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Prime Minister Trudeau published the mandate letters for each of the members of the new Cabinet.

Of particular interest to the telecommunications community is the mandate letter for Navdeep Bains, Canada’s Minister of Innovation, Science and Industry.

The letter includes a telecom specific section:

• Use all available instruments, including the advancement of the 2019 Telecom Policy Directive, to reduce the average cost of cellular phone bills in Canada by 25 per cent. You will work with telecom companies and expand mobile virtual network operators (MVNO) in the market. If within two years this price target is not achieved, you can expand MVNO qualifying rules and the Canadian Radio-television and Telecommunications Commission mandate on affordable pricing.
• Award spectrum access based on commitments towards consumer choice, affordability and broad access. You will also reserve space for new entrants.

Some concerns came to mind on my first read of the letter, as I wrote on my Twitter stream. While the preamble in the letter says “We are committed to evidence-based decision-making…”, one might have difficulty squaring this promise with what appears to be a pre-determination of issues being explored by the CRTC in Public Notice 2019-57: Review of Mobile Services.

Some additional points set out in Minister Bains’ mandate require coordination with other members of Cabinet:

• With the support of the Minister of Middle Class Prosperity and Associate Minister of Finance and the Minister of Seniors, create a new Canadian Consumer Advocate to ensure a single point of contact for people who need help with federally regulated banking, telecom or transportation-related complaints. Ensure that complaints are reviewed and, if founded, that appropriate remedies and penalties can be imposed.
• Work with the Minister of Infrastructure and Communities, the Minister for Women and Gender Equality and Rural Economic Development and the Minister of Canadian Heritage to deliver high-speed internet to 100 per cent of Canadian homes and businesses by 2030.
• Co-lead work with the Minister of Canadian Heritage to modernize the Broadcasting Act and the Telecommunications Act, examining how best to support Canadian content in English and French and ensure quality affordable internet, mobile and media access.
• Work with the Minister of Canadian Heritage to introduce legislation by the end of 2020 that will take appropriate measures to ensure that all content providers, including internet giants, offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content in both Official Languages, promote this content and make it easily accessible on their platforms. The legislation should also consider additional cultural and linguistic communities.

…

• Work with the Minister of Justice and Attorney General of Canada and the Minister of Canadian Heritage to advance Canada’s Digital Charter and enhanced powers for the Privacy Commissioner, in order to establish a new set of online rights, including: data portability; the ability to withdraw, remove and erase basic personal data from a platform; the knowledge of how personal data is being used, including with a national advertising registry and the ability to withdraw consent for the sharing or sale of data; the ability to review and challenge the amount of personal data that a company or government has collected; proactive data security requirements; the ability to be informed when personal data is breached with appropriate compensation; and the ability to be free from online discrimination including bias and harassment.
• With the support of the Minister of Canadian Heritage, create new regulations for large digital companies to better protect people’s personal data and encourage greater competition in the digital marketplace. A newly created Data Commissioner will oversee those regulations.

Like last time, the mandate letter talks about broadband coverage, without addressing factors impacting adoption.

Over the coming months, we’ll be certain to be coming back to these issues.

Statistics Canada has released its latest edition of the “Canadian Internet Use Survey”, providing data from 2018. I wrote about its last report, released in 2013 with data from 2012.

Some interesting data emerged by examining Tables 22-10-0081-01 and 22-10-0113-01 together.

I have asked Statistics Canada to clarify some of the anomalies that appear.

It is worthwhile noting that 80.9% of households in the lowest income quartile now have a home internet connection. At the time of the last Internet Use Survey six years ago, there was an internet connection in only 58% of those homes. This 40% increase is a testament, in part, to the focus of an industry led initiative, Connecting Families, to make affordable connected computers available to low income households. It also indicates that more households are coming online, even those in the lowest income quartile.

What are the factors that are standing in the way of universal adoption or internet services?

As recently as last week, I have written about the need to do more research to help us build a better understanding of digital economy issues:

I have often written about the need to understand all of the factors that have inhibited universal adoption of broadband and mobile services, such as in “Understanding the digital divide”. In “Do we know what we don’t know?”, I asked, “Is Canada doing enough research to explore the nature of its digital divide?”

