to achieve.

In a March 7 speech, the Industry Minister said that he wants to see “at least four players in each market.” When the statement was made in early March, it was one of the first times we have heard a clear objective being stated. We want at least four players in every market.

Normally, if there is a clear objective, one might expect that people would start to align their actions in pursuit of that objective. Perhaps start by looking at where we see four healthy players competing and try to encourage the replication and expansion of those conditions.

Can the Canadian market support four facilities based mobile wireless carriers? Quite likely. In fact, seven of the 10 provinces have strong, well financed wireless players other than Rogers, TELUS and Bell. Indeed, in Manitoba and Saskatchewan, the so-called Big 3 share only a third of the market as they battle MTS and SaskTel.

Will we see a fourth national carrier? Not a chance. At least not with the national policy framework we have in place.

I would go further and state that in choosing its spectrum and auction policy, whether by intent or unintended consequence, Industry Canada effectively blocked a fourth national wireless provider.

How else can one explain Industry Canada’s designation of MTS and SaskTel as wireless new entrants? These are incumbent telephone companies that have held wireless spectrum since the beginning of time. With two-thirds of the market in their operating territory, each has the highest regional market share of any phone company in Canada. Yet both were eligible to bid – and win – in their home territory for “new entrants” spectrum. As I warned five years ago, Industry Canada effectively anointed these companies to be the spoilers for anyone with national aspirations.

Despite this, Industry Canada offered an extra five years of in-territory roaming incentives, reserved solely for new entrants that acquired national spectrum or combined with others to build a national consortium.

At the time, if the government had truly wanted a national providers, it might have put some or all of the new entrant block of spectrum up for sale as a single 40 MHz national block. It could have offered a 20 Mhz parcel. It could have put in place 10 year, or perpetual restrictions on the sale of the spectrum to Rogers, TELUS and Bell. It did neither. So why are we feigning surprise at the outcome, five years later, of seeing investors looking at every option to recover their capital assets?

The government was not considering strong global brands entering the Canadian market. Why else would the government have waited until after the AWS auction to reform foreign ownership legislation?

Regardless of messages being heard from Ottawa, the actual policies have encouraged the deployment of billions of dollars of capital in pursuit of regional players. There shouldn’t be surprises emerging from recent M&A activity. The government put in place a 5-year moratorium on the transfer of new-entrant spectrum to incumbents, and now that we are coming up on the five year mark, why is anyone surprised that the dealing has begun? Five years must have seemed like such a long time, five years ago.

The market is behaving the way one might expect, given the signals from Ottawa. When the government signaled uncertainty over spectrum license transfers, the uncertainty likely contributed to the urgency of Mobilicity’s decision.

It should have been a predictable outcome.

The lessons for Ottawa: Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives.

I suspect this may come up more than once during the discussions at The 2013 Canadian Telecom Summit, taking place June 3-5, in Toronto. Have you registered yet?

The Commissioner for Complaints for Telecommunications Services (“CCTS“) released its 2011-2012 Annual Report this morning.

In January 2011, the CRTC expanded the mandate of the CCTS, requiring that all Canadian telecommunications service providers must participate in the CCTS process, no later than 5 days after the CCTS notifies a service provider that a complaint has been received from one of their customers.

In the past year, 38 new service providers have signed up; there are now 178 service providers and brands that are participating in the CCTS dispute resolution process. In the past year, more than 10,000 complaints were accepted by CCTS, an increase of 35% over the 8,000 accepted the previous year.

This growth is likely due to increased awareness of the CCTS as an arbitrator of last resort.

From an operational perspective, the CCTS reports that 90% of the complaints (9,626 of 10, 838) were resolved by the investigation stage, with a further thousand complaints closed by that stage, meaning that 98.5% of the complaints were concluded prior to a recommendation being required.

Just over 70% of the formal recommendations made were accepted by both the service provider and the customer.

The complaints process is described on the CCTS website.

Billing and contract issues seem to head the list of complaints. Nearly one in ten complaints dealt with early termination fees.

Fewer that 7% of the complaints dealt with service quality.

About 60% of complaints were wireless services related.

The report observed:

For example, many billing complaints arose simply because incorrect information about prices was provided to the customer, in particular when obtaining service over the phone. Others were attributable to invoices not being clear. Many billing complaints were the result of the sheer complexity of the monthly plan, in particular for wireless services and the various features, inclusions and exclusions associated with the plans. Other complaints seemed to be the result of a lack of training of customer service representatives (CSRs) about the products and services offered by the provider. In some cases, we wonder whether complaints arise because CSRs are required to meet certain sales targets or have sales incentives that increase their compensation. And of course, some billing errors occurred simply as a result of human or data entry errors. In our experience, service providers could help reduce the number of complaints about billing issues, and avoid much of the frustration experienced by their customers, by proactively addressing these matters.

Given the large number of complaints about billing issues, and the fact that many of these complaints could have been avoided, we strongly urge service providers to review their billing practices and take steps to ensure that they produce comprehensible and accurate invoices. We also recommend that appropriate training and supervision be provided to CSRs to guarantee that accurate information about products and services is provided to customers at all times, and to confirm that the customer understands and consents before service is provided.

The CCTS asks some questions that should cause industry executives to shake their heads.

• If the solutions in so many cases were so “obvious” and the resolutions so “simple”, why were these customers required to bring their complaints to CCTS?
• Why were the service providers’ internal complaint-handling processes unable to resolve these complaints directly with the customer at the outset?
• Many service providers have multiple levels in their internal complaint-handling processes. How did these complaints get through so many levels?
• How much extra time and effort was the customer forced to go through because of the service provider’s inability or unwillingness to correct obvious errors?

Six years ago, I said that executives at companies should deal with the normal customer service processes for their perquisite devices and services.

Given the choice, as an alternative to calling a carrier for customer support, I would rather undergo root canal treatment performed by a carpenter with a rusty icepick. Insert the name of whatever carrier you want. It dosn’t seem to matter which one of my service providers I happen to call.

I’ll say it again: If carriers aren’t having their employees and executives treated like a normal customer, you should change the way you handle internal accounts immediately. You need to see what you are doing to your customers. Monthly bills that are tough to read; interactive voice response units that can’t be navigated.

Some perspective is warranted. There are roughly 28M mobile lines in Canada, 10M internet access lines and 12M residential phone lines. That means 50M access services have generated these 10,000 complaints – a rate of about one per year out of 5,000 services. Not too bad, unless you are one of the victims on the receiving end.

Read the case studies in the CCTS Annual Report. Some of them will make you shake your head in wonder.

Check out the statistics at the back of the report to see which carriers have improved and which have the most work to do. Will customer care executives be watching their numbers?