Search Results for: incentives

Facebook CEO Mark Zuckerberg recently wrote in the Wall Street Journal that connecting everyone on the planet to the web can create opportunity and reduce poverty. It sets out a noble vision and it is an article worth reading.

Sometimes, I am left with a feeling of concern for Canada’s ability to lead in the digital economy.

It has nothing to do with our abilities to be creative, innovative, entrepreneurial, faster-to-market or any other characteristic.

It isn’t even a matter of government incentives. Indeed, if anything, my concern is that our government may sometimes be too eager to intrude.

Digital Canada 150 – Canada’s national digital strategy – is the product of three years of examination of thousands of pages of feedback following an extensive consultation process. The consultation sought input on 26 issues caught under 6 broad headings. Of the 26 pages in the pdf version of Digital Canada 150, 5 pages are the cover, printer notes, table of contents and letters from the Prime Minister and Industry Minister.

Europe released a digital scorecard looking at where it stands on targets in its digital agenda. What does Canada’s scorecard look like?

In the past week or so, the government announced it was moving forward on its Connecting Canadians program to spend nearly a third of a billion dollars to try to stimulate investment by ISPs to enable uninspiring broadband speeds to be available to rural and remote communities:

Over 99 percent of Canadian households currently have access to basic Internet with speeds of 1.5 Mbps, but newer online technologies typically require faster speeds and higher data transfer rates. Through Connecting Canadians, the government will boost speeds to 5 Mbps for up to 98 percent of Canadians.

Earlier today, Xplornet announced that it will beat those targets, offering 5 times the speed to all Canadian households:

CRTC and Industry Canada have forged a vision and an action plan to ensure all Canadians have equal access to high speed broadband. Xplornet has embraced this vision and is executing a plan to provide customers outside big cities with the most attractive Internet experience that technology can provide. Xplornet has started rolling out a new Long Term Evolution (LTE) fixed-wireless network this year and will activate two state of the art next generation satellites in 2016 with the aim of making 25 Mbps broadband service available at affordable prices to 100% of Canadian homes and businesses outside of the big urban cities.

Over the past year, I have written a number of pieces (such as “Measuring success” and “Inconsistent messages; predictable turmoil” and “Building a digital economy dashboard“) that call for the government to provide clear, measurable objectives for our digital policy agenda.

Two of the questions in the Digital Economy Strategy consultation asked by the government itself were directly related to this:

Improving Canada’s Digital Advantage

• Should we set targets for our made-in-Canada digital strategy? And if so, what should those targets be?
• What should the timelines be to reach these targets?

I have said it a number of times. “Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives.”

It is encouraging to see the Connecting Canadians program begin with a data gathering process. To get where you want to go, it helps to know where you are starting from.

Last week, the CRTC recognized the wide disparity in internet adoption rates based on income among Canadians:

The use of the Internet by individuals in households in the lowest income quartile continues to lag, at 62%, compared with 95% of individuals living in households in the highest income quartile.

It has been too easy for the government to focus on programs to stimulate the supply of internet. We need to examine programs that look at demand – increasing computer ownership and broadband adoption among low income households, especially in homes with school aged children.

Canada’s digital future depends on such inclusiveness and opportunity for all.

One of the most interesting sessions at The 2014 Canadian Telecom Summit was a panel featuring 5 of North America’s top telecommunications economists discussing the state of competition in the industry.

A video replay of the session is available from CPAC on demand.

A month before the panel appeared at The Canadian Telecom Summit, Canada’s Competition Bureau filed comments in the CRTC’s proceeding looking at wholesale mobile services (Telecom Notice of Consultation 2014-76). These comments were press released, highlighting the conclusion:

The Bureau has submitted to the CRTC that Canada’s largest wireless companies have retail market power, which provides them with the ability to profitably maintain prices above competitive levels for a significant period of time. These companies compete in both wholesale and retail markets for mobile wireless services; furthermore, they may benefit from charging high prices to rivals for the wholesale mobile services their rivals need to serve their customers. High wholesale costs may force rivals to increase their retail prices, resulting in some of their customers either leaving the market or switching to the large mobile wireless companies.

As a result, the higher rates charged by mobile wireless companies for wholesale mobile wireless services may hurt competition in retail markets. The Bureau estimates that increased retail competition from an additional nationwide mobile wireless carrier could result in gains of approximately $1 billion per year to the Canadian economy in the form of better product choices, price reductions and other benefits for consumers.

The Bureau is therefore recommending that the CRTC adopt measures to address the incentives Canada’s largest mobile wireless companies may have to raise their competitors’ wholesale prices as these increases may be passed on to consumers.

A couple weeks after The Canadian Telecom Summit, the Competition Bureau filed less publicized comments in the second round of the CRTC’s Review of wholesale services proceeding (Telecom Notice of Consultation 2013-551). On June 27, the Bureau’s filing in the CRTC’s Let’s Talk TV proceeding merited a press release, but no publicity was associated with the Bureau’s comments in the wholesale services proceeding.

The wholesale services comments may be newsworthy.

In reaching its conclusion that mandated access to unbundled local loops should be withdrawn, the Bureau said:

The vast majority of Canadian residences, as well as many businesses, are now served by two facilities-based competitors, and competition between ILECs and cable companies is generally vigorous.

Two competitors are sufficient for internet services, but 3 are considered insufficient for wireless services.

Why?

David Paddon of The Canadian Press has a story on the wires providing a preview of one of the concurrent panels taking place Monday (June 16) at The 2014 Canadian Telecom Summit.

The Winnipeg Free Press version of the story is titled “Canada’s wireless policies has left industry skeptical: summit organizer“. It features our Competition in Telecom panel, “a panel of academics and other economists who will debate whether governments can actually create sustainable competition through their regulatory policies.”

As I am quoted, “On one hand, you might have lower prices. On the other hand, you may have reduced incentives to invest in new technology.”

We are expecting a lot of media coverage this year from the global business press, industry newsletters and websites. BNN-TV will be on site and CPAC is recording a few of the keynote addresses and panel discussions for broadcasting later this summer.

Paul Bagnell of BNN had a preview of highlights he is looking forward to hearing at the event. You can read his blog post and watch his clip on the BNN website. Paul is planning to interview a number of speakers throughout the day.

The Financial Post has an article this morning that also includes a preview of The Canadian Telecom Summit.

If you are interested in telecommunications, broadcasting and information technology, then you should be at The Canadian Telecom Summit. Check out the full program.

I look forward to meeting you there!

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.