The price of connectivity is just one of the elements. How can we find solutions for a problem that we may not fully understand?

It should be embarrassing to Canada’s policy makers that it has been 6 years since the last Internet Use Survey. How is Canada supposed to be engaged in evidence-based policy making when there is so little information being gathered about who is online, how Canadians are using the internet and perhaps most importantly, who isn’t online yet and why not?

We need more data. We need to do better.

Too many are confusing ‘affordability’ with a desire to pay lower prices. Don’t we all want lower prices for everything we buy?

In reality, millions of Canadians are finding mobile data plans that they can afford, as evidenced by Rogers third quarter 2019 financial results. More than a million subscribers signed up for its unlimited data plans, “adopting these ‘no more overage’ plans at three times the pace anticipated”. More than 100,000 net new customers, despite an increase in churn.

Rogers indicated that “Approximately 60% of our existing customers that have migrated to these plans have upgraded to higher price plans.” It is an interesting data point. Clearly, those customers have found that the new plans are delivering much better value, with far more data for just a little more money.

Rogers’ financial results provide evidence that most Canadians are finding mobile plans to be affordable. While we all want to pay less, at the same time, we need to ensure our policies preserve incentives for investment in network expansion for capacity and coverage, maintaining leadership in the delivery of advanced speeds and services.

We should be exploring more creative approaches that deal with the small minority of Canadians who cannot afford the mobile devices and service plans they need to participate in the economy. I have often written about the need to understand all of the factors that have inhibited universal adoption of broadband and mobile services, such as in “Understanding the digital divide”. In “Do we know what we don’t know?”, I asked, “Is Canada doing enough research to explore the nature of its digital divide?”

The price of connectivity is just one of the elements. How can we find solutions for a problem that we may not fully understand?

I have also written frequently about the challenges associated with producing international price comparisons for telecommunications services. Each year, Innovation, Science and Economic Development produces a mobile price comparison study [2018 study | pdf | 1.35MB], examining trends in prices in Canada and how those prices compare to selected trading partners. The annual study looks at 6 baskets of services for mobile:

• Level 1: 150 voice minutes;
• Level 2: 450 voice minutes and 300 SMS (texts);
• Level 3: 1,200 voice minutes, 300 texts and 1 GB of data usage per month;
• Level 4: unlimited nationwide talk and text along with 2 GB of data;
• Level 5: unlimited nationwide talk and text along with 5 GB of data; and
• Level 6: Shared plan with 3 phones lines and unlimited nationwide talk and text along with 10 to 49 GB of data.

A problem arises when those baskets are no longer representative of the types of services that people are buying. For example, the average price for a level 4 plan from 2018’s study was $75.44 which included just 2GB of data. New ‘unlimited’ plans are available from most carriers for less than that price, with at least 5 times the full speed data. However, these new popular plans with no overage charges simply don’t fit into any of the survey’s arbitrary baskets.

As Statistics Canada writes about its updates to the Consumer Price Index, “If the fixed-quantity basket of goods and services was kept unchanged for an extensive period of time, it would gradually lose accuracy and relevance as a reflection of consumer spending.” The report continues, “New products and services are introduced to the market and existing ones may be modified or become obsolete. As a result, the basket needs to be revised periodically to reflect changes in consumers’ spending patterns.”

Over time, we have seen significant changes to consumers’ spending patterns for mobile equipment and services. Regulatory changes have led to a restructuring of device subsidies for many plans; new unlimited plans have caught on faster than anticipated. How will these get captured meaningfully in the annual study?

Consumers were promised lower telecommunications prices as part of the political campaign. Will the government’s annual price comparison study accurately “reflect changes in consumers’ spending patterns” and show that mobile plan prices are already much lower than last year?

As we move closer to the official start of election season, 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.

We should look for greater balance. In the 2019 Policy Direction to the CRTC, there was an important balance of interests, between “competition, affordability, consumer interests and innovation.”

