Search Results for: incentives to invest

I had an interesting discussion recently about unintended consequences. The subject arose when discussing quick fixes to a variety of issues related to social protests in the country I was visiting. People were suggesting that apartments are too expensive, so rents should be reduced across the board. I asked why landlords would want to build new apartments or fix their existing ones if they suddenly lost their income.

Are rental rates uniformly too high, or was there a lack of supply of housing at the lower end of the rental market? Of course, we would all like to see a reduction in anything that represents a monthly bill: rent, utility bills, parking, bus passes. Quick fixes often have unintended consequences.

It got me thinking that Canada has had its share of unintended consequences – some notable incidents in the telecommunications arena. With an especially fragile economy, we need government programs and strategies to avoid the kinds of disincentives that might discourage investment, employment and long term economic growth.

As we get into a new session of parliament on a federal level and enter a season of provincial and territorial elections, let’s hope that our leaders look beyond populist quick fixes in their campaign promises and economic programmes.

Another voice is calling for enhancing demand for a digital Canada. Today’s Globe and Mail has an interview with Google Canada chief Chris O’Neill who observes:

We estimate that there are roughly two million small businesses in this country, and less than half of them have a website. That is a problem [because] consumers are out there actively looking for what businesses offer, and it really is a missed opportunity.

He suggests that Canadians’ lower risk tolerance is part of the problem.

As I have written often on these pages, it is too easy to focus on the supply side – the networks – without enough time being given to looking at conditions that will stimulate demand. Increasing adoption of digital technologies, encouraging businesses to establish a web presence, attacking disincentives for private sector investment.

What else should be part of Canada’s national digital strategy?

It’s election time in Canada. I have a wish for the political parties: tell us clearly your vision to lead Canada in the 21st century digital world.

It seems to me that we need to stop the dithering around developing Digital Economy Strategies and actually put a stake in the ground.

Last week, Network World asked me to comment on what we should be looking for in the upcoming election campaign. I pointed out that we have studied communications issues enough, with the 2006 Telecom Policy Review Panel, the 2008 Competition Policy Review, together with last year’s consultation on foreign direct investment and the digital economy consultation, combined with the consultations and hearing for the recent Anti-Spam bill and the soon-to-die Copyright Bill, and finally the recent parliamentary Industry committee review of wholesale high speed Internet access.

Given all of that analysis over the past few years, it is hard to understand why we couldn’t have clear platform statements from each of the parties setting out their positions on foreign telecommunications investment, telecom and broadcast regulatory reform, copyright reform, incentives for investment in telecommunications facilities and development of digital media.

A comprehensive digital vision would include how we get connectivity to Canada’s lowest income earners, starting with ensuring all school aged children have access to computers with internet at home; how we will develop digital literacy in under-represented segments; and increased measurements, reporting and tracking to objectives.

I will be disappointed if all we hear about are current hot topics. That should be a signal that the candidates and parties lack vision and will be reactive, not proactive in their policy development.

Canadians have been waiting too long for digital policy leadership.

 

As I mentioned yesterday afternoon, it is unlikely that we will see the elimination of usage sensitive pricing for the aggregated wholesale services that many internet services providers use to reach their customers. Usage is an efficient and fair cost allocation system for shared resources, as suggested in the National Post.

However, the currently mandated approach of applying charges on a per-user basis may need to give way to some form of aggregation in order to provide ISPs with sufficient flexibility to offer consumer increased choice among price plans.

A number of times, I have referred to the all-you-can-eat buffet metaphor. The local restaurant tolerates the football team because there are enough other customers that don’t eat quite as much. The challenge is that the current user-based pricing mechanism charges excess fees to the heavy eaters, even if there are lighter users who don’t consume their maximum.

So under the current regime, we could have a situation where an ISP has two customers, one who uses 30 GB in a month and another who uses 5 GB. Under the current plan, the ISP will pay excess usage for the customer who exceeded the 25 GB threshold. Another ISP may have two customers who each use 20 GB, putting a total load of 40 GB on the wholesale access network, but there are no excess usage charges. If UBB is supposed to help manage traffic loads, it is difficult to reconcile this anomaly.

This is where we could see a directive from the government that allows a resolution to the problem, but continues to preserve the economic efficiency of usage based cost allocation. My long time colleague, lawyer and friend, Ed Antecol, who heads up regulatory affairs at Globalive, believes the key to resolving this could be found in the third paragraph of the dissent to Decision 2010-255 by Commissioner Molnar.

I would note that I am not convinced that the Bell companies’ proposal to apply UBB charges based upon end-customer usage is the most effective Internet traffic management practice (ITMP) approach. Nor am I persuaded at this time that an aggregated usage model, if properly structured, would nullify the potential effectiveness of UBB as a means of managing network usage. Certainly, an aggregated usage model would have provided ISPs that subscribe to the Bell companies’ GAS (GAS ISPs) with greater flexibility to manage end-user pricing/service solutions.

Usage based billing across an ISP’s entire base of customers makes sense. The non-facilities based ISPs will be able to offer flexible service plans, including unlimited service, by balancing their customer base with innovative pricing models and services.

Along these lines, an aggregated model will help drive the alternate ISPs to possibly develop innovative solutions to attract people who are not yet internet users, because such users may start with lighter loads to help balance the overall traffic levels. This will contribute to increasing broadband adoption rates, and dovetails nicely with my drive to increase digital connectivity among lower income earners.

An aggregated usage regime enables the smaller ISPs to continue to be a source of competition, driving the entire industry to provide creative products and improved service, while preserving the incentives for continued capital investments by all industry participants. 

It is a solution worth careful examination by the Industry Minister.

Canada needs a million computers for lower income households.

We have computers in 81.7% of our households, heavily skewed by income. High income households are already computer equipped – better than 97% of households in the top income quintile have a computer and virtually all of them are internet connected. But in the lowest income quintile, only half of the households have a computer. I think this points to computer ownership being an affordability issue. 

Canada has about 12.5 million households, so each quintile represents 2.5M homes. We need to start with households with school aged children. If we want to have the world’s most digitally literate economy, we need to make sure that no kids are left behind because their parents couldn’t afford a computer to help them compete.

Of Toronto’s 1.8M households, around 225,000 are without computers. In Montreal, there are about 300,000 households without a computer. Vancouver: 100,000. Many urban centres lag the national average; Yellowknife has among the highest rate of computer ownership.

A million computers will bring the lowest income households to parity. One Laptop Per Child set out to provide the world’s poorest children with a connected laptop computer. Shouldn’t all Canadian children be comparably (if not better) equipped?

How many computers are being discarded from corporations that should find their way out of recyclers and into the hands of school kids? Are there low cost incentives to encourage re-use of business computers and stimulate investment in new machines? Can we develop a voucher system that encourages competition among retailers to win the business of eligible households?

Virtually all households with computers already have an internet connection, but one in five Canadian households lacks a computer. To grow the market for internet services, we need to increase the number of households with computers. That represents an opportunity for more than 2 million new household connections. What is the role of the telecom services industry in increasing computer ownership?

One million computers. What ideas do you have?

Forty years ago, my father participated on the Commission on Emotional and Learning Disorders in Children that issued a report called “One Million Children” providing a blueprint for meeting the needs of one million Canadian children with primary learning disorders. The title of that report inspired the title of this blog post. We need to ensure that all Canadian children have access to the tools to succeed.