1. the Commission should consider how its decisions can promote competition, affordability, consumer interests and innovation, in particular the extent to which they
   1. encourage all forms of competition and investment,
   2. foster affordability and lower prices, particularly when telecommunications service providers exercise market power,
   3. ensure that affordable access to high quality telecommunications services is available in all regions of Canada including rural areas,
   4. enhance and protect the rights of consumers in their relationships with telecommunications service providers, including rights related to accessibility,
   5. reduce barriers to entry and barriers to competition for new, regional or smaller telecommunications service providers,
   6. enable innovation in telecommunications services, including new technologies and differentiated service offerings, and
   7. stimulate investment in research and development and in other intangible assets that support the offer and provision of telecommunications services; and
2. the Commission, in its decisions, should demonstrate its compliance with this Order and should specify how those decisions can, as applicable, promote competition, affordability, consumer interests and innovation.

It is particularly telling to examine how the text of the Policy Direction changed from its preliminary version to the final Order. These changes, which added the word “investment” in section (a)(i) and strengthened the concept of investment in high quality services “in all regions of Canada including rural areas”, are found in my June blog post.

As I wrote a few months ago, “most government programs continue to focus on increasing ‘supply’, extending access to broadband. We need to ensure there are strategies to drive ‘demand’: increasing adoption rates among groups that could subscribe, but have not. That is a problem across all geographies, and is perhaps more pronounced in urban markets.”

The demand side of the equation is often overlooked when governments deal with universal broadband adoption. That isn’t just a matter of price, but understanding all the barriers.

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.

Ask candidates how their platforms meaningfully ensure that all Canadians, those in urban and rural areas, will have access to high quality, innovative services.

The Association of Community Organizations for Reform Now, ACORN Canada, released a study [“Barriers to Digital Equality in Canada“] that aims to “shine a light on the urgent need to tackle [the] barriers to ensure equal access to digital opportunities.”

This is a theme that I have discussed frequently on these pages for more than a decade. Government programs have distributed billions of dollars to expand broadband networks based on geographic considerations, without regard to affordability. Typically, we have seen government funding focus on expanding supply rather than addressing demand through efforts aimed at affordability or digital literacy. See these posts for example:

• May 19, 2015: Affordable broadband isn’t just a rural issue;
• July 15, 2015: Canada still silent on low income broadband;
• August 5, 2015: Why we need to get low-income households online;
• January 21, 2016: Should broadband be part of “basic service”;
• February 2, 2016: Looking at who, not where;
• March 17, 2016: One home’s subsidy is another home’s cost; and,
• March 31, 2016: Unrepresentative survey.

Unfortunately, the ACORN study fell short of its objective. In its Introduction, the study cites a government statistic that says “Almost half of households with an annual income of $30,000 or less do not have high-speed internet access.” But ACORN conducted its own survey of 472 respondents and found 80% of those with household incomes of less than $30,000 had an internet connection. Either the government statistic is out of date or ACORN’s survey is not representative, or both. I suspect it is both. Statistics Canada data shows that 89% of Canadian households had an internet connection by year-end 2017. The data point of roughly 50% of low income households lacking a connection is very old – it was reported by Statistics Canada in its “Daily” on May 25, 2011, reporting on the results of the Canadian Internet Use Survey.

The Connecting Families initiative, a program funded entirely by the telecommunications industry, has gone a long way in helping to get affordable computers and broadband connections into low income households with school-aged children, thanks to the driving by leadership at TELUS and Rogers. This was always my first target: helping to bridge what FCC Commissioner Jessica Rosenworcel has termed the Homework Gap.

Frankly, I was disappointed with the quality of the ACORN research study. There is not a very big difference between the 80% adoption rate among low income households in the ACORN study and the current 89% adoption rate among all Canadian households. How does this “shine a light on the urgent need to tackle … barriers to ensure equal access to digital opportunities”? I have no doubt that there is a problem; I am not persuaded that ACORN has illuminated the subject.

We need to understand the factors that are inhibiting universal broadband adoption. That will require more research, improved data and increased dialog among stakeholders. Canada’s Internet Registry Authority (CIRA) apparently supported the development of the ACORN report through its Community Investment Program. Perhaps CIRA should consider commissioning better quality research on its own, to contribute to the development of policies that further its objective “to build a better online Canada.”